UBS announces partnerships to help mobilize private wealth towards the United Nations Sustainable Development Goals
Zurich, 22 January 2018 – UBS today released a new white paper for the World Economic Forum (WEF) Annual Meeting 2018 in Davos. The paper focuses on partnerships for the United Nations Sustainable Development Goals (UN SDGs), which UBS sees as a crucial part of Creating a Shared Future in a Fractured World, the theme of this year's Meeting.
The paper, authored by experts from across UBS, outlines the steps taken to mobilize capital, including private wealth, towards the SDGs and announces a range of SDG-related partnerships for 2018. It also explores lessons that UBS has learned in this field since the 2017 Annual Meeting, where it made its most recent SDG commitments. The paper features contributions from the World Economic Forum and interviews with General David H. Petraeus, Chuck Slaughter, and David Hertz.
In the white paper, UBS today announces the following SDG-related partnerships:
- The first 100% sustainable cross-asset portfolios for private clients, targeting market rates of risk-adjusted return as well as positive social and environmental outcomes. These portfolios include an exclusive partnership with the World Bank on an allocation to World Bank debt instruments, which offer a more explicit sustainability focus than other highly rated debt, as well as a new best-in-class, shareholder engagement strategy involving Hermes Investment Management – the first strategy to explicitly focus on generating intentional, measurable, and additional social and/or environmental impact through public rather than private equity.
- A partnership with Solactive and leading green bond managers on new indices featuring World Bank, multilateral development bank (MDB), and green bonds. The indices enable asset allocation along three dimensions – financial return, financial risk, and sustainability. These new standards can pave the way for more institutional investors to invest in highly rated sustainable debt, doing good for society while satisfying fiduciary obligations.
- The launch of Align171 (to take place on Jan 24 during the WEF Annual Meeting in Davos). This independent platform, a concept announced in UBS’s white paper for the 2017 Annual Meeting and developed over the past year, stands out in connecting a wider range of public, institutional, and private wealth investors with SDG-related investment opportunities. Align17 is a WEF Young Global Leaders initiative supported by UBS, PwC, Linklaters, the IFC, and Hamilton Lane.
- The Collaborative hosted by UBS, an initiative involving UBS's Global Ultra High Net Worth Philanthropy Center, the UBS Optimus Foundation, and UBS clients. The Collaborative, among other things, endeavors to connect philanthropists to scalable and sustainable solutions to bring healthcare access to more than 34 million people in Africa.
Axel Weber, Chairman of UBS, said: "The UN Sustainable Development Goals define the world's aspirations in addressing social and environmental issues. The 17th SDG – strengthening implementation and revitalizing the global partnership for sustainable development – will be critical to meeting the SDGs' 2030 deadline. UBS will continue to initiate collaborations that address the SDGs overall and SDG 17 specifically."
Sergio Ermotti, Group CEO of UBS, said: "We are pleased to announce initial success in our commitment to help meet the UN SDGs, including our new partnership with the World Bank. As the 2030 deadline for the SDGs approaches, we look forward to working with our clients and other financial institutions on ways of tackling the world's sustainability challenges."
Mark Haefele, Global Chief Investment Officer (CIO) at UBS Wealth Management, said: "Partnerships between multilateral development banks, the financial industry, private wealth, philanthropists, and social enterprises are absolutely critical to funding the SDGs. For investors, they also provide a range of opportunities that can generate above-market risk-adjusted returns."
Simon Smiles, CIO for Ultra High Net Worth at UBS Wealth Management and a World Economic Forum Young Global Leader, said: "As the world's leading wealth manager, we are committed to providing our clients with the world's leading sustainable and impact investments across asset classes, along with highly innovative, impactful partnerships in philanthropy and social entrepreneurship."
Phyllis Costanza, CEO of the UBS Optimus Foundation, said: "Innovative social finance and philanthropy will play a key role in achieving the SDGs. UBS is partnering with governments on new international aid financing instruments like development impact bonds to harness the power of its network and expertise towards addressing some of the most challenging social issues."
The white paper (available in full at www.ubs.com/cio) also outlines the key lessons UBS has learned from partnering with others to meet shared sustainability challenges:
- Wealth managers need to work more closely with multilateral development banks (MDBs) like the World Bank to explain their clients' expectations with respect to financial and social/environmental returns. This can help development agencies increase the appeal of sustainable debt and raise more funds for the SDGs. Wealth managers should also educate clients on MDB debt's key potential role in portfolios, even conventional ones designed to maximize risk-adjusted returns.
- Financial firms must work together to standardize terms, measurements, and evaluations involved in sustainable and impact investing. Clear criteria should separate mislabeled products from true sustainable or impact investments, thus increasing transparency, investor trust, and available funding for the SDGs. Sustainable and impact investments should be defined as generating at least market rates of financial return, alongside positive societal benefits. Financial firms must cooperate on building out new SDG-related financial instruments, across all asset classes, which meet this definition. Client appetite for such instruments is rising, as shown by the significant demand for our impact investment partnership with TPG Growth on the Rise Fund.
- A “one-size-fits-all” approach to underlying giving and investing opportunities is unlikely to appeal to private individuals and their highly personal sustainability preferences. UBS has seen significant client interest in a comprehensive set of sustainable and impact investments, ranging from cross-asset portfolios to liquid single asset class solutions, private market vehicles, and early-stage venture capital.
- Philanthropists are increasingly focusing on impact philanthropy, and finding more innovative and impactful ways to fund international development. UBS Optimus Foundation is working with the US Agency for International Development, MSD for Mothers, and others in this field on a development impact bond to improve the quality of private sector health care facilities in Rajasthan, India.
- For-profit businesses are increasingly adopting a “business with impact” approach that can achieve the SDGs and boost commercial performance. All firms can benefit from supporting social entrepreneurs – whether by introducing them to stakeholders or offering mentoring. A successful example is our partnership with UBS Global Visionary Tristram Stuart. His award-winning product Toast Ale beer, which UBS is proud to serve at its client and stakeholder events, is brewed from surplus fresh bread and saves potential food waste in support of SDG 12 (responsible consumption and production). Toast Ale is also a 2018 finalist for the Dell Circular Economy People’s Choice Award granted by the Circulars, an initiative of the WEF and the Forum of Young Global Leaders, run in collaboration with Accenture Strategy.
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