6-K 1 sustainabilityreport2.htm 6-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: March 28, 2024
UBS Group AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive office)
Commission File Number: 1-15060
Credit Suisse AG
(Registrant's Name)
Paradeplatz 8, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-33434
Indicate by check mark whether the registrants file or will file annual
reports under cover of Form
20-F or Form 40-
F.
Form 20-F
☒
Form 40-F
☐
This Form 6-K consists of UBS Sustainability Report 2023,
which appears immediately following this
page.
Sustainability Report
2023
Thinking and acting with the long term in mind
Table of contents
Page
Introduction
................................................................
................................................................
...................................................
3
The importance of sustainability and culture to UBS
................................................................
..................................................
3
About this report ................................................................
................................................................
.....................................
5
Banking on sustainability
................................................................
................................................................
..........................
8
Our integration journey – at a glance ................................................................................................
.......................................
9
Our business model
................................................................
................................................................
................................
11
Sustainability drives our ambitions
................................................................
................................................................
..........
13
Strategy ................................................................................................
................................................................
.......................
14
Our sustainability and impact strategy ................................................................................................
....................................
14
Our aspirations and progress
................................................................
................................................................
..................
15
Governance
................................................................
................................................................
..................................................
17
Our sustainability governance
................................................................
................................................................
.................
17
Environment
................................................................
................................................................
................................................
21
Contributing to a low-carbon economy ................................................................................................................................
..
21
Supporting our clients’ low-carbon transition
................................................................
.......................................................... 27
Reducing our environmental impact ................................................................................................
.......................................
38
Monitoring the environmental impact of our supply chain ................................................................................................
......
42
Managing the risks of climate change to our business ................................................................
............................................
44
Social
................................................................
................................................................
............................................................ 45
People and culture make the difference
................................................................
................................................................
..
45
Driving social impact ................................................................................................
.............................................................. 54
Respecting human rights
................................................................
................................................................
........................
57
Managing our supply chain responsibly ................................................................................................
..................................
58
Supporting opportunities
................................................................
................................................................
...........................
61
Global Wealth Management ................................................................
................................................................
..................
66
Asset Management
................................................................
................................................................
................................
68
Investment Bank ................................................................
................................................................
....................................
71
Personal & Corporate Banking
................................................................
................................................................
................
73
Managing sustainability and climate risks ................................................................................................................................ 75
Sustainability and climate risk management framework
................................................................
..........................................
76
Appendix ................................................................................................
................................................................
...................
100
Appendix 1 – Governance
................................................................
................................................................
....................
100
Appendix 2 – Environment ................................................................................................
...................................................
104
Appendix 3 – Entity-specific disclosures
for Credit Suisse AG
................................................................
.................................
116
Appendix 4 – Other supplemental information ................................................................................................
.....................
130
Sustainability Report 2023
| Introduction
3
Introduction
The importance of sustainability and culture to UBS
The acquisition of the Credit Suisse Group made 2023 an exceptional year
in our firm’s history. We completed the
first-ever combination of two global systemically important financial institutions (G-SIFIs) and have embarked on a
major
program
to
integrate
the
two
banks.
Our
sustainability
frameworks
are
no
exception.
We
have
made
significant progress
in aligning
our frameworks
for the
combined firm
and will
continue with
this alignment
in 2024
and
beyond.
2023
also
saw
significant
developments
in
corporate
disclosure
requirements,
particularly
the
European Union’s Corporate
Sustainability Reporting Directive
(the CSRD), as well as
in the availability of emissions
data and standards. In
addition, market volatility and the
conflicts in Ukraine and
the Middle East presented new
challenges for sustainable investing.
Integration of Credit Suisse
We
have
made
significant progress
in
integrating
UBS
and
Credit
Suisse’s
sustainability
policy
frameworks
and
processes:
–
We
have
implemented a
revised
sustainability and
climate
risk
policy
framework and
associated processes
to
reflect the full suite of activities of the combined
business and a consistent approach.
–
We
are
minimizing
our
scope
1
and
2
greenhouse
gas
(GHG)
emissions
through
energy
efficiencies
and
by
switching to more sustainable energy sources,
across the combined firm.
–
We have developed
updated scope 3
emissions targets
reflecting the combined
profile of the
combined firm
and
evolving regulatory
and data
standards. We
have updated
our previous
emissions targets
for real
estate mortgage
lending, as
well as
the fossil
fuels, power
generation and
cement sectors,
reflecting both
the combined
portfolios
of the two
firms and methodology changes.
We have added
targets for shipping, and
iron and steel
based on
the
materiality
of
these
sectors
in
our
combined
financing
portfolio
and
have
dropped
sectors
that
are
not
material.
–
We have made progress towards
the alignment of our sustainable investing
products standards across the firm
and will
benchmark Credit
Suisse’s products
against these
standards. We
expect to
incorporate products
that
meet our standards across our platforms in 2024.
–
We have
integrated our
performance evaluation and
compensation structures, including
our fair
pay practice.
We are
also aligning
social plans or
severance payments at
UBS and
Credit Suisse
in the
respective country to
ensure that all employees are treated equally.
We still have
significant milestones to deliver
in 2024 and
beyond. We firmly
believe, however, that
our activities
are already strengthening our creation of long-term value for our
shareholders, clients and other stakeholders. As
we progress with
the integration,
we aim to
leverage the
most effective
ideas and
capabilities of
both organizations
as we strive to build a highly dependable and
trustworthy firm globally.
We strongly believe that
institutions are defined by
their culture and, with
our “three keys to
success”, we have an
established concept
for advancing
the culture
across our
combined organization.
Our culture
is decisive
in achieving
our ambitions, and client centricity, accountability with integrity, collaboration, and risk
management are all areas
where our combined strengths can make the
biggest difference and as such, are a
key priority.
We continued
to make
good progress
on the
execution of
our Group-wide
sustainability and
impact strategy
in
2023, as
outlined in
this Sustainability
Report. While
market volatility
and rising
geopolitical tensions
over the
course
of 2023
proved challenging,
flows into
sustainable funds
and ETFs
remained positive.
Sustainable investing
also
gained
ground
in
alternative
markets,
including
real
estate
and
hedge
funds.
Against
this
backdrop,
we
saw
sustainable
assets
under
management
increase.
Overall,
our
efforts
across
sustainability
and
culture
have
been
reflected in solid results in key environmental,
social, governance (ESG) ratings.
Sustainability Report 2023
| Introduction
4
Trends
Policymakers
and
regulators
increasingly
require
corporations
to
embed
ESG
considerations
within
their
own
operations and
value chains,
and to
disclose them.
One example
of this
is the
CSRD, which
came into
effect in
2023
and will require
compliant reporting
within annual
financial reporting
for the first
wave of in-scope
entities for
fiscal
year 2024,
with reporting
in
2025. While
we welcome
this
move toward
greater transparency
and reliability
of
information, we continue to seek greater alignment across
existing and emerging disclosure requirements in order
to enable greater comparability.
While climate continues
to dominate the
sustainable finance
landscape, there
has been a
notable shift in
emphasis.
After
two
years
of
formulating
and
refining
net-zero
commitments
across
industries,
the
ongoing
progress
in
methodologies, data
and transition
finance frameworks
has
allowed discussions
to shift
toward the
quality and
ambition level of net-zero
targets. Transition has
become more widely
recognized as a
requisite path. As our
clients
look to a shift
in their business models to
prepare for the future, the
fast pace of technological innovation, along
with high inflation and input costs, are
key considerations as they develop their transition
strategies.
Emerging
trends
which
have
all
gained
momentum
in
2023
include
nature,
impact
transparency
and
blended
finance. The most advanced
of these is nature where there
has been a growing awareness
of the impact of society
on
the
world’s
biodiversity and
natural
capital.
New
frameworks are
being rolled
out
to
enhance
transparency,
including the release of the recommendations of the Taskforce on Nature-related Financial Disclosures (the TNFD).
This will improve the availability of good, economy-wide nature and biodiversity
data, contributing toward greater
transparency and providing an important
tool for investors and companies alike.
Turning to impact,
the increasing disclosure requirements
and growing demand
for transparency from
clients are
encouraging
the
development
of
new
measurement
methodologies.
In
the
last
year,
we
have
also
seen
governments and development finance institutions launch blended finance initiatives, using capital from public or
philanthropic sources
to increase
private sector
investment in
sustainable development. In
the past
decade, such
initiatives have mobilized over USD
200 billion in capital
toward sustainable development in developing countries
and we see significant opportunity for this to
grow further.
Our commitment
By 2050, our ambition
is to achieve net-zero
greenhouse gas emissions across
our scope 1 and
2, and specified scope
3 activities.
We recognize
there is
more to
do and
aim to
phase in
additional scope
3 activities
over time.
It is,
however,
important to
note that the
decarbonization of
the global
economy, emissions
reductions by
clients, and the
realization
of our own targets and ambitions all
depend on a variety of factors, some
of which are beyond our direct influence.
The decarbonization of the
global economy will
require governments, regulators, all industries
and consumers to
move in
the same
direction. Clear
guidance by
governments
through thoughtful
regulations, policies
and incentives,
including mechanisms to factor in the price of carbon,
as well as the development and scaling of key technologies
and broader changes in the behavior of our
society, will be critical.
Our ambition
to be
a global
leader in
sustainability remains
unchanged. We
are committed
to supporting
our clients
in the transition
to a low-carbon
world, leading by
example in our
own operations,
and sharing our
lessons learned
along the way with the rest of the world.
We hope you will join us on the journey.
Colm Kelleher
Chairman of the Board of Directors
Sergio P.
Ermotti
Group Chief Executive Officer
UBS was among the 43 companies that first signed
the UN Global Compact in 2000 and is also
a member of the
UN
Global
Compact Network
Switzerland, meaning
we
are
committed
to
its
principles
on
human
rights, labor
standards, the environment and anti-corruption. As reflected in detail in this report, we have a comprehensive set
of goals and activities in place pertaining to
the principles of the UN Global Compact.
Sustainability Report 2023
| Introduction
5
About this report
Overview
The reporting period
for this UBS
Group Sustainability Report, which
also covers Credit
Suisse, is 1
January to 31
December 2023, which is aligned with the financial reporting period of UBS Group
AG. All 2023 data included in
the report
is therefore
for this
period. Historical
data (for
e.g., 2022
and 2021)
pertains to
Pre-acquisition UBS,
unless otherwise
stated. For
UBS’s own
environmental footprint,
the reporting
period has
changed from
July to
June (as applied
in the UBS
Sustainability Report 2022) to
January to December (for
this report) to
align with the
UBS
financial
reporting
year.
2022
data
is
restated
in
the
relevant
tables.
Data
showing
progress
against
our
decarbonization sectorial targets,
including net-zero ones, pertains
to 31 December 2022
(due to the unavailability
of relevant 2023 data, as explained in the respective section
of this report).
Unless otherwise
noted, the
information included
in this report
is presented
at the
consolidated level
for UBS
Group
AG, UBS AG and Credit Suisse AG.
›
Refer to “Note 29 Interests in subsidiaries and other entities” in the UBS Group AG Annual Report 2023 for
supplementary information regarding certain significant subsidiaries
This report
comprises the
“non-financial” disclosures
required for
UBS Group
AG, and
its subsidiaries,
including
UBS AG
and Credit
Suisse AG,
under the
Swiss Code
of Obligations
Art. 964b.
It also
comprises disclosures
required
for UBS AG by the German law implementing EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz
/ CSR-RUG)
(nichtfinanzieller
Konzernbericht)
(the
EU
Non-Financial
Reporting
Directive).
A
table
at
the
end
of
this
report
(Appendix 4)
provides the
references to
such non-financial
information. This
report also
contains information on
UBS AG and UBS Europe SE pursuant to Art.
8 of the EU Taxonomy Regulation (Appendix
4).
UBS is
in the
process of
implementing a combined
and aligned sustainability-and-climate-risk dataset
across UBS
Group
and
including
Credit
Suisse
AG.
For
this
reason,
UBS
will
publish
UBS
Group
and
Credit
Suisse
AG
sustainability and climate risk metrics required pursuant to FINMA Circular 2016/1 "Disclosure – banks", Annex 5,
in
a
supplement
to
the
UBS
Group
Annual
Report
and
the
UBS
Group
Sustainability
Report
in
line
with
the
publication timeline for the
semi-annual Pillar 3
disclosures in the
third quarter of 2024.
The current inventory of
quantitative sustainability
and climate
risk metrics,
including exposure
to carbon-related
assets, climate-sensitive
sectors and nature-related risks for UBS
AG, is disclosed in this report.
Additional information
pertaining to
the content
of this
report is
provided
in a
supplementary
document. All
climate-
and nature-related information contained
in this report and in the supplementary
document is also made available
through
a
separate
UBS
Group
Climate
and
Nature
Report
2023.
The
latter
report
follows
the
structure
recommended
by
the
Task
Force
on
Climate-related
Financial
Disclosures
(the
TCFD)
1
and
also
leverages
the
framework of the Taskforce on Nature-related
Financial Disclosures.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to this report,
available at
ubs.com/sustainability-reporting
,
for information on the implementation of the environmental risk
regulations in Singapore and the Hong Kong SAR by both UBS AG and Credit Suisse AG and disclosures in
connection with the legal entity reporting requirements of the ESG Sourcebook in the Business Standards section
of the UK Financial Conduct Authority Handbook, and for information pertaining to UBS Group AG’s approach to
the “Swiss Ordinance on Due Diligence and Transparency
in relation to Minerals and Metals from Conflict-Affected
Areas and Child Labor”
Our
Sustainability
Accounting
Standards
Board
(SASB)
index
and
our
Principles
for
Responsible
Banking
(PRB)
reporting and self-assessment are available at
ubs.com/sustainability-reporting
.
›
Refer to “Key terms and definitions”
in the appendices to this report for terms and abbreviations used in this report
Credit Suisse integration – explanations and
related assumptions
On 12
June 2023, UBS
Group AG
acquired Credit
Suisse Group AG,
succeeding by operation
of Swiss law
to all
assets and liabilities of Credit Suisse Group AG, and became
the direct or indirect shareholder of all of
the former
direct
and
indirect
subsidiaries of
Credit
Suisse Group
AG.
UBS
Group
AG
is
a
holding
company and
conducts
substantially all
of
its
operations
through
UBS
AG
and
Credit
Suisse
AG,
and
subsidiaries thereof.
UBS
aims
to
substantially complete the integration of Credit
Suisse into UBS by the
end of 2026. As part
of the integration of
Credit
Suisse,
UBS
plans
to
simplify
the
legal
structure,
including the
merger
of
UBS
AG
and
Credit
Suisse
AG
planned for 2024.
1
In June 2023, the International Sustainability Standards Board (the ISSB) finalized its first set of requirements for corporate disclosures regarding sustainability
matters: IFRS S1 and IFRS S2. The standards incorporate
the recommendations of the Task Force on Climate-related Financial Disclosures (the TCFD).
Sustainability Report 2023
| Introduction
6
In compliance with applicable regulatory requirements, information on Credit
Suisse AG has been included in
the
UBS Group Sustainability Report 2023.
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for more
information about Credit Suisse AG disclosures.
The legal structure of the UBS Group
The chart below gives an overview of our principal
legal entities and our legal entity structure.
›
Refer to the “Risk factors” and “Regulatory and legal developments” sections and the “Acquisition and integration
of Credit Suisse” section of the UBS Group AG Annual Report 2023 for more information
Assurance
This report has been
reviewed by Ernst &
Young
Ltd (EY). The content has
been prepared in accordance
with the
Global Reporting Initiative (GRI) Standards. We use the GRI as the basis
for this report and apply a careful process
weighing up the
materiality and relevance
of the information reported
and the expectations of
our stakeholders.
We
also
apply
our
firm’s
information
policy
and
disclosure
principles.
The
GRI
content
index,
supplementary
information, and EY’s assurance
report can be downloaded from
ubs.com/sustainability-report
. Selected metrics in
this report have
been subject
to reasonable or
limited assurance by
EY. A list of these
metrics and level
of assurance
can be found in the assurance report.
›
Refer to “Appendix 4 – Other supplemental information” in the appendices to this report for the assurance report
›
Refer to the Supplement to this report available at
ubs.com/sustainability-reporting
,
for more information on the
metrics definitions, approaches and scope (Basis of Reporting)
Explanation of dependencies
Certain activities
of UBS
that pertain
to the
implementation of
its sustainability
and impact
strategy are
directly
impacted
by
factors
that
UBS
cannot
influence
directly
or
can
only
influence
in
part.
These
include
pertinent
governmental actions (e.g., when it comes to
the achievement of the Paris Agreement
and thus the achievement
of our
firm’s net-zero
ambitions); the
quality and
availability of
(standardized) data
(e.g., in
such areas as
emissions);
the development
and enhancement
of required
methodologies and
methodological tools
(e.g., on
climate- and
nature-related risks); the ongoing evolution
of relevant definitions (e.g., sustainable
finance); and the furthering of
transparency (e.g., pertaining to
company disclosures of
data). Areas
where these dependencies
are of particular
relevance (including in particular
regarding the examples noted
above) are explained
in the relevant sections
of this
report.
28 March 2024
UBS Group AG
Contacts
Our Sustainability
Chief Financial
Officer (the
sCFO) and
our Corporate
Responsibility (CR)
teams manage
UBS’s
sustainability disclosures. Information to stakeholders about the
content of this report is provided by the CR team,
part of the UBS Group Chief Sustainability
Office (CSO).
cr@ubs.com
Sustainability Report 2023
| Introduction
7
Terms used in this report, unless the context requires otherwise
Description
”UBS,” ”UBS Group,” “UBS Group AG consolidated,” “Group,”
“the
Group”, “we”, “us” and “our”
UBS Group AG and its consolidated subsidiaries
“UBS Group excluding the Credit Suisse AG sub-group”
All UBS Group entities, excluding the Credit Suisse
AG sub-group
"UBS Group excluding Credit Suisse”
All UBS Group entities, excluding Credit Suisse AG
and its consolidated
subsidiaries, Credit Suisse Services AG, and other
small former Credit Suisse
Group entities now directly held by UBS Group AG
“UBS AG” and “UBS AG consolidated“,
“UBS AG sub-group“
UBS AG and its consolidated subsidiaries
“Pre-acquisition UBS”
UBS before the acquisition of the Credit Suisse Group
“Credit Suisse AG”, “Credit Suisse AG consolidated” and
“Credit
Suisse AG sub-group”
Credit Suisse AG and its consolidated subsidiaries
“Credit Suisse Group” and “Credit Suisse Group AG consolidated”
Credit Suisse Group AG and its consolidated subsidiaries,
before the
acquisition by UBS
“Credit Suisse”
Credit Suisse AG, its consolidated subsidiaries, Credit
Suisse Services AG, and
other small former Credit Suisse Group entities now directly held
by UBS
Group AG
“UBS Group AG” and “UBS Group AG standalone”
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and “Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LCC”
UBS Americas Holding LLC and its consolidated
subsidiaries
“Pre-acquisition Global Wealth Management”
The UBS Global Wealth Management business division
before the acquisition
of the Credit Suisse Group (data, if any, from before the date of the
acquisition of the Credit Suisse Group)
“UBS AG Global Wealth Management”
The Global Wealth Management business division
of UBS AG and its
consolidated subsidiaries
“Wealth Management (Credit Suisse)”
The Wealth Management business division of Credit
Suisse AG and its
consolidated subsidiaries
“Pre-acquisition Personal & Corporate Banking”
The Personal & Corporate Banking business
division before the acquisition of
the Credit Suisse Group (data, if any, from before the date of the acquisition
of the Credit Suisse Group)
“UBS AG Personal & Corporate Banking”
The Personal & Corporate Banking business
division of UBS AG and its
consolidated subsidiaries
“Swiss Bank (Credit Suisse)”
The Swiss Bank business division of Credit Suisse
AG and its consolidated
subsidiaries
“Pre-acquisition Asset Management”
The Asset Management business division before the
acquisition of the Credit
Suisse Group (data, if any, from before the date of the acquisition of the
Credit Suisse Group)
“UBS AG Asset Management”
The Asset Management business division of UBS
AG and its consolidated
subsidiaries
“Asset Management (Credit Suisse)”
The Asset Management business division of Credit
Suisse and its consolidated
subsidiaries
“Pre-acquisition Investment Bank”
The Investment Bank business division before the
acquisition of the Credit
Suisse Group (data, if any, from before the date of the acquisition of the
Credit Suisse Group)
UBS AG Investment Bank
The Investment Banking business division of
UBS AG and its consolidated
subsidiaries
Investment Bank (Credit Suisse)
The Investment Bank business division of Credit
Suisse AG and its
consolidated subsidiaries
“Non-core and Legacy”
The Non-core and Legacy Portfolio
Sustainability Report 2023
| Introduction
8
Banking on sustainability
Our commitment
We want to be the financial provider of choice for clients
who wish to mobilize capital toward the achievement of
the
17
United
Nations
Sustainable
Development
Goals
(the
SDGs)
and
the
orderly
transition
to
a
low-carbon
economy. We are supporting
our clients in the transition
to a low-carbon economy,
leading by example in our
own
operations, and sharing our lessons learned along the way with the rest of the world. By 2050, our ambition is
to
achieve net-zero greenhouse gas (GHG) emissions
across our scope 1 and 2, and specified
scope 3 activities.
Continued ambition to be a global leader
in sustainability
The
acquisition
of
the
Credit
Suisse
Group
enlarged
our
exposure
to
sustainability
matters,
as
reflected
in
the
increased qualitative and quantitative content we are disclosing in this Sustainability Report. Since the acquisition,
we have been working to
progressively align governance, policies, methodologies and frameworks. We expect to
complete this work during 2024.
Our ongoing alignment includes making UBS
sustainable product standards the
benchmark, with Credit Suisse’s sustainable financing and investment products undergoing a detailed assessment
to ensure compliance with our standards, frameworks and expectations.
Our revised sustainability and climate risk
policy
framework
and
associated processes
reflect
the
full
suite
of
activities
of
the
combined
organization and
ensure a consistent approach.
Our priorities
Planet
Making climate a clear priority as we shift
toward a low-carbon economy
People
Addressing societal challenges through client
and corporate philanthropy, as well as
employee engagement.
Partnerships
Working with other thought leaders to achieve
impact on a truly global scale.
Our achievements in 2023
Serving clients’ sustainable finance
needs
–
USD 292.3 billion of sustainability focus and
impact investments (UBS
AG) (10% increase)
–
USD 11.2 billion clients' impact investing
assets (UBS AG Global Wealth
Management)
–
1,611 ESG resolutions voted upon (UBS AG Asset
Management)
–
46.5% sustainable investments share of assets
under custody reached
(UBS AG Personal & Corporate Banking)
–
102 green, social, sustainability or sustainability-linked
bond deals
facilitated
1
Among the leaders in key sustainability
ratings
–
Dow Jones Sustainability Index member (S&P
Global)
–
A– rating and included in Leadership band
(CDP)
–
AA rating (MSCI ESG)
–
Medium risk rating (Sustainalytics)
Addressing societal challenges
–
USD 328 million in donations raised by the
UBS Optimus network of
foundations
–
7 million beneficiaries reached across our social impact
activities (UBS
AG)
Transitioning to a low-carbon economy
–
Made progress toward our ambition of achieving net-zero GHG
emissions by 2050 across our scope 1 and 2, and
specified scope 3
activities and undertook an extensive review of the
decarbonization
targets of the UBS Group, as part of the integration
of Credit Suisse
–
Established decarbonization targets to address the
emissions of our in-
scope lending activities for specified sectors
and made progress toward
them
–
Analyzed the facilitated emissions from capital
markets activities for
select carbon-intensive sectors
–
Decreased carbon-related assets proportion of total customer lending
exposure to 7.2% in 2023 from 7.5% in 2022 (UBS
Group excluding
Credit Suisse)
–
Share of climate-sensitive sectors at 12.1% (transition
risk) and 9.7%
(physical risk) of our total customer lending exposure
(UBS Group
excluding Credit Suisse)
–
Exposure to nature-sensitive sectors at 15.1% of our total
customer
lending exposure (UBS Group excluding Credit Suisse)
–
57.3% positive progress against climate corporate engagement
objectives
–
157 companies at which we voted upon climate-related
resolutions
–
Reduced net GHG footprint for scope 1 and
2 emissions by 21%
–
65% of our GHG key vendors declared their emissions
on CDP and also
set 2050-aligned net-zero goals
Shaping a high-performing organization
–
29.5% of all Director level staff and above are women
–
24.3% of UK / 25.1% of US staff at Director level and
above are held by
employees from ethnic minorities
–
EQUAL-SALARY Foundation certification for equal pay
practices in
Switzerland, the US, the UK, the Hong Kong
SAR and Singapore (UBS
Group excluding Credit Suisse)
1
Investment Bank
figure is
102 of
which UBS
AG figure
is 93
and Credit
Suisse figure
is 16.
The metrics
include transactions
such as,
but not
limited to,
Investment Bank Global Banking bonds issued under the voluntary ICMA Green Bond Principles, Sustainability Bond Principles, and Sustainability-Linked Bond
Principles. The principles
include a recommendation
that the issuer
appoints an external review
provider to undertake
an independent external
review (e.g.,
second-party opinion). This is consistent with market practice.
The metrics also include sustainability-themed bonds
(e.g., Transition). Transactions are counted
only once, there is no double counting
(e.g., if and where UBS AG and
Credit Suisse were involved in the
same transaction). UBS has performed
an assessment
for Credit Suisse green,
social, sustainability and sustainability-linked bonds reported
in this report and
deemed them to be
aligned to UBS sustainable bond
guidelines.
Sustainability Report 2023
| Introduction
9
Our integration journey – at a glance
Following the
acquisition of
Credit Suisse
Group AG
by UBS
Group AG
on 12 June
2023, we
implemented integration
measures across our sustainability and culture
activities. We have set out key
measures in the table below.
Strategy
Sustainability and impact strategy applies
Group-wide
–
The sustainability and impact strategy of Pre-acquisition
UBS applies to UBS Group, including Credit Suisse.
While certain
sustainability-related policies, processes and activities continued
at Credit Suisse AG,
they are applied within the overarching strategy
of UBS Group.
Governance
Senior level governance spans the
entire Group
–
The responsibility for sustainability of UBS Group AG’s
Board of Directors (the BoD) spans the entire Group, including
Credit Suisse
AG. The five committees that support the BoD
each have specific ESG (environmental, social, governance)-related
responsibilities, with
the Corporate Culture and Responsibility Committee
(the CCRC) having primary responsibility for overseeing
our Group-wide
sustainability and impact strategy.
–
The Group CEO has delegated responsibility for setting
the sustainability and impact strategy
and developing Group-wide
sustainability and impact objectives, in agreement with
fellow GEB members, to the Group Executive
Board (GEB) Lead for
Sustainability and Impact. The GEB Lead for
Sustainability and Impact manages the UBS
Group Sustainability and Impact (GSI)
organization and, together with the Chief
Sustainability Officer (the CSO), co-chairs the Group-wide
Sustainability and Climate Task
Force (the SCTF).
–
In 2023, alignment with the Group’s strategies, objectives
and guidelines was ensured by UBS personnel being
represented on the
governance bodies of Credit Suisse. The overarching
governance of sustainability at Credit Suisse
AG was integrated into UBS Group
and certain CS governance bodies were retired. In 2024,
we aim to complete the integration of Credit Suisse
sustainability governance
bodies into the UBS Group sustainability governance.
Environment
Group-wide ambition to achieve net-zero greenhouse
gas emissions across our scope 1 and 2, and
specified scope 3
activities, by 2050
Financing:
–
In 2023, we revised our decarbonization targets to
reflect the combined lending portfolios and resulting
exposures to carbon-intensive
sectors.
–
In 2023, we calculated the emissions metrics
shown for 31 December 2021 and 31 December
2022 on the basis of the joint loan
books of UBS AG and Credit Suisse AG on those
dates, on a pro forma basis.
Investing:
–
In 2023, we undertook an extensive review of our
approaches to setting decarbonization targets, to
reflect the activities of the
combined organization and evolving standards
and methodologies.
–
In 2023, UBS AG Asset Management made
progress toward delivering its 2030 target of aiming to align
20% of UBS AG Asset
Management’s total assets under management
(AuM) with net zero, using science-based portfolio
alignment approaches. This Pre-
acquisition UBS aspiration will be reassessed in 2024.
Own operations:
–
For 2023, we disclosed the environmental footprint
of the joint operations of UBS Group, including
Credit Suisse,
unless otherwise
stated.
–
We integrated the greenhouse gas (GHG) emissions calculations
for the combined firm, with a new joint
base year set to
2019.
–
We integrated Credit Suisse energy consumption in UBS’s
15% reduction target by 2025.
–
For UBS Group excluding Credit Suisse, we continued
to apply an internal carbon price of
USD 400 per metric ton for scope
1 and 2 emissions in our capital investment business
cases in order to incentivize carbon reductions.
Supply chain:
–
In 2023, we revised and updated the list of
GHG key vendors (defined by us as those vendors
that collectively account for more than
50% of our estimated vendor GHG emissions)
from 83 to 95 to include Credit Suisse vendors.
–
In 2024 and 2025, our requirements to reduce the environmental impact
of vendors that provide services from offshore development
centers (ODCs),
as currently applied to UBS ODC vendors, will be
rolled out to Credit Suisse ODC vendors.
Social
Building a unified culture
Workforce
–
In 2023, we achieved the implementation
of a combined and fully integrated performance
management approach for all employees,
including Credit Suisse.
–
In 2023, we fully integrated former Credit Suisse
Group employees into our fair pay practices and continued
to monitor and improve
our pay equity position in our leading
countries.
–
For 2023, we are reporting consolidated workforce figures, unless
otherwise stated.
–
In 2023, we continued with our DE&I aspirations
(for the combined organization) and retired the Credit
Suisse DE&I aspirations.
Responsible supply chain:
–
In 2023, we established a combined spend
and vendor inventory for UBS AG and Credit Suisse
AG. In 2024, the UBS Responsible
Supply Chain Management framework will be
rolled out to Credit Suisse AG (which, in 2023, continued
to apply its Third-Party Risk
Management due diligence approach.
Sustainability Report 2023
| Introduction
10
Supporting
opportunities
Leveraging the power of the combined
firm for the benefit of clients
–
In 2023, we made UBS sustainable product standards
the benchmark going forward, with Credit Suisse AG’s
sustainable financing
and investment products undergoing a detailed
assessment to ensure compliance with our standards, frameworks
and expectations.
In 2024, we intend to fully incorporate
Credit Suisse data into our sustainable finance
and investing disclosures.
–
For 2023, we reported sustainable investments
(SI) for UBS AG. Credit Suisse AG sustainable investing
products and associated
invested assets continued to be classified under
the Credit Suisse AG Sustainable Investing Framework
(SIF) and reported separately.
All Credit Suisse AG green, social, sustainability and sustainability-linked
bonds reported were aligned to UBS guidelines.
–
In 2023, the Investment Bank, operating under
a single consolidated governance at
end-of-year, has combined sustainability
expertise from Credit Suisse AG to strengthen UBS Group’s offering across
Global Markets, Global Banking and Research. New
sustainable finance content, products and other
services taken over from Credit Suisse AG follow UBS Group standards
and approval
process. The Credit Suisse Sustainable Activities Framework,
as well as its related external USD 300 billion
sustainable finance
commitment, was retired.
–
In 2023, Credit Suisse (Schweiz) AG continued
to offer its sustainable products to its clients.
The development of new products was
paused, in light of our review and vetting of the
sustainable products of Credit Suisse (Schweiz) AG
against the UBS sustainable
product frameworks.
–
In 2024 and 2025, we will bring selected Credit
Suisse sustainable and impact investing
solutions onto the merged Global Wealth
Management platform. These solutions will
be subject to existing UBS Global Wealth Management
sustainable investing frameworks,
diligence, and instrument selection approaches. During
the migration of solutions, clients, and assets,
we will phase down dual
governance, with the aim of aligning
under the existing UBS Global Wealth Management
sustainable investing governance.
–
In 2024, the UBS AG Asset Management
SI product classification framework will be applied
to the Credit Suisse AG Asset
Management products when onboarded to the UBS shelf.
A joint governance forum is in place to
support the alignment of policies,
methodologies and frameworks.
Managing
risks
Combined sustainability and climate risk
appetite
–
In 2023, we revised our sustainability and climate
risk policy framework and associated processes
across UBS Group to reflect the full
suite of activities of the combined business
and ensure a consistent approach. We enhanced these by
adding Credit Suisse standards
relevant to the combined bank, for shipping, project finance,
and mining.
–
In 2023, Credit Suisse AG’s sector-specific client
energy transition framework (CETF) underpinned
its climate risk management, until
its decommissioning at end of year. A Group-wide approach is being developed
by the combined firm to assess clients’
energy
transition readiness.
–
For 2023, we disclosed climate risk metrics for
UBS AG, with Credit Suisse AG climate risk
metrics to be published in 2024 when
aligned data is fully available.
In 2024, we will also progressively align Credit Suisse AG’s
approach to the assessment of climate risk
materiality and its risk reporting cycles and metrics
with those of UBS AG, in parallel with the integration
of underlying processes and
controls.
Sustainability Report 2023
| Introduction
11
Our business model
UBS – who we are
UBS
is
a
leading
and
truly
global
wealth
manager,
enhanced
by
synergetic
investment
banking
and
asset
management capabilities, and the
leading bank in Switzerland. We
enable people, institutions and
corporations to
achieve
their
goals
by
providing
financial
advice
and
solutions.
We
have
a
unique
capital-generative and
well-
diversified business
model with
a
strong competitive
position in
our target
markets and
an attractive
long-term
outlook on return on capital. Our business model, our strong
culture, our respected brand with over 160 years
of
history and our capital prudence have made
it possible to both grow profits and deliver
high return on equity.
We are focused on driving sustainable
long-term growth while maintaining
risk and cost discipline
Our
objective
is
to
generate
value
for
our
shareholders
and
clients
by
driving
sustainable
long-term
structural
growth, as well
as capital
returns. To accomplish
this, we are
building on
our scale, content
and solutions, while
remaining disciplined on
capital, risk and costs.
