UBS Wealth Management's Chief Investment Office (CIO) launches Business with Impact white paper on new models of corporate sustainability
- Companies have historically sought to meet basic sustainability standards as a means of managing operational and reputational risks. CIO's white paper, however, shows companies can improve performance by meeting enhanced standards and exploring sustainable business opportunities more actively.
- This 'business with impact' approach is likely to appeal to millennials and other investors who attach more value to sustainability and related areas such as impact investing, which targets social and environmental as well as financial returns.
- Solutions to sustainability challenges will require annual investment of USD 5-7 trillion1 , creating demand for associated products and services.
Zurich, 19 September 2017 – UBS Wealth Management's Chief Investment Office today launched a white paper entitled Business with Impact: From corporate social responsibility to corporate societal returns. The paper concludes that businesses are more likely to perform better and satisfy their investors if they treat sustainability as an opportunity to earn a compelling return and make a measurable social or environmental impact, rather than simply managing sustainability risks. The paper also features case study interviews with business executives including Paul Polman, Chair of the World Business Council for Sustainable Development and CEO of Unilever, and Tan Sri Dr. Lim Wee Chai, Executive Chairman of Top Glove Corporation.
Investor interest in sustainability and associated business opportunities has grown significantly in recent years and has been accelerated by the launch of and widespread support for the United Nations Sustainable Development Goals (UN SDGs). Assets managed according to responsible investment criteria grew from USD 18.3 trillion in 2014 to USD 22.9 trillion in 20162.
Sustainability initiatives are demonstrating an ability to enhance firms' bottom lines as well as mitigating risks, supporting a 'business with impact' approach. One recent example is the International Labor Organization's SCORE supply chain program. It has enabled suppliers to save significantly on surplus storage by raising productivity and cutting waste, as well as measurably improving worker welfare. Over the longer term, meeting the SDGs will require USD 5-7 trillion of annual investment1, boosting demand for sustainability-related products and services.
A 'business with impact' approach is likely to find favor with millennial and female investors and other corporate stakeholders with growing financial influence. For instance, under-35s are twice as likely to sell an investment with perceived sustainability issues3, while 65% of women judge an investment on its social, political, or environmental outcomes, versus just 42% of men4.
Mark Haefele, Global Chief Investment Officer at UBS Wealth Management, said: "Amid increasing pressure from investors and other stakeholders, companies can best address their sustainability challenges by treating them as opportunities. A 'business with impact' approach can help them enhance not only their social and environmental footprint but also their financial returns."
Simon Smiles, Chief Investment Officer for Ultra High Net Worth at UBS Wealth Management, said: "Our wealthiest clients are increasingly focused on sustainability in both their investments and their businesses. We expect them to gravitate increasingly towards a "business with impact' approach when dealing with their own companies as well as firms in which they invest."
Paul Polman, Chair of the World Business Council for Sustainable Development and CEO of Unilever, said: "For businesses, sustainability opens up opportunities, efficiencies, and potential for innovation. It enables them to attract and retain employees, customers and investors and helps secure their licenses and reputations. As such, sustainable companies are thriving and delivering attractive returns to shareholders."
Tan Sri Dr. Lim Wee Chai, Executive Chairman of Top Glove Corporation, said: "Companies that want to become more sustainable but feel they lack resources should start small and gradually invest more in the most productive areas for social and financial returns. Firms should treat areas like employee well-being as priority long-term investments given the potential benefits involved."
Recommendations: How companies can become 'businesses with impact'
- Work with other organizations to test impactful business approaches, meet client demands, and overcome internal constraints. Key case studies include C&A's partnership in recent years with the C&A Foundation, GIZ, TBM Consulting Group, Giving Evidence, and Solutions Matrix.
- Draw on private businesses and family offices to incorporate social and environmental returns into operations in a scalable way. Almost half of family firms with 501 to 5000+ employees are already highly engaged in impact investing, as are more than a third of firms with up to 500 employees, according to a 2016 study on family business philanthropy5.
- Learn how to invest on a long-term basis from sustainability-focused clients and investors. Examples include select participants in the impact investing industry, which aims to maximize measurable social and environment impact as well as generate compelling financial returns.
- Establish digital platforms that enable connections with like-minded investors and suitable 'business with impact' opportunities. In addition to networking opportunities, such networks could highlight relevant information and investment incentives as well as facilitate independent thirdparty assessments.
Business with impact: UBS's commitments
- UBS is a global leader in sustainability. For the third year running the company was awarded first place in the diversified financials industry group of the Dow Jones Sustainability Indices (DJSI) and obtained the best score among its peers on all three criteria (economic, environmental and social).
- UBS is a global leader in sustainable and impact investing. More than CHF 1 trillion of UBS client money is managed according to sustainable principles, or roughly a third of firm-wide invested assets. UBS has committed to raise USD 5 billion over five years for impact investments related to the UN SDGs.
To view the full white paper, visit www.ubs.com/cio. For discussion about the paper on social media, search for #YouCanAdapt on Facebook, LinkedIn, and Twitter.
UBS provides financial advice and solutions to wealthy, institutional and corporate clients worldwide, as well as private clients in Switzerland. The operational structure of the Group is comprised of our Corporate Center and five business divisions: Wealth Management, Wealth Management Americas, Personal & Corporate Banking, Asset Management and the Investment Bank. UBS's strategy builds on the strengths of all of its businesses and focuses its efforts on areas in which it excels, while seeking to capitalize on the compelling growth prospects in the businesses and regions in which it operates, in order to generate attractive and sustainable returns for its shareholders. All of its businesses are capital-efficient and benefit from a strong competitive position in their targeted markets.
UBS is present in all major financial centers worldwide. It has offices in 54 countries, with about 34% of its employees working in the Americas, 35% in Switzerland, 18% in the rest of Europe, the Middle East and Africa and 13% in Asia Pacific. UBS Group AG employs approximately 60,000 people around the world. Its shares are listed on the SIX Swiss Exchange and the New York Stock Exchange (NYSE).
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