On 3 October 2016, UBS teamed up with Natural Capital Declaration (NCD) to host a major symposium on natural resources and the economy. Organized by the NCD, the Swiss State Secretariat for Economic Affairs (SECO) and Swiss Sustainable Finance (SFF), the event brought together major financial players to discuss how best to mitigate natural resources risks.
In its 2016 Global Risk Report, the World Economic Forum set out the most likely and impactful risks for the years ahead. Failure of climate-change mitigation and adaptation and water crises are two top-rated examples of risks with the potential to limit access to essential natural resources and thus create structural challenges on both a macro- and microeconomic level. It is therefore imperative that financial institutions integrate natural capital considerations into their investment and lending processes and risk management.
At the UBS-sponsored event in Zurich, NCD presented its Advancing Environmental Risk Management (AERM) project, a collaborative venture in partnership with UBS and other peer banks that calls upon the private and public sectors to create the conditions to maintain and enhance natural capital as a critical economic, ecological and social asset. Supported by SECO, AERM aims to consolidate the collective expertise of financial institutions worldwide to better understand credit risk, protect investment returns and improve insurance industry resilience.
Liselotte Arni, Head of Environmental and Social Risk, showed how UBS currently manages natural resources risks by stress testing UBS’s balance sheet and lending portfolios to climate change risks. She also highlighted the challenges with regard to the granularity and accuracy of data available and tools necessary to perform this analysis. Arni stated that “collaboration across the financial sector is now required to overcome these challenges and develop the necessary capabilities. The project with NCD will allow UBS to actively contribute to and benefit from the development of new methodologies and tools for mapping and integrating natural capital risks.”
As Caroline Anstey, Global Head UBS and Society, pointed out, in collaboration with SECO and SSF, UBS can now take a leading role in positioning Switzerland as a sustainable finance hub. This commitment is in line with UBS’s ambition, embodied in the UBS and Society policy, to be a leader in sustainability in the financial industry and to promote common good by being proactive, purposeful and accountable.