Maintaining a balance sheet
for all seasons remains
the foundation
of our success. This will
give us the capacity to
invest strategically and will
enable us to deliver against
our financial
targets and commercial ambitions, which are outlined in the “Targets, capital guidance and ambitions” section of
the UBS Group Annual Report.
We benefit
from an
attractive business
mix, with
more than
one-third of
our risk-weighted
assets (RWA)
in our
global
asset-gathering
Global
Wealth
Management
and
Asset
Management
business
divisions,
which
are
structurally attractive from the risk, growth and capital
consumption perspectives and generate more than half of
our revenues. Roughly another
third of our RWA are
in Personal & Corporate
Banking in Switzerland, an
attractive,
stable
and
well-diversified
economy
with
low
historic
credit
losses.
Furthermore,
we
operate
a
capital-efficient
Investment
Bank
business
division,
which
is
limited
to
less
than
25%
of
Group
RWA
(excluding
Non-core
and
Legacy).
Moreover, we are aiming to maximize
our impact and that of our
clients to create long-term sustainable
value. We
also
have
a
responsibility
toward
the
communities
we
serve
and
our
employees.
We
have
outlined
selected
environmental, social
and governance
(ESG) aspirations,
which should
support our
financial and
commercial targets.
The acquisition of the Credit Suisse Group
is accelerating our strategy
The
acquisition
of
the
Credit
Suisse
Group
enhances
our
client
franchises
by
increasing
scale
while
adding
complementary
capabilities
and
gaining
talent.
Our
strategic
focus
remains
on
building
out
our
leading
global
investment platform. The acquisition
of the Credit Suisse Group
enables us to combine and
optimize our resources
and
to
target
investments
that
enable
us
to
provide
superior
levels
of
client
service.
Our
geographical
growth
segments will remain the Americas and Asia
Pacific, with Switzerland remaining our home
market. The acquisition
of the Credit Suisse Group will further shift our
business mix toward wealth management,
asset management and
our Swiss
business. The
acquisition also
strengthens our
investment banking
capabilities, without
compromising
our model, as the Investment Bank will consume
a limited share of the Group’s RWA.
We have a global, diversified business model
Our invested assets of more
than USD 5trn are regionally
diversified across the globe.
We give our clients access
to
a broader,
more relevant
and customizable
range of
solutions, which,
together with
our thought
leadership and
capabilities,
position
us
well
to
become
their
partner of
choice.
Our
strategic
ambitions
are
a
reflection
of
the
outlook
on
long-term
demographic
and
social
trends
affecting
wealth
distribution,
product
demand
and
client
experience.
Regionally, more than
half of
our wealth
management clients’ invested
assets are
in the
US, which
is the
largest
wealth pool
globally, with
solid wealth
generation. Here
we are
a top player,
and we
are focused
on improving
scale
and
profitability
by
deepening
our
relationships
with
core
clients
and
by
building
out
our
digital-supported
capabilities and banking platform.
In Asia Pacific, which is the fastest-growing
wealth market, we are by far the
largest wealth manager
1
, and we are
building on that scale
to drive growth.
We are further developing
our businesses in
China and working
to offer our
capabilities in a more cohesive way to our
clients in Southeast Asia.
1
Asian Private Banker,
23 January 2024.
Sustainability Report 2023
| Introduction
12
In EMEA,
we are
focused on
improving profitability
and driving
focused growth
by optimizing
our domestic
footprint
and providing holistic coverage for entrepreneurs.
Finally, in Switzerland, we have a highly integrated business and
aim to reinforce our position as the leading bank.
We
are
driving
our
digital
transformation,
improving
the
client
experience
and
focusing
on
capturing
selected
growth opportunities.
Our growth plans are underpinned by
cross-divisional collaboration
We want to serve our clients
as one firm. The collaboration between
our business divisions is critical to the
success
of our strategy and is
a source of competitive advantage. This
collaboration also provides further revenue growth
potential and enables us to better meet client needs
in our core wealth and global family and institutional wealth
(GFIW) segments
alike. Our
Asset Management
business division
provides clients
with a
broad offering
and exclusive
access to
premium personalized
services, while
our investment
banking capabilities
support our
growth plans
across
the
client
franchise
with
unique
insights,
execution,
and
risk
management.
Close
collaboration
between
our
businesses adds value
for clients, including
access to private
markets, alternatives and
ESG products, and
we are
continuously striving to enhance our holistic
client offering.
Clients are at the center of everything
we do
Helping clients to achieve their financial and personal goals is the essence of what we do. We aim to differentiate
our service by
delivering a client
experience that is
personalized, relevant,
on-time and seamless.
This is our
promise
to clients.
With evolving
client needs,
we are
adapting by
making our
wealth coverage
more needs-based,
digital and
effective.
In wealth management, our focus remains on our core wealth and GFIW clients, while expanding our coverage of
entrepreneurs,
women
and
the
next
generation
of
wealthy
individuals.
We
are
launching
and
scaling
digitally
customizable
services,
enhancing
personally
advised
wealth
with
digital
support,
and
expanding
our
custom
offerings for GFIW to cater for the different
needs of our clients.
We are investing in our technology as an
enabler for client experience, simplicity
and efficiency
The trusted and personal
relationship with our clients
across our businesses is
evolving. Today, our clients
expect us
to provide
our services
more
seamlessly across
the firm
in a
personalized,
relevant and
timely fashion,
with increasing
demand for services that are
digital first and available anytime and anywhere.
This presents an opportunity for us
to fully embrace technology, through which
we aim to differentiate the firm.
We
continue
to
invest
in
technology,
such
as
Artificial
Intelligence,
with
the
goals
of
improving
efficiency
and
effectiveness, driving and enhancing growth and
better serving our clients. We believe the continued
optimization
of our processes, our platforms, our organization
and our capital resources will help us to
achieve this.
Sustainability Report 2023
| Introduction
13
Sustainability drives our ambitions
We partner with
our clients
to help them
mobilize their
capital toward
a more sustainable
world. Our aim
is to meet
clients’ demands for credible sustainable offerings. We want
to be the financial provider
of choice for clients that
wish to
mobilize capital
toward the
achievement of
the United
Nations Sustainable
Development Goals
and the
orderly transition to a
low-carbon economy, including in Switzerland, where, as
the leading bank, we are
helping
to finance this transition.
Our ESG policies and guidelines support
the implementation of our sustainability
and culture agenda
Our
Code
of
Conduct
and
Ethics
(the
Code)
sets
out
the
principles
and
commitments
that
define
our
ethical
standards and
the
way
we
do
business.
It
outlines
UBS’s
aspiration
to
create
a
fairer,
more
prosperous
society,
champion a healthier
environment and address inequalities.
It also contains
our commitment to
fulfil compliance
obligations. We are committed to
obeying the laws, rules and
regulations of the areas where
we live, work and do
business. The
Code covers our
dealings with clients,
counterparties, shareholders,
regulators, business
partners and
colleagues.
It
is
the
basis
for
our
policies,
guidelines
and
procedures,
including
on
environmental,
social
and
governance (ESG) matters.
›
Refer to the “Key policies and principles ” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
for the summary of our related key policies and principles
Key regulatory and market developments
impact our approach to sustainability
During 2023, the
regulatory and policy agenda
on sustainability and climate
continued to evolve,
as regulators and
supervisors
increasingly
required
ESG
considerations to
be
embedded
across
own
operations
and
value
chains.
Expanding reporting and disclosure requirements and risk management expectations,
a growing focus on broader
sustainability
issues
including
nature,
and
social
impact
are
all
contributing
to
increased
pressure
on
firms.
Meanwhile, a
regulatory
focus on
the
prevention of
greenwashing is
fueling initiatives
on
taxonomies, product
labels, ESG data and ratings, and corporate sustainability
due diligence.
A number of important developments
relating to corporate sustainability disclosure
and reporting standards took
place during 2023, including the swift adoption by companies globally of the recommendations of the Task
Force
on Climate-related Financial Disclosures (the TCFD)
in their annual reporting. Elsewhere, we saw finalization
of the
Corporate Sustainability Reporting Directive
(the CSRD) in
the European Union,
and issuance of
the International
Sustainability Standards Board’s (the ISSB) inaugural standards. These efforts are expected to
contribute to greater
harmonization of
sustainability reporting
standards globally,
thereby helping
to mitigate
greenwashing concerns
and improve the quality of sustainability data.
Alongside a
continued focus
on climate
matters in
corporate disclosures
and regulatory
frameworks, there
is an
increasing recognition of the degree to which the world’s biodiversity
and natural capital are being damaged. This
is
a
growing
concern,
as
many
business
sectors
rely
on
natural
resources
to
operate
effectively
and
efficiently;
eroding those
resources could
have profound
implications, both for
the global
economy and wider
society.
New
frameworks have been rolled out to enhance transparency in this area, notably by the Taskforce on Nature-related
Financial Disclosures
(the TNFD)
in September
2023. The
publication of
the TNFD
guidelines and
their adoption
may
well lead
regulators to ask
businesses to take
into consideration more
effectively the impact
of their activities
on
nature. We expect that, over
time, this will also drive further
client interest in natural capital and
biodiversity topics
and corresponding products and solutions.
Finally,
after
two
years
of
formulating
and
refining
net-zero
commitments,
2023
saw
a
strong
focus
on
implementation.
With ongoing progress in methodologies, data and transition
finance frameworks, the emphasis
of industry discussions is shifting toward the quality
and ambition level of net-zero targets. For
many of our clients
meanwhile, developing the right transition strategies,
given the fast pace
of technological innovation, along with
high inflation and input costs, is a key consideration.
Voluntary carbon markets will likely play an
important part in
the world’s
transition to
low-carbon economies,
but they
continued to
suffer from
relatively depressed
prices in
2023. Nonetheless,
market and policy
standards aiming
to safeguard against
known market
weaknesses continued
to evolve.
›
Refer to
ubs.com/code
for the full UBS Code of Conduct and Ethics
›
Refer to “Our strategy, business model and environment” in the UBS Group
Annual Report 2023
Sustainability Report 2023
| Strategy
14
Strategy
Our sustainability and impact strategy
What sustainability means to us
We all have a role to play in securing a more sustainable world,
and the financial industry is no exception.
At UBS,
we reimagine
the power of
people and capital
to create a
better world for
everyone,
striving toward a
fairer society,
a more
prosperous economy and
a healthier
environment. That is
why we
partner with
our clients
to help
them
mobilize their capital toward a more sustainable world and it is why we have made sustainability a significant part
of our culture.
Group-wide application of sustainability
and impact strategy
The sustainability and
impact strategy of Pre-acquisition
UBS now applies to
UBS Group. Credit Suisse
AG does not
maintain a separate sustainability strategy, but its activities are integrated
within the strategy of UBS Group. While
certain sustainability-related
policies, processes
and activities continued
at Credit Suisse
AG, they are
applied within
the overarching
strategy of
UBS Group
which is
focused on
three key
priorities to
achieve it:
Planet, People
and
Partnerships.
›
Refer to “UBS Sustainability objectives and achievements 2023 and objectives 2024 ” section in the Supplement to
the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
for more information
about our sustainability and impact key mid- and long-term aspirations.
Supporting our clients’ low-carbon transition
Helping our clients to navigate the orderly transition to a low-carbon economy and build climate-resilient business
models is
a key
objective of
our approach
to climate,
as is
the mobilization
of private
and institutional
capital toward
this transition. Aligning our in-scope lending and investment portfolios to the objectives of the Paris Agreement is
an important part of this approach and so
are the products and services we offer.
Planet first
We acknowledge that achieving the orderly transition to a
low-carbon economy is highly ambitious. Nonetheless,
we are committed to doing
our part, which is why the shift
to a lower-carbon future is a
priority for UBS and a key
focus of our sustainability strategy.
In
order
to
protect
our
clients’
assets
and
those
of
our
firm
from
the
impacts
of
climate
change
and
loss
of
biodiversity,
we are
focused on
managing the
risks related
to climate
and natural
capital.
However, at
the same
time, we recognize that the low-carbon transition
also presents consequential opportunities.
›
Refer to the “Environment” section of this report for more information about our approach to climate
›
Refer to the UBS Group Climate and Nature Report 2023, available at
ubs.com/sustainability-reporting
which brings
together all climate- and nature-related information in this report
People matter
As a large, diverse and inclusive organization with a global presence, we want to use our influence
to help people
advance. We do
this through our
interactions with each
other, the communities
in which we
operate and our
other
stakeholders. We also
believe this approach
can support the
creation of a
diverse, equitable and
inclusive society
and help build a virtuous cycle of viable, long-term
economic and social development.
›
Refer to the “Social” section of this report for more information about UBS’s employees and its philanthropic
activities
Partnerships bring it together
The sustainability-related challenges our world faces
cannot be solved by
one organization alone. That is
why we
partner with other thought leaders and standard setters to unite around
common goals that can drive change on
a global scale.
›
Refer to the Supplement to this report available at
ubs.com/sustainability-reporting
for more about our
partnerships and our stakeholder engagement
Sustainability Report 2023
| Strategy
15
Our aspirations and progress
We work with a long-term
focus on providing appropriate
returns to our stakeholders
in a responsible manner.
We
are committed to
providing transparent aspirations or
targets and reporting
on the progress
made against them.
Following
the
acquisition
of
the
Credit
Suisse
Group,
our
exposure
increased
accordingly,
so
we
reviewed
our
aspirations. Amendments that arose from
this review process were
considered by the Group
Executive Board and
the UBS Group Board of Directors' Corporate Culture and Responsibility Committee. This table reflects the overall
outcomes of this process with more detailed
information provided throughout this
report.
Our priorities
Our aspirations or targets
Our progress in 2023
Planet, people,
partnerships
Sustainable investments.
1
Increased invested assets in sustainable investments
in UBS AG to
USD 292.3 billion (compared with USD 266 billion in 2022).
Planet
Following the acquisition of the Credit Suisse Group,
we
refined the UBS Group lending sector decarbonization
targets
to reflect the activities of the combined organization
and
evolving standards and methodologies:
2
Reduce emissions intensity associated with
UBS in-scope
lending by 2030 from 2021 levels for:
–
Swiss residential real estate by 45%;
–
Swiss commercial real estate by 48%;
–
power generation by 60%;
–
iron and steel by 27%; and
–
cement by 24%.
Reduce absolute financed emissions associated
with UBS in-
scope lending by 2030 from 2021 levels for:
–
fossil fuels by 70%.
Continue disclosing in-scope ship finance portfolios
according to the Poseidon Principles decarbonization
trajectories with the aim of aligning therewith.
3
Calculated progress against pathways for revised targets.
4
Changes
in emissions intensity associated with
UBS in-scope lending
(end of 2022 vs. 2021 baseline):
–
Swiss residential real estate reduced by 6%;
–
Swiss commercial real estate increased by 2%;
–
power generation reduced by 13%;
–
iron and steel reduced by 4%; and
–
cement reduced by 1%.
Changes in absolute financed emissions associated
with UBS in-scope
lending (end of 2022 vs. 2021 baseline) for:
–
fossil fuels reduced by 29%.
In-scope ship finance portfolio remains below the
existing International
Maritime Organization (IMO 50) decarbonization
trajectory.
Aim, by 2030, to align 20% of UBS AG Asset
Management’s
total assets under management (AuM) with
net zero. This
Pre-acquisition UBS aspiration will be reassessed in 2024.
5
Aligned 2.9% of UBS AG Asset Management’s
total AuM with net zero.
Minimize our scope 1 and 2 emissions through
energy
efficiencies and switching to more sustainable energy
sources. After which, procuring credible carbon removal
credits to neutralize any residual emissions down to zero by
2025.
6
Reduced net GHG footprint for scope 1 and 2
emissions by 21% and
energy consumption by 8% (compared with 2022);
continued replacing
fossil fuel heating systems and monitored delivery of
contracted carbon
removal credits; achieved 96% renewable electricity coverage in
line
with RE100 despite challenging market conditions.
Offset historical emissions back to the year 2000
by sourcing
carbon offsets (by year-end 2021) and by offsetting credit
delivery and full retirement in registry (by year-end 2025).
The scope is UBS Group excluding Credit Suisse.
Continued to follow up on credit delivery and retirement of
sourced
portfolio.
Engage with our greenhouse gas (GHG) key vendors,
for
100% of them to declare their emissions and set
net zero-
aligned goals by 2026, and reduce their scope 1
and 2
emissions in line with net-zero trajectories by 2035.
7
We invited the vendors that accounted for 67%
of our annual vendor
spend to disclose their environmental performance
through CDP’s
Supply Chain Program, with 70% of the invited vendors
completing
their disclosures in the CDP platform.
65% of GHG key vendors (defined as those
vendors that collectively
account for more than 50% of our estimated vendor
GHG emissions)
have declared their emissions on CDP and set net-zero-aligned
goals.
People
(aspirations)
By 2025, 30% of worldwide roles at Director level and
above
held by women.
Increased to 29.5% (2022: 27.8%) of worldwide
roles at Director level
and above held by women.
By 2025, 26% of US roles at Director level and above held
by employees from ethnic minority backgrounds.
Increased to 25.1% (2022: 20.5%) of US roles at Director level
and
above held by employees from ethnic minority backgrounds.
By 2025, 26% of UK roles at Director level and above
held
by employees from ethnic minority backgrounds.
Increased to 24.3% (2022: 23.4%) of UK roles at Director
level and
above held by employees from ethnic minority backgrounds.
By 2025, 4% of UK roles at Director level and above held
by
black employees.
Stable at 2.1% (2022: 2.2%).
By 2025, 25% of Americas financial advisor
/ client advisor
roles held by women (UBS Group excluding Credit Suisse).
Increased to 16.8% (2022: 16.6%).
By 2025, 18.8% of US financial advisor
/ client advisor roles
held by employees from racial / ethnic minority backgrounds
(UBS Group excluding Credit Suisse).
Decreased to 12.2% (2022: 12.4%).
Raise USD 1 billion in donations to our client
philanthropy
foundations and funds and reach 26.5 million beneficiaries
by 2025 (cumulative for 2021–2025).
Achieved a UBS Optimus network of foundations
donation volume of
USD 328 million in 2023,
totaling USD 763.9 million since 2021
(both
figures include UBS matching contributions).
8
Sustainability Report 2023
| Strategy
16
Our priorities
Our aspirations or targets
Our progress in 2023
Reached 7 million beneficiaries in 2023
and 18.5 million beneficiaries
across our social impact activities since 2021.
Partnerships
Continue to position UBS as a leading facilitator
of
discussion, debate and idea generation.
Delivered a variety of insights, including through interviews
with subject-
matter experts, individual research reports and comprehensive white
papers, via the UBS Sustainability and Impact
Institute, including key
publications
The Rise of the Impact Economy and Rethink,
rebuild,
reimagine.
Co-organized, with the Institute of International
Finance, the second
Wolfsberg Forum for Sustainable Finance.
Drive standards, research and development, and product
development.
Co-led financial-sector-specific working group of the
Taskforce on
Nature-related Financial Disclosures (the TNFD) and supported the
launch of the TNFD framework.
Co-chaired the UNEP FI Principles for Responsible
Banking Nature
working group that developed initial guidance on
nature target setting
for financial institutions.
1
As part of the integration
of Credit Suisse, UBS has
retired the Pre-acquisition UBS sustainable
investing aspiration of USD
400 billion in SI invested
assets.
2
While we continue to take steps to align our business activities to our targets, it is important to note that progress towards our targets may not be linear and
that the realization of our
own targets and aspirations
is dependent on various
factors which are outside of
our direct influence. We will
continue to adjust our
approach in line with
external developments
and evolving best practices
for the financial
sector and climate
science. Refer to the
Supplement to the UBS
Group
Sustainability Report 2023 for parts
of the value chain within
sectors covered by metrics and
targets. Metrics are based on
gross exposure, which includes total
loans and advances
to customers, fair
value loans and
guarantees as well
as irrevocable
loan commitments. Exclusions
from the
scope of
analysis primarily
include financial services, credit card and
other exposure to private individuals.
3
As part of our ship
finance strategy, ships
in scope of Poseidon Principles
(PP) are assessed on criteria which aim at aligning portfolios
to the PP decarbonization trajectories. The
PP are a framework for assessing and disclosing, on an
annual basis, the climate alignment
of in-scope ship finance
portfolios to the ambition of
the International Maritime
Organization (the IMO), including
its 2023
Revised GHG Strategy for GHG emissions
from international shipping to decrease
to net zero by or around 2050 (compared with 2008
levels).
4
Refer to the
“Environment” section of this
report for further
information. The inherent one-year
time lag between the
as-of date of
our lending exposure and
the as-of
date of emissions can
be explained by
two factors: corporations
disclose their emissions
in annual reporting only
a few months after
the end of a
financial year;
and specialized third-party data providers take up to nine
months to collect disclosed data and make it
available to data users. Consequently, the baselines for
our decarbonization targets are calculated on
year-end 2021 lending exposure and 2020
emissions data. Our 2022
emissions actuals are based on
year-end
2022 lending exposure and 2021 emissions data. For
asset financing (e.g., real estate, shipping) there is no time
lag, and exposure and emissions actuals refer
to the same year.
5
The 20% alignment
goal amounted to
USD 235 billion
at the time of
Pre-acquisition Asset Management’s
commitment in 2021.
By 2030,
the weighted average carbon intensity
of funds is to be 50% below
the carbon intensity of the
respective 2019 benchmark.
6
Scope 2 emissions are market-
based emissions. The remaining scope 1 and 2 emissions may be in excess of the approximately 5–10% residuals required for net zero (per the definition of a
“net-zero target”
by the ESRS E1 Climate Change per
delegated act, adopted on 31 July
2023), which is our ambition
for 2050. In 2024, we will be reviewing
our 2025 scope 1 and 2 target for
achievability for the combined organization
and alignment with latest guidance.
7
In 2024, we may review our targets for
GHG key vendors
for the combined
organization and alignment with
latest guidance. Our GHG
key vendors are
those vendors that
collectively account for
more than
50% of
our estimated
vendor GHG
emissions.
8
Figures provided
for the
UBS Optimus
network of
foundations are
based on
unaudited management
accounts and
information available
as of
January 2024.
Audited financial
statements for
UBS Optimus
network of
foundations entities
are
produced and
available per local market regulatory guideline.
Cautionary note:
We have
developed methodologies that we
use to set
our climate-related targets
and identify climate-related risks
and which underly
the
metrics that are
disclosed in this report.
Standard-setting organizations and regulators continue
to provide new
or revised guidance and
standards, as well
as
new
or
enhanced
regulatory
requirements
for
climate
disclosures.
Our
disclosed
metrics
are
based
upon
data
available
to
us,
including
estimates
and
approximations where actual or specific data is
not available. We intend to update our
disclosures to comply with new guidance
and regulatory requirements as
they
become applicable
to
UBS.
Such
updates may
result
in
revisions
to
our
disclosed metrics,
our
methodologies and
related
disclosures, which
may
be
substantial, as well as changes to the metrics
we disclose.
Sustainability Report 2023
| Governance
17
Governance
Our sustainability governance
Our sustainability and corporate culture
activities are grounded in our
Principles and Behaviors and
overseen at the
highest level of our organization. These principles
are laid down in our Code of Conduct and
Ethics (the Code).
›
Refer to “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for more
details on how Credit Suisse sustainability governance was integrated into UBS Group
Board of Directors and Group Executive
Board
The Board of Directors of UBS Group AG (the BoD) has ultimate
responsibility for the
success of the Group and for delivering sustainable shareholder value
within a framework
of prudent and effective controls.
The BoD
decides on
the Group’s
strategy and
the necessary
financial and
human resources,
on the
recommendation
of the Group Chief Executive
Officer (the Group CEO),
and also sets the Group’s
values and standards to ensure
its
obligations to shareholders
and other stakeholders
are met. The
BoD oversees the
overall direction, supervision
and
control of the
Group and
its management.
It also supervises
compliance with
applicable laws,
rules and regulations.
The Chairman
of the
BoD, together
with the
Group CEO,
takes responsibility
for UBS’s
reputation and
is closely
involved in, and
responsible for, ensuring
effective communication with
shareholders and stakeholders, including
government officials, regulators and public
organizations.
Five committees support the BoD in fulfilling its duty through the respective responsibilities and authority given to
them. All BoD committees have
specific responsibilities pertaining
to ESG matters.
For example, the Compensation
Committee is responsible
for ESG-related compensation
topics, the
Risk Committee supervises
the integration of
ESG
in
risk
management,
the
Governance
and
Nominating
Committee
supports
the
Board
in
establishing best
practices in corporate governance and the Audit Committee
has oversight of the control framework underpinning
ESG metrics.
Sustainability Report 2023
| Governance
18
The BoD’s Corporate Culture and Responsibility Committee
(the CCRC) is the body primarily
responsible for corporate culture, responsibility,
and sustainability.
The CCRC oversees our Group-wide sustainability and impact strategy and key activities across environmental
and
social
topics.
This
includes
climate,
nature,
and
human
rights.
Annually,
it
considers
and
approves
our
firm’s
sustainability (including
climate) and
impact objectives.
As
part of
this process,
it
also
considers the
impact and
financial materiality of climate-related risks and
opportunities on UBS’s business and
strategy.
The
CCRC’s
function
is
forward-looking
in
that
it
monitors
and
reviews
societal
trends
and
transformational
developments
and
assesses
their
potential
relevance
for
the
Group.
In
undertaking
this
assessment,
it
reviews
stakeholder concerns and expectations pertaining to
the societal performance of UBS
and to the development of
its corporate
culture. UBS
has various
mechanisms (including
complaint and
feedback procedures)
in place
to ensure
that such concerns and expectations are received,
managed and, where necessary, brought to the
attention of the
Group
Executive Board
(the GEB)
and
the BoD.
The
CCRC
is
also responsible
for conducting
the annual
review
process for the Code and for proposing amendments to the BoD. This process includes a prior review of the Code
by the GEB and is led by the Group CEO.
›
Refer to
ubs.com/code
for the full UBS Code of Conduct and Ethics
The GEB develops the Group strategy and is responsible for managing
our assets and
liabilities in line with that strategy and our regulatory commitments
,
and in the interests of
our stakeholders.
As determined by
the BoD’s Risk
Committee, the GEB manages
the risk profile
of the Group
as a whole
and has
overall
responsibility
for
establishing
and
implementing
risk
management
and
control.
The
Group
CEO
has
delegated responsibility for
setting the sustainability and
impact strategy and developing
Group-wide sustainability
and
impact objectives,
in
agreement with
fellow GEB
members, to
the GEB
Lead
for Sustainability
and Impact.
Progress against the strategy and associated
targets are reviewed at least once a year
by the GEB and the CCRC.
The GEB
Lead for Sustainability
and Impact also
manages the Group
Sustainability and Impact
(GSI) organization
and, together
with the
Chief Sustainability
Officer (the
CSO), co-chairs
the Sustainability
and Climate
Task Force
(the SCTF). Both the GEB Lead for Sustainability
and Impact and the CSO attend the CCRC meetings.
›
Refer to the “Supplement to Governance“ section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for an explanation and depiction of the sustainability governance at
UBS Group AG, including the main bodies involved in this governance
Integration of Credit Suisse
The BoD
is responsible
for sustainability
across the
Group, including
Credit Suisse.
Until its
acquisition by
UBS Group
in June 2023, Credit Suisse
Group AG had an
established sustainability governance system. It was exercised at
its
Board of
Directors, Executive
Board, and
senior management
levels, thus
integrating
sustainability
into line
processes
and structures,
as well
as through
boards and
committees specifically
focused on
sustainability topics.
With the
integration of Credit Suisse
into UBS Group in 2023,
this governance was adapted
for Credit Suisse and
integrated
into UBS Group, which included the successive
retirement of certain CS governance bodies.
In 2023, alignment
with the Group’s
strategies, objectives
and guidelines has
been ensured through
representation
of UBS personnel in the
governance bodies of Credit
Suisse. The governance of
sustainability at Credit
Suisse AG is
exercised through its established governance bodies, thus integrating sustainability into operational processes
and
structures, as
well as
through those
boards and
committees specifically
focused on
sustainability topics.
Certain
Credit Suisse
sustainability governance bodies
have already
been retired
in 2023
and it
is our
aim to
achieve full
integration
of
the
relevant
bodies,
together
with
their
associated
procedures
and
policies,
into
the
overall
UBS
Group sustainability governance during 2024.
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for an
explanation and depiction of the sustainability governance (including the main bodies involved) at Credit Suisse AG
Sustainability Report 2023
| Governance
19
Group Sustainability and Impact
GSI (Group
Sustainability and
Impact) comprises
the Chief
Sustainability Office
and the
Social Impact
Office, headed
by the CSO and the Head of Social Impact
respectively.
The
CSO
is
responsible
for
driving
implementation
of
the
following:
the
Group-wide
sustainability
and
impact
strategy,
the approach to climate across all in-scope activities, and the ESG data strategy. In addition, the CSO has
responsibility for supporting
the business divisions and Group
Functions in the design of
sustainability frameworks,
the
implementation of
sustainability regulations
and the
development of
education and
awareness programs
in
relation
to
sustainability.
Furthermore,
the
CSO
also
manages
external
relationships, industry
advocacy
and
the
annual sustainability disclosure.
The
Head
of
Social
Impact
is
responsible
for
driving
and
implementing
the
Social
Impact
strategy,
including
Community Impact, Philanthropy Services and UBS Global Visionaries. Reporting
to the Head of Social Impact, the
regional
Heads
of
Social
Impact
and
Philanthropy
are
responsible
for
extending
the
reach
and
maximizing
the
effectiveness of our
social impact activities
locally, nationally and
globally. In addition, they
have responsibility for
all our programs’ operations and risk management,
client engagement, and employee volunteering.
Progress made in
implementing Group-wide
sustainability and
impact objectives is
reported as part
of UBS’s annual
sustainability
disclosure. This
reporting is
reviewed
and
assured
externally according
to
the
requirements of
the
Sustainability
Reporting
Standards
of
the
Global
Reporting
Initiative
(the
GRI
Standards).
UBS
Group
excluding
Credit Suisse is
also certified under
the ISO 14001
standard for its
products, services and
activities in all
business
divisions
and
locations.
To
this
degree,
UBS
seeks
to
continuously
improve
environmental
and
sustainability
performance,
as
well
as
pollution
prevention,
where
possible,
across
UBS.
The
GSI
governance
and
framework
document complements
the Code,
and together
they govern
UBS’s Environmental
Management System,
according
to ISO 14001.
›
Refer to the “Supplement to Governance” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for additional information about our sustainability governance
Sustainability and climate risk
Our management
of sustainability
and climate
risk is
steered at
the GEB
level. Reporting
to the
Group CEO,
the
Group
Chief
Risk
Officer
is
responsible
for
developing
and
implementing
control
principles
and
an
appropriate
independent control framework for sustainability and climate risk within
UBS, together with integrating it into the
firm’s overall risk management and risk appetite frameworks.
The Chief Risk Officer for Sustainability supports the
GEB
by providing
leadership on
sustainability in
collaboration with
business divisions
and Group
Functions. Our
Sustainability and Climate Risk
Policy Framework is applied
Group-wide to relevant activities,
including client and
supplier relationships.
Sustainability Chief Financial Officer
The Sustainability Chief Financial Officer (the sCFO) supports the new and
expanding requirements that are being
driven by our global sustainability agenda. Reporting to
the Group Chief Financial Officer (the GCFO) and the GEB
Lead for
Sustainability and
Impact, the
sCFO also
works closely
with the
Group Controller
and the
Chief Accounting
Officer’s team and
is the primary
lead on sustainability
topics for the
GCFO. The sCFO
ensures that sustainability
considerations are
embedded into
our financial
decision-making processes
and supports
the expanding
external
sustainability disclosures arising from both new regulatory requirements and the voluntary commitments made by
our
firm.
In
addition,
the
sCFO
ensures
the
continued
development
of
the
financial
control
environment
that
underpins our disclosures.
Sustainability and Climate Task Force
The SCTF is the cross-divisional and cross-functional authority for sustainability and climate governance, as well as
the Group’s
sustainability and
climate governance
body. Its
role includes
agreeing on
the actions
required to
achieve
UBS’s sustainability and impact
strategy, monitoring progress
against that strategy and
providing assurances to the
GEB that UBS is managing sustainability and climate
risks
and opportunities in an appropriate manner.
The SCTF relies on the
Sustainability and Climate
Implementation Group to
ensure cross-divisional, cross-functional
and
cross-regional
(if
needed)
alignment
of
sustainability
and
climate
activities. It
oversees
the
following
cross-
divisional
and
cross-functional
workstreams:
Net
Zero,
Corporate
Disclosures
and
Reporting,
Regulatory
and
Market,
Financial
Risk
Management,
Non-Financial
Risk,
Investment
Product
Regulations,
Commercial
Opportunities, Data and Methodology,
and
Educate
workstreams
.
Sustainability Report 2023
| Governance
20
Key topics and working groups
Net-zero workstream
Our approach
to climate outlines
our ambition
to support clients
through the
world’s transition to
a low-carbon
economy and embed
considerations of climate change
risks and opportunities
across the bank
for the benefit
of
our stakeholders. As part
of this, it is our ambition
to achieve net-zero greenhouse gas
(GHG) emissions across our
scope 1 and 2, and specified scope 3 activities
by 2050. The net-zero workstream coordinates the implementation
and execution of this ambition,
in line with UBS’s
fiduciary responsibilities. It is
one of the workstreams
reporting
into the SCTF and includes members from the business
divisions and Group Functions.
Own operations: in-house environmental management
Our in-house environmental management
is steered by
Group Corporate Services (GCS).
Reporting to the Group
Head Human Resources and Corporate Services, GCS is responsible for driving the reduction in the environmental
impact arising
from our
offices, technology
and supply
chain. GCS
implements
the sustainability
and impact
strategy
within UBS’s
operations by
ensuring compliance
with local
legislation, monitoring
and measuring
environmental
and energy performance, and making continuous improvements in
accordance with ISO 14001, the international
environmental management standard, and ISO 50001
(EMEA region).
