"We believe that any company focusing on the long-term also needs to take into account societal expectations and concerns in an evolving environment."
Axel Weber, UBS Chairman
What we do for our stakeholders - fostering sustainability and long-term value
Sustainable performance is one of the three principles that guide our work at UBS.
We provide our clients with financial advice as well as the right products and services to support them in addressing societal issues
We actively engage our employees in the successful execution of UBS and Society, including through sustainability-related training and awareness raising activities and employee volunteering
We engage our investors on environmental, social and governance (ESG) topics such as corporate culture or climate change
Our management of environmental and human rights matters
The proper management of our own environmental footprint and our supply chain are essential proof points of doing business in a sustainable manner. This is also true of our comprehensive management of environmental and social risks (ESR). We enforce our in-house environmental and responsible supply chain management, and our ESR standards and management firm-wide.
Environmental and social risk (ESR)
Learn in which cases we will not do business, or only under stringed criteria and how the process for the identification, assessment and monitoring of environmental and social risks works.
As a leading global financial services provider, we focus our climate change strategy on risk management, investments, financing, research and our own operations.
In-house environmental management
We constantly strive to reduce our own emissions, our waste production, energy and paper consumption and water usage. For figures and facts see:
Responsible supply chain management
We strive to adhere to high ethical standards in all decisions we make and when we interact with our stakeholders. We expect the same from our suppliers.
Case studies on the management of environmental and human rights matters
Why are soft commodities such a hot topic? It is estimated that more than 50% of tropical deforestation is due to the production of palm oil, soy, timber and beef. Deforestation and forest degradation can cause biodiversity to decline. Deforestation is, in fact, second only to the energy sector as a source of global greenhouse gas emissions and accounts for up to 20% of global emissions. Furthermore, as millions of people rely directly on forests, deforestation continues to cause severe societal challenges, sometimes leading to violent conflict.
What is our commitment? The magnitude of these impacts have led a group of international banks, among which UBS, to endorse the Soft Commodities Compact of the Banking Environment Initiative, which seeks to align banking standards with consumer goods companies that are committed to support the transformation of soft commodity supply chains and achieve zero net deforestation by 2020.
In addition, we are a member of the Roundtable on Sustainable Palm Oil (RSPO) and also joined their Complaints Panel. This is a contribution to further enhance transparency and accountability of the sector and the RSPO.
What are our policy standards? Transactions related to soft commodities trigger an enhanced due diligence and approval process. The objective of this process is to ascertain that operations of clients active in the soft commodities business are sustainable. To that effect UBS requires companies producing palm oil, soy or timber in markets at high risk of tropical deforestation to be publicly committed to achieving full certification of their production, by 2020, against the standards of recognized sustainability schemes, such as the RSPO, the Roundtable on Responsible Soy (RTRS), and the Forest Stewardship Council (FSC).
How do we execute our standards? Before doing business with any company involved in soft commodity production or trading, our experts for environmental and social risk inquire how a company manages environmental and social challenges in its operations, as required by UBS’s standards for soft commodity production. Depending on the client and the type of transaction that UBS is confronted with, such as lending, trade finance, underwriting or advisory mandates, due diligence may involve desk research and interaction with the companies, external experts, as well as global and local non-governmental organizations. Depending on the results, this can lead to a variety of actions, from requiring the client to certify its production or trading processes against the standards of relevant sustainability schemes, to declining to do business with the client.
How does our ESR approach impact a particular case? UBS negotiated the commencement of a relationship with a corporate client whose activities also included the palm oil business. At that point the corporate entity was not a member of the Roundtable on Sustainable Palm Oil, which is a requirement under the respective UBS standard. UBS therefore agreed to a conditional onboarding of the corporate entity under the condition that it adhered to the RSPO within a predefined time period. After the agreed period had passed without the client taking the necessary steps, UBS exited the relationship.
Why is climate change such a hot topic? Climate change is one of the most significant challenges of our time. The world’s key environmental and social challenges – such as population growth, energy security, loss of biodiversity and access to drinking water and food – are all closely intertwined with climate change. This makes the transition to a low-carbon economy vital. We support this transition through our comprehensive climate change strategy.
What do we do? We are determined to support our clients in preparing for success in an increasingly carbon constrained world. As a leading global financial services provider, we focus our climate change strategy on risk management, investments, financing, research and our own operations. We are committed to:
- Supporting renewable energy and clean tech transactions;
- not financing new coal-fired power plant projects in high-income OECD countries;
- only financing new coal-fired projects outside high – income OECD countries that use high-efficiency, low-emissions technologies;
- only supporting other types of transactions of coal-fired operators who have a strategy in place to reduce coal dependency or who adhere to strict internationally recognized greenhouse gas emissions standards;
- severely restricting lending and capital raising to the coal mining sector and not supporting coal mining companies engaged in MTR operations;
- securing 100% of our electricity from renewable sources by 2020, reducing our own greenhouse gas footprint by 75% compared to 2004 levels as a result.
How does our ESR approach impact a particular case? UBS acted as a lead bookrunner in a bond issue of a steel company. After the review of the deal documentation, our ESR unit concluded that in the risk section of the deal prospectus, there was insufficient disclosure of risks emanating from future climate change and other environmental regulation. The ESR unit interacted with the client and the legal advisors and proposed an alternative wording for the respective section to address potential liability risks. In its efforts, UBS was joined by other banks involved in the bond issuance. The client agreed to change the wording accordingly.
Why is agriculture such a hot topic? Meeting the needs of a growing population, providing greater food and energy security, increasing woodland coverage and offering better environmental protection are important demands for agriculture globally.
What do we do? Key areas within our Environmental and Social Risk Policy Framework are directly related to agriculture. These include our standards pertaining to world heritage sites, wetlands, endangered species of wild flora and fauna, high conservation value forests, and illegal fire – as well as our standards pertaining to soft commodities (palm oil, soy, timber).
How does our ESR approach impact a particular case? A corporate client was exposed to a number of controversies in the agribusiness sector. To address these issues our ESR unit recommended to the client to establish a relationship with a third party organization specialized in this area. The client, the third party organization and the ESR unit have since launched a process to systematically address the issues raised.
Ratings and recognitions
Our commitment and progress in the area of sustainability are reflected in important external ratings, rankings and recognitions.