Zurich, 19 April 2018 – UBS today launches new financial benchmark indices for World Bank and other high-grade development bank debt. The launch marks a new phase in UBS's partnership with the World Bank and in its drive to make sustainable investment opportunities more available to clients. Axel Weber, Chairman of the Board of Directors, UBS Group AG, and Jim Yong Kim, World Bank Group President, announced the launch at the 2018 Spring Meetings of the International Monetary Fund and the World Bank Group in Washington, D.C.
The new benchmarks will enable investors to allocate more to these highly rated sustainable fixed income instruments than via traditional indices, which have lower development bank exposure. For instance, a typical high-grade fixed income index has only 2.1% exposure to multilateral development bank debt1.
Axel Weber, Chairman of the Board of Directors, UBS Group, says: "UBS has committed to channeling more capital towards meeting the United Nations Sustainable Development Goals. Indices for World Bank and other highly rated development bank debt enable investors to allocate more to sustainable high-grade debt overall. They also help development banks fund their activities."
Jim Yong Kim, World Bank Group President, says: "We’re pleased to partner with UBS to include World Bank bonds as part of the sustainable investment strategies they are offering investors across asset classes. Indices are critical to building and deepening sustainable capital markets that can move investment dollars off the sidelines and put that capital to work to address the immense environmental and social challenges in developing countries."
The indices will assist institutional investors and corporate treasuries, who typically have to follow indices more closely due to fiduciary obligations. They will also help deepen the pool of capital available to the World Bank and other development banks globally.
The launch has been conducted in collaboration with index provider Solactive and forms part of a series of sustainable and impact investing partnerships that UBS has announced over the past two years, including with the World Bank. UBS has invested in roughly CHF 2 billion of World Bank debt via its treasury function and also holds it as part of its new 100% sustainable cross-asset portfolios for private clients, in place of traditional high-grade bonds.
Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, says: "Investors have historically struggled to find high-grade debt instruments with a sustainability focus, especially within traditional financial benchmarks. These new indices open up new avenues for sustainable investors and fruitful partnerships with development banks seeking fresh funds."
Steffen Scheuble, CEO of Solactive, says: "Indices play a critical role in attracting capital to sustainable development. They enable investors to gain efficient, standardized access to relevant instruments and can help deepen liquidity and issuance. Partnering with large institutions such as UBS helps us develop these offerings and bring them to a wider audience."
For more information on UBS's sustainable and impact investing partnerships, please see UBS's white paper for the World Economic Forum Annual Meeting 2018 in Davos here.