Nature
Our approach to nature and
the environment is part of
the group-wide sustainability and
impact strategy overseen
by the CCRC. The GEB is responsible for driving our nature-related efforts, as part of the
measures to achieve our
sustainability and
impact strategy.
The
business divisions
and Group
Functions ensure
that UBS’s
nature-related
strategy
and
risk
management
frameworks
are
implemented.
Through
strategy
management
reports,
GSI
periodically
updates
the
GEB
and
CCRC
on
our
approach
to
nature.
On
an
annual
basis,
the
CCRC
receives
dedicated updates on nature and biodiversity,
including the progress of
the Taskforce
on Nature-related Financial
Disclosures (the
TNFD) and
UBS’s own
activities relating
to the
TNFD, as
well as
updates on
the evolving
frameworks
and regulations, and potential nature-related risks and opportunities
facing the firm.
›
Refer to the “Appendix 2 – Environment” in the appendices to this report for more information on our approach to
nature
Human rights
As
our
Human Rights
Statement articulates,
the governance
outlined above
also applies
to our
commitment to
respecting internationally recognized human rights
across UBS globally.
›
Refer to
ubs.com/sustainability-reporting
for our Human Rights Statement
Financial crime prevention
The GEB oversees
our efforts to
combat money
laundering, corruption
and terrorist
financing. A dedicated
financial
crime team of anti-money laundering compliance
experts leads these efforts.
›
Refer to “Appendix 1 – Governance” in the appendices to this report for more information on financial crime
prevention
People and culture
Our GEB and
CCRC oversee our approach
to corporate culture overall,
as well as
to culture integration.
The GEB
also oversees our approach to diversity,
equity and inclusion (DE&I). Our global head of DE&I drives a Group-wide
strategy, complemented by divisional and regional initiatives.
›
Refer to the “Social” section of this report for more information
Sustainability Report 2023
| Environment
21
Environment
Contributing to a low-carbon economy
Following the
acquisition of
the Credit
Suisse Group,
we have
conducted an
extensive review
of the
decarbonization
targets to reflect the activities of the combined organization
and evolving standards and methodologies.
Based on
this
review,
we
have
undertaken
revisions
to
the
decarbonization
targets
and
also
explicitly
described
in-scope
activities where we have detailed plans, supported
by short- and medium-term targets.
By
2050,
our
ambition
is
to
achieve
net-zero
greenhouse
gas
(GHG)
emissions
across
our
scope
1
and
2,
and
specified scope 3 activities. Our current targets
include:
Scope 1 and 2:
–
minimizing our
scope 1
and 2
emissions through
energy efficiencies
and by switching
to more sustainable
energy
sources; after which,
procuring credible carbon
removal credits to
neutralize any
residual emissions
down to zero
by 2025
1
;
Scope 3:
–
engaging with
our GHG key
vendors, for 100%
of them
to declare their
emissions and
set net zero-aligned
goals
by 2026, and reduce their scope 1 and 2 emissions
in line with net-zero trajectories by 2035
2
;
–
addressing our financed emissions by aligning
specified sectors to decarbonization pathways;
and
–
aiming, by 2030, to align
20% of UBS AG Asset
Management’s total assets under
management (AuM) with net
zero.
3
We recognize that
there is more
to do, and
we aim to
phase in additional
scope 3 activities
over time. While
we
continue to take steps to align our business activities with the ambition set out above, it is important to note
that
progress towards our targets may not be
linear. Our priority is to
support the transition of clients to a
low-carbon
economy, and their transition-financing needs.
In the area of client investments, the scope
of our investments that
are subject
to net-zero
targets and
our ability
to meet
our ambitions
depend on
our fiduciary
duties as
an investment
manager and on the terms of the mandates
agreed to with clients.
Reaching net
zero will
require collaboration
across the
private and
public sectors.
Decarbonization of
the global
economy,
emissions
reductions
by
clients,
and
the
realization
of
our
own
targets
and
ambitions
all
depend
on
various
factors outside
of our
direct influence.
Clear guidance
by
governments through
thoughtful regulations,
policies and incentives, the development and scaling of key technologies,
and broader changes in the behavior of
our society are needed.
We actively
participate
in political
discussions
to share
our expertise
on proposed
regulatory and
supervisory changes
and engage in discussions relating to sustainability and climate (e.g.,
via the International Institute of Finance (the
IIF),
the Association
for Financial
Markets in
Europe (the
AFME) and
the Swiss
Bankers Association (the
SBA)). In
addition, our participation in sustainability-
and climate-focused organizations and associations helps us to deliver
on our commitments whilst promoting the transition
to a low-carbon economy.
We will
continue to
adjust our
approach in
line
with external
developments and
evolving best
practices for
the
financial sector and climate science. This may
also lead us to revisit previously agreed
voluntary commitments.
1
Scope 2 emissions are
market-based emissions. The
remaining scope 1 and
2 emissions may be in
excess of the approximately
5-10% residuals required for net
zero (per the definition of a “net-zero target” by the ESRS E1 Climate Change per delegated act, adopted on 31 July 2023), which is our ambition for 2050. In
2024, we will be reviewing our 2025 scope 1 and
2 target for achievability for the combined
organization and alignment with latest guidance.
2
In 2024, we may review our targets for GHG key vendors for the combined
organization and alignment with latest guidance.
Our GHG key vendors are those
vendors that collectively account for more than 50%
of our estimated vendor GHG emissions.
3
This Pre-acquisition UBS aspiration will be reassessed in
2024.
Sustainability Report 2023
| Environment
22
Own operations
In 2023,
we reduced
our scope
1 and
market-based scope
2 emissions
by 21%
and, for
UBS Group
excluding Credit
Suisse, we continued to apply
an internal carbon price of
USD 400 per metric
ton for scope 1
and 2 emissions in
our
capital
investment
business
cases
to
support
the
transition
away
from
carbon-intense
building
systems.
In
addition,
we were able to achieve 96% renewable electricity
in line with the stringent RE100
4
guidelines.
›
Refer to “Use of carbon offsets and carbon removal credits” in the “Environment” section of this report for more
information about our internal carbon price
With regards to our supply chain, we have
continued a process of engagement with our
vendors, asking them to
provide their
climate disclosures
and set
net zero-aligned
goals. The
number of
our vendors
completing their
climate
disclosures in
CDP increased
by 74%
from 2022
to 2023.
Meanwhile, 65%
of our
GHG key
vendors (which
we
define as those
vendors that collectively
account for more
than 50% of
our estimated vendor
GHG emissions) have
declared their emissions in CDP and set net zero-aligned
goals.
Financing activities
We evaluated
the combined
lending portfolios
and resulting
exposures to
carbon-intensive sectors following
the
acquisition of
the Credit
Suisse Group in
June 2023 and
have set
revised decarbonization targets
for the
Group.
We have updated
our previous emissions
targets for real estate
mortgage lending, as
well as for the
fossil fuels (oil,
gas and coal), power generation
and cement sectors,
reflecting both the combined
portfolios of the two firms
and
the methodology
changes. We
also identified
iron and
steel and
shipping as
additional target
sectors.
For the
Credit
Suisse AG
in-scope shipping portfolio,
we continue
to disclose
the portfolio’s
climate alignment
to the
Poseidon
Principles decarbonization index. In addition, we undertook further assessment of the overall emissions
associated
with our lending and real estate mortgages and conducted a preliminary analysis of the facilitated emissions from
our capital markets activities for select carbon-intensive
sectors.
Investing activities
UBS AG Asset Management made progress during
2023 toward delivering its 2030 target of aiming to align 20%
of UBS
AG Asset
Management’s total
assets under
management (AuM)
with net
zero, using
science-based portfolio
alignment approaches. This included implementing
revisions to fund documentation and investment
management
agreements in certain portfolios to align with our net-zero-aligned framework. This Pre-acquisition UBS aspiration
will be reassessed in 2024.
Our Global
Wealth Management business
division is
a large
distributor and
manager of
investment solutions for
clients, including sustainable investing solutions and climate-focused investments. We
supported private investors
and family
offices seeking
to decarbonize
their overall
holdings by
offering related
investment solutions
across asset
classes and increasing climate awareness
through dedicated client education sessions.
Supporting climate-focused frameworks
We
are
committed
to
helping
our
clients
achieve
their
decarbonization
goals
and
to
supporting
the
work
of
governments around the world
in their transition to
a low-carbon economy in
alignment with the objectives
of the
Paris Agreement. In our home country of Switzerland,
we support the new Climate and Innovation Act, passed in
June 2023, through regulatory engagement,
industry partnerships and collaboration.
›
Refer to the “Environment” section of the Supplement to the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about our climate-related methodologies and targets
›
Refer to the “Our transition plan” section in “Appendix 2 – Environment” in the appendices to this report for a
high-level overview of our activities to support our own transition and that of our clients
4
RE100 is
an international guideline
on renewable
electricity procurement
that outlines
the approach
for credible
claims and
frameworks, including specific
market boundaries and the standard
of third-party verification amongst other requirements.
RE100 is considered a
revised interpretation of the GHG
Protocol
Corporate Standard market-based scope 2 accounting
standards.
Sustainability Report 2023
| Environment
23
Our climate roadmap
Sustainability Report 2023
| Environment
24
Our climate-related metrics
Evolving our climate-related metrics
Standard-setting organizations and regulators continue to provide
new or revised guidance and standards, as
well as
new or enhanced regulatory requirements for climate
disclosures. We have developed methodologies that
we use to
set our climate-related targets
and identify climate-related risks
and opportunities. These methodologies underlie
the
metrics that
are disclosed
in this
report and
are based
upon data
available to
us, including
estimates and
approximations
where actual or specific data is not
available. We intend to update our disclosures to
comply with new guidance and
regulatory requirements as they
become applicable to
UBS. Such updates may
result in possibly substantial
revisions to
our disclosed metrics methodologies and
related disclosures. They may
also change the metrics we
disclose.
Our
climate-related targets
have
been
set based
on
the
methodologies, data
and assumptions
currently in
use.
Changes to these
methodologies, data and
assumptions may
affect our progress
toward these targets
and our net-
zero ambition,
as well as their achievability.
Our net-zero ambition and
related targets for
scope 3 emissions
have a
critical dependency
on the
overall progress
made by
all sectors
and countries
toward net-zero
carbon emissions.
Across
many
jurisdictions,
substantial
governmental
action
will
be
required
to
achieve
that
progress.
If
such
advances are not made, our targets and ambitions
with respect to scope 3 emissions will not
be achievable.
Climate-related risks and opportunities metrics
2023
Climate-related risks and opportunities metrics
For the year ended
% change
from
31.12.23
31.12.22
31.12.21
31.12.22
Risks (UBS Group excluding Credit Suisse)
Carbon-related assets (USD billion)
1, 2, 3, 4, 5
34.2
33.6
36.0
1.7
Exposure to climate-sensitive sectors, transition
risk (USD billion)
1, 2, 4, 5, 6
58.1
52.5
52.4
10.6
Exposure to climate-sensitive sectors, physical risk
(USD billion)
1, 2, 4, 5, 6
46.2
38.0
36.7
21.4
Exposure to nature-related risks (USD billion)
1, 4, 5, 6, 7
72.0
64.6
67.3
11.4
Opportunities (UBS Group)
Number of green, sustainability, and sustainability-linked bond deals
8
93
69
98
34.8
Total deal value of green, sustainability, and sustainability-linked bond deals (USD billion)
8
49.3
42.4
63.3
16.3
UBS-apportioned deal value of above (USD
billion)
11.6
8.8
13.2
31.6
1
Methodologies for assessing climate-
and nature-related risks
are emerging and may
change over time. As the
methodologies, tools, and data
availability improve, we will
further
develop our risk identification and measurement approaches. Lombard lending rating is assigned based on the
average riskiness of loans.
2
Metrics are calculated and restated based
on the 2023 methodology, across three years of reporting, 2021–2023.
3
As defined by the Task Force on Climate-related Financial Disclosures (the TCFD), in its expanded definition
published in 2021, UBS defines carbon-related assets through industry-identifying attributes of the firm’s banking book.
UBS further includes the four non-financial sectors addressed
by the TCFD, including, but not limited to, fossil fuel extraction,
carbon-based power generation, transportation (air,
sea, rail, and auto manufacture), metals production
and mining,
manufacturing industries, real
estate development,
chemicals, petrochemicals,
and pharmaceuticals, building
and construction
materials and
activities, forestry,
agriculture, fishing,
food and beverage production, as well
as including trading companies that may
trade any of the above (e.g., oil
trading or agricultural commodity trading
companies). This metric is
agnostic of risk
rating, and therefore
may include exposures
of companies that
may be already
transitioning or adapting
their business models
to climate risks,
unlike UBS climate-
sensitive sectors methodology,
which takes a risk-based
approach to defining
material exposure to climate
impacts.
4
Total
customer lending exposure
consists of total loans
and
advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss) and is based on consolidated and standalone IFRS
numbers.
The credit
exposure includes
portfolio adjustment
bookings, which are
either directly
impacting the
metrics, and have
been reflected
in the heatmaps,
or are
impact assessed
and
immaterial to the metrics representation.
5
UBS continues to collaborate to resolve methodological and data challenges, and seeks to integrate both impacts to and dependency on
a changing natural and
climatic environment, in
how it evaluates risks
and opportunities.
6
Climate-
and nature-related risks
are scored between
0 and 1, based
on sustainability
and climate risk transmission channels,
as outlined in the Supplement
to the UBS Group Sustainability
Report 2023. Risk ratings represent a
range of scores across five-rating categories:
low, moderately low,
moderate, moderately high, and
high. The climate- or nature
-sensitive exposure metrics are
determined based upon the
top three of the
five rated categories:
moderate to high.
7
Nature-related risk metric methodology has been further strategically enhanced, as part of an ongoing collaboration between UBS and UNEP-FI.
8
The metrics
include transactions such
as, but not
limited to, Investment
Bank Global Banking
bonds issued under
the voluntary ICMA
Green Bond
Principles, Sustainability Bond
Principles, and
Sustainability-Linked Bond Principles. The principles include a recommendation that the issuer appoints an external review provider to undertake an independent external review (e.g.,
second-party opinion). This is consistent with
market practice. The metrics also include
sustainability themed bonds (e.g., Transiti
on). Transactions
are counted only once, there
is no
double counting (e.g., if and where UBS AG and Credit Suisse were involved
in the same transaction). UBS performed an assessment for Credit Suisse green,
social, sustainability and
sustainability-linked bonds reported in the 2023 Sustainability Report and deemed them
to be aligned to UBS sustainable bond guidelines.
›
Refer to the “Supporting our approach to climate – our climate-related materiality assessment” section of the
Supplement to the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more
information about our approach to climate-related risks and opportunities
›
Refer to the “Managing sustainability and climate risks” section of this report for more details on climate-related
risk metrics
Climate-related lending metrics 2023
Based on the guidelines
by the World Resources Institute
(the WRI) and the World
Business Council for Sustainable
Development (the WBCSD)
for reporting in the
event of a
material acquisition
5
, the emissions
metrics shown for
31
December 2021
and 31
December 2022
are calculated
on the
basis of
the joint
loan books
of UBS
and Credit
Suisse
on those dates, on a pro forma basis. As in previous Sustainability Reports, climate-related lending metrics are not
shown for the current reporting year, due to the inherent time-lag in the availability of emissions data.
Based on
an assessment
of qualitative
and quantitative
criteria such
as alignment
with industry
guidance, availability
and quality
of data
and consistency across
sectors in
existing targets
disclosed by
Pre-acquisition UBS and
Credit
Suisse Group, 2021 has been adopted as the baseline
year for all sectors.
›
Refer to the “Climate-related methodologies – decarbonization approach for our financing activities” section of the
Supplement to the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more
information about our climate-related methodologies
5
GHG Protocol Corporate Value chain (Scope 3) Accounting and
Reporting Standard
Sustainability Report 2023
| Environment
25
Climate-related lending metrics (UBS Group)
For the year ended
% change
from
31.12.22
31.12.21
31.12.21
Lending
1
Baseline 2021
Swiss residential real estate (scopes 1 and 2 kg CO
2
e / m
2
ERA)
2
36.5
38.7
(6)
Swiss commercial real estate (scopes 1 and
2 kg CO
2
e / m
2
ERA)
2
32.1
31.3
2
Fossil fuels (oil, gas and coal; scopes 1, 2 and 3 million metric
t CO
2
e)
45.9
64.7
(29)
Power generation (scope 1 kg CO
2
e / MWh)
297
339
(13)
Iron and steel (scopes 1 and 2 metric t CO
2
/ metric t of steel)
1.68
1.75
(4)
Cement (scopes 1 and 2 metric t CO
2
/ metric t of cementitious)
0.63
0.64
(1)
1
Based on gross
exposure, which
includes total
loans and
advances to
customers, fair
value loans and
guarantees as
well as irrevocable
loan commitments.
Refer to
the “Basis
of
Reporting” section
of the
Supplement to
the UBS
Group Sustainability
Report 2023,
available at
ubs.com/sustainability-reporting
for more
information about
our climate-related
methodologies.
2
ERA: Energy Reference Area.
Credit Suisse AG completed its Poseidon Principles
disclosure for 2023, as disclosed in the following
table.
Climate-related lending metrics – Poseidon Principles (Credit Suisse AG consolidated)
For the year ended
% change
from
31.12.22
31.12.21
31.12.21
Poseidon Principles disclosure
Shipping (delta alignment to Poseidon Principles
“IMO 50” trajectory)
1
-4.6%
-1.3%
n/a
Shipping (delta alignment to “IMO 2023
minimum trajectory”)
2
11.5%
n/a
n/a
Shipping (delta alignment to “IMO 2023
striving for trajectory”)
2
15.7%
n/a
n/a
1
Poseidon Principles
“IMO 50” trajectory is not 1.5°C aligned.
2
The IMO Revised GHG Strategy sets out the following
absolute reduction levels of ambition: (i) to reduce total annual
GHG emissions by at least 20%, striving for 30%, by 2030 (compared with 2008); (ii) to reduce total annual GHG emissions by at least 70%, striving for 80%, by 2040 (compared with
2008); (iii) GHG emissions to peak as
soon as possible and to reach
net-zero GHG emissions by or around
2050; and (iv) carbon intensity to decrease
in order to reduce CO
2
emissions
per transport unit
by at least
40% by 2030
(compared with 2008).
The Revised GHG
Strategy considers well-to-wake
CO
2
e emissions, i.e.,
it includes upstream
emissions, as well
as
accounting for the impact of methane (CH4) and nitrous oxide (N
2
O). The updated IMO trajectories are not 1.5°C aligned.
Climate-related investing metrics 2023
Metrics relating to net-zero
investments, portfolio emissions,
and voting apply to
UBS AG Asset Management
only.
Climate-related investing metrics (UBS AG)
For the year ended
31.12.23
31.12.22
31.12.21
Opportunities – net-zero investing
Number of net-zero ambition portfolios
35
Net-zero ambition assets share of total assets under management
(%)
2.9
Portfolio emissions
UBS AG Asset Management investment-associated
emissions (absolute; in t CO
2
e)
1
46,266,089
UBS AG Asset Management investment-associated
carbon intensity (in t CO
2
e per USD million invested)
1
62.0
Weighted average carbon intensity – by asset
class
1, 2
Weighted average carbon intensity – active equity
assets (t CO
2
e per USD million of revenue)
105.6
130.4
109.8
% AuM weighted average carbon intensity below
benchmark (active equity)
3
81.3
75.7
62.4
Weighted average carbon intensity – active fixed income
assets (t CO
2
e per USD million of revenue)
114.9
145.3
198
% AuM weighted average carbon intensity below
benchmark (active fixed income)
3
65.0
63.5
76.3
Weighted average carbon intensity – indexed equity
assets (t CO
2
e per USD million of revenue)
100.7
128.3
128.9
Weighted average carbon intensity – indexed fixed income
assets (t CO
2
e per USD million of revenue)
127.9
139.8
169.8
Weighted average carbon intensity – direct real
estate (kg CO
2
e per square meter)
4, 5
26.89
31.5
Carbon footprint - by asset class
1, 2
Carbon footprint – active equity assets (t
CO
2
e per USD million invested)
44.1
% AuM weighted average carbon intensity below
benchmark (active equity)
79.1
Carbon footprint – active fixed income assets
(t CO
2
e per USD million invested)
45.5
% AuM weighted average carbon intensity below
benchmark (active fixed income)
20.6
Carbon footprint – indexed equity assets
(t CO
2
e per USD million invested)
45.9
Carbon footprint – indexed fixed income assets
(t CO
2
e per USD million invested)
108.3
Stewardship – voting
6
Number of climate-related resolutions voted upon
157
160.0
89.0
Proportion of supported climate-related resolutions
(%)
69.4
71.2
78.6
1
Based on data for scope 1 and 2
GHG emissions of investee companies from a third-party data provider.
2
Carbon intensity and carbon footprint of an asset
class are the aggregates
of the individual portfolios weighted by portfolio size.
Portfolios and benchmarks measures are the
aggregates of individual issuers weighted by share
of portfolio or benchmark. Data
coverage thresholds are applied
in determining which portfolios
are included.
3
The disclosure for %
AuM weighted average carbon
intensity below benchmark (active
equity) and
(active fixed income) have been updated for 31.12.21 to be
reflected in percentages of 62.4% and 76.3% instead of the decimals previously presented.
4
Data is collected from direct
real estate assets for discretionary funds and mandates that participate in the Global Real Estate Sustainability Benchmark. The numbers used represent either reported data grossed up
to 100% (where area coverage, ownership days or occupancy is less
than 100% and greater or equal to 50%) or an estimate based
on proxy where area coverage, ownership days
or
occupancy is less than 50%.
The data includes Scopes 1,2
and if available scope 3
GHG emissions with one-year time
lag.
5
Due to the lag in
the availability of emissions data,
our
disclosure is reported on a one
year lag (please refer to the
Basis of Reporting section of
the Supplement to the UBS
Group Sustainability Report 2023, available at ubs.com/sustainability-
reporting for further details).
In the 2022 Sustainability Report, the number
calculated in 2022 was incorrectly reported
as 2022 and t CO
2
e, when the underlying data was related
to
2021 and kg CO
2
e.
The 31.12.21 comparative number has now been updated
reflecting methodology changes and increased data
availability since the previous reporting period.
6
Data for
2021 excludes
proposals
related
to Japanese
companies that
included changes
to companies’
articles of
association. Data
includes proposals
by both
management
and
shareholders and reflects common market definition of climate-related proposals.
Sustainability Report 2023
| Environment
26
Climate-related own operations metrics 2023
Climate-related own operations metrics (UBS Group)
For the year ended
% change
from
31.12.23
31.12.22
31.12.21
31.12.22
Own operations
Net GHG footprint (1,000 metric tons CO
2
e)
1
169
169
133
(0)
Change from baseline 2019 (%)
(53)
(53)
(63)
0
Share of renewable electricity (%)
96
91
92
5
1
Net GHG footprint equals gross
GHG emissions minus GHG
reductions from renewable
electricity (gross GHG emissions
include: direct GHG
emissions by UBS Group;
indirect GHG
emissions associated with the generation of
imported / purchased electricity (grid average
emission factor), heat or steam; and other
indirect; GHG emissions associated with
business
travel, paper and water consumption, energy related activities and waste disposal). Refer to the “Environment” section
of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for a breakdown of our GHG emissions (scopes 1, 2 and 3).
Our approach to nature
We recognize
the challenges
of transitioning
toward a
society that
can meet
human needs
while respecting
the
limits of
our planet’s
natural resources.
These challenges
are reflected
in stark
numbers: for
example, the
World
Economic Forum estimates that approximately USD 58 trillion of economic value depends
on the natural world in
some
way,
yet,
according
to
a
recent
United
Nations Environment
Programme report, annual
financial flows
to
nature-based solutions need
to more
than double
by 2025
(from USD 200
billion to USD
436 billion)
and nearly
triple to USD 542 billion by
2030 to reach climate, biodiversity
and land degradation targets
6
. However, challenges
can represent
opportunities.
That is
why we
look forward
to the
setting of
global policy
objectives and
goals through
the Convention on Biological Diversity and welcome the milestone
set of policy goals adopted by
governments in
the shape
of the
Kunming–Montreal Global
Biodiversity Framework.
This is
a key
enabler for
setting critical
direction
for economy-wide
transitions aimed
at safeguarding
global biodiversity.
We firmly
believe that
public policy
and
frameworks
have,
and
will
continue,
to
play
a
critical role
in
steering and
incentivizing
markets
to
support the
transition toward a sustainable economy.
Our approach
to understanding
impacts and
dependencies related
to natural
capital and
biodiversity,
and managing
the
resulting
risks
and
opportunities
across
our
activities,
reflects
our
commitment
to
mobilize
capital
toward
achieving
the
SDGs.
Nonetheless,
we
are
aware
that natural
capital is
inherently more
challenging to
define
in
financial terms due to a lack of easily
available data and standardized methodologies. Therefore, we strive to play
an active role
in creating new
global standards that
can help clients,
companies and the
financial sector manage
nature-related
risks
and
develop
opportunities, while
also
addressing
potential adverse
impacts
and
generating
positive impacts. That
is why we
were honored to
be part of
the efforts of
the Taskforce
on Nature-related Financial
Disclosures (the TNFD), including leading its
financial sector working group, and contributing
to the development
of the recommendations it released in September
2023.
Building on our
first integrated UBS Group
Climate and Nature
Report for 2022, we
developed our activities and
disclosures
for
2023
by
leveraging
the
recommendations
set
by
the
TNFD.
We
will
continue
to
develop
our
disclosures on
nature dependencies,
impacts, risks
and opportunities
over the
next few
years, aligned
with the
TNFD
recommendations and regulatory requirements.
During the course of 2023,
we also contributed to the debate
and improvement of knowledge and innovation in
this area
through our thought
leadership activities and
capacity building exercises.
For instance,
we ran
a Nature
Academy to train key staff about nature-related
issues, frameworks, standards, risks
and opportunities.
›
Refer to the “Managing sustainability and climate risks” section of this report and the “Our approach to nature”
section in “Appendix 2 – Environment” in the appendices to this report for more information about our
management of nature-related risks and opportunities
›
Refer to our UBS Group Climate and Nature Report 2023, available at
ubs.com/sustainability-reporting
6
Source : UN Environment Programme,
State of Finance for Nature 2023
Sustainability Report 2023
| Environment
27
Supporting our clients’
low-carbon transition
Helping our clients to navigate the orderly transition to a low-carbon economy and build climate-resilient business
models is
a key
objective of
our approach
to climate,
as is
the mobilization
of private
and institutional
capital toward
this transition.
Aligning our in-scope lending and investment portfolios to the objectives of the Paris Agreement is
an important part of this approach and so are the products and services
we offer. Specifically,
these include:
Offering sustainable finance products and
services
By offering innovative sustainable financing, investment and capital markets solutions, we strive to provide
clients
with the choices they need to meet their specific
sustainability objectives while supporting their transition
to a low
carbon economy.
We are developing innovative
advisory, lending, basic banking and
transition financing solutions,
as well as offering our clients access to various sustainable investment (SI) solutions.
By combining targeted advice
with our research, thematic insights, and data and analytics services,
we aim to help clients better understand and
mitigate
risks
and
identify
new
opportunities.
Further,
we
provide
support
in
the
form
of
tools,
platforms
and
education.
›
Refer to the “Supporting opportunities” section of this report for more information about our sustainable finance
product and service offering and an overview of key developments in 2023
Engaging with our investees and clients
Through
collaboration
and
engagement
with
industry,
investees
and
our
clients,
we
help
clients
access
best
practices, robust science-based approaches,
standardized methodologies and
quality data that help
them to better
measure and mitigate
climate risks
and act on
climate-related opportunities. Our
aim is to
better understand where
we should focus our engagement efforts to best support our investees and clients,
which is why,
as a first step, it
is important that we assess where investees and
corporate clients are on their low-carbon journey.
To
do this, we
are developing a framework that considers existing categorization frameworks used by UBS
AG and Credit Suisse
AG, such as the Credit Suisse Client Energy Transition Framework (CETF).
›
Refer to “Our transition strategy levers” and “Supporting our investing clients’ low-carbon transition” section for
more information about our engagement with our clients and to the “Asset Management” section of this report for
more information about our active ownership approach and climate engagement program with our investees
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for a
description of Credit Suisse’s CETF
Developing thought leadership
Our aim is to further inform and facilitate
our engagement activities by acting
as a thought leader in sustainability,
providing our clients with deep
insights and research content from
across our business areas and
central initiatives.
Our main
Group sustainability
thought leadership initiative,
the UBS
Sustainability and Impact
Institute, develops
insights into the long-term developments needed to support the transition to a low-carbon, sustainable
economy.
Our
Global
Wealth
Management
Chief
Investment
Office
and
our
Investment
Bank
Research
offer
actionable
insights on
sustainable investments and
finance. Meanwhile, our
Investment Bank, Global
Wealth Management,
Asset Management and Personal &
Corporate Banking business divisions each
delivered a variety
of conferences,
webinars, reports, papers and other events during 2023
to discuss some of the most important developments
and
themes around sustainability with our clients.
›
Refer to the “Expanding insights” section of the Supplement to the UBS Group Sustainability Report, available at
ubs.com/sustainability-reporting
,
for more information about our thought leadership activities
Sustainability Report 2023
| Environment
28
Supporting our financing clients’
low-carbon transition
Our lending sector decarbonization targets
As set out in
the UBS Group Sustainability
Report 2022, Pre-acquisition
UBS set targets
to address in-scope lending
emissions for
the residential
and commercial
real estate,
fossil fuels
(oil, gas
and coal),
power generation
and cement
sectors,
while the
Credit Suisse
Group had
(as set
out in
the Credit
Suisse Group
Sustainability Report 2022)
set
targets for
the oil,
gas and
coal, power
generation,
commercial real
estate, iron
and steel,
aluminum and
automotive
sectors.
For the shipping
sector,
the Credit Suisse
Group disclosed the
portfolio’s climate
alignment to
the Poseidon
Principles decarbonization index.
During
2023,
following
the
acquisition
of
the
Credit
Suisse
Group,
we
refined
the
UBS
Group
lending
sector
decarbonization targets based on the integration of
the Credit Suisse Group portfolios and in
alignment with our
net zero ambition.
We prioritized
sectors that
have the highest
carbon impact,
as per the
guidelines of the
Net-Zero
Banking Alliance
(NZBA), and
also applied
additional considerations.
These include
the materiality
of sectors
in terms
of financial exposure and the
availability of data and applicable methodologies to
estimate baselines and develop
pathways toward net zero. We performed additional analysis to establish transparency around the contribution of
each sector in our portfolio to the total.
Decarbonization targets
have
been
established for
Swiss
real
estate
mortgages
(commercial
and
residential real
estate) and for
financing of in-scope activities
in the fossil fuels
(oil, gas and
coal), power generation,
iron and steel
and cement sectors.
For the Credit
Suisse AG in-scope
shipping portfolio, we
continue to disclose
the portfolio’s
climate
alignment
to
the
Poseidon
Principles
decarbonization
index.
As
the
automotive
and
aluminum
sectors
previously reported
by the
Credit Suisse
Group did
not meet
the exposure
or emissions
materiality thresholds
as
calculated based on estimated 2023 exposure for the combined portfolios,
they have been deprioritized for target
setting at this time.
We will continue
to assess the
materiality of
the deprioritized
sectors annually
and aim
to develop
additional targets
for
the
remaining material
carbon-intensive sectors
in
line
with our
commitment to
the NZBA
and
as
data and
methodologies become available.
Sustainability Report 2023
| Environment
29
›
Refer to the “Supplement to Environment” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for more information about our targets
›
Refer to the “Basis of Reporting” section of the Supplement to the UBS Group Sustainability Report 2023, available
at
ubs.com/sustainability-reporting
for more information about our climate-related lending metrics
Sustainability Report 2023
| Environment
30
Our approach to
target-setting is based
on the guidance
from global standards and
initiatives such as
the NZBA,
the
Partnership
for
Carbon
Accounting
Financials
(PCAF),
the
Paris
Agreement
Capital
Transition
Assessment
(PACTA) and
the Science-Based
Targets Initiative
(the SBTi).
UBS acknowledges
that Credit
Suisse had
a commitment
to SBTi to have its 2030 targets externally validated. To develop the combined 2030 targets, we have utilized SBTi
guidance where possible and we continue to assess
the options for target validation and
assurance.
We strive to measure and monitor progress
toward our targets and their alignment
with our climate commitments
and emerging standards. It is important to note that progress towards our targets may not be linear, and year-on-
year volatility is
expected due to
changes in the portfolios’
composition over time.
We plan to disclose
our progress
publicly on an
annual basis. In
line with NZBA
guidelines for climate
target-setting,
we intend, as
a minimum, to
review our targets every five years to ensure
consistency with the most recent climate
science and best practices.
How we aim to underpin our targets with transition
strategies
To
underpin our targets and guide our transition
strategies and actions, we followed a two-step
process:
–
assessing
the
overall
emissions
associated
with
UBS’s
in-scope
lending
portfolio,
including
Swiss
real
estate
mortgages and
estimated
emissions reductions
by
2030 (by
business division
and sector),
considering client’s
historical emissions trends as well as public
decarbonization commitments;
and
–
considering
anticipated
changes
in
the
size
and
composition
of
our
in-scope
lending
portfolios
arising
from
lending structures and business strategy.
Alongside these estimated emissions reductions, we defined three
key transition strategy levers where we
believe
we can have an impact and facilitate additional
emissions reductions to reach our
targets.
Our transition strategy levers
A. Engage: engaging with our clients
Building on the review of our clients’ public
decarbonization commitments, we further
assess where they currently
stand on
their journey
toward a
low-carbon and
climate-resilient business
model. By
establishing a
view on
our
clients’ current decarbonization
ambitions and activities,
we aim to work
alongside them to
support their transition
efforts.
This
can
include
encouraging the
disclosure
of
current
emissions,
the
setting of
future
decarbonization
targets in line with Paris-aligned pathways and
the development of credible transition plans.
