Research

Investment Bank – Sell-side research

In 2004, the Investment Bank created an SRI team of sell-side analysts (sell-side analysts write recommendations and reports for professional investors) in its equity research area. Among other things, these sell-side analysts research areas of increasing or diminishing risk. Many SRI issues cannot easily be quantified but, where possible, the team leverages UBS standard models, such as the Value Creation Analysis Model, to analyze the potential effects of social and environmental issues on companies’ share prices. Identifying the material SRI issues presents challenges as, essentially, three things help determine which environmental and social issues are critical: what society sees as important; the nature of the competitive pressures facing firms in an industry; and how costs and benefits are (or will be) distributed between stakeholders.

Since the team was established, client interest in some aspects of SRI – most notably climate change – has grown, and so has research coverage. The SRI team regularly collaborates with analysts in sector teams to write about emerging SRI themes, and relevant research content is regularly published by a growing number of specialists within the mainstream research effort. An SRI page is available to UBS’s institutional clients on UBS’s Research Web. This brings together publications of the SRI team, as well as relevant sector reports from other teams.

Global Asset Management – Buy-side research

In the asset management business, an SRI buy-side (internal proprietary research) team was established in Switzerland in 1996, and has expanded to the US and Singapore. The team carries out in-depth, theme-based research in the areas of climate change, water and demographics. It also leverages the asset management’s business research platform of more than 100 analysts to construct all of its SRI portfolios. The internal research is complemented by specialized rating agencies. An expert network also provides strategic support.

Global Wealth Management & Business Banking – Secondary research

The secondary research team in UBS’s wealth management business helps private investors navigate large volumes of global financial data. It monitors and interprets research information on most traded asset classes. The team established an SRI competence center in 2007 in order to provide sound advice to clients. It publishes in-depth studies of emerging socio-economic and environmental trends such as climate change by assessing their potential impact on investment markets.

Case studies

2007 – Research study addressing climate change

At the end of January 2007, Wealth Management Research published a report entitled 'Climate Change: beyond whether', that examines the scientific, technological, and economic effects of climate change. Its authors argue that climate change will have far-reaching implications for the global economy and the worldwide investment climate, and conclude that measures to combat global warming will increasingly influence people's behavior, the risk profiles of certain industries, and prospects for investment. The analysis suggests that products and processes that improve energy efficiency, as well as the development of renewable or low-CO2 energy sources, have great potential to slow climate change.

2007 – Theme-based research in Global Asset Management

The Socially Responsible Investments (SRI) analysts at Global Asset Management started focusing more on thematic research. As traditional (“Best in Class”) ecological and social company analysis of large cap companies is becoming increasingly standardized, UBS can access a significant range of information from external rating agencies. In doing so, the team members can contribute their own sector-specific expertise and focus more on the three main topics which represent the key challenges of the 21st century: climate change, water and demographics.

2006 – Water scarcity

In April 2006 the Investment Bank's Socially Responsible Investment Research team published a report examining the investment opportunities and risks raised by water scarcity. The study, entitled 'Fresh Water - Liquid Gold?', was prompted by the team's ongoing interest in the investment issues relating to climate-change-related risk and the steady flow of news relating to freshwater availability. The study argues that specialist equipment and services firms could take advantage of opportunities raised by water scarcity. In a later report, the team noted that substantial investment in water infrastructure is likely to be needed in the medium term, since it is estimated that only 20% of wastewater is currently being treated at secondary level. The team also noted that wastewater re-use has become more feasible in recent years owing to technology advances.

2005 – UBS hosts conference on climate change

The Investment Bank's Socially Responsible Investment (SRI) Research team hosted its first ever conference on climate change. Over 100 clients attended the day-long event at the London offices, which featured thought-provoking and informative presentations by both internal and external environment experts.

In an opening keynote speech Sir David King, chief scientific advisor to the UK government, addressed the science of climate change, exploring the question: 'What's really happening?

There then followed a series of presentations on a variety of climate-related issues, including 'Why business cannot ignore climate change' or 'Climate change risk: is it a significant threat to the oil business?'. The afternoon sessions focused on what it takes to make climate-change-related businesses viable. Companies at the cutting edge of innovation in this area spoke on solar power, carbon sequestration, biofuel and energy recovery from waste.