Delivering a forward thinking, cost-effective climate index solution

UBS Climate Aware Equity Strategy

Many investors are looking to mitigate the risk of climate change, including the transition to a low-carbon economy, to their portfolios. The challenge is how can carbon risk be managed without compromising long-term performance.

Many existing solutions take the straight-forward approach of offering strategies that overweight the stocks of companies that are less dependent on fossil fuels relative to higher carbon-emitting peers. We believe this approach has some important limitations.

Our UBS Climate Aware Equity Strategy looks to capitalize on the long-term transition to a low emissions economy through an innovative, low cost, rules-based strategy. It aims to deliver returns broadly in line with the reference index with a low tracking error.

Global GHG emissions must decrease dramatically to effectively address the risks of climate change and global warming. A coordinated and broad-based response is required across a range of sectors.

Key benefits

A customizable rules-based strategy that applies positive and negative 'tilts' related to climate relevant factors.

Engaging directly with companies through conversations with management to convey best practices and encourage them to report sustainability metrics

Utilize current and forward looking data to estimate a company's carbon footprint and gauge their commitment to reduce carbon emissions in the future

Approach

Rules-based

The strategy applies positive and negative 'tilts' related to climate relevant factors that guides portfolio construction

Engagement

Engaging directly with company's management to educate about best practices and encourage reporting of sustainability metrics

Risk mitigation

Incorporating sustainability in the investment process may lower the cost of capital and limit downside risks

Strategy

Portfolio offering

  • Passive-like deviations vs. benchmark
  • Low TE and turnover
  • Low cost
  • Customizable
  • Potentially lower performance risk
  • Meaningful carbon reduction

Portfolio methodology

  • Utilizes multiple environmental data sources
  • No exclusions policy
  • Tilted to renewable energy
  • Voting and engagement
  • Aligned to forward-looking carbon reduction targets

Solution

UBS Climate Aware Equity Strategy

Capitalize on the long-term transition to a low emissions economy through an innovative, low cost, rules-based strategy


Our strengths

  • With more than 40 years’ experience in indexing solutions, our team have a strong focus on research.
  • We aim to reach an optimal balance between a strong emphasis on reducing transaction costs and managing the tracking error within a defined range based on our stratified sampling approach.
  • Our approach is lifted by UBS-AM wide client engagement strategy.

UBS – your partner in sustainable investing

  • Today, UBS Asset Management ranks as the 6th largest sustainable investing focused manager by assets under management globally with USD 48 billion1 and has USD 357 bn in ESG integrated assets under management. We are also the 2nd most successful in raising net new money over the last 12 months.
  • We are also a leader in sustainability data and committed to supporting clients in their own climate change transition.
  • Putting that commitment into action, we continue to focus on the development of investor relevant solutions.

Related Climate Aware insights

For further information on what we can offer you, please get in touch.