Through
our
ESG
Advisory
Group,
we
are
also
providing
the
necessary
lens
to
help
our
clients
assess
ESG
(environmental, social, governance) topics throughout the corporate lifecycle and critically analyze a corporation’s
ESG profile from a business and investor perspective.
›
Refer to the “Investment Bank” section of this report for more information about our ESG Advisory Group
Sustainability Report 2023
| Environment
31
B. Grow: offering sustainable finance solutions
We complement our
engagement efforts with
sustainable and sustainability-linked financial
advice and solutions
(advisory,
lending,
basic
banking
and
transition
financing
solutions)
to
help
our
clients
transition
to
a
more
sustainable future. These
solutions can
be on-balance
sheet (e.g.,
green or sustainable
loans and
mortgages) or
off-
balance sheet (such as access to debt and
equity capital markets). They can also include
transaction structuring.
For example, in
the corporate client business, we
focus on supporting our
clients by advising them
as part of
the
strategic dialogue and partnering with them
in the implementation of new
solutions. We offer sustainable-linked
loans
(SLL)
to
incentivize
the
borrower’s
achievement
of
ambitious,
predetermined
sustainability
performance
targets.
Our
SLL
offering
is
open
to
qualifying
corporates
from
all
sectors
wishing
to
reflect
their
sustainability
ambitions in their funding strategy and benefit
from meeting agreed sustainability performance
targets.
›
Refer to the “Supporting opportunities” section of this report for more information about our sustainable finance
product and service offering,
and specifically to the “Personal & Corporate Banking” section for more information
about our corporate client business
We continue
to develop
and refine
our sustainable
finance solutions
and approaches
on an
ongoing basis
to support
our clients in orienting their business efforts
toward the objectives of the Paris Agreement.
C. Prioritize: providing capital for lower-carbon-intensity
activities
As previously highlighted, our
aim is to direct capital toward
lower-carbon activities, or to clients with
credible net-
zero
targets and
plans to
transition to
low-carbon and
climate-resilient business
models. This
is in
line with
our
sustainability risk
process which
may trigger
enhanced due
diligence for
clients in
those carbon-intensive sectors
that have higher climate-related impacts and
risks. At the same time, as
the global economy shifts toward
lower-
carbon activities, we see opportunities
to provide financing and advisory services
to clients that are well positioned
to benefit from this transition.
Evolving our transition strategy
Managing and monitoring our financing
activities remains an ongoing
focus. We continue
to build on and
refine
our transition strategy
and further tailor
it to
our business divisions.
Our aim
is to
make our
approach to climate
“business as
usual”
and to
orient our
new and
existing business
efforts toward
net zero
by 2050.
We
strive to
routinely consider
the climate
impact resulting
from our
financing activities,
take an
active approach
to growing
our
low-carbon
business
and
address
our
financed
emissions
by
engaging
with
clients
and
supporting
their
transition. We strive
to further strengthen our
operating model and increase
our efforts in
the fields of transition
and green finance.
We also expect
new technologies
to emerge,
along with
policies and
actions from
governments,
that will support the transition
to a low-carbon economy. We regard such developments
as dependencies for
us to
contribute toward meeting the objectives of the Paris
Agreement.
As we work toward
our targets and further
develop our transition strategies, we
aim to consider a
just transition
to a low-carbon
economy,
one that is
as fair and
inclusive as possible.
In this regard,
we contributed
to the market’s
understanding of
the concept
as part
of the
Principles for Responsible
Banking (the PRB)
Just Transition
working
group.
Carbon reduction and removal
In accordance with the NZBA
guidelines, offsetting can play a
role that is supplemental to
sectoral and economy-
wide
decarbonization. We
support
transparent
investment in
carbon
markets that
are
aligned
with
the
current
publicly
available consensus
on
high
integrity
standards and
robust
governance (including
the
VCMI
(Voluntary
Carbon Markets Integrity
Initiative) Claims Code
of Practice, the
ICVCM (Integrity
Council for the
Voluntary Carbon
Market)
Core
Carbon
Principles
and
the
Oxford
Principles
for
Net-Zero-Aligned
Carbon
Offsetting).
Any
decarbonization strategies,
including offsetting, that
UBS applies to
its own in-house
operations or advises
other
organizations on must meet these standards.
Our
transition
plan
prioritizes
emissions
reductions
in
line
with
science-based
climate
targets
and
credible
trajectories to
achieve these
targets. In
addition, we
anticipate that
the deployment of
carbon-removal solutions
will be needed to counterbalance
hard-to-abate emissions and
supplement the reduction
strategies of some
of our
clients. For example,
certain industrial processes
cannot yet achieve
absolute zero emissions
as technologically or
financially viable
emissions-elimination alternatives do
not exist.
Those industries,
however, still
provide products
and services
that are
important to
society and
are likely
to remain
relevant in
the future.
In these
cases, carbon
removals
are
critical
to
balance
residual
emissions.
As
best
practice
guidance,
regulation,
methodologies
and
technologies develop, our approach to decarbonization,
including offsets, will continue to evolve.
Sustainability Report 2023
| Environment
32
Sustainable lending operating model
To
operationalize our approach to climate,
it is important to
embed sustainability and climate
considerations into
our
lending
operating
model,
leading
to
regular
adjustment
of
evaluation
and
decision-making
frameworks,
governance structures, control and monitoring
processes, and underlying systems.
For example,
following the
acquisition of
the Credit
Suisse Group,
UBS reassessed
the emissions
and targets
for
sectors with a
high-carbon impact for
the combined organization. To
operationalize our target
approach, we are
reviewing
whether
our
planning
and
governance
processes,
risk
appetite,
sector
strategies,
and
so
on
are
still
appropriate.
In parallel,
we are
assessing required
enhancements to
our loan
origination, credit
granting, monitoring
and reporting processes.
Our approach to measuring facilitated emissions
from our capital markets business
Investment
Bank
The Investment
Bank offers
our clients
access to
the world’s
primary, secondary and
private capital
markets,
through
an array
of sustainability-
and climate-focused services,
products, research
and events. Our
role in
capital market
transactions helps our clients access capital
for their businesses.
We facilitate clients’ capital raising and,
therefore,
think it is important to monitor the related emissions
which we are involved in.
Facilitated emissions differ from financed emissions in two aspects: Firstly, they are off-balance sheet
(representing
services rather
than financing)
and secondly,
our role
is completed
within a
short timeframe
rather than
a long-term
loan-related exposure.
As a
result, and
in line
with industry
guidance, we
distinguish between
on-balance sheet
“financed” and off-balance sheet “facilitated”
emissions.
By disclosing our
facilitated emissions for select
carbon-intensive sectors
1
, we aim
to provide transparency on
the
emissions we
facilitate as
a
result of
our
capital market
activities. We
are currently
assessing methodologies
for
calculating facilitated emissions for the remaining NZBA
carbon-intensive sectors
2
. We calculated UBS’s facilitated
emissions in
line with
PCAF’s draft
accounting and
reporting standard
for facilitated
emissions, including
public
equity capital markets
and public debt
capital markets,
where UBS, including
Credit Suisse,
held a lead bookrunner
or lead manager
/ co-manager
role on the
transaction. Facilitated
emissions are
not shown for
the current reporting
year due to the inherent time-lag in the availability of emissions data. We have conducted an initial assessment of
our approach against the final PCAF Standard released in December 2023 and identified select areas to be
further
explored in 2024.
It is important
to note that
reporting facilitated emissions from
transactions that took
place in the
reporting year
will introduce volatility in our numbers as it
will be related to the volume of capital markets
activity in the year and
our market share. Global capital markets activity was
strong post-Covid in 2020 and 2021 but slower in 2022 and
2023. When market activity
rebounds, we would expect our facilitated emissions
to see a similar increase.
1
Disclosed for those
sectors where data
and methodology are
available: fossil fuels (coal,
oil and gas),
power generation, iron
and steel, aluminum,
cement,
automotive and air transportation.
2
The
NZBA identifies
nine priority
sectors: agriculture,
aluminum, cement,
coal, commercial
and residential
real estate,
iron
and steel,
oil and
gas, power
generation and transport.
Sustainability Report 2023
| Environment
33
UBS reviews and assesses
every Global Banking transaction
and employs a robust
business selection process. This
means that,
in
our capital
markets activities
for carbon-intensive
sectors, we
consider the
potential climate
and
sustainability impacts of the transaction and related
material risks and opportunities.
We
continue
to
review
and
assess
emerging industry
guidance
and
target-setting methodologies
for
facilitated
emissions.
31.12.22
31.12.21
Facilitated
amount
(USD
billion)
Facilitated
emissions,
scopes 1
and 2
(million
metric t
CO
2
e)
Facilitated
emissions,
scope 3
(million
metric t
CO
2
e)
PCAF
score,
scopes 1
and 2
2
PCAF
score,
scope 3
2
Facilitated
intensity
(million
metric t
CO
2
e /
USD
billion)
Facilitated
amount
(USD
billion)
Facilitated
emissions,
scopes 1
and 2
(million
metric t
CO
2
e)
Facilitated
emissions,
scope 3
PCAF
score,
scopes 1
and 2
2
PCAF
score,
scope 3
2
Facilitated
intensity
(million
metric t
CO
2
e /
USD
billion)
Facilitated
emissions
Select carbon-
intensive sectors
1
12.0
2.0
2.3
1.6
2.3
0.4
23.0
5.1
16.3
1.6
2.8
0.9
Select carbon-
intensive sectors
as % of total
5.7%
5.9%
Other sectors
197.7
368.2
Total facilitated
amount
3
209.7
391.3
1
Select carbon-intensive sectors comprise:
fossil fuels (coal, oil and
gas), power generation, iron
and steel, aluminum, cement,
automotive and air transportation.
Refer to the sector
approach in
the “Climate-related
methodologies –
decarbonization approach
for our
financing activities“
section of
the Supplement
to the
UBS Group
Sustainability Report
2023,
available at ubs.com/sustainability-reporting,
for more information about
the parts of the
value chain in-scope within sectors.
2
PCAF data quality score
has been combined for
the
key sectors and weighted by the facilitated amount.
3
Includes all sectors.
›
Refer to the “Investment Bank” section of this report for more information about our capital market activities
›
Refer to the “Basis of Reporting” section of the Supplement to the UBS Group Sustainability Report 2023, available
at
ubs.com/sustainability-reporting
, for more information about our methodology to calculate facilitated emissions
Sustainability Report 2023
| Environment
34
Supporting our investing clients’
low-carbon transition
Asset Management
UBS AG
Asset Management
became a
founding member
of the
Net Zero
Asset Managers
(NZAM) initiative
in 2020,
committing to support
its ambition of
net-zero GHG emissions
by 2050. Membership
of the NZAM
initiative entails
a range of expectations at an organizational
level and for in-scope assets under management
(AuM). Through this
commitment, our aim
is to further
support our clients
in reaching their sustainable
investment and decarbonization
objectives.
In order to provide choice
to our clients and to effectively
monitor our progress toward
our target, we use a clearly
defined framework to
assess whether a
product has a
net-zero ambition. This
framework is based
on the NZAM
initiative’s guidance
on assets
committed to
be managed
in line
with attaining
net-zero emissions
by 2050
or earlier,
as well as guidance
from other industry bodies. From
this we have derived
the following guiding principles when
defining an investment portfolio as having a net-zero
ambition:
–
The
portfolio
has
a
defined
decarbonization
target,
a
commitment
to
increasing
portfolio
coverage
of
SBTi-
verified targets and/or invests in climate solutions
that enable net-zero global GHG emissions
by 2050.
–
The
portfolio
makes
a
contribution
to
the
transition
to
a
low-carbon
economy
where
relevant
companies,
partners, managers, borrowers, tenants
and vendors that are not currently meeting or
aligned with net zero are
the subject of direct or collective engagement
and stewardship actions.
–
Offsets may be used to enable or
support long-term carbon removal where there are no technologically and/or
financially viable alternatives to eliminate emissions.
–
Monitoring and annual disclosure of progress
toward portfolio-level targets.
›
Refer to the “Supplement to Environment” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for UBS AG Asset Management’s science-based methodologies
2030 target for the proportion of assets to
be managed in line with net zero
Our
Asset
Management
business
division
set
a
target
aiming,
by
2030,
to
align
20%
of
UBS
AG
Asset
Management’s total
assets under
management (AuM)
with net
zero.
1
Net zero
portfolio alignment
currently focuses
on areas of its business where methodologies exist and there is credible data to support tracking and reporting of
our progress, namely active equities, active fixed income, indexed equities and some of our real estate investment
activities. We believe, however,
that only a proportion of these assets
can be feasibly managed in ways
that align
with net
zero by
2030, consistent
with their
respective intended
investment objectives,
the needs
of our
clients,
and
market
evolution.
There
is
also
a
portion
of
assets
for
which
there
is
no
currently
agreed
or
accepted
methodology for
net-zero alignment.
These include
asset classes
such as
multi-asset funds, hedge
funds, private
markets,
money
markets,
sovereign
bonds,
and
municipal
issuers.
Portfolio
alignment
will
be
pursued
once
acceptable data and methodology solutions
are identified.
During 2023,
we implemented
revisions to
fund documentation
and investment
management agreements
in certain
products
to
align
with
our
net-zero-aligned
framework. UBS
AG
Asset
Management currently
has
35
available
products being managed in line with net zero,
representing 2.9% of our total AuM.
Our plans for making further progress toward our target include investing in the
necessary data and infrastructure
to support
the management
and monitoring
of portfolios,
continuing to
assess net-zero
alignment at
the issuer
level, and our active ownership efforts
toward the transition to a low-carbon economy.
We draw on a wide variety of data sources to inform our assessment of climate-related risk and opportunities
and
recognize that approaches
to achieving net-zero are
likely to develop over time
as both data availability
and quality
continue to improve. Consequently, we also
expect our portfolio alignment approach to
evolve as the transition to
a
low-carbon
economy
progresses
and
as
further
data
and
methodologies
become
available.
For
example,
we
enhanced
our assessment by adding
temperature alignment and
climate solutions approaches,
as well as exploring
how to best incorporate scope 3 metrics into our
data model.
1
This Pre-acquisition UBS aspiration will be reassessed in
2024.
Sustainability Report 2023
| Environment
35
Helping clients understand net zero
We understand that our
approach to net-zero investing is
determined by our clients’ choices. We
believe that we
have
an
important
role
to
play
in
working
collaboratively
with
our
clients
on
climate
risk
education,
providing
information about
best practices
in climate
risk management,
climate-related opportunities
and approaches
for net-
zero-aligned portfolios.
To
help
our
clients and
other investors
understand the
journey to
net
zero,
as well
as the
range
of options
for
allocating capital that
we offer, we
launched a digital
campaign during 2023
that provides educational
materials
and
thought
leadership
content.
We
are
using
various
media
avenues
available
to
us
to
increase
awareness,
including a
redesigned web
experience, videos
and podcasts,
Adobe campaigns,
and our
social media
platform.
Our
investment
experts
delivered
individualized
education
to
clients
and
prospects
on
specific
components
of
sustainable investing. Some of our
investment approaches include rules-based net-zero strategies, climate-related
indexing and factor-based investing.
Net-zero active ownership by UBS AG Asset Management
We recognize
that the transition
of investment portfolios
requires
real-economy emission reductions
and we
see
our
active
ownership
strategy
as
a
powerful
tool
in
influencing
corporate
behavior
to
achieve
real-economy
outcomes. We have
had a dedicated
climate engagement
program in place
for five years
to address climate-related
risks
with
measurable
progress
tracked.
In
2023,
we
applied
a
sector-specific
approach
and
engaged
with
companies from the
following sectors: oil
and gas, electricity
and other utilities,
diversified mining, steel,
chemicals,
and construction material.
We set our engagement objectives and expectations based on company target-setting,
decarbonization measures,
capital deployment
and progress
toward stated
commitments. We
also widened
our
engagement coverage to
include the
highest-emitting companies across
our investment universe,
expanding the
range of sectors and geographies we cover.
We have also linked our climate engagement with our voting
actions. In this respect, we clarified our climate and
net-zero expectations
of companies
in our
policy framework.
In 2022,
we outlined
our criteria
for management
say-on-climate proposals. In 2023, we have further evaluated such proposals against the following six key factors:
climate
governance,
net-zero
ambition
and
targets,
quality
of
decarbonization
strategy,
net-zero
performance
alignment, lobbying and policy engagement,
and use of offsets.
›
Refer to the “Supporting opportunities” section of this report for more information about our active ownership
approach and climate engagement program
Collaborative engagement by UBS AG Asset
Management
UBS
AG
Asset
Management
is
a
co-lead
and
collaborative
investor
in
Climate
Action
100+,
engaging
with
companies on the initiative’s focus list that are key to driving the global net-zero emissions transition.
In 2023, we
joined,
and
have
been
participating
in
the
Institutional
Investors
Group
on
Climate
Change
(IIGCC)’s
Net
Zero
Engagement Initiative (NZEI), which was set up
to build on and extend
the reach of investor engagement beyond
the Climate
Action 100+
focus list.
This includes
a broader
spectrum of
companies that
are driving
demand for
fossil fuels due
to their business
activities. In 2023,
we were signatories
to a CDP
campaign encouraging
more than
2,000
companies
to
adopt
science-based
climate
targets,
and
co-signatories
to
two
investor-led
letters
to
policymakers encouraging the acceleration of decarbonization
goals at state-owned companies.
Sustainability Report 2023
| Environment
36
Annual disclosure by UBS AG Asset Management
UBS
completed
the
annual
CDP
disclosure
in
July
2023,
including
pertinent
information
about
UBS
AG
Asset
Management.
Since this
disclosure, UBS
AG Asset
Management has
made additional
progress against
our 2030
target as disclosed
above, expanding our
available net-zero product
shelf and further
increasing those
AuM that
are being managed in line with net-zero objectives.
We
also
participated
in
other
industry
and
disclosure
initiatives,
and
the
development
of
regional
best
practice
climate-related
guidance,
such
as
the
new
Swiss
Climate
Scores
(SCS).
UBS
was
part
of
the
working
group
developing
the
SCS,
an
initiative
conducted
by
the
Swiss
government
in
collaboration
with
industry
and
non-
governmental
organizations.
The
SCS
are
based
on
international
standards
and
aim
to
encourage
investment
decisions that contribute
to achieving the
global climate goals.
As the
largest financial institution
in Switzerland,
we are committed
to this transparency
milestone and
were the first
major bank
to launch
SCS reports
for 136
funds
(as of
31 December 2023). In
accordance with the
recommendations put forward
by the
government, our initial
focus is on equities
and fixed income funds
domiciled in Switzerland.
More funds and
products will follow
in 2024.
Available UBS SCS reports for funds can
be viewed on the UBS Quotes
data and information platform. For clients
interested in climate-related topics,
advisors can use the SCS to
demonstrate the climate compatibility
of products,
based on the latest international information
available.
›
Refer to
sif.admin.ch/swissclimatescores
for more information about SCS
›
Refer to
UBS quotes
for more information about UBS SCS reports for funds
Global Wealth Management
Global Wealth Management
is a distributor
of sustainable
investing solutions,
including climate
investing. While
we
recognize that
not every
investor might have
net-zero ambitions or
an affinity
for investing in
the transition to
a
low-carbon economy, we aim to provide a range of options
for private investors and family
offices to address their
own decarbonization
targets where
possible. We
do this
through
allocations to
climate-related
solutions in
our
discretionary mandates
where relevant,
as well
as by
curating climate investment
options for
advisory portfolios.
The focus on providing a
range of credible solutions is
complemented by building investor awareness and
driving
solutions innovation across asset
classes and strategies.
We also
continue to build an
understanding of how best
to integrate climate risk into portfolios.
Extending the range of investment options
and allocating capital
In 2023,
Global Wealth
Management continued
to increase
the number
of investment
solutions across
asset classes
and strategies to support clients’ decarbonization objectives.
We launched a low-carbon single equity module and
a sustainability-focused fund
of hedge funds
solution,
which includes allocation
to climate-focused equity
hedge
strategies, credit options for renewable infrastructure and a carbon markets strategy. We also extended our credit
research
coverage
of
individual
green
bonds,
expanding
the
available
universe
for
clients
who
prefer
direct
investments to fund solutions.
We work
closely with
our industry
partners on
developing new
sustainable solutions,
including those
aiming to
address decarbonization. We aim to identify relevant and
compelling investment opportunities and credible tools,
and to
support the
launch of
new solutions
where possible
and relevant
for client
portfolios. We
continue to
believe
that the transition to a
low-carbon economy requires an “all-of-the-above” approach where investments
in clean
energy
infrastructure
and
green
technologies
are
complemented
by
effective
and
credible
shareholder
and
bondholder
engagement
with
heavy
polluters
on
decarbonization.
As
such,
we
dedicate
a
portion
of
our
discretionary
portfolios
to
impactful
engagement
strategies,
including
those
that
invest
in
companies
with
the
objective of engaging on decarbonization.
Helping clients understand net zero
Our investment specialists provide
education and training to
advisors, clients and prospects
on various aspects of
sustainable investing
and how
to incorporate
these strategies
into portfolios.
These training
sessions include
general
education
and
discussions
around
decarbonization
and
climate
investing.
We
also
work
with
clients
that
are
interested in setting their own portfolio decarbonization targets or are exploring how to build exposure to carbon
markets.
In
addition
to
individual
client
meetings,
we
host
broader
client
events
on
specific
topics
including
decarbonization and climate investing. Our conversations emphasize that investing in the transition
is relevant not
just to investors who want to
drive positive environmental impact, but
rather to all investors, given the
importance
of climate change to business models and capital
markets.
Sustainability Report 2023
| Environment
37
We
also
incorporated
discussions
of
the
investment
relevance
of
climate
and
broader
sustainability
topics
in
publications
for
private
clients
throughout
2023.
We
provided
a
private
investor
perspective
on
emerging
investment opportunities
tied to
the low-carbon
transition, including
both regulatory
and voluntary
carbon markets.
Our
analysts continued
to cover
a
broad range
of longer-term
investment themes
with links
to
the low-carbon
transition, including within energy efficiency, energy transition, clean air and carbon reduction, smart mobility,
the
circular economy,
and the
food revolution.
Other topics
covered include
but were
not limited
to: climate-related
litigation and
regulation, investing in
(and the
role of)
oceans for
climate resilience, and
progress on
key climate
objectives. We activated this content
both internally and externally through
a variety of channels,
including video
content, social media campaigns, podcasts in
collaboration with industry partners, and an
active presence on our
webpage.
Engaging with the wider industry
As an
asset allocator, Global
Wealth Management
is an
active participant
in industry
forums to
help raise
awareness
of
the
needs
of
private
investors
and
family
offices
when
it
comes
to
climate-related
investing.
This
includes
feedback to
regulators on
climate-related transparency
and disclosures,
as well
as working
groups with
industry
peers, such
as within
Swiss Sustainable
Finance (SSF)
and the
Global Impact
Investing Network
(GIIN), and
engaging
with fund management partners.
We
continue
to
see
a
greater
focus
on,
and
demand
for,
transparency
and
disclosure
around
climate
and
decarbonization, and
we participate
in dialogue with
industry and
regulators on
these topics.
Given the importance
of transparency to private investors on new and emerging investment solutions around the low-carbon transition,
we collaborated and provided
inputs for the initial and
ongoing development of the
SCS. Since the introduction
of
the SCS,
we have
informed advisors
on the
content and
how to
deliver the
information to
clients that
are interested.
We also make the reports published
by UBS AG Asset Management and
third-party managers on our platform (if
available) available through
our UBS Quotes platform
– and we will
continue efforts to
make this information
more
easily accessible in
our digital environments.
We also published
our first Principal Adverse
Impacts report to
provide
transparency on offerings
for investors
at selected
UBS legal
entities within
the scope of
the Sustainable
Finance
Disclosure Regulation (SFDR), including key metrics
on the climate footprint of our investments.
2024 and beyond across our investing activities
Following the acquisition of the
Credit Suisse Group, we have
undertaken an extensive review of
our approaches
to setting
decarbonization targets,
to reflect
the activities
of the
combined organization
and evolving
standards and
methodologies.
Based
on
this
assessment,
we
will
deliver
a
revised
2030
target
in
2024,
which
will
cover
the
combined UBS and
Credit Suisse Asset
Management business. Consequently,
the Credit Suisse Climate
Action Plan
published in December 2022 will be withdrawn in its entirety in 2024. Additionally,
we are enhancing an in-house
framework post Credit Suisse integration that
delineates our key transition levers in investing.
›
Refer to “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for progress
made towards Credit Suisse’s target on reduction
of investment-associated emissions
Sustainability Report 2023
| Environment
38
Reducing our environmental impact
A key element of our commitment to contribute toward a lower-carbon future
is minimizing our own operational
footprint and supporting
our employees, clients,
suppliers and investors
in the
decarbonization of their
activities.
That is
why we aim
to report
accurately on
our efforts
to decrease
GHG emissions.
The environmental
areas we
focus on in particular are energy, water,
paper, waste and travel.
For 2023,
we are
disclosing the
environmental footprint
of the
joint operations
of UBS
Group, including
Credit
Suisse, unless otherwise
stated.
Due to the acquisition
of the Credit Suisse
Group, we have
reviewed our combined
portfolio and building
strategy which in turn
has affected the timeline
of our ongoing initiatives
across the regions.
A further significant challenge in
2023 was the alignment
of reporting methodologies for the
Group’s quantified
impact on the environment. While both entities had previously reported in line with the GHG Protocol,
there were
notable differences in the scopes, processes
and tools.
Environmental focus areas
Energy reduction and sustainable buildings
We enhanced
our efforts
to reduce
operational
energy
consumption
and optimize
our corporate
real estate
portfolio.
In
2023,
we
lowered
energy
consumption
1
by
8%
compared
with
2022.
Several
initiatives contributed
to
this
reduction,
for
example,
investing
in
more
sustainable
buildings
and
upgrading
existing
buildings
by
switching
to
energy-saving LED lamps
and modernizing heating systems and pumps.
We opted to disclose only renewable electricity in line with RE100 in this report as we are committed to achieving
100%
sourcing
according
to
this
high
standard
across
the
combined
group.
Due
to
the
increased
real
estate
portfolio
globally,
and
limited
supply
in
certain
markets,
we
were
able
to
procure
96%
renewable
electricity
according to RE100’s guidelines. Keeping with our high sustainability ambition, we will analyze a feasible timeline
for 100% RE100 compliance during 2024 and review our purchasing strategy to define acceptable quality criteria
on the way to full compliance.
In support of
the RE100 ambition,
we are increasing
our onsite electricity
production through
photovoltaic systems.
In
Switzerland,
we
expanded
the
existing
photovoltaic
installation
at
our
Wolfsberg
Conference
Center
and
increased our
panel
coverage on
another
building to
generate an
additional annual
122
MWh
and
123 MWh,
respectively. We are in
the process of increasing
the number of power
purchase agreements (PPAs) in Asia
Pacific
and are in advanced discussions about virtual
power purchase agreements (vPPA) in the
Americas.
In 2023, we achieved certifications for multiple locations across
our global operations,
aligned with internationally
renowned green-building standards.
Two of our offices in Shenzhen,
China, attained the
Leadership in Energy and
Environmental
Design
(
LEED)
Platinum
certification
in
2023,
while
our
office
in
New
Jersey
received
the
WELL
Platinum certification. In Hong Kong SAR, all offices
received accreditation from the Hong Kong
Quality Assurance
Agency for Green Banking
Practices in Office Operations,
making us the first international
bank in the city to reach
this milestone.
Elsewhere in
Asia Pacific,
we designed
and fully
implemented a
new internal
benchmark to
rate
potential real estate options based on
their environmental impact and sustainability. This benchmark was built
on
foundations from
international standards,
such as
LEED and
the Building
Research Establishment
Environmental
Assessment Method (BREEAM) and Green Mark.
Reducing waste, paper and water
In 2023,
we reduced
our landfill
waste by
21% compared
with 2022,
resulting in
a decrease
of approximately
546
metric tons globally. Our efforts regarding waste
center on reducing overall waste and
improving recycling rates. We
implemented
various
solutions, including
composting organic
and
commercially
compostable
materials
to generate
energy and other by-products. Simultaneously, we upgraded
our recycling facilities while concurrently optimizing
the
recycling process for furniture and the use of paper hand towels. In our efforts to achieve our ambition of zero waste
to landfill,
we rolled
out a
pilot program
for one
site in
each region
and also
eliminated takeaway
packaging at
selected
locations. Despite these efforts, we have seen a waste increase per full-time equivalent of 16% compared with
2022.
During 2024
we will
identify measures
to help
break this
trend. In
light of
the integration
of Credit
Suisse, we
will
review our efforts and targets
for waste across our combined
real estate portfolio. UBS
Group works with third parties
to
manage
the
waste
generated
by
our
organization.
Our
ISO
14001
environmental
management
program
and
additional contract spot checks
ensure that our waste
management partners operate in
accordance with contractual
and legislative obligations.
1
Includes all energy consumption reported for
UBS Group
Sustainability Report 2023
| Environment
39
Paper consumption per full-time
employee increased by 27%
compared with 2022,
despite the launch of
several
awareness campaigns with our
employees and our ongoing
efforts to reduce the
number of printers in our
offices.
Of the total amount of paper used, 65% was
either sourced as recycled or was certified
by the Forest Stewardship
Council
or
equivalent
labels.
These
measures
help
reduce
the
environmental
impacts
associated
with
paper
production and manufacturing processes,
such as deforestation or energy usage.
Water conservation is
a critical priority,
its importance being
amplified by severe
droughts and global
water scarcity.
To enhance
water efficiency
in our
facilities we
expanded our
office’s environmental
programs,
for example,
by
monitoring water use and
optimizing flushing times and
overflow management.
Whilst implementing measures
to
the contrary,
we currently
see an
increase in
water use
by 17%
compared to
2022. This
is part
of the
rebound effect
from the pandemic years when water consumption
dropped to a minimum.
Travel
In our ongoing commitment
to advance sustainability
in business travel, we
focused our efforts on three key
areas:
–
Strengthening
our
reporting
with
the
enhanced
carbon
intensity
metrics,
thereby
providing
comprehensive
insights into travel-related emissions, both before
and after trips, to measure and manage our
travel footprint.
–
Updating
our
travel
policy
to
encourage
employees
to
opt
for
eco-friendly
transportation
options
whenever
possible.
In
addition,
strengthening
our
partnerships
with
hotels
that
have
embraced
sustainable
practices,
marking them prominently with green flags at the point of
sale to help our staff make informed
and conscious
choices.
–
Continuing to
purchase high-quality carbon
offsets that
correspond with
100% of
our air-travel
emissions for
UBS Group excluding Credit Suisse.
Biodiversity
We have taken steps
to protect biodiversity across
our offices, mitigate the
impact of our
operations on nature and
raise awareness
among our
staff. For
example, installing
green roofs
at selected
office locations,
combined with
employee volunteering activities, such as Clean-Up Day and a program
to highlight the critical role of
bees to our
natural ecosystem,
served to shine a spotlight on the critical
role of biodiversity.
›
Refer to the “Appendix 2 – Environment” in the appendices to this report for more information on our approach to
nature
Impacts from our value chain
In addition
to supplier
engagement, we
also worked
to quantify
and manage
our relevant
scope 3
emissions related
to our operations.
While further
work is required, we
are already providing
increased transparency on
these efforts.
›
Refer to “Monitoring the environmental impact of our supply chain” below and to the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information
Our environmental management system
All UBS
Group excluding
Credit Suisse’s
environmental activities,
including the
entire scope
of products,
services
and in-house
operations, are
subject to
our environmental management
system (EMS),
which we
run in
accordance
with ISO 14001:2015. UBS Group excluding Credit Suisse and Credit Suisse separately successfully passed the ISO
14001 audits every
year since implementation,
including in 2023.
In the
EU and the
UK, our
activities (excluding
those
of
Credit
Suisse)
are
certified
according
to
the
ISO
50001:2018
energy
management
system
standard.
Information on our GHG emissions and underlying information (energy, water,
paper, waste, recycling
and travel)
is also included
in our yearly
GHG emissions report
prepared in
accordance with the
ISO14064 1:2018 standard.
This report is subject
to yearly external
verification in accordance
with the ISAE 3410
standard and also considering
the ISO 14064 3:2019 standard.
These
sets of
extensive audit
standards ensure
the appropriate
policies and
processes are
in
place, both
for the
management
of
environmental
and
energy
topics
within
our
operations
and
for
affirming
their
daily
implementation.
Sustainability Report 2023
| Environment
40
Use of carbon offsets and carbon removal credits
During
the
transition
towards
our
decarbonization
goals
and
as
part
of
our
beyond-value-chain mitigation
we
continue to
purchase high-quality
carbon offsets
at an
equivalent volume
to match
our net scope
1 and 2
emissions
from our
own operations,
as well
as our
scope 3
air-travel
emissions. These
are verified
against either
the Gold
Standard,
or
Verra
VCS
plus
the
Climate,
Community
and
Biodiversity
Standard
which
certifies
the
additional
contribution to
Sustainable Development
Goals (the
SDGs) beyond
the carbon
impact. In
addition, our
carbon offset
commitments undergo internal quality
checks with our Sustainability and Climate
Risk unit.
In 2023,
for UBS
Group excluding Credit
Suisse, we continued
to apply
an internal carbon
price of
USD 400 per
metric
ton
for
scope
1
and
2
emissions
in
our
capital
investment
business
cases
in
order
to
incentivize carbon
reductions - for
example by replacing fossil-fuel
heating systems. The cost
reflects the blended mix
of permanent
carbon
removals
required
to
neutralize
any
residual
emissions
that
cannot
be
otherwise
abated.
We
continued
working
with
our
partners
Climeworks, Neustark
and
NextGen
to
support
their
efforts
to
provide
scalable and
effective solutions in the market and expect to
start receiving the first carbon removal credit
deliveries in 2025.
Environmental targets and performance in our operations (UBS Group)
1
GRI
2
2023
Target
2025
Baseline
3
% change
from baseline
Progress /
Achievement
4
2022
2021
Total net greenhouse gas emissions (GHG footprint) in t CO
2
e
5
305
168,688
n/a
6
359,360
-53
green
169,144
133,243
Scope 1 and net scope 2 greenhouse gas emissions
in t CO
2
e
305
48,522
0
145,911
-67
amber
61,627
59,889
Energy consumption in GWh
302
797
-15%
1,064
-25
green
866
899
Share of renewable electricity
302
95.6%
100%
76.6%
25
green
91.1%
92.3%
Paper consumption in kg per FTE
7
301
34.1
-50%
54.9
-38
amber
26.9
35.9
Share of recycled and FSC paper
301
65.1%
100%
63%
3
amber
52.7%
61.2%
Waste in kg per FTE
7
306
77.1
-10%
133.5
-42
green
66.3
69.3
Zero waste to landfill
8
306
21.4%
0%
31.6%
-32
amber
30.5%
22.2%
Waste recycling ratio
306
57.7%
60%
50%
15
amber
52.2%
61.5%
Water consumption in m m³
303
1.22
-5%
1.33
-8
green
1.04
0.84
Legend: CO
2
e = CO
2
equivalents; FTE = full-time employee; GWh = gigawatt hour; kWh = kilowatt hour; km = kilometer; kg = kilogram;
m m³ = million cubic meters; t = metric ton
1
Detailed environmental
indicators are
available at
www.ubs.com/environment
. Reporting
period 2023
(1 January
2023 -
31 December
2023).
2
Reference to
GRI Sustainability
Reporting Standards (see also
www.globalreporting.org
).
3
Baseline year 2019.
4
Green: on track; Amber: improvements required.
5
GHG footprint equals gross GHG emissions
minus GHG reductions from renewable energy (gross GHG emissions include:
direct GHG emissions by UBS Group; indirect GHG emissions associated with the generation
of imported
/ purchased electricity (grid average emission factor), heat or steam and other indirect GHG emissions associated
with business travel, paper consumption and waste disposal).
6
Net-
zero target 2050.
7
Non-significant deviations due to summing and
rounding may occur.
8
FTEs are calculated on monthly / quarterly
average basis as applicable and include FTEs
which were employed through third parties on short-term contracts.
9
In locations where UBS Group has influence and where alternatives are available.
Sustainability Report 2023
| Environment
41
Engaging in sustainable technology
The
Group-wide
Sustainable
Technology
Guild
(the
STG)
aims
to
raise
awareness
of
sustainable
technology
initiatives among
our technology
teams and
accelerate the
execution of
strategic plans
that will
have a
positive
environmental
impact
through
technology
optimization.
The
STG
also
contributes
by
rethinking
ways
that
we
develop and deploy applications, store data and manage our infrastructure. The STG remains primarily
focused on
energy consumption
by the
UBS technology
estate, in
addition to
e-waste and
use of
precious
metals. The
STG
achieved major milestones in 2023:
–
50% energy savings from UBS Workspace migration;
–
50% energy savings resulting from Azure Kubernetes
Service (AKS) optimization in Group Finance;
and
–
Sustainable Fundamental training completed
by over 1,000 staff UBS Certified Engineers.
The STG has focused on four distinct tracks,
all of which are sponsored by our senior management:
–
optimization of our
on-premises technology estate to
support more energy-efficient
consumption, by ongoing
decommissioning
of
unused
and
power-intense
technology
components,
as
well
as
changes
to
hours
of
operation;
–
application development
with sustainability
in mind,
achieved by
providing transparency,
using near
real-time
metrics, to application owners about the environmental
impact of their applications;
–
execution of our
Cloud First strategy
and continuous adoption
of our primary strategic
Cloud partner, Microsoft;
–
running internal
campaigns to
encourage employees
in archive
management of
the applications
and systems
that they are accountable for; and
–
building sustainable technology knowledge
through focused training.
Heading into 2024, the STG will also focus on:
–
continuing to raise
awareness through a
refreshed and re-launched
campaign to all
UBS Group technology
staff;
–
taking
a
structured approach
to
identifying
and
implementing energy
saving initiatives
using
public
cloud to
target cost and energy savings, modelled on the
FinOps approach, also known as
‘GreenOps’; and
–
a renewed focus on Measurement & Tooling,
based on lessons learned in this area.
Across all these
initiatives, we continue
to upgrade our
technology infrastructure with
newer and more
efficient,
market-leading
infrastructure
and
technology
vendors,
moving
some
technology
platform
workloads
from
on-
premises and
private cloud
servers to Microsoft
Azure.
In some specific
use cases,
this has yielded
energy reductions
of up to 30%. This
year, our technology
sustainability partnership with
Microsoft has continued
to strengthen with
executive briefings and workshops conducted
to discuss areas of collaboration and paths
forward.
We are
a Steering
Member of
the Green
Software Foundation
(GSF) and
continue to
partner closely
with other
member organizations on
a number
of open-source projects
that are
exploring ways of
reducing emissions from
large technology
estates. In
2023, GSF
attained the
ISO accreditation
of the
Software Carbon
Intensity Specification
(SCI) – a measure of software-related energy usage
that was trialed on two applications at
UBS.
Sustainability Report 2023
| Environment
42
Monitoring the environmental impact of our supply
chain
In line with our net-zero ambition, we are strengthening sustainable
practices and engaging
with our suppliers on climate information disclosures to create
transparency and
commitment to reducing GHG emissions within our supply
chain.
In
2023,
we
invited
440
vendors,
which
accounted
for
67%
of
our
annual
vendor
spend,
to
disclose
their
environmental performance through CDP’s Supply Chain Program. We
implemented a structured communication
plan and conducted
webinars to
guide our vendors
through the disclosure
process and
requirements to
ensure they
understood the need for, and importance of, declaring their emissions and committing to their own 2050-aligned
net-zero goals.
70%
of
the
invited
vendors completed
their
climate
disclosures
via
the
CDP
platform.
The
number
of
vendors
completing disclosures increased by 74% from 176
in 2022 to 307 in 2023.
We have also established a baseline for supply chain vendor scope 3 emissions (categories
1 and 2 vendor-related)
of 1.13 million metric tons of CO
2
e for financial year 2023.
We identified GHG
key vendors
(defined
by us as
those vendors that
collectively account for
more than 50%
of our
estimated vendor GHG emissions) in order
to focus our efforts on the highest-impact
vendors.
In 2023, we revised
and updated the
list of GHG
key vendors from
83 to 95
to include Credit
Suisse vendors. We
are engaging with
our GHG key
vendors, for 100%
of them to
declare their emissions
and set net
zero-aligned goals by
2026, and
reduce their
scope 1
and 2
emissions in
line with
net-zero trajectories
by 2035
1
. We
met with
all
our GHG
key
vendors,
shared
formal
guidance
through
our
vendor
climate
information
declaration
guideline
and
developed
tailored engagement plans, based on the vendor’s maturity. In 2023, 65% of our GHG key vendors declared their
emissions on CDP and also set 2050-aligned
net-zero goals.
1
In 2024, we may review our targets for GHG key vendors for the combined
organization and alignment with latest guidance.
Our GHG key vendors are those
vendors that collectively account for more than 50%
of our estimated vendor GHG emissions.
Sustainability Report 2023
| Environment
43
Initiating focused
emissions-reduction initiatives,
we partnered
with vendors
that provide
services from
offshore
development centers
(ODCs) to
foster responsible
and sustainable
practices in
those facilities.
Our approach
is based
on proactive
engagement with
these vendors
to reduce
their environmental
impact. To
ensure transparency
and
accountability, we have established contractual agreements with six of our ODC vendors to disclose their scope 1,
2 and 3 emissions and commit to achieving net zero by 2050. In addition, we have established
three categories of
supplementary
requirements
for
these
ODC
vendors:
energy
efficiency,
waste
management
and
paper
consumption.
Our requirements include LEED Gold
certification (or equivalent) for any
new premises, a transition
to 100% renewable electricity by
2030, waste recycling goals and
a commitment to use sustainable paper. These
will be rolled out to Credit Suisse ODC vendors
in 2024 and 2025.
We also collaborated with one of our IT software development services providers to train up 76% of this vendor’s
software engineers
who are
engaged in
providing services
to us
on GSF
certification. The
training serves
as a
catalyst
for software
developers to
learn environmentally-conscious
coding practices,
which in
turn accelerates
the reduction
of carbon
emissions from
software. By
providing developers
with specialized
knowledge and
skills in
sustainable
software
development,
they
are
empowered
to
create
code
for
UBS
that
is
inherently
energy-efficient
and
environmentally responsible.
›
Refer to our vendor climate information declaration guideline, available at
ubs.com/suppliers
›
Refer to the “Supplement to Environment” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for more information on methodologies applied
Sustainability Report 2023
| Environment
44
Managing the risks of climate change to our business
We define sustainability and
climate risk as the risk that
UBS negatively impacts, or is
impacted by, climate change,
natural capital,
human rights,
and other
environmental, social
and governance
(ESG) matters.
Sustainability and
climate risks may
manifest as credit,
market, liquidity business
and non-financial risks
for UBS, resulting
in potential
adverse financial, liability and
reputational impacts. We manage
sustainability and climate risk
within a dedicated
risk management
framework. In
2023 we worked
to revise this
framework and
our processes
across UBS,
following
the acquisition of the Credit Suisse Group AG.
›
Refer to the “Managing sustainability and climate risks” section of this report for further details
Sustainability Report 2023
| Social
45
Social
People and culture make the difference
Driving sustainable performance
We are dedicated to being
a world-class employer and a
place where people can unlock
their full potential. With
more
than
115,000
employees
working
in
52
countries,
our
global
presence,
expertise
and
range
of
business
activities help us to make a positive difference
for our clients, colleagues and communities.
Our employees execute
our business strategy
and deliver the
products and services
our clients need. This
is why we
invest
in
our
people,
aiming
to
attract,
develop
and
retain
employees
with
the
diverse
skills,
capabilities,
backgrounds and experiences that can enable us to
achieve our goals.
Good corporate citizenship
principles are embedded
into our employment
practices, for
example in the
benefits we
offer, our fair
pay practices, and
our commitment to
increase
our workforce diversity.
As a founding
member of the
World
Economic
Forum’s
Good
Work
Framework,
we
partner
with
like-minded
companies
to
develop
and
implement metrics that support high-quality
work worldwide.
›
Refer to “Driving social impact” in this section for information about our community impact and employee
volunteering activities
As part of the integration of Credit Suisse, we examined
our people management landscape. Our analysis
showed
that nearly
all of
Credit Suisse’s workforce
and demographic data
is compatible
with ours,
allowing us
to report
consolidated figures
in this
report, unless
otherwise stated.
We are
particularly focused
on the
alignment of any
outlying people-related frameworks, policies,
programs, processes and data.
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more information about
our workforce
Sustainability Report 2023
| Social
46
The three keys and our corporate culture
Our culture
is the
foundation of
our identity,
and it
defines how
we work
together every
day. It
is based
on our
three
keys
to
success:
our
Pillars,
Principles
and
Behaviors.
These
keys
drive
our
business
decisions
and
people
management processes.
In the second
half of 2023,
familiarizing our
new colleagues
with our three
keys to
success
and building a
unified culture across our
combined organization
were top priorities.
To support this process,
during
2023, we
established a
forum to
focus on
culture integration
which is
chaired by
the Head
Group Human
Resources
and Group Corporates Services and composed of senior
management representatives and select external advisors,
to oversee culture integration across our firm.
›
Refer to the “Governance” section of this report for more information on key governance bodies pertaining to ESG
matters
Culture-building behavior
is promoted
through a
number of
Group-wide, divisional
and regional
initiatives. One
example is
Three
Keys on
Air.
In
2023,
this
Group-wide series
highlighted key
aspects of
our
culture,
including
maximizing
performance,
psychological
safety
in
high-performing
teams,
and
improving
risk
management.
In
addition, the
Group Franchise Awards (GFA)
program recognized employees for cross-divisional collaboration and
suggesting innovative
or simplification
ideas. In
2023, more
than 1,800
ideas were
submitted for
consideration.
The
global
peer-to-peer
appreciation
program
(called
Kudos)
makes
it
easy
for
employees
to
recognize
and
appreciate their colleagues’
above-and-beyond behavior,
serving to promote excellence and increase engagement
and
employee
satisfaction.
In
2023,
our
employees
gave
nearly
439,000
Kudos
recognitions.
Credit
Suisse
employees participated in Recognizing and Valuing Excellence (RAVE), a similar peer-to-peer recognition program.
The GFA program and Kudos will be rolled out
to the entire organization starting in 2024.
›
Refer to
ubs.com/global/en/our-firm/our-culture.html
for details about our three keys to success
Hiring, developing and retaining talent
How effectively we attract, develop and retain a talented workforce is reflected in our long-term success.
In 2023,
we hired a
total of 11,435 external candidates across the
Group, and developed more
than 3,720 graduates and
other
trainees,
apprentices
and
interns
in
programs
around
the
world.
The
combined
organization
is
a
major
apprenticeship provider in
Switzerland, and
we actively
promote multi-year
apprenticeship programs in
Switzerland
and the UK, along with summer internship programs and work-study programs in the
US, EMEA, Asia Pacific and
Switzerland.
›
Refer to the Supplement to the UBS Group Sustainability Report 2023 or to
ubs.com/global/en/careers/awards.html
for employer ratings and recognitions
We are committed to hybrid-working options wherever possible. In 2023, most of
our employees were eligible to
work
partially
from
home, depending
on
their
role,
regulatory
restrictions
and
location,
as
well
as
divisional or
functional requirements. Pre-acquisition
UBS and
Credit Suisse
Group already had
similar programs in
place, and
these will be
aligned over the course
of the integration. For
those with hybrid-working arrangements, regular
in-
office days promote team building, collaboration and a sense of belonging,
all of which are key to integrating our
businesses and shaping
a unified
identity and culture.
Hybrid-working arrangements, along
with options such
as
flexible locations or hours, part-time
working, job sharing and partial
retirement help employees thrive
throughout
their careers, while
attracting a wider
range of candidates
and making us
an even more
adaptive and responsive
company.
Talent management
We take a systematic approach to talent management. Annual talent and succession reviews help ensure
that we
have strong talent pipelines and
succession plans. We aim to
create a culture of
cross-divisional and international
mobility for
early-career talent,
mid-career professionals
and senior
leaders. Group-wide
talent programs
are offered
across the
organization,
and supplemented by
specific programs in
the business divisions,
functions and regions.
Programs
range
from
those
targeting
senior
leaders
to
junior
talent,
in
addition
to
those
open
to
women
and
employees
from
diverse
backgrounds.
To
support
line
managers,
we
offer
targeted
development
for
new
line
managers and those who
want to improve on various
aspects. Regular leadership events
align business heads with
our strategy and further our corporate and
cultural integration.
Internal mobility
is a
key component
of talent
management, with
line managers
expected to
support individual
development and job mobility. In 2023, we filled many of our roles
with internal candidates
1
– 38.8% of all hires,
40.5% of all female hires, 30.9% of UK ethnic
minorities hires and 31.4% of US
ethnic minority hires.
1
Internal candidates
refers only
to UBS and
Credit Suisse employees
moving internally.
Credit Suisse
employees moving to
UBS are not
considered to
be internal
mobility but rather external hires.
Sustainability Report 2023
| Social
47
Employees
can
explore
career
paths,
search
for
jobs
and
short-term
rotation
opportunities,
and
connect
with
mentors on our Career Navigator platform. In 2023, more than 44,000 employees of UBS Group excluding Credit
Suisse accessed
our internal
job board,
313 participated
in a
short-term rotation
opportunity, and
1,056 participated
in mentoring relationships.
Credit Suisse employees
are expected to
have full Career
Navigator access during
2024.
We deliver internal training and development via our
UBS University
platform. Our offering includes client advisor
certification
and
regulatory,
business,
and
line
manager
training,
alongside
modules
on
topics
such
as
culture,
sustainable finance, data literacy, and well-being. In addition,
our learning experience platform makes AI-powered
training recommendations
based on
an employee’s
needs and
interests. Credit
Suisse employees
transitioned to
the
UBS University
platform in January 2024. UBS Group excluding Credit Suisse invested approximately
USD 92.7
million in
training in
2023, with
permanent (UBS
Group) employees
completing more
than
2.3 million
learning
activities (including
mandatory training
on compliance,
business, and
other topics).
This was
an average
of 1.91
training days per employee.
Performance management
Our
performance management
approach
reflects
our
strategy
and
supports
our
high-performance culture.
The
Objective-setting process fosters accountability with objectives
focused on outcomes to align
the organization on
what
matters
most.
To
support
appropriate
management
of
risks
and
a
strong
and
proactive
risk
culture,
all
employees
set
a
risk-related
objective.
Further,
we
consider
both
performance-
and
behavior-related
objectives
because we value
not only “what” an
employee accomplishes
but also “how”
they accomplish it
and demonstrate
our behaviors – accountability with integrity, collaboration, and innovation.
An embedded Feedback
app allows employees
to easily give
and receive feedback
in real time throughout
the year,
supporting continuous improvement. We counted more than 296,330 instances of feedback
across the combined
organization by the end of 2023, and 100%
of eligible employees received a performance
review for the year.
Self-
and
line
manager
reviews,
along
with
additional
management
discussions
to
validate
performance,
help
support fair and transparent
decision-making. Line managers play
a key role in the quality
of our approach and
are
ultimately responsible for year-end performance
decisions. Leaders at all levels are also expected
to role-model our
House
View
on
Leadership.
Its
principles
are
integrated
into
all
of
our
core
HR
processes,
including
hiring,
performance management, training, succession
planning, and promotions.
For
2023
year-end, we
ran a
combined
fully integrated
performance management
approach for
all
employees,
including our
Credit Suisse
colleagues. Supporting
a one-bank
employee experience
helps all
employees understand
what matters most to drive a sustainable high-performance culture. The completion of our year-end approach is a
significant milestone for our organization
and a success that accelerates our cultural
integration journey.
Employee engagement
Our
employees
want
to
be
heard
and
are
involved
in
shaping
their
daily
experience.
As
such,
we
provide
opportunities
throughout the
year for
them to
share their
views and
to connect
with management
on topics
ranging
from strategy and engagement to the work environment.
In 2023,
we conducted
employee lifecycle
surveys, in-depth
analyses of
specific business
issues, and
“pulse” surveys
to learn
about employees’
views and
concerns. One
such pulse
survey, conducted
across the
combined organization
in
November
2023,
showed
high
levels
of
psychological
safety,
respect,
collaboration
and
empowerment.
In
particular, 87% of
respondents reported experiencing a
professional and respectful work
environment, and 83%
reported that their function
collaborates well with different areas.
Further, 77% of respondents
felt empowered to
make decisions
and
86% felt
able
to speak
up
and raise
concerns
2
. All
of these
results
are
above the
financial
services benchmark
3
.
Employee feedback
in 2023 also
included virtual
focus-group sessions
with more
than 5,000 participants
across the
combined organization. Those conversations, along with feedback received
through our internal communications
channels and
various events,
allowed employees
to
share their
perspective and
insights on
the integration,
and
provided employee sentiment data points to
track progress.
2
Result shown is
the sum of “strongly
agree” and “agree” scale.
Questions: 1) In my
business division or
function, we provide
a professional and
respectful work
environment, 2) Where I work, we
collaborate well with different areas,
3) I'm empowered to
make appropriate decisions in
my job and 4) I am
able to speak up
and raise concerns if I see things I consider
to be wrong
3
Benchmarks provided by Ipsos Karian and Box
as of Q3 2023
Sustainability Report 2023
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48
In addition, a dedicated online integration hub, accessible
to both UBS and Credit Suisse employees from the date
of
the
legal
close,
enabled
us
to
communicate
key
strategic,
organizational
and
operational
decisions
and
information, and
to start
building a
unified identity
and culture.
Initiatives like
our regular
“Ask the
CEO” event
gave employees the chance to learn about (and
ask questions on) topics such as strategy
and direction.
Employee representation
In
addition
to
seeking
out
employee
feedback,
we
maintain
an
open
dialogue
with
our
formal
employee
representation groups. We have European works councils representing 17 countries and consider topics related to
our performance and operations. Local works councils (such as the UBS Employee Representation Committee and
the Credit
Suisse Staff
Council in
Switzerland) discuss
benefits, workplace
conditions and
redundancies, among
other topics. Collectively, these groups represent approximately 51.5%
of our global workforce.
Where applicable, our operations are subject to collective bargaining agreements (CBA). Benefits are aligned with
local markets and often go beyond legal requirements
or market practice.
Fair and equitable pay
Fair
and
consistent
pay
practices
are
designed
to
ensure
that
employees
are
appropriately
rewarded
for
their
contribution. We pay for performance, and
we take pay equity seriously.
We have embedded clear commitments
in our global compensation
policies and practices.
We regularly conduct internal
reviews and independent external
audits on
pay equity, and
our statistical
analyses show
a differential between
men and
women in
similar roles
across
our major locations of less than 1%.
In 2020,
we completed
an equal
pay analysis
in Switzerland,
as required
by the
Swiss Federal
Act on
Gender Equality.
The results
confirmed that
we are
fully compliant
with Swiss
equal pay
standards. Beginning
in 2020,
Pre-acquisition
UBS was
certified (through
2023) by
the EQUAL-SALARY
Foundation
4
for our
HR practices,
including compensation,
in
Switzerland,
the
US,
UK,
the
Hong
Kong
SAR
and
Singapore,
covering
more
than
two-thirds
of
our
global
employee population.
All of our HR policies are
global, and we apply the
same standards across all
locations. Furthermore, we review
our
approach and policies
annually to support
our continuous improvement.
In 2023, we
fully integrated former
Credit
Suisse Group
employees into
all of
our fair
pay practices
and continued
to monitor
and improve
our pay
equity
position in our leading countries.
We also aim to
ensure that all employees
are paid at least
a living wage
5
. We regularly assess employees’
salaries
against local living wages,
using benchmarks defined
by the Fair Wage Network.
Our analysis in 2023
showed that
employees’ salaries were at or above the respective
benchmarks.
›
Refer to our UBS Compensation Report 2023 at
ubs.com/annualreporting
and to
ubs.com/diversity
for our 2023 UK
Gender & Ethnicity Pay Gap report
Environmental, social and governance (ESG)
objectives in the compensation process
Our compensation
determination process
considers ESG
objectives in
objective-setting, performance award
pool
funding,
performance
evaluation
and
individual
compensation
decisions.
ESG-related
objectives
have
been
embedded
in
our
Pillars
and
Principles
since
they
were
established
in
2011.
In
2021,
we
introduced
explicit
sustainability objectives in
the non-financial category
of the Group CEO
and GEB performance
scorecards. In 2023,
we
further
enhanced
the
GEB
performance
scorecard
framework
by
establishing
separate
Environmental
&
Sustainability and
People &
Governance categories.
The objectives
in these
categories are
linked to
our sustainability
priorities,
and
their
progress
is
measured
via
robust
quantitative
metrics
and
qualitative
criteria.
Sustainability
objectives are assessed
for each
GEB member
on an
individual basis,
directly impacting
their respective
performance
assessments and compensation decisions.
The determination of the Group performance award pool funding
also takes into account ESG factors. Aside from
financial performance,
an assessment
of progress
is made
against objectives
linked to
our focus
areas of
Planet
(including climate-related
goals), People
(including progress
made against
our diversity
aspirations) and
Partnerships,
alongside other key non-financial considerations.
4
For more information on the gender certification,
refer to the
EQUAL-SALARY Foundation website
5
Excluding our US financial advisor staff (as their
compensation is primarily based on a formulaic
approach).
Sustainability Report 2023
| Social
49
Therefore,
ESG
is
taken
into
consideration
when
the
Board
of
Directors’
Compensation
Committee
assesses
performance and compensation
for GEB members.
Additionally, the assessment
impacts the
overall performance
award pool for the Group. Going forward, we will continue to review and refine the role of ESG considerations in
our performance
and compensation
framework to
ensure they
remain aligned
to our
strategic priorities
and the
sustainable growth of shareholder value.
›
Refer to “GEB performance assessments”
in the UBS Compensation Report 2023 for more information
›
Refer to “Our focus on sustainability and climate,” “Employees,” and “Social impact” in our UBS Group Annual
Report 2023 available on
ubs.com/annualreport
for more information
›
Refer to
ubs.com/sustainability-reporting
for more information about ESG-related topics
Employee support
We are committed to being a responsible employer, and that includes supporting our employees’ health and well-
being. Social, physical, mental and
financial well-being elements are woven
into our HR policies
and practices, as
well as
into employee-focused initiatives to
increase awareness
and educate employees
on how
to improve
their
well-being. Supporting employee health and well-being remained a priority in 2023. Resources to support holistic
well-being
included
a
range
of
programs,
benefits
and
workplace
resources,
along
with
a
bespoke
eLearning
curriculum that aimed
at helping our
employees manage their
health, foster well-being,
strengthen their resilience,
and support the sustainability of the organization. For example, in
the first part of 2023, UBS became a
founding
partner of #WorkingWithCancer to improve our support
for employees impacted by cancer.
During the second half of
2023, we focused on helping
our employees across the
combined organization adapt to
changes related to the integration of Credit
Suisse.
In this context, we expanded our offering
to include guidelines
and instructor-led
sessions on
managing organizational
change, uncertainty,
and resilience.
Credit Suisse
employees
also had access to holistic personal health
coaching support.
Benefits and assistance
All
our
employees
have
access
to
competitive
benefits, such
as
healthcare,
well-being and
retirement
benefits,
insurance (such as
life and disability
insurance), and flexible
leave policies. Benefits
are set
in the
context of local
market practice and are regularly reviewed for competitiveness.
Employee assistance programs and internal
teams help employees and
their family members manage personal
or
work-related issues
that may
affect their
well-being.
UBS Group
excluding Credit
Suisse’s absentee
rate in
2023
was 1.9% globally and Credit Suisse’s absentee rate was 2.3% in Switzerland
6
of total scheduled days, according
to the number of illness or accident absences
recorded in the respective self-service HR tools.
In 2023,
we announced
that the
social plans
or severance
payments at
UBS and
Credit Suisse
in the
respective
countries will be
aligned to ensure
that all employees
are treated equally.
The terms of
the social plans
or severance
payments are harmonized according to a
“best of both” principle to support employees
affected by redundancy
7
.
Should business or
organizational circumstances arise that
lead to
employee redundancy, we
offer redeployment
and outplacement services with a
key focus on redeployment
within UBS and we
have significantly increased the
budget
for
education
and
training
in
all
business
divisions
and
regions.
Those
services
are
designed
to
help
employees find
new internal
roles or
to transition
out of
UBS. We
believe that
these measures
help skilled
employees
who
are
affected
by
restructuring
to
position
themselves
favorably
on
the
labor
market
within
or
outside
the
financial services industry. Additionally, employees considering retirement have access to various resources to help
prepare them for this transition, including access
to educational sessions and individual
assistance.
›
Refer to the Supplement to the UBS Group Sustainability Report 2023 for UBS’s health and safety statement
›
Refer to
ubs.com/employees
for more information about benefits and assistance
Equal opportunities and whistleblowing
Building
a
high-performing
and
inclusive
workplace
includes
providing
equitable
access
to
employment
and
advancement opportunities. We
are an
equal opportunity employer,
and our policies
do not tolerate
harassment
of any kind.
We have measures
in place to
prevent bullying, victimization, harassment,
and retaliation, as well
as
anti-harassment representatives who independently review relevant training,
policies and protocols.
6
Credit Suisse does not currently and has
not in the past reported absenteeism globally,
as Credit Suisse’s systems capture this
data on a regional rather than
global level and definitions between regions differ, impacting the accuracy of
a global number.
7
Due to local legal or consultation requirements,
in five countries alignment remains in progress
Sustainability Report 2023
| Social
50
Our policies encourage employees
to raise concerns
openly and to
report any potential violations
of our Code
of
Conduct
and
Ethics
(the
Code).
Group-wide,
staff
have
multiple
ways
(including
confidential
whistleblowing
hotlines
and
online
applications
that
offer
anonymity)
to
raise
concerns
about
any
suspected
breach
of
laws,
regulations, rules
or other
legal requirements,
policies, sexual
misconduct or
harassment, or
any violation
of the
Code. We do
not tolerate any
form of retaliation
against any employee
who reports
a concern that
they reasonably
believe is a breach or violation.
Diversity, equity and inclusion
At
UBS, we
aim to
build a
culture of
belonging, where
employees from
all backgrounds
and identities
can feel
recognized and valued, and where everyone can unlock their full potential. To succeed, we need to enable UBS to
deliver the greatest possible impact for our stakeholders – both external (our clients,
our communities and society,
and our
suppliers) and
internal (our
employees). Our
employee diversity,
equity and
inclusion (DE&I)
8
strategy is
built
on
four pillars:
how we
hold ourselves
accountable, how
we hire,
how we
develop talent
and
how we
build
a
culture of
belonging. We leverage
all four pillars
as we move
toward achieving our
ambitious gender and
ethnic
diversity aspirations,
disability integration and in creating an inclusive
culture for all.
›
Refer to the “Supporting opportunities” section of this report for more information about our clients
›
Refer to the “Driving social impact” section of this report for more information on the topic of community and
society
›
Refer to the “Managing our supply chain responsibly”
section of this report for more information about our
suppliers
Accountable
Our accountability framework
embodies the oversight
of the GEB
and its commitment
to achieving our
aspirational
goals,
along
with
empowering
leaders
to
drive
our
DE&I
strategy
forward.
We
use
data
monitoring,
fair
pay
practices, management dashboards,
and toolkits to support accountability.
All GEB members and their leadership
teams are evaluated on
their efforts toward achieving our
aspirations.
Furthermore, supporting business-led DE&I
councils and
people forums
ensures
that accountability
is a
shared responsibility Group-wide.
Externally, we partner
with initiatives such as
the UK government’s
Women in Finance Charter to
support the progression of women
into
senior roles and to publicly report on progress.
We also
believe that
transparency is
key to
achieving our aspirations.
In 2020,
we outlined
specific intentions to
increase our female and
ethnic minority representation, especially among
management. Specifically, by 2025, we
aspire to have
30% of Director
level
9
and above roles
globally held by
women and 26%
of Director level
and above
roles in
the US
and
the UK
held
by
ethnic-minority talent,
along with
additional regional
aspirations.
Our DE&I
aspirations remain
unchanged for
the combined
organization and
the Credit
Suisse DE&I
aspirations have
been
retired.
8
For all data in the DE&I section of this report, 2023
data reflects the combined firm unless otherwise
stated. Prior-year data reflects UBS only, unless otherwise
stated.
9
We informed employees that as of 1 April
2024, the firm will adapt its organizational
titles to the UBS structure. This change is primarily
one of nomenclature;
role, responsibilities,
employment terms
and conditions
are all
unchanged. The
title of
managing director
is unchanged.
Credit Suisse
directors will
become
executive directors, and vice
presidents will become directors.
Assistant vice presidents/associates
will become associate
directors. Employees with
a staff title will
ultimately be
aligned to
either employee or
authorized officer,
depending on
their role,
responsibilities, and experience
and following
a thorough
review by
management, supported by HR.
Sustainability Report 2023
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51
It is important to note that improving representation is rarely
linear. Moreover, progress is based in part on drivers
like promotion rates, as well as on various
business and market conditions, employees’ willingness to self-disclose
demographic
information,
and
other
factors.
We
therefore
aim
to
ensure
that
every
element
of
our
people
management
process
is
a
positive
influence.
For
instance,
implementing
processes
and
controls
to
mitigate
unconscious bias in the
hiring process, talent reviews
and promotions have
helped to maintain a
continuous line of
progress,
with
the
number
of
diverse
new
hires,
promotions
and
retentions
slowly
improving
our
overall
representation, particularly regarding female and
ethnic minority employees.
For
example,
women
now
account
for
40.9%
of
our
workforce
and
29.5%
of
our
Director
level
and
above
population, up from 27.8%
in 2022 and 26.7%
in 2021. Women also
represent 30.5% of management
positions,
and 22.6% of management
positions in revenue-generating functions.
In addition, 37.5% of members
of the GEB
and 33.3%
of members of the Board of Directors (BoD) are women,
as are 30.3%
of senior managers who report
directly to a member of the GEB.
Due to variations
in legal requirements
and historical progress, we
take a country-specific
approach to increasing
the representation of
ethnic minorities, with
a particular focus
on making
progress in the
US and
the UK, where
ethnicity data is more
readily available. As at
the end of 2023,
ethnic minorities held 24.3% of
Director level and
above roles in the UK, up from 23.4% in 2022 and 21.9%
in 2021, and 2.1% of these roles were Black talent.
As
at the
end of
2023, ethnic minorities
held 25.1% of
Director level and
above roles in
the US, up
from 20.5% in
2022 and 20.1% in 2021.
Sustainability Report 2023
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52
Hire
Over
the past
five years,
we have
put strong
foundational processes
in
place to
optimize diverse
hiring even
in
uncertain
markets
and
times
of
considerable
attrition.
We
continue
to
focus
on
training
recruiters
and
hiring
managers to help mitigate unconscious bias in the hiring process and hire the best-suited candidate for each role,
regardless of
background. In 2023,
our hiring ratios were
strong for women
at all levels
(43.3% hired compared
with 40.9% headcount representation). Our ethnicity hiring ratios improved for US talent (46.9%
hired compared
with 31.9% headcount
representation), UK talent
(40.4% hired compared
with 29.2% headcount
representation),
and for UK Black talent (16.4% hired compared with 3.6%
headcount representation).
To
support
talent
who
have
been
out
of
the
workforce,
our
UBS
Career
Comeback
and
the
Credit
Suisse
Real
Returns programs were designed to support
talent returning from a longer career
break or career shift. Introduced
in 2016
and offered
globally since
2019, UBS
Career Comeback
helped 19
participants (15
women and
4 men)
return to corporate jobs
in 2023, and a
total of 253 individuals
since its inception. Since the
launch of the Credit
Suisse
Real
Returns
program
in
2014,
363
of
the
543
participants
were
hired
into
permanent
roles
after
the
program. In 2023, the
program helped 11 participants (10 women
and 1 man). Going
forward, the Credit Suisse
program will be retired.
Develop
Part of building an inclusive
workplace is providing equitable access
to advancement opportunities. To help ensure
employees at
all career
stages have
equitable development
opportunities, we
sponsor key
talent and
leadership
development programs. As examples,
in 2023, our new Growth Alignment
Experience was launched for
Associate
Director and
Director level
employees of
UBS Group
excluding Credit
Suisse in
the US
identified through
a self-
nomination process. Over
a six-month
period, 50 initial
participants worked with
external coaching professionals
to enhance
their strategic planning
skills, expand
their networks
and build
connections. Selected ethnic-minority
employees in the
UK at Associate
Director and Director
levels were
invited to participate
in Not in
Your
Image, a
nine-month development program to build skills and leadership readiness in which they were paired with a senior
sponsor for
longer-term
career development.
In addition,
in the
US and
the UK,
we participate
in the
Executive
Leadership Council’s Institute
for Leadership Development
and Research, which offers
leadership development
and
action-based planning
for Black
professionals,
to facilitate
individual growth
that in
turn strengthens
our talent
pipeline.
The strength and potential of our development
programs and talent processes were
reflected in female promotion
rates for 2023
at Director, Executive
Director and Managing
Director levels. For
example, 35.6% of
Director level
and
above
promotions
were
female
(compared
with 31.5%
in
2022).
Similarly, the
US
ethnic
minority
rate
for
Director level and above promotions was 33.9% in
2023 (vs. 19.6% in 2022) and the UK
ethnic minority rate for
Director level and above promotions was 28.7%
in 2023 (vs. 24.8% in 2022).
Belong
A
sense
of
belonging
helps
drive
engagement
and
is
important
for
overall
well-being.
We
strive
to
create
an
environment where every
employee feels they
have a place
and are recognized
and respected for
who they are
and
what they add
to our workplace.
Many of our
policies, including
fair pay and
equal opportunities,
along with
highly
valued
employee
options
such
as
hybrid
working
arrangements, support
a
workplace environment
that
fosters
belonging. In the
same way,
our 64 combined employee
networks are vital
to building a
sense of belonging and
strengthening our inclusive
culture. Whether the
topic is gender, gender identity, sexual orientation,
culture, ethnic
diversity,
cultural background, disability, parenting,
elder care, veteran status or life stage, employee volunteers in
every
region
host
numerous
events
every
year
to
promote
understanding,
engagement
and
belonging,
and
to
support our overall
DE&I strategy.
One of our
networks’ key offerings
is mentoring, including reverse
mentoring.
For
example,
our
race
and
ethnicity
and
gender
networks
use
mentoring
programs
to
help
members
level
up
opportunities for
career
development. Allyship
initiatives further
extend engagement
and
reach,
particularly for
gender, gender identity,
and ethnicity efforts.
All employee networks were integrated by
the end of 2023, enabling
us to combine programming and resources
and to extend our networks’ impact to a much
larger audience.
Sustainability Report 2023
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53
Our commitment to
the Valuable 500,
a global business
collective of 500
CEOs and their
companies, who innovate
in support of disability inclusion, also continues to be a primary focus. We uphold
this commitment by providing a
barrier-free application,
recruiting and
onboarding process
for all
candidates, providing
inclusive disability
awareness
training
for
HR
professionals
with
a
focus
on
working
with
people
with
disabilities.
Providing
toolkits
for
line
managers and all employees
enables them to leverage
disability etiquette, facilitate
accessible meetings, and
more,
and we
support and promote
our Ability employee
networks, world-wide. In
2023, we also
implemented robust
global accessibility standards
that inform our Disability
strategy,
and our digital accessibility
and IT specialists
began
implementing the
latest international
Web Content
Accessibility Guidelines
(WCAG 2.2)
to further
enhance and
optimize our digital accessibility.
›
Refer to
ubs.com/diversity
for additional information on diversity, equity and inclusion topics and progress against
our aspirational goals
›
Refer to
ubs.com/employees
or
ubs.com/careers
for more topics of interest to employees and potential applicants
›
Refer to the “Supporting our strategic goals – our engagement in partnerships” section of the Supplement to the
UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about
our external commitments pertaining to DE&I
Sustainability Report 2023
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54
Driving social impact
Social
Impact
has
continued to
be
a
strong
differentiator, with
its
activities
underpinning our
sustainability and
impact strategy.
With the
integration of Credit
Suisse, we
will continue
to put
clients and people
first across
the
combined organization,
helping clients maximize their impact
locally and globally.
Our vision is to contribute to and scale an impact economy,
an economy that values the
well-being of all people and the planet. This means building partnerships
that drive greater
impact transparency, more impact ventures and innovative ways
of financing and paying for
impact.
Philanthropy services and collective impact
More than half
of the world’s
population is still
not covered by
essential health services.
1
More than 648
million live
below the international
poverty line, with
up to 40 million
living in modern
slavery.
2
Over 600 million young
people
lack
basic
mathematics and
literacy
skills.
3
Adding
to
these
challenges,
climate change
and
the
degradation
of
nature are furthering inequalities.
Despite exponential growth, philanthropy
alone is not enough to
fill the funding
gap required.
We believe that by working collectively, philanthropists and public and private organizations have the
potential to
create lasting
change and
maximize a
positive impact
for people
and planet.
We provide
comprehensive advice,
insights
and
execution services,
working
with
our
clients
and
finding
ways
to
tackle
some
of
the
world’s
most
pressing social
and environmental
problems. We
aim to mobilize
USD 1 billion
in philanthropic
capital and
positively
impact over 26.5 million people by 2025 (cumulated
since 2021).
Collective impact
The power of philanthropic partnerships will be critical in achieving systemic scalable change. Led by our in-house
philanthropy team, we
have three Collectives
comprising philanthropists
who bring together
their efforts, skills
and
resources during a
two-year learning journey.
By combining our
expertise and investor capital,
our aim is
to fund
initiatives that address
child protection, climate
change, and health
and education-related issues.
Each Collective
provides
investors
with
the
opportunity
to
work
alongside
peers
and
expert
practitioners
to
achieve
systemic
change. An important part
of the Collectives journey
is for clients to experience
the impact of those
programs they
are funding.
Members
of
the
UBS
Collectives,
namely,
the
Accelerate
Collective,
the
Climate
Collective
and
the
Transform
Collective,
concluded
their
two-year
journey
in
2023,
with
new
cohorts
for
each
Collective
ready
to
launch
in
January 2024.
The UBS
Optimus network of
foundations’ program team
is key
in supporting
the impact
of the
UBS Collectives
and identifying the partners we
work with across the three
Collectives in order to ensure
our clients are making an
effective and scalable impact.
Helping our clients structure their philanthropy
– donor-advised funds
Donor-advised funds offer clients an alternative charitable-giving vehicle to set up their own foundations, offering
greater choice and personalization,
and are managed in line
with their usual investment
approach. Their charitable
donations can
be invested
within the
parameters they
select (such
as capital,
growth
or income),
helping them
grow their
fund to give
grants at a
later date. Administrative
fees are
borne by UBS.
UBS offers
these services in
Switzerland, Singapore
and the
UK, and
in 2023
they were
launched in
the Hong
Kong SAR,
with USD 317.7
million
in donations in 2023.
4
1
Based on information from the World Health
Organization, see
who.int/news/item/18-09-2023-billions-left-behind-on-the-path-to-universal-health-coverage
2
Based on information from the World Bank, see
https://blogs.worldbank.org/developmenttalk/half-global-population-lives-less-us685-person-day#
and
https://www.iom.int/news/more-40-million-modern-slavery-152-million-child-labour-around-world
3
Based on information from UNICEF, see
https://www.unicef.org/education
4
Figures provided for UBS Optimus network of foundations
and donor-advised funds are based on unaudited
management accounts and information available
as of January 2024.
Audited financial statements for Optimus
and donor-advised foundation entities are produced
and available per local market regulatory
guideline.
Sustainability Report 2023
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55
UBS Global Visionaries
Through our UBS Global Visionaries program, we aim to
(i) create opportunities for clients and prospective clients
to
connect
with
leading
social
entrepreneurs;
and
(ii) help
the
best
entrepreneurs
focusing
on
social
and
environmental
issues
to
scale
their
positive
change
by
expanding
their
network,
building
capacity
and
raising
awareness
about
their
work.
Since
the
program
started
in
2016,
we
have
onboarded
and
supported
85
entrepreneurs to accelerate their impact.
UBS Optimus network of foundations
The UBS Optimus network of foundations
also aims to contribute to an
impact economy that meets the long-term
needs of children and preserves the natural environment,
now and in the future. It connects clients with
programs
that are
making a
measurable, long-term
difference to
the most
serious and
enduring social
and environmental
problems.
With
a
24-year
track
record,
it
is
focused
on
incubating
impact
ventures,
scaling
impact
through
partnerships and
achieving impact
transparency. In 2023, the UBS
Optimus network
of foundations had
a presence
in 9 global locations.
It is now working on harmonizing the Credit Suisse
program portfolio.
In 2023, it raised USD 328 million in donations, including UBS matching contributions, and committed
USD 305.9
million in grants from the Foundation.
4,5
Key activities of the UBS Optimus network of
foundations in 2023 are set
out below.
Social and blended finance
The UBS
Optimus network
of foundations
is actively
developing larger-scale
investment vehicles,
in partnership
with
other parts of the bank,
by using a blended finance approach. In 2023,
it secured major investor commitments
for
a USD 100
million SDG
Outcomes blended
finance initiative
with Bridges
Outcomes
Partnership, British
International
Investment (the UK’s development
finance institution) and
the US International
Development Finance Corporation.
These anchor investors participated alongside
private investors, including Legatum,
family offices (such as the Tsao
Family Office) and other high net worth individuals.
Partnerships
The UBS Optimus network of foundations works to build capabilities, capacity and partnerships to strengthen the
social finance
ecosystem. In
2023, it
selected eight
organizations for
the first
cohort of
the 100x
Impact Accelerator,
a global impact
accelerator based
at the London
School of
Economics. Seven
of the eight
selected ventures operate
in emerging markets and six out of the eight have
female founders or co-founders. Its objective is to work closely
with these entrepreneurs as
they grow into social
zebra organizations.
6
Each organization received
GBP 150,000 in
capital and participated in a 12-week program focusing
on scale, impact measurement and fundraising
strategies.
In 2023, the UBS Optimus network of foundations continued to develop its
partnership with the State Secretariat
for Economic Affairs,
the Swiss Development
Cooperation Agency and
the Credit Suisse
Foundation.
One objective
of the SDG
Impact Finance
Initiative is to
raise CHF 100
million for innovative
financial solutions which
can mobilize
new capital around the
SDGs, and work toward our
target of unlocking CHF 1 billion
in private finance by 2030,
thereby accelerating progress toward delivering the SDGs.
In 2023, the four founding donors
committed nearly a
third
of
the
fundraising target
and
started
disbursing grants
to
the
seven
winners of
its
first
call
for
proposals,
tackling climate change, education access and
quality, smallholder farming and SME support.
Impact transparency
The UBS Optimus network of foundations’ vision is for impact to be measured using the highest quality standards
and for
that information
to be
publicly available
for the
benefit of
all. In
2023, it
developed and
rolled out
an owned
industry-aligned rating
tool that aims
to assess programs
against three impact
categories:
breadth of impact;
depth
and proof of impact; and likelihood of
scaling and sustaining impact. This facilitates:
the prioritization of programs
that contribute
the most to
the UBS Optimus
network of
foundations’ strategic
impact objectives;
the identification
of anticipated value
added; the documentation of
actions that can be
taken to improve
the program and
impact
potential, and the consistent
and transparent communication
of complex information
around its impact objectives.
In
2024,
the
UBS
Optimus
network
of
foundations
will
be
assessing
how
the
impact
rating
tool
can
bring
additionality to the social impact landscape
globally.
4
Figures provided for UBS Optimus network of foundations and donor-advised
funds are based on unaudited management accounts and information
available
as of
January 2024.
Audited financial
statements for Optimus
and donor-advised
foundation entities are
produced and
available per
local market
regulatory
guideline.
5
The UBS Optimus network of foundations
receives donations from all Business Divisions, with
the majority stemming from Global Wealth Management.
6
A Zebra represents a
business model that
strives for both profitability
and positive societal
impact, with a
strong focus on sustainability, community
involvement
and cooperation. This concept is presented as an alternative to the
traditional Silicon Valley unicorn model that often prioritizes rapid growth and
high returns
over other considerations.
Sustainability Report 2023
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56
Emergency philanthropy
The UBS Optimus
network of foundations
and Social Impact
raise funds and
support partners
providing emergency
relief in
response to
disaster situations,
and sometimes
launch dedicated
appeals to
support these
efforts. Whenever
an appeal
is launched by
the UBS
Optimus network of
foundations, it will
act swiftly and
mobilize funding from
clients and employees to support immediate
relief,
as well as longer-term recovery and resilience.
Where budgets
allow, it
also aims
to provide
unrestricted support
to emergency-relief-focused
NGOs, so
that it
contributes
toward
strengthening
the
humanitarian
ecosystem;
supports
the
development
of
monitoring,
evaluation and
learning capacities
and evidence-based
decision-making by
implementing partners;
and supports
forgotten crises that receive little media attention.
In 2023, the UBS Optimus network of foundations raised and started
to distribute more than USD 25.4 million for
the Turkey and Syria earthquake, the Hawaiian wildfires, flooding in Pakistan and Italy and people affected by the
humanitarian crisis in
Israel and Gaza.
It also
continued to distribute
USD 56 million raised
for the Ukraine
Relief
Fund launched in 2022. To date USD 43.3 million
has been granted to our partners
on the ground.
UBS’s charitable contributions
Direct cash contributions by
UBS AG (including through
partnerships in the communities that
we operate in) and
our
affiliated foundations
in Switzerland,
as well
as contributions
to the
UBS
Optimus network
of foundations,
amounted to USD 62.6 million in 2023.
7
›
Refer to the “Supplement to Social” in the Supplement to this report available on
ubs.com/sustainability-reporting
for an overview of our charitable contributions in 2023 and additional information
Communities
We aim to
maximize our
impact in the
local communities
that we are
a part of
because we recognize
that our
long-
term success depends on their health and prosperity.
We regard our ongoing investment in
these areas as central
to furthering
the economic
and social
inclusion of
those people
that our
activities support.
We
have a
strategic
focus on education
and the development
of skills, as
we believe these
topics are where our
resources can make
the
most impact.
We endeavor to
create business and
community impact by
identifying innovative and
high-quality programs that
are
aligned
to
our
business,
providing
focused
financial
and
human
support,
including
employee
volunteering
programs and
client participation, where
appropriate. These programs
are delivered
through local execution
and
partnerships operating under a global framework
with coordination across regions.
Employee volunteering
Our well-established employee volunteering
model has been adapted to meet the
needs of our new hybrid ways
of working, with both face-to-face and virtual
opportunities to support our local communities.
We have global
targets for employee engagement through volunteering,
which are built bottom-up and on a best-efforts basis. In
2023, we successfully engaged 38% of
our global workforce in volunteering, and 45% of
the 199,633 volunteer
hours were skills-based.
7
Lower cash contributions compared
to previous years are due to the decision
to exclude business-related contributions
since these are donations made outside
of UBS’s
strategic Social
Impact strategy
and do
not support
the longer-term
impact we
are striving
to achieve
with our
strategic grantee
and volunteering
partners.
Sustainability Report 2023
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57
Respecting human rights
We are committed to respecting and promoting human rights, as set out in the UN Guiding Principles on
Business
and
Human
Rights.
As
human
rights
standards
are
embedded
in
the
Sustainable
Development
Goals
(SDGs),
respecting human
rights is
a key
consideration in
our business
practices. When
assessing our
potential human
rights
impacts, we focus on three key stakeholder groups
(employees, clients and vendors), as well as
society at large.
›
Refer to “Supporting our strategy through stakeholder engagement” section of the Supplement to the UBS Group
Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about our
interactions with other stakeholders, including civil society groups
Employees:
We are
committed to
respecting human
rights standards
through our
human resources
policies and
practices, and
to meeting
the obligations
that a
responsible company
is required
to comply
with. These
are reviewed
on a regular basis in an effort to make sure we
continue to respect human and labor rights.
›
Refer to the “People and culture make the difference” section above and to the Supplement to this report,
available at
ubs.com/sustainability-reporting
, for more information about UBS’s human resources policies
and
practices
Clients:
We aim
to provide
our clients
with innovative
investment solutions
on themes
related to
human rights,
such
as health, education, gender and/or equality.
In addition,
we take human rights risks into account
in solutions that
address a broader range of sustainability issues. We identify
and manage actual and potential adverse impacts on
human rights to which our clients’ assets and
our own assets are exposed,
most notably through our sustainability
(including human rights) and climate risk policy
framework.
›
Refer to the “Supporting opportunities” section of this report for more details about our approach to sustainable
finance and investing and to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more
information about the sustainability and climate risk policy framework
Vendors:
We are
committed to
reducing the
negative societal impacts
of the
goods and
services UBS
purchases.
That is why, when we are establishing new contracts or renewals, we identify high-risk vendors based on whether
they
provide
goods
and
services
that
either
have
a
substantial
social
impact,
or
are
sourced
in
markets
with
potentially
high
social
risks.
Vendors
that
do
not
meet
the
minimum
applicable
standard,
because
they
are
associated with
actual and
potential human
rights risks,
have to
agree to
and comply
with a
remediation plan
before
signing a contract with us.
›
Refer to the “Managing our supply chain responsibly” section below for more details about our responsible supply-
chain management
Our human-rights-related
commitments and
actions are
set out
in our
Human Rights
Statement. The
statement
shows the
structures (governance
and policies)
and mechanisms
(procedures and
processes) UBS
has in
place to
support its commitments. UBS also publishes a Modern Slavery and Human Trafficking Statement pursuant to the
UK 2015 Modern Slavery Act and to the Australian
2018 Modern Slavery Act.
›
Refer to our Human Rights Statement and our Modern Slavery and Human Trafficking Statement, available at
ubs.com/sustainability-reporting
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more information about
“UBS Group’s approach to the Swiss Ordinance
on Due Diligence and Transparency
in relation to Minerals and
Metals from Conflict-Affected Areas and Child Labor”
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58
Managing our supply chain responsibly
We embed
environmental, social
and governance
(ESG) standards
into our
sourcing and
procurement activities.
The
Responsible
Supply Chain
Management
(RSCM)
framework for
UBS
Group
excluding
Credit
Suisse
is
based
on
identifying, assessing and
monitoring vendor practices
in the
areas of
human and
labor rights,
the environment,
nature, health and safety, and anti-corruption. Central to our RSCM framework are our Responsible Supply Chain
Standards (RSCS), to
which our
direct vendors
are bound
by contract.
The RSCS
define our
expectations toward
vendors
and
their
subcontractors regarding
legal
compliance, environmental
protection, avoidance
of
child
and
forced
labor,
non-discrimination,
diversity,
equity
and
inclusion,
remuneration,
hours
of
work,
freedom
of
association,
humane
treatment, health
and
safety,
anti-corruption measures,
and
whistleblowing protection
for
employees. In 2023, the Credit Suisse Third-Party Risk Management due diligence approach continued
to manage
reputational
risk
from
an
ESG
perspective
for
Credit
Suisse
AG.
To
ensure
a
consistent
and
high
standard
of
reputational
risk
coverage across
the
combined organization,
the
RSCM
framework will
be
rolled
out
to
Credit
Suisse in 2024.
›
Refer to
ubs.com/suppliers
for the RSCS
Identifying, assessing and monitoring
high-impact vendors
In
2023,
100%
of
new
vendors
were
screened
for
environmental
and
social
risk.
In
addition,
for
UBS
Group
excluding Credit
Suisse, we
identify high-impact vendors
when establishing
new contracts
or renewals
based on
whether the vendors
are providing goods
and services that
could either have
a substantial environmental
and social
impact or
be sourced
in markets
with potentially
high social
or governance
risks. Such
high-impact vendors
are
assessed against
our RSCS.
These vendors
are required
to provide
disclosures about
their management
practices
and corresponding evidence that is evaluated by
a specialist team. Actual and potential
negative impacts that are
considered in the
impact assessment
of purchased goods
and services include,
but are not
limited to, the
following:
–
adverse environmental impacts due to inefficient use of resources (e.g., water and energy),
poor environmental
practices and emissions during the life cycle
of a product;
–
hazardous substances,
emissions, pollutants
and the
limited recyclability
of products
that adversely
affect people,
nature and the environment;
–
modern slavery, forced labor or child labor;
–
unfair employment
practices, such
as low wages,
excessive overtime
and the absence
of occupational
health and
safety measures;
–
anti-corruption;
and
–
insufficient management of subcontractors
and suppliers regarding sustainability
aspects.
If our assessment reveals any non-compliance with our
standards, we define and agree (together with the vendor)
specific improvement
measures, and
closely monitor
the implementation
progress of
these remediation
actions.
Lack
of
improvement
may
lead
to
the
termination
of
the
vendor
relationship.
Vendors
are
reassessed
after
24 months
to
ensure
that,
even
in
long-term
contracts, UBS’s
expectations
regarding
environmental and
social
aspects
are
being
met
and
continuously
supervised.
We
also
regularly
screen
active
vendors
as
part
of
our
sustainability and climate risk control processes.
High-impact vendors go through assessments against UBS’s
RSCS. We also undertake assessments
on some non-
high-impact vendors
where we
have significant
ongoing relationships.
In 2023,
for UBS
Group excluding
Credit
Suisse, we carried out risk-based due diligence assessments on 266
vendors of newly sourced contracts, renewals
and ongoing contracts. To drive positive change in our supply
chain, we also require our vendors to improve their
management practices in line with our sustainability goals and
industry best practices. Of the vendors assessed for
UBS
Group
excluding
Credit
Suisse,
42%
were
considered
in
need
of
improving
their
management
practices.
Specific
remediation
actions
were
agreed
upon
and
implementation
progress
is
being
closely
monitored.
Additionally in 2023, for Credit Suisse, 15 vendors were assessed
against Credit Suisse’s environmental and social
standards. No actual
significant ESG risk
was identified with any
of the vendors
that were assessed
for both UBS
Group excluding Credit
Suisse and Credit
Suisse. We have
an overall assessment coverage
of 20% of
vendors by
spend for UBS.
Sustainability Report 2023
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59
Contracts in high-risk countries include
specific contractual requirements relating to environmental
management,
human rights, labor rights
and anti-corruption. If we
were to become aware of
a case of modern slavery
or human
trafficking
occurring
within
our
direct
supply
chain,
we
would
address
it
through
our
governance
processes.
Depending on the severity
of the case, or
if satisfactory remediation is not
possible, the supplier relationship may
ultimately be terminated.
In 2023,
none of
our vendor
relationships
were terminated
as a
result of
our assessments
and no
human rights
issues with active vendors
were identified or reported. In
part, this was due
to having carried out
our assessment
process prior to the signing of contracts.
Embedding supplier sustainability in our
everyday activities
The goods
and services
we buy,
how we
buy them,
from where
and from
whom are
all crucial
elements of
our
sustainability impact. We are committed to making a positive environmental and
social impact, and we expect the
same
from
our
suppliers.
Our
procurement
policy
includes
taking
account
of
the
lower
ESG
impact
of
products/services when selecting
a vendor. Within
the policy, we
have also included
mandated minimum weighting
for ESG criteria in our tenders, as part of vendor
evaluation and selection. This ensures that we award business to
vendors with
strong ESG
performance and
incentivize vendors who
want to
work with
us to
show commitment
and improvement in these areas. This approach
will be extended to Credit Suisse in 2024.
We care
about our vendors’
ESG performance and
want to work
with vendors that
have strong ESG
credentials,
drive positive
environmental and
social impact,
and are
transparent about
their climate
disclosures. We
leverage
ESG
market
data
which
gives
us
deeper
insight
into
our
vendors’
ESG
performance
and
encourages
them
to
continuously improve
their practices.
In 2023,
90% of
spend in
deals >USD 1
million were
signed with
vendors
having an adequately high ESG performance.
›
Refer to the “Climate-related methodologies” in the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for more for details on the methodology applied
We have also
been reviewing our purchasing catalogues
to reduce the
number of items and
move to sustainable
products
wherever possible.
This
year,
we
focused on
driving responsible
consumption and
removed 444
items
(67%) from our office supplies catalogues.
This approach will also be applied to Credit
Suisse in 2024 and 2025.
We expect our suppliers to uphold high standards of
ethics, mitigate risks, and honor global and local labor laws,
human rights and environmental
responsibilities. Suppliers are required
to follow our global supplier
policies which
include a policy on anti-bribery and corruption,
sanctions, fraud, and anti-facilitation of
tax evasion.
›
Refer to our “Supplier Code of Conduct,” available at
ubs.com/suppliers
›
Refer to our “Global Supplier Policies,” available at
ubs.com/global/en/our-firm/suppliers/contracting-standards
›
Refer to the “Monitoring the environmental impact of our supply chain” section of this report on the reduction of
greenhouse gas emissions in our supply chain
Inclusive growth in the supply chain
In
2023,
we
extended
our
efforts
globally
to
support
inclusive
growth
in
the
use
of
diverse
suppliers
that
are
certified/recognized by a local/national government
authority or advocacy organization. These include,
but are not
limited to, minority-owned (including aboriginal-owned and indigenous-owned), women-owned, veteran-owned,
disabled-owned, and
LGBTQ-owned, as well
as disadvantaged-owned and
small businesses.
We actively
identify
and
include
diverse
vendors as
part
of
our
“rule
of
one”
guidance, which
aims to
include
at
least
one
diverse
supplier in every competitive tender. Globally, our diverse spend accounts for 8.5% of third-party spend.
We are
members of
diverse supplier
advocacy organizations
which give
us insights
into diverse
supplier markets
across the globe, as well as supporting supplier
outreach efforts and opportunity matching.
›
Refer to “Supplier Diversity” at
ubs.com/
global/en/our-firm/suppliers/supplier-diversity
›
Refer to “Supporting our strategic goals – our engagement in partnerships” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information on our
sustainability-
and impact-related memberships
Sustainability Report 2023
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60
Leveraging partnerships to help suppliers
build capability
Recognizing the role
small and medium-sized
enterprises (SMEs)
play in fostering positive
change across our
supply
chain, we
have partnered
with Heart
of the
City, a
UK charity
dedicated to
supporting SMEs
on their
journey toward
sustainability. Through a series of workshops, masterclasses
and webinars, the charity empowers small and diverse
business owners in
the UK to
navigate their sustainability
journeys effectively.
Not only do these
activities help drive
sustainability beyond our immediate supply chain,
they also support the communities in which
we operate.
We
are
also
partnering
with
the
United
Nations
Global
Compact.
This
year,
we
invited
Swiss
SME
suppliers
to
participate in a
series of six
sessions organized
by the UNGC
Network Switzerland
on sustainability topics,
including
climate action, environmental
stewardship, human and
labor rights. These sessions
offer our vendors opportunities
to exchange insights,
acquire knowledge,
and address challenges
related to sustainability.
Building their knowledge
and
sustainability
capabilities
helps
to
support
our
sustainability
goals
through
improved
vendor
compliance,
reduces risks from environmental or ethical issues
and builds commitment toward shared
sustainability objectives.
Sustainability Report 2023
| Supporting opportunities
61
Supporting opportunities
Sustainable finance
metrics listed
above and
throughout this
chapter are
either for
UBS Group,
including Credit
Suisse
entities,
or
UBS
AG
(referenced
accordingly),
depending
on
data
availability
and
the
degree
to
which
sustainable product frameworks could
already be brought
into alignment in 2023.
For 2024 it
is our intention
to
fully incorporate Credit Suisse data into our
disclosures.
Our sustainable finance ambitions
Finance has an important
role to play
as companies and individuals
consider how best to
approach the transition
to a more sustainable,
lower-carbon world. At the same time,
the regulatory environment continues to evolve, as
do
the
associated
capital-raising
and
investment
opportunities.
Against
this
backdrop,
we
are
committed
to
supporting our clients’ sustainability ambitions,
whether their focus is on
reducing the carbon emissions footprint
of their business or portfolio, or encouraging
a fairer and more prosperous society.
Through our sustainable finance
product and service offerings,
we target four key
objectives in serving our
clients:
–
The
power
of
choice:
we
want
to
give
our
investing
clients
the
choices
they
need
to
meet
their
specific
sustainability objectives.
–
An orderly transition: we
aim to support our clients
through the world’s transition
to a low-carbon economy,
for
instance, by offering innovative sustainable financing
and investment solutions.
–
Managing
risks
and
identifying
opportunities:
we
offer
research
and
thematic
insights,
as
well
as
data
and
analytics
services.
Combined
with
targeted
advice,
these
are
designed
to
help
clients
better
understand and
mitigate risks and identify new opportunities.
–
Making sustainable
finance an
everyday topic:
we want
to make
sustainability topics
tangible throughout our
interactions with clients. To help us do that,
we provide support in the form of tools, platforms,
and education.
Sustainability Report 2023
| Supporting opportunities
62
Our approach to sustainable finance
It is important to set out how we define
sustainable finance, as no uniformly accepted
definition currently exists in
the industry.
We consider sustainable finance
to include any
financial product or service
(including both investing
and financing
solutions) that
aims to explicitly
align with
and/or contribute
to sustainability-related
objectives, while
targeting
market-rate
risk-adjusted
financial
returns.
Sustainability-related
objectives
may
include,
but
are
not
limited
to,
the
Sustainable
Development
Goals
identified
in
the
United
Nations’
2030
Agenda
for
Sustainable
Development.
This
approach
to
sustainable
finance
is
also
reflected
in
our
UBS
AG
sustainable
investing
framework,
which
specifically defines “sustainability focus” and
“impact investing” strategies.
Both categories reflect a
defined and
explicit sustainability
intention of
the underlying
investment strategy.
This intentionality
differentiates them
from
traditional investment
products,
or those
that consider
sustainability-related
aspects
but do
not actively
and explicitly
pursue
any
specific sustainability
objective, such
as
ESG
integration or
exclusions-only approaches. The
way we
define sustainable investments is reviewed on
a regular and ongoing basis in
order to ensure that it
appropriately
considers evolving market practice, client
expectations and relevant regulatory guidance.
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting,
for more on ESG integration
and exclusion
›
Refer to the ”Sustainability and climate risk policy framework“ or “Key terms and definitions” section of the
Supplement to the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
for our
definitions of sustainable bonds and loans
Sustainability Report 2023
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63
Market developments in 2023
2023 was dominated by
persistently high inflation
and interest rates across
many key jurisdictions, correspondingly
high
energy
prices
and
significant
geopolitical
volatility
and
uncertainty.
These
challenges
also
negatively
contributed to tensions associated
with sustainability-related industries and political
discussions. Notwithstanding
these
challenges
and
tensions,
sustainable
finance
business
opportunities
continued
to
broaden
and
deepen.
Interest in
sustainable investing
(SI) and
financing solutions
continued to
be robust.
This was
bolstered by
major
legislative initiatives,
including the
Inflation Reduction
Act in
the United
States and
the European
Union’s Green
Deal Industrial Plan, as well as various ongoing
regulatory initiatives.
At the same
time, investors, corporations, and regulators have
continued to pay close
attention to greenwashing
risks.
Sustainable product
frameworks have
evolved, and
it
is
widely
expected that
standards will
be
subject to
further amendments,
given that certain frameworks
are still under review
and subject to further
development or in
the early
stages of
implementation (e.g.,
the EU
Sustainable Finance
Disclosure Regulation
and the
UK Sustainability
Disclosure Regulation).
Throughout the
year investors
took advantage of
higher interest
rates by moving
to income-producing
asset classes
and
money
market
products,
with
the
latter
attracting
over
USD 1.1
trillion
1
in
net
inflows.
Increased
investor
appetite for fixed income products was accompanied
by corresponding outflows from equity funds.
Investor appetite for
sustainability-oriented funds and ETFs continued.
Once again, after
2022 and 2021,
inflows
into sustainable
investment funds in
2023 outpaced
those into
their non-SI
counterparts,
albeit at
more modest
levels compared to the highs
seen in 2021. Throughout the year,
investors expanded their sustainable investment
allocations into alternative asset classes, including
hedge funds, real estate or infrastructure.
This was
also reflected
in our
clients continued
interest in
SI solutions.
Over the
course of
2023, UBS
AG’s SI
invested
assets
rose
to
USD 292.3 billion as
of
31
December
2023,
compared
with
USD 266
billion
at
the
end
of
2022,
representing a year-on-year increase of 10%. A
combination of factors contributed to this growth, including new
product launches, net new
money inflows as
well as market performance. SI
invested assets accounted for
6.5%
of UBS’s total invested assets at year-end
2023.
We expect the
acquisition of the Credit
Suisse Group to provide
UBS with additional
sustainability-focused assets
and clients,
a wider
selection of
products and
services and
even greater
in-house expertise.
However, there
are areas
of variance
between the
two organizations’
reporting and
product standards
that we
are actively
working to
analyze
and
harmonize.
UBS
sustainable
product
standards
will
be
the
benchmark
going
forward,
with
Credit
Suisse’s
sustainable financing and
investment products undergoing
a detailed
assessment to ensure
compliance with our
standards, frameworks and expectations.
The table below
provides additional detail
on SI invested
assets for UBS
AG. As stated
before, this table
and section
do not contain any values related to Credit Suisse
sustainable investment products.
›
Refer to the “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for more
information about the Credit Suisse Sustainable Investment Framework (SIF)
Sustainable Investments
1
For the year ended
% change from
USD billion, except where indicated
31.12.23
31.12.22
31.12.21
31.12.22
Total invested assets (UBS Group)
5,714.1
3,980.9
4,614.5
44
of which: total invested assets (UBS AG)
4,504.7
3,980.9
4,614.5
13
Sustainable investments (UBS AG)
2
Sustainability focus
3
270.4
246.9
222.7
10
Impact investing
4
21.8
19.2
28.1
14
Total sustainable investments
5,6,7
292.3
266.0
250.8
10
SI proportion of total invested assets (%)
8
6.5
6.7
5.4
1
The table above details UBS AG Sustainable Investing Invested Assets (IA) and the
evolution thereof. This table does not contain any Credit Suisse products and associated IA classified
under the Credit Suisse
Sustainable Investing Framework (SIF).
Credit Suisse IA in
accordance with the
SIF are reported separately
as figures are not
directly comparable with
the UBS
figures due to material differences in the
underlying sustainable investment frameworks and definitions
being applied. Please see "Appendix 3
Entity-specific disclosures for Credit Suisse
AG" for further details.
2
We focus our sustainable investment reporting on those investment
strategies exhibiting an explicit sustainability intention.
3
Strategies that have explicit
sustainable intentions
or objectives
that drive
the strategy.
Underlying investments
may contribute
to positive
sustainability outcomes
through products
/ services /
use of
proceeds.
4
Strategies that have
explicit intentions of
generating measurable, verifiable and
positive sustainability outcomes.
Impact generated is
attributable to investor
action and/or contributions.
5
Certain products
have been
reclassified during
2023 for
reasons including,
but not
limited to,
an evolving
regulatory environment,
periodic monitoring
of the
product shelf,
and
developing internal
classification standards.
Impact of
these movements
on sustainable
investment invested
assets was
a net
reduction by
USD 7
billion in
UBS AG
Global Wealth
Management Americas and a
net reduction by
USD 6 billion in
UBS AG Asset Management.
6
In line with general
market practice, IA reported
for sustainable investments
include
limited amounts of instruments not classified as sustainable investment, including cash and cash-like instruments that each fund and portfolio hold for liquidity management purposes,
as well as, subject to clear,
limiting restrictions, client-directed
investments included in sustainable investing
mandates managed by UBS Asset
Management.
7
The impact investing
and total sustainable investments
(UBS AG) disclosures
for 31.12.22 and
31.12.21 reporting periods
have been restated
to remove investments
that were duplicated
in the disclosed
values. As a result, the values disclosed for 31.12.22 and 31.12.21 for
both categories have each decreased by USD 1.6 billion and USD 0.4 billion,
respectively.
8
Total invested assets
(UBS AG) are used to calculate the SI proportion.
1
Morningstar
Sustainability Report 2023
| Supporting opportunities
64
Following a year of subdued debt market issuance
activity in 2022, green, social, sustainability, and sustainability-
linked (GSSS)
bond supply
rebounded in
2023, rising
7% year-on-year
(YoY).
2
The growth
was driven
by bonds
with green (+15%
YoY) and sustainability (+7%
YoY) labels. We
saw banks and corporate
issuers favoring green
bonds, while sovereign, supranational and agency (SSAs) issuers
primarily opted for the latter,
given a broader mix
of green and social
assets. Sustainability-linked issuance dropped 25% year-on-year driven
by heightened market
scrutiny around the
materiality and ambition
of the
key performance indicators
(KPIs) used,
compounded by SLB
issuers failing to reach their
annual targets.
Regionally, EMEA issuers accounted
for 52% of 2023 FY global
supply,
while APAC issuers were responsible for 29%. In line
with the overall GSSS bond market dynamics, the
number of
transactions facilitated by the Investment Bank
in 2023 increased to 102.
3
Looking ahead
Despite
another relatively
challenging
and
turbulent year
for
markets, we
believe
the
strong
market
growth
of
sustainable investing
and financing
products in
recent
years and
a general
increase in
investor demand
for innovative
sustainable finance
solutions indicates
clients’ ongoing
desire to
pursue sustainability-related
objectives.
That, in
turn, is
encouraging a greater
level of
active investor ownership, with
rising levels of
corporate engagement and
system-wide advocacy.
The ongoing
relevance of
sustainability for
institutional investors
and senior
management of
the world’s
largest
companies was
once again
evidenced by
a 2023
Bloomberg Intelligence
survey of
C-suite executives
and senior
institutional investor
representatives
4
. All
told, 85%
of investors
surveyed believe
that incorporating
ESG in
their
investments leads
to better
returns, more
resilient portfolios
and enhanced
fundamental analysis,
while 84%
of
surveyed executives
said ESG
helps them
shape a
more robust
corporate strategy.
These are
strongly supportive
results which confirm our belief that incorporating sustainability-related considerations
is ultimately good business
practice and will continue to inform business
leaders’ forward thinking and planning.
Additionally, our
own 2023
UBS AG
Asset Management
client survey
showed 74%
of clients
expect to
increase
their allocation
to sustainable
investments over
the next
five years.
The survey
results also
show an
encouraging
growth in
satisfaction with
the
way in
which we
are
increasing exposure
to
sustainable investments
within
the
various asset classes.
At the same time, high net worth individuals (HNWI) appear
to have become more selective about how they grow
their sustainable
investments, after
having done
so quite
aggressively in
2022. A
2023 Global
Wealth Manager
Investment Survey
by Mercer
5
noted that
34% of
respondents said
their clients
want to
grow their
exposure to
sustainable investments,
while another
34% wanted
to keep
it at
the same
level. This
followed 80%
of respondents
to the 2022 survey having reported rising client
demand for sustainable investments.
Meeting diverse needs
There is
no typical UBS
client. Each one
has varying needs,
but all
expect outstanding advice
and service, a
wide
range of product choices, and an excellent client
experience.
Our clients span ultra high and
high net worth individuals, families
and family offices worldwide,
affluent clients in
selected markets, and an
array of corporate, institutional,
private, small and
medium-sized enterprises, as well
as
retail clients in Switzerland.
We work hard to service our clients’ diverse sustainable financing, investing and/or advisory needs
in the best way
possible, leveraging the
knowledge of our
specialist teams. An
established rationale guides
our interactions with
clients,
and
it
starts
by
building
an
understanding
of
the
relevance
of
sustainability
for
their
business
and/or
investment portfolio.
The
following
graphic
provides
an overview
of sustainable
finance
products
and services
offered
by UBS.
Included
here
for illustrative purposes,
it is not
an exhaustive representation
of our sustainable
finance and investing
offering,
which
varies by
jurisdiction, booking
center and
client domicile
and is
subject to
client eligibility
and preferences.
Not all
products
and services
are available
to all clients.
2
Bloomberg, all market figures in this paragraph.
3
Investment Bank figure
is 102
of which
UBS (AG)
figure is
93 and
Credit Suisse
figure is
16. The
metrics include transactions
such as,
but not
limited to,
Investment Bank Global Banking bonds
issued under the voluntary ICMA Green
Bond Principles, Sustainability Bond Principles, and
Sustainability-Linked Bond
Principles. The
principles include
a recommendation
that the
issuer appoints an
external review
provider to
undertake an
independent external review
(e.g.,
second-party opinion). This is consistent with market practice. The
metrics also include sustainability themed bonds (e.g., Transition).
Transactions are
counted
only once, there is no double counting (e.g., if and where UBS AG and Credit Suisse were
involved in the same transaction). UBS performed an assessment for
Credit Suisse
green, social,
sustainability and
sustainability-linked bonds reported
in the
2023 Sustainability
Report and
deemed them
to be
aligned to
UBS
sustainable bond guidelines.
4
bloomberg.com/company/press/bioomberg-intelligence-survey-finds-investors-and-c-suite-embrace-esg-despite-concerns/
5
mercer.com/insights/investments/portfolio-strategies/wealth-management-investment-survey/
Sustainability Report 2023
| Supporting opportunities
65
›
Refer to the “Basis of Reporting” in the Supplement to this report, available at
ubs.com/sustainability-reporting
, for
details of which products are included in the calculations of sustainable product metrics.
Sustainability Report 2023
| Supporting opportunities
66
Global Wealth Management
Building on our unrivalled global scale and footprint in wealth
management,
with USD 3.8
trillion in assets under management,
we aim to help private clients and family offices
achieve their sustainability objectives in line with their targeted financial
performance. We
do this via an end-to-end research-driven investment value chain.
The starting point is
dedicated sustainability-focused investment research, including strategic
asset allocation,
thematic and asset-class views. These then translate into high-conviction
instrument
selection and advice.
This approach aims to provide insights for clients about sustainability risks
and opportunities and how to consider
them within a portfolio
context. These research
views inform our
sustainable and impact
investing solutions,
which
include
multi-asset investment
portfolios
and
a
suite of
advisory
options
across equities,
bonds,
and
alternative
investments.
Integration of Credit Suisse
The acquisition
of Credit Suisse
Group offers Global
Wealth Management
several discrete
opportunities to
enhance
our
existing
sustainable
investing
offering
with
potentially
complementary
capabilities
and
resources.
These
opportunities
include
enhancement
of
transparency
and
reporting
on
the
sustainability
characteristics
of
investments and
portfolios; as
well
as
the addition
of more
subject-matter experts
who
bring a
focus on
client
engagement and internal capacity building. We also look forward to
bringing select Credit Suisse sustainable and
impact investing
solutions onto
the merged
platform during
2024 and
2025. These
solutions will
be subject
to
existing UBS
AG Global
Wealth Management
sustainable investing
frameworks, diligence,
and instrument
selection
approaches.
Deviations
in
these
approaches
have
already
been
identified,
with
findings
integrated
into
the
migration planning. During
the migration
of solutions, clients,
and assets, we
will phase
down dual
governance,
with the aim of aligning
under the existing UBS
AG Global Wealth Management
sustainable investing governance.
2023 highlights
Continued delivery of actionable investment
insights
Global Wealth
Management CIO continued
to identify actionable
sustainability-related investment opportunities,
including SI frameworks and strategies across
carbon markets, selected areas of
fixed income, such as securitized
debt, and thematic
areas such as
the circular economy. We publish
a regular series
of sustainable
investment views,
including
a
monthly
Sustainable
Investing
Perspectives
series
and
a
longer-term-focused
quarterly
Sustainable
InSights
publication.
They are
complemented by the
Sustainable Investing in
Charts
and
SI Top
Holdings
reports,
both introduced during 2023.
The underlying
sustainable investing
research views
are integrated
into the
CIO
House View
and are accompanied,
where relevant,
by media such as videos or
podcasts, to facilitate client reach and
accessibility. A spectrum of topics
was covered during 2023, including impact
investing, green-tech, opportunities arising from public
capital programs,
carbon markets and the circular economy.
In addition, we introduced a framework
to help investors gain exposure to
securitized assets with a focus on
sustainability,
including mortgage-backed securities. We expect this
area to provide
more opportunities for innovation as investors increase
their focus on sub-asset classes within
fixed income.
Sustainability Report 2023
| Supporting opportunities
67
We
also
continued
to
include
sustainable investing
insights
in
the CIO
monthly
Messages
in
Focus
publication,
which provides private
clients with tactical,
actionable investment ideas. Additionally,
the flagship CIO
2024 Year
Ahead
publication outlined investment
implications for sustainable
investors in the year to
come and discussed the
impact of decarbonization over the coming decade.
We further enhanced
the methodology underpinning the
CIO Sustainability Scores
for issuers
, which now
covers
approximately 13,000 issuers and enables
issuer-, fund-, and portfolio-level transparency
to be delivered to clients.
Educating our clients and their advisors
Supporting our
clients, prospects
and advisors
with timely
research and
education on
sustainable investing is
an
important
part
of
the
advice
we
provide.
Given
the
rapidly
evolving
environment
around
sustainability
and
investments, it
is crucial for
advisors to
stay up-to-date
on industry trends,
regulatory developments
and investment
ideas. During 2023, we delivered a range
of voluntary learning opportunities
at various client events, including
the
APAC
flagship
sustainable
finance
conferences
(which
attracted
more
than
600
APAC
clients),
the
Emerging
Successors
Program,
Own
Your
Worth
Sustainability
Summit,
and
the
UBS
x
Unlocked
Foundation
Women’s
Summits. To
complement these events,
we also introduced additional sustainability-focused training opportunities
for advisors globally. These ranged from mandatory training modules to a series
of virtual discussions with internal
and external subject-matter experts
on topics like ESG politicization and investing
in oceans.
›
Refer to
ubs.com/global/en/wealth-management/sustainable-investing
for more information about our Global
Wealth Management’s sustainable investing insights
›
Refer to the UBS Group Annual Report 2023 available on
ubs.com/annualreport
for more information on the overall
business and financial profile of UBS Global Wealth Management as important context for the product and
financial information provided here
›
Refer to the “Supporting opportunities” section of this report for more information on the proportion of
sustainable investment assets as part of UBS Group’s total invested assets
Sustainability Report 2023
| Supporting opportunities
68
Asset Management
Sustainable Investing (SI) has been an integral part of our Asset
Management business for
over 20 years,
grounded in the clear belief that,
from our products and services to the way
we work and operate in society, sustainability means thinking and
acting with the long term
in mind. The array of sustainable investment (SI) strategies we offer
aims to drive financial
returns and sustainability outcomes.
Integration of Credit Suisse
In
our
combined
organization,
there
is
a
continued
focus
on
sustainability
and
innovation.
We
believe
the
integration
brings
opportunities
for
an
expanded
client
offering
and
a
more
influential
“seat
at
the
table”
for
stewardship and engagement activities, given our
increased asset base.
The existing
UBS AG Asset
Management SI
product classification
framework will
remain in
place and will
be applied
to the
Asset Management (Credit
Suisse) products when
onboarded to the
UBS shelf, starting
in 2024. Separate
governance structures
remain in
place as
of end
2023, while,
concurrently,
progress has
been made
to align
policies,
methodologies and frameworks. A joint governance
forum has been put in place to support this alignment.
2023
highlights
Active Ownership
We are convinced that
taking a focused, investment-led
and outcomes-driven approach
to active ownership
brings
benefits to companies, their shareholders,
and wider society. Effective engagement
can help companies contribute
to
value
creation
and
protection
at
the
company-specific
and
systemic
levels,
addressing
both
risks
and
opportunities.
Climate
UBS AG Asset Management has been running a
Climate Engagement Program for more than
five years. In 2023,
we sharpened the
program’s focus on
engaging with companies
to adopt targets
and transition planning
in line
with a net-zero pathway
and increased the
number of companies
covered by the
program. In addition
to our direct
engagement, we continued to use collaborative initiatives to scale
our impact, especially through our membership
of Climate Action 100+.
Sustainability Report 2023
| Supporting opportunities
69
We believe
we can
support industry leaders
in accelerating
the early
adoption of transformative
decarbonization
technologies. By
way of
example,
in September
2023, we
hosted an
engagement event
designed to
accelerate
decarbonization in
the shipping
sector. Cargo owners,
commodity shippers,
marine engine
manufacturers and
low-
carbon fuel providers,
as well as recognized
experts, used the
event to discuss key
barriers to alternative
fuels, such
as supply,
technical complexities,
and pricing.
The event
supported one
of the
main objectives
of our
Climate Action
fund. Launched
in December
2022, the
fund invests
in attractively
valued companies
in emission-intensive
industries
that need to
decarbonize over time. We
actively engage with these
companies one-on-one, and across
the value
chain, to monitor and support such efforts.
We also engage with companies to set climate targets in line
with net-zero pathways, which we see as critical for
credible climate risk management
and achieving the transition
to a low-carbon economy.
We were a signatory
to a
campaign led by
the Carbon Disclosure
Project, encouraging over
2,000 companies to
adopt science-based climate
targets.
We
were
also
co-signatories
to
two
investor-led
letters
to
policymakers,
calling
on
them
to
accelerate
decarbonization goals at state-owned companies.
Linking our climate
engagement with
voting action is
key to ensuring a
continued clear alignment
across our active
ownership approach. To support this, we have aligned our voting policy with our climate engagement efforts and
objectives in
our policy
framework and
clarified our climate
and net-zero
expectations of
companies. We have
a
clearly defined set of criteria which we use to
evaluate companies’ say-on-climate
proposals.
We
will
further
evaluate
climate
proposals
against
the
following
six
key
factors:
climate
governance,
net-zero
ambition and
targets, quality
of decarbonization
strategy, net-zero
performance alignment,
lobbying and
policy
engagement, and
use of
offsets. We
will also
support shareholder proposals
that seek
information about issuers
adopting
or
adhering
to
relevant
norms,
standards,
codes
of
conduct
or
universally
recognized
international
initiatives, including the recommendations of
the TCFD.
We have a fiduciary duty and fundamental objective to act in the best financial interests of our clients to
enhance
the long-term
value of
their investments.
We exercise
our
voting rights
in
a
manner which
we believe
is in
the
companies’ long-term financial
interests.
Nature
To
support our increasing focus on natural capital, Asset Management became a founding member of the Nature
Action
100
collaborative
engagement
initiative
and
joined
the
Principles
for
Responsible
Investment’s
Advisory
Committee for its stewardship initiative on nature.
Social
In 2023, we progressed against the engagement objectives of our Social Engagement Program, which launched a
year
earlier.
Our
three
focus
themes
are
human
capital,
human
rights
and
health.
To
complement
our
direct
engagement efforts, we continued to collaborate with
other investors to maximize our engagement
impact.
We have seen target engagement companies
enhance their labor practices, set time-bound
quantitative targets to
enhance gender diversity, conduct human rights risk assessments, and initiate plans to reduce risks and raise
their
focus on societal health. We also
filed a shareholder resolution, urging a company
to enhance gender diversity at
board level after several years of stewardship
activities led to no signs of progress.
In addition,
we took
up the
role of
Chair of
the global
engagement workstream in
the UK
Chapter of
the 30%
Club and we also co-chair the Investors
in Nutrition and Health initiative of the
Access to Nutrition Initiative. These
roles allow us to drive industry collaboration
and enhance our effectiveness in reaching
engagement outcomes.
Credit Suisse AG Asset Management
collaborated with other asset
managers to establish social and
human capital
key performance
indicators for
funds with
a social
objective in
the industry,
to build
financially and
socially important
data such as human capital turnover at the
levels of gender, ethnicity, and age group.
Sustainability Report 2023
| Supporting opportunities
70
Thought leadership research
Asset
Management
launched
a
special
Sustainable
Investing
edition
of
its
Panorama
series
during
2023.
The
publication
focused
on
the
opportunities
and
risks
of
sustainable
investing,
enhancing
the
effectiveness
of
stewardship by
asset
owners and
asset
managers, showing
how
to
customize sustainability
through active
and
index investing, and the role that natural capital
plays in sustainability investing approaches.
During 2023,
we also
published several
thought leadership
pieces, including
articles focused
on
natural capital,
chemical pollution
, embodied carbon, physical risk,
impact investing and active ownership.
They included:
–
Chemical pollution and the need to transition to
sustainable chemistry
;
–
No false starts: The race to reduce embodied
carbon
;
–
China and net zero
;
A recipe for alpha?
;
–
Finding our voice: Active owners need to bring
something to the table
; and
–
Green premium.
We also conducted extensive
thematic research on emerging sustainability
topics such as biodiversity,
to facilitate
engagement activities and portfolio investment
decision-making.
External awards recognition
UBS AG Asset
Management won several sustainability-themed awards
during 2023, underlining
the strengths of
our approach. Highlights include:
–
Top 5 Fastest Riser for ESG at the Broadridge
Distribution Achievement Awards;
–
Best ESG Fund House (Passive) and Best ESG
Emerging Markets Equity Fund (Passive)
at the ESG Clarity Awards;
–
Best
Equity
ESG
Investment Fund
at
the
ESG
Investment Leader
Awards
2023
for
the
Global
Equity
Climate
Transition Fund;
and
–
Strong results in the
2023 GRESB Real Estate and Infrastructure
Assessments
, with all 20 discretionary strategies
achieving
4
or
5
stars
and
outperforming
the
GRESB
average,
14
of
them
receiving
5
stars
and
four
of
the
strategies being ranked first in their peer group.
1
›
Refer to the UBS Group Annual Report 2023 available on
ubs.com/annualreport
for more information on the overall
business and financial profile of UBS AG Asset Management as important context for the product and financial
information provided here
›
Refer to the “Supporting opportunities” section of this report for more information on the proportion of
sustainable investment assets as part of UBS Group’s total invested assets
1
GRESB is a third-party organization that provides ESG data to financial markets. GRESB collects, validates, scores, and independently
benchmarks ESG data to
provide business
intelligence, engagement
tools, and
regulatory reporting
solutions for
investors, asset
managers, and
the wider
industry. UBS has
been a
member
of GRESB for over a decade. Award as of October 2023.
UBS submitted 2022 data to GRESB for the
2023 Assessments.
Sustainability Report 2023
| Supporting opportunities
71
Investment Bank
Our Investment Bank
offers clients global
advice and access
to the world’s
primary, secondary and private
capital
markets,
through
an
extensive
array
of
sustainability-focused
services,
products,
research
and
events.
The
Investment Bank
has incorporated
sustainability expertise from
Credit Suisse
to strengthen
UBS Group’s
offering
across Global Markets,
Global Banking
and Research. New
sustainable finance
content, products
and other services
taken over from Credit Suisse follow UBS Group standards and approval
process. As of the end-of-year 2023, the
Investment Bank has been operating under
a single consolidated governance. In 2023, we
honed our capabilities
through initiatives across Global Markets,
ESG Research, Global Banking and data-led offerings.
2023 highlights
Global Research
In 2023, ESG Research delivered thematic reports on topics including energy transition materials,
EV charging, the
EU and global sustainability-related regulatory landscape, PFAS (per-and polyfluoroalkyl
substances, also known as
“forever
chemicals”), battery
recycling
in
China,
biodiversity, and
alternative fuels.
More
generally,
through
our
research, we
addressed ways
in which
ESG factors
connect to
individual markets,
sectors and
companies in
our
coverage, for example in an expanded ESG Sector
and Company Radar product.
ESG research
is supported
by the UBS
Evidence Lab.
It provides data-driven
insights into
ESG-relevant questions
and
in
2023,
it
identified
six
themes
favored
by
family
offices
for
impact
investing:
education;
climate
change;
healthcare; economic
development and
poverty alleviation;
agriculture; and
a
broad
theme covering
alternative
food sources, clean water, and sanitation.
Sustainable finance at conferences and other
events
Throughout
the global
calendar,
ESG
and
sustainability-related topics
are
frequently
integrated into
proprietary
investor conferences
run by
the Investment
Bank,
and into
other industry
events. These
include targeted
events
focusing on sustainable finance
topics such as transition finance,
regulatory developments, impact technology
and
green equity.
We also incorporate sustainability
topics into sector- or
market-specific conferences including
our Energy Transition
Conference, Global Real Estate
CEO/CFO Forum and our
Greater China Conference. In
September 2023 we held
our annual
Investment Bank-wide
Sustainable Finance
Conference,
which addressed
areas such
as the
development
of supportive
regulation and
products to
support the
ongoing journey
to net
zero and
the development
of transition
finance.
Sustainability Report 2023
| Supporting opportunities
72
Global Banking
ESG Advisory Group
Increasingly, consideration of ESG is seen
as a central component
of any corporate
business strategy and
a key tool
in achieving sustainability in business
and corporate operating models. A recent
Bloomberg Intelligence-run survey
of senior corporate executives confirmed this trend.
1
As pressure from regulators and other key stakeholders, such
as customers, investors and employees,
grows,
so too does the need for transformation. The ESG Advisory Group
supports UBS’s clients in assessing ESG topics throughout
the corporate lifecycle.
Our
approach is
underpinned by
a
profiling framework
with
carefully
developed modules
to
critically analyze
a
corporation’s ESG
profile from
a business
and investor
perspective. The framework
lies at
the heart
of all
Global
Banking transactions and addresses four core components
(with examples of analytical modules in parentheses):
–
what you do
(stakeholder engagement framework);
–
how you do it
(ESG performance analysis, PAI
2
as a product explaining investor needs to corporates);
–
how you talk about it
(corporate sustainability report diagnostics);
and
–
what others say about you
(outside-in stakeholder analysis via artificial intelligence
(AI) platform).
Leveraged and debt capital markets
The
Investment
Bank
arranged
USD 53.7
billion
3
in
green,
social,
sustainability
and
sustainability-linked
(GSSS)
bonds through 102 bond deals
during 2023
4
. Our deal activity was
particularly strong in EMEA
and Australia while
also
solidifying our
market-leading position
in
the
Swiss-franc-denominated market
with
the
Investment Bank’s
market share at nearly 50%
5
.
In addition, we have
built a strong position in
Brazil’s local labelled ESG
debt market.
Deal
highlights
included the
structuring
and
execution of
the
Western
Australia
Treasury
Corporation’s (WATC)
inaugural AUD 1.9
billion green
deal,
and
winning the
structuring mandate
for the
Australian government.
The
funds
for
WATC
will
support
government
projects
targeting
environmental
outcomes,
such
as
investments
to
decarbonize the main electricity grid.
This includes batteries and wind
farms, EV charging infrastructures
as well as
rebates and standalone power systems.
Meanwhile, the establishment of the Australian
government’s green bond
framework highlights its
key priorities,
by referencing its
aim for
upcoming green bonds
to finance
projects that
will help Australia achieve its ambition to
be net zero by 2050.
In July 2023, we acted as a joint global coordinator,
physical bookrunner and sustainability coordinator
on a debut
EUR 270 million green senior secured notes
issuance in support of the leveraged
buy-out (LBO) of Amara Nzero by
a consortium
led by
Cinven. This
was the
first green
bond to
be issued
in EMEA
with LBO
use of
proceeds. In
August
2023,
we
facilitated
an
innovative
senior
non-preferred
sustainability-linked
loan
(SLL)
note
from
Nordea.
This
transaction represented the first banking SLL note
issued across core currency markets globally.
›
Refer to the UBS Group Annual Report 2023 available on
ubs.com/annualreport
for more information on the overall
business and financial profile of UBS Investment Bank as important context for the product and financial
information provided here
1
bloomberg.com/company/press/bioomberg-intelligence-survey-finds-investors-and-c-suite-embrace-esg-despite-concerns
2
Principal adverse impacts, as defined by the EU
Sustainable Finance Disclosure Regulation
3
Notional value. Investment Bank figure is USD 53.7 billion of
which UBS AG figure is USD 51.5 billion and
Credit Suisse figure is USD 4.6
billion.
The metrics
include transactions such as, but not limited
to, Investment Bank Global Banking bonds issued under
the voluntary ICMA Green Bond Principles, Sustainability
Bond Principles,
and Sustainability-Linked
Bond Principles.
The principles
include a
recommendation that
the issuer
appoints an
external review
provider to
undertake an independent external review
(e.g., second-party opinion). This
is consistent with market
practice. The metrics also
include sustainability themed
bonds (e.g., Transition). Transactions are counted only once,
there is no double counting
(e.g., if and where UBS
AG and Credit Suisse
were involved in the same
transaction). UBS performed
an assessment for
Credit Suisse green,
social, sustainability
and sustainability-linked
bonds reported in
the 2023 Sustainability
Report
and deemed them to be aligned to UBS sustainable
bond guidelines.
4
Investment Bank figure is 102 of which UBS AG
figure is 93 and Credit Suisse figure is 16.
5
Bloomberg
Sustainability Report 2023
| Supporting opportunities
73
Personal & Corporate Banking
In our home market of Switzerland,
our aim is to be the most progressive financial
institution when it comes to offering sustainable and sustainability
-linked financial advice
and products. As Switzerland sets course for a successful transition
to a low-carbon future,
we are developing innovative advisory, lending, basic banking,
and transition financing
solutions, while also offering our clients access to sustainable investment
solutions.
Integration of Credit Suisse
UBS Switzerland AG
and Credit Suisse
(Schweiz) AG currently
remain separate entities.
However, the sustainable
products
of
Credit
Suisse
(Schweiz)
AG
have
been
reviewed
and
vetted
against
the
UBS
sustainable
product
frameworks. Based on this, Credit Suisse (Schweiz) AG continues to offer its sustainable products to its clients but
paused developing new products in 2023.
2023 highlights
Private clients
Supporting our
clients to
meet their
sustainability ambitions
remained a
focus in
2023. Our
private clients
continued
to
allocate
to
sustainable
investment
solutions
during
the
year,
helped
by
easy
access
to
the
relevant
product
offerings across both
sustainable funds
and sustainable
pension solutions using
our mobile
banking app,
UBS key4.
Forming sustainable partnerships and thought
leadership
Partnerships continue to play a key role in our efforts. In 2023, UBS entered into a new partnership with the
Ecole
Polytechnique
Fédérale
Lausanne
(EPFL)
to
support
innovation
in
sustainability
and
collaboration
through
joint
projects. In
addition, we
became the
first bank
to join
the Swiss
Green Fintech
Network, actively
supporting the
development
of
innovative and
scalable
technology
solutions,
and
the
development of
Switzerland
as
a
global
leader in
green fintech.
We continued
publishing articles
in order
to deepen
client dialogue
and engagement.
Jointly
with the business and group functions, we have participated
in various sustainability-related seminars
and events.
›
Refer to
ubs.com/sustainability-ch
for information on sustainability at UBS in Switzerland
›
Refer to the UBS Group Annual Report 2023 available on
ubs.com/annualreport
for more information on the overall
business and financial profile of Personal & Corporate Banking as important context for the product and financial
information provided here
Sustainability Report 2023
| Supporting opportunities
74
Group Treasury activities
In
2023,
Group
Treasury
continued
to
invest
its
high-quality
liquid
assets
portfolios
under
a
dedicated
ESG
Investment Framework as described
in UBS’s net-zero ambition
statement of 2021. This framework
integrates ESG
considerations
in
the
investment
process
alongside
more
traditional
economic
and
risk
dimensions.
It
supports
investments in
ESG-labelled securities
that have
a direct
link to sustainable
projects, promotes
investments in
issuers
with positive ESG characteristics and flags potential
risks.
At year-end 2023,
Group Treasury held
more than USD
8 billion of green,
social and sustainability
bonds in its
high-
quality liquid
assets (HQLA)
portfolios, up 20%
from the
USD 6.7 billion
it held in
2022. In comparison,
global GSSS
bond issuance increased 7%
1
in 2023.
Non-core and Legacy
In 2023, we
created Non-core and Legacy,
which includes positions and
businesses not aligned with
our strategy
and policies. Those
consist of the
assets and liabilities
reported as part
of the
former Capital Release
Unit (Credit
Suisse) and certain assets
and liabilities of the
former Investment Bank (Credit
Suisse), Wealth Management
(Credit
Suisse),
Swiss
Bank
(Credit
Suisse)
and
Asset
Management
(Credit
Suisse)
divisions,
as
well
as
of
the
former
Corporate Center
(Credit Suisse).
Non-core and
Legacy also
includes the
remaining assets and
liabilities of
UBS’s
Non-core and Legacy Portfolio,
previously reported in
Group Functions (now
renamed to Group Items),
and smaller
amounts of assets
and liabilities of
UBS’s business divisions
that we have
assessed as not
strategic in light
of the
acquisition of
the Credit
Suisse
Group. We
are
actively
reducing the
assets of
Non-core and
Legacy
in
order to
reduce operating costs and financial resource
consumption, and to enable us to simplify
infrastructure.
›
Refer to the UBS Group Annual Report 2023 for more information about the Non-core and Legacy business division
Upon
the
legal
close
of
the
acquisition
of
the
Credit
Suisse
Group,
we
have
applied
existing
UBS
prudent risk
management practices
to material
risks of Credit
Suisse. Positions
and businesses
not aligned with
the core strategy
and policies of UBS have been ring-fenced in the Non-core and Legacy business division, with the aim of ensuring
a timely and orderly wind-down.
›
Refer to the “Managing sustainability and climate risks” section of this report for a description of sustainability-
and climate-related de-risking activities
1
Bloomberg
Sustainability Report 2023
| Managing sustainability and climate risks
75
Managing sustainability and
climate risks
Introduction
Managing sustainability
and climate
risk is a
key component
of our
corporate responsibility.
We define
sustainability
and climate risk as the risk that UBS negatively impacts, or is impacted by,
climate change, natural capital, human
rights and other environmental,
social and governance
(ESG) matters. Sustainability
and climate risks may manifest
as credit, market,
liquidity, business or
non-financial risks for
UBS, resulting in potential
adverse financial, liability
or
reputational impacts.
Group
Risk
Control
(GRC)
is
responsible
for
our
firm-wide
sustainability
and
climate
risk
framework
and
the
management of
exposure to
sustainability
and
climate (financial)
risks
on
an
ongoing
basis
as
a
second
line
of
defense, while our Group
Compliance, Regulatory & Governance
(GCRG) function monitors the
adequacy of our
control
environment
for
non-financial
risks
(NFR),
applying
independent
control
and
oversight.
We
manage
sustainability and climate risk within a dedicated
risk management framework.
In 2023 we worked to revise this framework and our processes across UBS, following the acquisition
of the Credit
Suisse Group.
Recognizing that
it is
imperative to
have a
consistent approach
to managing
sustainability and
climate
risk across the consolidated banking group, we have merged the Sustainability and Climate Risk (SCR) units under
the Chief Risk
Officer (CRO)
for Sustainability. We
also developed a
combined Group policy
for sustainability and
climate
risks,
including
risk
appetite
standards.
Furthermore,
we
continued
to
work
toward
consolidating
our
sustainability and
climate risk metrics
and quantitative approaches
across the combined
entity, while enhancing
our
analytical capabilities and further integrating sustainability and climate risk considerations into traditional financial
and
non-financial risks,
for example
by
enriching our
risk
management processes
and
reporting around
nature-
related risks.
At the
same time
our sustainability
and climate
risk framework
continued to
mature through
our multi-year
initiative
focused on addressing
regulatory requirements and
enhancing core processes,
such as reporting
and disclosures.
This chapter presents our
approach to managing sustainability, climate and
nature-related risk, while highlighting
those areas where further work is ongoing to align the
Credit Suisse approach to the overall Group approach.
The
current inventory
of quantitative sustainability
and climate
risk metrics, including
exposure to
carbon-related assets,
climate-sensitive sectors
and nature-related
risks for
UBS Group
excluding Credit
Suisse,
is disclosed
later in
this
section. UBS
is in
the process
of implementing
a combined
and aligned
sustainability-
and climate-risk
dataset across
UBS
Group
and
including Credit
Suisse
AG.
For
this
reason, UBS
will
publish
UBS
Group
and
Credit
Suisse AG
sustainability and climate risk metrics required pursuant to FINMA Circular 2016/1 "Disclosure – banks", Annex 5,
in
a
supplement
to
the
UBS
Group
Annual
Report
and
the
UBS
Group
Sustainability
Report
in
line
with
the
publication timeline for the semi-annual Pillar
3 disclosures in the third quarter of
2024.
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more information about
the UBS Group sustainability and climate risk policy framework
Sustainability Report 2023
| Managing sustainability and climate risks
76
Sustainability and climate risk management
framework
Our
firm-wide
sustainability
and
climate
risk
management
framework
and
related
policies,
standards
and
guidelines
underpin
our
management
practices
and
control
principles.
They
enable us to identify and manage potential adverse impacts on the climate, the environment
and human
rights, as
well as
the associated
risks affecting
us and
our clients,
while supporting
the transition to a low-carbon world.
Overseen by senior management, the framework
applies to the balance sheet, our own
operations and our supply
chain. It consists of four different phases: (i) risk identification and measurement; (ii) monitoring,
and risk appetite
setting; (iii) risk management and control; and
(iv) risk reporting and disclosure.
›
Refer to “Our investment management approach to sustainability and climate risks“ in this section for a description
of our sustainability and climate risk investment approach
Sustainability Report 2023
| Managing sustainability and climate risks
77
The
Group
Chief
Risk
Officer
(GCRO)
is
responsible
for
the
development
of
the
sustainability
and
climate
risk
framework and
risk appetite,
along with
its integration
into those
of the
Group. The
CRO for
Sustainability supports
the GEB by providing leadership on sustainability in collaboration
with business divisions and Group Functions and
is supported by the
Sustainability and Climate Risk unit (SCR
unit). In addition, the BoD
Risk Committee monitors
the progress of UBS’s efforts to address sustainability
and climate risk.
›
Refer to the “Supplement to Governance” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
,
for further details on the sustainability governance at UBS
Our
multi-year Sustainability
and
Climate Risk
Initiative (the
SCR
Initiative),
launched in
2020
by
Pre-acquisition
UBS’s SCR
unit, continues
to build
capacity through
expertise, collaboration,
technology and
data. This
initiative
was created to integrate sustainability and climate risk considerations into the firm’s traditional financial and non-
financial risk
management frameworks,
which address
these traditional
risks across
the firm’s
business divisions
and
legal entities, against a continuously evolving
regulatory context.
In 2023, the SCR Initiative
further advanced efforts
toward the goal of
fully integrating
qualitative and quantitative
sustainability
and
climate
risk
considerations
into
the
firm’s
traditional
risk
management
and
stress-testing
frameworks. 2023 developments
include introducing
climate-driven risk analytics
into the
credit decision-making
process
for
select
portfolios,
introducing
climate-driven
quantitative
risk
appetite
for
specific
legal
entities,
expanding climate
and nature-related
risk monitoring
internally, and
further refining
processes and
governance and
methodologies to drive forward more comprehensive
ESG reporting and disclosures.
Like that
of UBS,
Credit Suisse’s
approach to
the management
of sustainability
and climate
risk consists
of four
phases, (1) risk identification, (2) monitoring,
(3) management, and (4) reporting.
›
Refer to “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for a
description of Credit Suisse’s approach
to sustainability and climate risk management
Sustainability and
climate risk
management activities
conducted in
2023 are
described below,
across the
four phases
of
the
sustainability
and
climate
risk
framework.
These
activities
laid
the
foundation
for
the
creation
of
a
sustainability and climate risk management
framework for the combined organization.
›
Refer to the “Supplement to Governance” and “Supplement to Managing risks“ sections of the Supplement to the
UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more details about our
sustainability and climate risk policy framework
Risk identification and measurement
On
an
annual
basis,
an
assessment
of
the
materiality
of
sustainability
and
climate-driven
risks
is
carried
out
in
accordance with the ISO 14001 standard for environmental management systems.
1
In 2023, we further advanced
our materiality assessment
methodology to integrate
documented transmission
channels that may
drive new forms
of
sustainability
and
climate-driven
financial
and
non-financial
risks,
leveraging
internal
and
external
expert
guidance.
We
aim
to
identify
sustainability
and
climate
risks
at
divisional
and
cross-divisional
levels,
both
through
the
sustainability and
climate risk-driven
materiality assessment
mentioned above
and,
increasingly, by
integrating them
into the
firm-wide traditional
risk identification
and measurement
processes. This
is also
applied to
significant Group
entities under UBS Group AG.
›
Refer to “Supplement to Strategy” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for details about our climate-related materiality assessment and the
underlying methodology
Our risk identification methodologies
collectively define UBS’s
materiality-driven approach, focus
areas and key risk
drivers. The outputs of these efforts define our
sustainability and climate risk management
strategy by:
–
identifying concentrations of climate
and nature-sensitive exposure
that may make
UBS vulnerable to
financial
and
non-financial
risks,
enabling
the
prioritization
of
resources
towards
enhanced
risk
quantification
and
subsequent management actions;
–
supporting delivery of a client-centric business strategy,
where the firm supports clients
with their sustainability
transition,
e.g., by low-carbon transition finance,
identifying clients that may benefit from
sustainability-focused
UBS products and services.
This provides information to senior management to support more informed decision-making on sustainability and
climate-driven
risks,
along
with
providing
decision-useful
information
to
stakeholders,
through
our
external
disclosures.
1
For the financial year 2023,
the materiality assessment covered UBS
Group excluding Credit Suisse.
Sustainability Report 2023
| Managing sustainability and climate risks
78
Transition risk
Climate-driven transition risks
arise from
global efforts
to mitigate
the effects
of climate
change. They
cover the
financial impact on our clients or on UBS itself through the creditworthiness of UBS counterparties or the value of
collateral held by UBS. Financial
impacts from climate-driven transition risks could
materialize through several key
risk factors:
–
climate policies: affecting operating expenses
(e.g.,
carbon taxes), analyzed both directly and indirectly;
–
low-carbon technologies
and
their
potential for
disruption: affecting
capital expenditure
requirements and/or
market share due to low-cost competition;
or
–
shifts in
consumer or
investor sentiment:
affecting revenues
(consumer demand
shifts) or
market perceived
value.
To
arrive
at
UBS
Group
excluding
Credit
Suisse
exposure
to
climate-driven
transition
risks,
we
have
analyzed
economic sectors within
UBS’s classification taxonomy,
with a view to defining
sub-sectors (hereafter referred
to as
“segments”) that
share similar characteristics
in their vulnerability
to the risk
factors identified above.
The approach
consists of grouping companies into these segments under an adverse risk scenario. This scenario is defined as an
immediate and disorderly approach
toward meeting the
well-below-2˚C Paris goal
over the zero-to-three-year time
horizon
(reflecting
the
business
planning
horizon).
The
outcome
of
this
process
is
a
sector-level
transition
risk
heatmap, where risk ratings range from low to high,
and ”climate-sensitive sectors” include the top three ratings
(high, moderately high and moderate).
In 2023, methodology enhancements on
the sector-level heatmap provided
for the incorporation of the additional
“disorderly” component (in
line with
the NGFS
immediate and
disorderly definition and
UBS’s in-house
scenario
developments).
Here,
disorderly
is
defined
as
a
differentiation
between
industrialized
and
emerging
market
countries: in the
short term, industrialized economies are
rated relatively riskier than
emerging economies due to
faster acceleration
in implementing
programs to
meet national
commitments made
within the
Paris Agreement
framework. These policies and programs are executed primarily through more stringent climate transition policies,
larger investments
in advanced low-carbon
technologies, and
the effects in
delivering affordable
and more climate-
friendly products (analyzed through price elasticity
in demand for these products).
The
transition
risk
heatmap below
shows
that,
at
year-end
2023,
our
exposure to
climate-sensitive sectors
and
related activities remains
relatively stable. Climate-driven
transition risk-sensitive exposure
now represents
12.1%
(up
from
11.7%
in
2022)
of
total
customer
lending
exposure,
mainly
driven
by
an
increase
in
exposure
to
commercial real
estate in
Switzerland. This
risk exposure
can be
associated with the
passage of
the Climate
and
Innovation
Act
in
Switzerland
and
the
expected
zero-to-three-year
impact
on
energy-efficiency
rules
in
the
commercial real estate sector. A slight reduction
in exposure can be observed in the fossil fuels trading
and mining
conglomerates sectors.
›
Refer to the “Supplement to Managing sustainability and climate risks” and the “Basis of reporting” sections of the
Supplement to the UBS Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for details
on methodologies
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Physical risk
Climate-driven physical
risks arise
from acute hazards,
which are increasing
in severity and
frequency, while chronic
climate risks arise
from an
incrementally changing climate.
These effects
may include increased
temperature and
sea-level rise, and
the gradual changes
may affect productivity
and property values
and increase the
severity and
frequency of acute hazards.
Our
physical
risk
heatmap
methodology
groups
together
corporate
counterparties
based
on
exposure
to
key
physical risk factors
(risk segmentation),
by rating sectoral,
sub-sectoral, and
geographical vulnerabilities
to climate-
driven
physical
risks.
These
vulnerabilities
were
identified
using
a
proprietary
in-house
UBS
model.
The
model,
developed in
2023, is
a significant
advance on
the historical
physical risk
heatmapping methodology
which Pre-
acquisition UBS
published in
2021 and
2022. By
leveraging over
1 billion
data points,
UBS analyzed
cross-sector
information on asset-level
data (sub-company
level), third-party
climate hazard ratings
through geospatial
datasets,
and
academic
insights
into
how
hazards
and
production
methods
may
be
aggravated
or
complementary
(transmission
channels).
The
analyses
are
then
quantitatively
aggregated
across
assets,
transmission
channels
(including value chains) and hazards at a
sub-sector/country or sub-country level of
granularity.
The refined
heatmap methodology
shows that
UBS Group
excluding Credit
Suisse physical
risk vulnerability
remains,
on average,
moderately low
(below the
sensitivity threshold
of moderate).
Given UBS’s
business profile,
the key
drivers
for
our
climate-sensitive
lending
(physical
risk) are
financial
intermediation activities,
and
collectively the
services, agriculture, and transportation sectors. In its current state, the model takes a conservative
approach in its
key assumptions,
limiting full
incorporation of
geographical and
sectoral sources
of variability
(which may
either
further amplify or mitigate financial vulnerability). We are committed to
addressing these and other limitations by
continuously improving the
modeling approach alongside
the industry, as it
continues to standardize
the disclosure
of physical
climate risk
data, integrates
regionalized scientific
climate models,
specializes in
its impact
on sectors
and assets, and collaborates
with a view to more informed decision-making.
More specifically, in 2024 and beyond, UBS will seek to expand its use of vendor data through both diversification
and
refinement,
further
address
the
limitations
presented
due
to
key
assumptions
in
the
model,
and
develop
approaches
to
address
data
limitations
in
other
types
of
assets
(e.g.,
real
estate).
We
will
also
explore
the
link
between
a
changing
climate
and
nature-related
financial
risks,
which
may
result
in
intensified
compounding
vulnerabilities.
Notably,
companies
that
depend
on
natural
capital
assets
may
be
adversely
affected
by
climate
change, which presents further risks to the
environment and the provision of ecosystem
services.
The physical
risk heatmap
below shows
that UBS
Group excluding
Credit Suisse
exposure to
climate-sensitive
sectors
was at
9.7% (up
from 8.4%).
This increase
is driven
by exposure
to the
services sector,
which includes
financial
services
activities
in
emerging
markets.
Most
of
the
climate-sensitive
physical
risk
exposure
is
located
within
countries that have high adaptive capacity to physical risk hazards; which
is an important aspect to consider when
interpreting the 9.7% exposure to physical risk.
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Nature-related risk
Nature-related
risk
refers
to
how
humans
and
organizations
depend
on
and
impact
the
natural
environment.
Natural resources
are referred
to as natural
capital which, in
combination,
provides the ecosystem
services which
benefit people and the planet. In the following we describe our understanding of how UBS’s business model may
depend on or impact those services, resulting in financial
and non-financial risk for UBS.
Biodiversity is
presented as
a function
of various
natural capital
assets providing
life on
earth with
a range
of services
(ecosystem services),
categorized and rated
for their role
in the development
of medicines,
technologies, and
more.
UBS‘s
development
of
insights
in
biodiversity,
among
other
nature-related
risks,
is
discussed
in
the
context
of
improving data
and methodology.
Like the
collaborative effort
that UBS
made on
climate-related risks
in earlier
years, we
have contributed
to global
efforts to
raise awareness
and exchange
knowledge on
nature-related risk
assessment methodologies. UBS
has made
these contributions through
its role
as a
member of
the Taskforce
on
Nature-related
Financial Disclosures
(the TNFD,
since 2021)
and the
United Nations
Environment Programme
Finance
Initiative (the UNEP-FI) working group on nature-related
risks (since 2018).
As
a
key
member of
the UNEP-FI
working group,
UBS
supported the
development of
a
methodology to
assess
nature-related risks
from both
the dependency
and impact
perspectives (to
the natural environment).
UBS took
part
in
the
collaborative
work
to
develop
the
Exploring
Natural
Capital
Opportunities,
Risks
and
Exposure
toolkit
(ENCORE),
central
to
UBS’s
initial
nature-related
risk
analysis.
The
UNEP-FI
coordinated
this
working
group
in
partnership
with
the
World
Conservation
Monitoring
Centre
(the
WCMC),
Global
Canopy,
the
Swiss
State
Secretariat for Economic Affairs (SECO), and
the Swiss Federal Office for the Environment
(FOEN).
In 2022 we
initially piloted
a quantification
approach for
nature-related risks
solely based
on the dependency
of our
clients
on
the
natural
environment,
using
the
ENCORE
methodology.
This
approach
allowed
us
to
assess
our
vulnerability to nature-sensitive economic activities by our
clients, which may drive financial
risks for UBS, such
as
reduced creditworthiness
of our
clients, or
the value
of companies’
debt, or
of equity
posted as
collateral for
lending
activities. In
2023 we expanded
the definition of
our “nature-sensitive metric”
to now include
both dependency
on, and impact on, nature, its assets,
and the ecosystem services that nature provides
to sustain human activities.
Our methodology assigns
ratings on the same
scale and granularity
as our climate-driven
sector-level heatmaps. As
in the case of the climate-driven heatmap assumptions,
UBS takes a conservative approach in assigning
the overall
nature-sensitive risk
rating to
each
of
the UBS
industry codes.
The
key
assumption here
is
driven
by
taking the
higher of the two values between the ENCORE-defined
impact and dependency ratings.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for further information on our
methodology
Our enhanced nature-related risk heatmap below
shows that at year-end 2023 UBS Group excluding
Credit Suisse
exposure to nature-sensitive sectors is at 15.1%
(up from 14.4% in 2022) of our total customer lending
exposure.
Sensitivity is
driven by
sectors that
either have
a high
impact or
a high
dependency on
the natural
environment.
These
include
metals
and
mining,
utilities
and
agriculture.
Our
business
activities
are
concentrated
in
Lombard
lending and
the financial
services sector
which are
rated as
relatively low.
A strong
correlation can
be observed
between
climate
risk
sensitivity
(both
transition
and
physical)
and
nature-related
risks,
showing
a
heightened
correlation identified in climate-sensitive sectors.
›
Refer to “Appendix 2 – Environment” in the appendices to this report for our approach to nature.
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Climate scenario analysis
We use scenario-based approaches
to assess our exposure
to physical and transition risks
stemming from climate
change. We have
introduced a series
of assessments
facilitated by industry
collaborations to
harmonize approaches
for addressing methodological and
data gaps. We
have performed top-down balance-sheet
stress testing (across
Pre-acquisition UBS), as well as targeted, bottom-up
analysis of specific sector exposures covering
short-, medium-
and long-term time horizons.
The work performed includes
regulatory scenario analysis and stress
test exercises such as
the Climate Risk Stress
Test (CST) of the
European Central Bank (the
ECB), which assesses banks’
preparedness for dealing with financial
and economic
shocks stemming
from climate
risk; and
the Bank
of England
(BoE) 2021
Climate Biennial
Exploratory
Scenario (CBES).
These exercises enabled the identification of financial risks from climate change and allowed Pre-
acquisition
UBS
to
assess
management
actions
in
response
to
different
scenario
results,
as
well
as
perform
counterparty-level
analysis. While
these
exercises
showed
mild
losses
and
low
exposure
to
climate
risk
for
the
entities
in
scope,
the
analysis
allowed
UBS
to
enhance
climate
risk
scenario
analysis
and
stress
testing,
further
developing our capabilities for assessing risks
and vulnerabilities from climate change.
In 2023, we further advanced our capabilities surrounding internal climate risk scenario analysis and stress testing
for UBS Group excluding Credit
Suisse. We enhanced and refined
our climate risk scenarios with a
focus on both
transition and physical risk projections
across 30 years. Further,
we have been developing additional
corresponding
climate risk
models to
amend the coverage
of major
risk types and
have enhanced
consistent modelling
approaches
in the context of real estate energy performance
and location-specific physical risk.
Over
the
last
years
we
also
leveraged
industry-wide
initiatives,
such
as
the
Paris
Agreement
Capital
Transition
Assessment (PACTA) exercise launched by the Swiss Federal Office for the Environment (FOEN) in 2020 and 2022.
Through this exercise, we assessed the climate alignment of our listed investments (including equities and bonds),
mortgages and direct
real estate portfolios.
The assessment allowed
us to compare
our results with the
aggregated
performance of all participating banks’ portfolios,
showing progress made over time and efforts
still needed.
The following chart shows the evolution of
our scenario-based analysis and stress-testing over
time.
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for a
description of Credit Suisse’s scenario analysis
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›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for details about our climate
scenario analysis at UBS and Credit Suisse
Monitoring and risk appetite setting
Our sustainability
and climate
risk policy
framework
defines the
qualitative risk
appetite for
sustainability and
climate
risk and is
subject to periodic
updates and enhancements.
Following the acquisition
of the Credit
Suisse Group,
the
sustainability and
climate risk
appetites of UBS
and Credit Suisse
were revised to define
combined standards
for the
new combined organization,
aimed at supporting mitigation and de-risking
of the joint risk profile.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for further details about our
combined risk appetite
As part of the sustainability
and climate risk monitoring
process, we have developed
methodologies and metrics
to
assess our ongoing exposure to
carbon-related assets and climate-sensitive sectors. In developing our metrics, we
consider the
inputs and
guidance provided
by standard-setting
organizations as
well as
new or
enhanced regulatory
requirements
for
climate
disclosures. In
2023
we
continued
working
on
methodologies covering
climate-driven
transition,
physical
and
nature-related
risks.
Examples
of
such
enhancements
include
adding
issuer
and
traded
products in
our risk
monitoring and
reporting capabilities.
The table
below includes
climate risk
metrics for
UBS
Group
excluding Credit
Suisse and
UBS AG
on
a
standalone basis,
as well
as for
UBS
Switzerland AG
and UBS
Europe SE, both on a
standalone basis. UBS will
publish UBS Group and
Credit Suisse AG sustainability
and climate
risk metrics in a supplement to
the UBS Group Annual Report and the
UBS Group Sustainability Report in line
with
the publication timeline for the semi-annual
Pillar 3 disclosures in the third quarter
of 2024.
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Carbon-related
assets
proportion
of
total
customer
lending
exposure
for
UBS
Group
excluding
Credit
Suisse
decreased
to 7.2%
in
2023
from 7.5%
in
2022. In
2023,
the share
of
climate-sensitive sectors
for UBS
Group
excluding
Credit
Suisse
was 12.1%
for
transition
risk and
9.7%
for
physical
risk
of
our
total
customer
lending
exposure.
The main
driver for
transition risk was
an increase
in exposure
to commercial real
estate in
Switzerland. This risk
exposure was associated with
the passing of the
Climate and Innovation
Act in Switzerland and
the expected zero-
to-three-year impact on energy-efficiency rules in the commercial real estate sector.
The key driver for physical risk
was exposure
to the
services sector, which
includes financial services
activities in emerging
markets. Most of
the
climate-sensitive physical
risk exposure
was located
in countries
that have
high levels
of capacity
to adapt
to physical
risk hazards.
The year-end 2023
exposure to
nature-sensitive sectors
of the UBS
Group was 15.1%
of the total
customer lending
exposure.
For
nature-related
risk,
sensitivity
was
driven
by
sectors
that
either
have
a
high
impact
or
a
high
dependency on the natural environment. These include metals and mining,
utilities, and agriculture. Our business
activities are concentrated in
Lombard lending and the
financial services sector, which are
rated as having relatively
low sensitivity to nature risk. A strong correlation can be observed between climate risk sensitivity (both transition
and physical) and nature-related risks, with
a heightened correlation in climate-sensitive sectors.
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Risk management – Climate- and nature-related metrics
For the year ended
%
change
from
31.12.23
31.12.22
31.12.21
31.12.22
Climate-
and nature-related metrics (USD billion)
1, 2
Carbon-related assets UBS Group excluding Credit Suisse
1, 2, 3, 4, 5
34.2
33.6
36.0
1.7
Carbon-related assets proportion of total customer
lending exposure, gross (%)
1, 2, 3, 4, 5
7.2
7.5
7.8
Carbon-related assets: UBS AG (standalone)
1, 2, 3, 4, 5
8.5
8.6
9.9
(1.5)
Carbon-related assets: UBS Switzerland AG
(standalone)
1, 2, 3, 4, 5
26.6
24.6
25.6
8.0
Carbon-related assets: UBS Europe SE (standalone)
1, 2, 3, 4, 5
0.0
0.0
0.0
(25.7)
Exposure to climate-sensitive sectors, transition
risk UBS Group excluding Credit Suisse
1, 2, 4, 5, 6
58.1
52.5
52.4
10.6
Climate-sensitive sectors, transition risk, proportion
of total customer lending exposure, gross
(%)
1, 2, 4, 5, 6
12.1
11.7
11.4
Exposure to climate-sensitive sectors, transition
risk: UBS AG (standalone)
1, 2, 4, 5, 6
9.9
9.2
9.6
7.8
Exposure to climate-sensitive sectors, transition
risk: UBS Switzerland AG (standalone)
1, 2, 4, 5, 6
47.5
41.2
41.1
15.1
Exposure to climate-sensitive sectors, transition
risk: UBS Europe SE (standalone)
1, 2, 4, 5, 6
0.0
0.0
0.0
(0.1)
Exposure to climate-sensitive sectors, transition
risk: Traded products, UBS Group excluding Credit Suisse
1, 2, 4, 5, 6, 7
0.9
Exposure to climate-sensitive sectors, transition
risk: Issuer risk, UBS Group excluding Credit Suisse
1, 2, 4, 5, 6, 8
4.6
Exposure to climate-sensitive sectors, physical risk
UBS Group excluding Credit Suisse
1, 2, 4, 5, 6
46.2
38.0
36.7
21.4
Climate-sensitive sectors, physical risk, proportion
of total customer lending exposure, gross
(%)
1, 2, 4, 5, 6
9.7
8.4
8.0
Exposure to climate-sensitive sectors,
physical risk: UBS AG (standalone)
1, 2, 4, 5, 6
52.7
44.8
42.1
17.7
Exposure to climate-sensitive sectors,
physical risk: UBS Switzerland AG (standalone)
1, 2, 4, 5, 6
15.7
14.8
16.0
5.8
Exposure to climate-sensitive sectors,
physical risk: UBS Europe SE (standalone)
1, 2, 4, 5, 6
0.0
0.0
0.0
122.3
Exposure to climate-sensitive sectors, physical risk:
Traded products, UBS Group excluding Credit Suisse
1, 2, 4, 5, 6, 7
7.2
Exposure to climate-sensitive sectors, physical risk:
Issuer risk, UBS Group excluding Credit Suisse
1, 2, 4, 5, 6, 8
15.7
Exposure to nature-related risks UBS Group excluding Credit Suisse
1, 4, 5, 6, 9
72.0
64.6
67.3
11.4
Exposure to nature-related risks, proportion of
total customer lending exposure, gross
(%)
1, 4, 5, 6, 9
15.1
14.4
14.7
Exposure to nature-related risks: UBS AG (standalone)
1, 4, 5, 6, 9
14.4
12.0
12.7
20.1
Exposure to nature-related risks: UBS Switzerland
AG (standalone)
1, 4, 5, 6, 9
56.3
49.8
49.7
13.0
Exposure to nature-related risks: UBS Europe
SE (standalone)
1, 4, 5, 6, 9
0.1
0.0
0.0
205.1
Exposure to nature-related risks: Traded products, UBS Group excluding Credit Suisse
1, 5, 7, 9
1.2
Exposure to nature-related risks: Issuer risk, UBS Group excluding
Credit Suisse
1, 5, 8, 9
3.5
1
Methodologies for assessing
climate- and nature-related
risks are emerging
and may change
over time. As
the methodologies, tools,
and data availability
improve, we will
further
develop our risk identification and measurement approaches. Lombard lending rating is assigned based on the average riskiness of loans.
2
Metrics are calculated and restated based
on the 2023 methodology, across three years
of reporting, 2021–2023.
3
As defined by the Task Force on Climate-related Financial
Disclosures (the TCFD), in its expanded definition
published in 2021, UBS defines carbon-related
assets through industry-identifying attributes of
the firm’s banking book. UBS further
includes the four non-financial sectors addressed
by the TCFD, including, but
not limited to, fossil fuel
extraction, carbon-based power generation,
transportation (air,
sea, rail, and auto manufacture),
metals production and mining,
manufacturing industries, real estate development, chemicals,
petrochemicals, and pharmaceuticals, building and construction materials
and activities, forestry, agriculture, fishing, food
and beverage production, as well as including trading companies that may
trade any of the above (e.g., oil trading or agricultural commodity trading
companies). This metric is agnostic
of risk rating, and therefore may
include exposures of companies that may
be already transitioning or adapting their business
models to climate risks, unlike
UBS climate-sensitive sectors
methodology, which takes a risk-based approach to
defining material exposure to climate
impacts.
4
Total customer lending exposure consists of total loans
and advances to customers
and guarantees, as
well as irrevocable
loan commitments (within
the scope of
expected credit
loss) and is
based on consolidated
and standalone IFRS
numbers. The credit
exposure
includes portfolio adjustment bookings, which are either directly impacting the metrics, and have been reflected in the heatmaps, or
are impact assessed and immaterial to the metrics
representation.
5
UBS continues to collaborate
to resolve methodological
and data challenges,
and seeks to integrate
both impacts to and
dependency on a changing
natural and
climatic environment, in how it evaluates risks and opportunities.
6
Climate- and nature-related risks are scored between 0 and 1, based on sustainability and
climate risk transmission
channels, as
outlined in
the Supplement
to the
UBS Group
Sustainability Report
2023. Risk
ratings represent
a range
of scores
across five-rating
categories: low,
moderately low,
moderate, moderately high, and high.
The climate- or nature-sensitive
exposure metrics are
determined based upon the top
three of the five
rated categories: moderate to high.
7
Traded products
are newly disclosed
for FY 2023. Risk
exposures consist of
receivables from securities
financial transactions, cash
collateral receivables on
derivative instruments and
financial assets measured at amortised cost.
8
Issuer Risk is newly disclosed for FY 2023. Risk
exposures consist of HQLA assets, debt securities,
bonds, liquidity buffer securities.
9
Nature-related risk metric methodology has been further strategically enhanced, as part of an ongoing collaboration
between UBS and UNEP-FI.
The table below presents a view of UBS’s risk
profile and changes year-on-year, within sectors and across climate-
and nature-related
risks. It
first shows
UBS’s total
exposure,
and trend,
to each
sector, followed
by an
exposure-
weighted risk
rating, the
trend in
the underlying
quantitative score
year-on-year, and
finally shows
the total
absolute
exposure rated as
moderate or higher
within that sector.
This is
presented for all
three risk types.
Exposures may
appear
under
one
or
more
of
the
risk
types
and
therefore
may
not
be
added
together;
this
is
because
the
methodologies are distinct in their approach
and application.
Overall,
UBS
Group
excluding
Credit
Suisse
has
a
moderate
or
moderately
low
outlook
across
the
three
risk
categories at the end of
2023. We found that most
year-on-year fluctuations were
driven by an increase in
lending
and changes in the
risk profile relating
to commercial real
estate activities, especially
in Switzerland. The
changes in
the risk profile can be attributed to regulatory
action in Switzerland regarding climate policies.
›
Refer to our transition and physical risk heatmaps above
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Risk exposures by sector for UBS Group excluding Credit Suisse
1, 2, 3, 4, 5
Transition risk
Physical risk
Nature-related risk
8
Sector / Subsector
2023
exposure
(USD bn)
2022-
2023
exposure
trend
6
Weighted
average transition
risk rating 2023
7
2022-
2023
weighted
average
transition
risk trend
6
2023
transition
risk
climate
sensitive
exposure
(USD bn)
5
Weighted
average physical
risk rating 2023
7
2022
risk-
rating
category
6
2023
physical
risk
climate
sensitive
exposure
(USD bn)
5
Weighted
average nature-
related risk rating
2023
7
2022-
2023
weighted
average
nature-
related
risk trend
6
2023
nature-
related
risk
climate
sensitive
exposure
(USD bn)
5
Agriculture
Agriculture, fishing and
forestry
0.30
↑
Moderate
→
0.23
Moderate
→
0.08
High
→
0.30
Food and beverage
3.72
↑
Moderately high
→
3.72
Moderate
→
2.08
Moderate
→
3.71
Financial services
Financial services
60.72
↑
Moderately low
↓
0.00
Moderate
→
17.47
Low
→
0.06
Fossil fuels
Downstream refining,
distribution
0.25
↓
Moderately high
→
0.25
Moderate
→
0.16
Moderately high
→
0.24
Integrated oil and gas
0.32
↓
Moderately high
→
0.32
Moderately low
→
0.00
High
→
0.32
Midstream transport,
storage
0.17
↑
Moderate
→
0.17
Moderate
→
0.17
Moderately low
→
0.00
Trading fossil fuels
4.55
↓
Moderately high
→
4.55
Moderate
→
0.57
Moderate
→
4.44
Upstream extraction
0.21
↑
High
→
0.21
Moderate
↓
0.18
High
→
0.21
Industrials
Cement or concrete
manufacture
0.35
↑
High
→
0.35
Moderate
→
0.13
High
→
0.35
Chemicals manufacture
1.71
↑
High
→
1.71
Moderate
→
0.39
Moderately high
↓
1.71
Electronics manufacture
2.08
↑
Moderately low
→
0.00
Moderate
→
0.53
Moderate
→
0.82
Goods and apparel
manufacture
2.63
↑
Moderately high
→
2.63
Moderate
→
1.58
Moderate
→
2.55
Machinery manufacturing
3.73
↑
Moderately high
→
3.26
Moderate
→
0.59
Moderately high
→
3.72
Pharmaceuticals
manufacture
2.12
↑
Moderately high
→
2.12
Moderate
→
0.89
Moderate
→
2.10
Plastics and petrochemicals
manufacture
0.91
→
Moderately high
→
0.91
Moderate
→
0.28
Moderate
→
0.51
Metals and mining
Mining conglomerates (incl.
trading)
2.06
↓
Moderately high
→
2.06
Moderate
→
0.05
Moderate
→
2.06
Mining and quarrying
0.43
→
Moderate
→
0.12
Moderate
→
0.37
High
→
0.43
Production of metals
0.59
↑
Moderately high
→
0.59
Moderate
→
0.39
Moderately high
↓
0.25
Private lending
Lombard
122.76
↓
Moderately low
→
0.00
Moderately low
→
0.00
Low
→
0.00
Private lending, credit cards,
others
9
2.90
↓
Not classified
→
0.00
Not classified
→
0.00
Not classified
→
0.00
Real estate
Development and
management
4.58
↓
Moderately high
→
4.40
Moderately low
→
0.42
Moderately high
→
4.58
Commercial real estate
55.09
↑
Moderate
→
24.75
Moderately low
→
2.87
Moderately low
→
26.71
Residential real estate
176.70
↑
Moderately low
→
0.00
Low
→
0.00
Low
→
0.00
Services and
technology
Services and technology
19.10
↑
Moderately low
→
0.00
Moderate
→
11.24
Moderate
→
10.49
Sovereigns
Sovereigns
2.77
→
Moderate
→
0.09
Moderately low
→
0.04
Low
→
0.00
Transportation
Air transport
1.72
→
Moderately high
→
1.72
Moderate
→
1.58
Moderately high
→
1.72
Automotive
0.41
↑
Moderate
→
0.11
Moderate
→
0.36
Moderate
→
0.41
Rail freight
0.50
↑
Low
→
0.00
Moderate
→
0.39
Moderate
→
0.49
Road freight
0.51
→
Moderately high
→
0.51
Moderate
→
0.43
Moderately high
→
0.51
Transit
0.59
→
Moderately low
→
0.00
Moderate
→
0.54
Moderate
→
0.23
Transportation parts and
equipment supply
0.65
↑
Moderately high
→
0.65
Moderate
↓
0.34
Moderate
→
0.65
Water transport
0.64
↑
Moderately high
→
0.64
Moderate
→
0.64
Moderately high
→
0.64
Utilities
Power generation
1.73
→
High
→
1.71
Moderate
↓
1.36
Moderately high
→
1.73
Waste treatment
0.27
↑
Moderately high
↑
0.27
Moderate
→
0.05
Moderately low
↓
0.02
Not classified
9
0.12
↑
Not classified
→
0.00
Not classified
→
0.00
Not classified
→
0.00
Grand Total
477.89
↑
Moderate
→
58.05
Moderately
low
→
46.18
Moderately
low
→
71.97
1
Methodologies for assessing
climate- and nature-related
risks are emerging
and may change
over time. As
the methodologies, tools,
and data availability
improve, we will
further
develop our risk identification and measurement approaches. Lombard lending rating is assigned based on the average riskiness of loans.
2
Metrics are calculated and restated based
on the 2023 methodology, across three years of reporting, 2021–2023.
3
Total customer lending exposure consists of total loans and advances to customers and guarantees, as well
as irrevocable
loan commitments
(within the
scope of
expected credit
loss) and
is based
on consolidated
and standalone
IFRS Accounting
Standards numbers.
The credit
exposure
includes portfolio adjustment bookings, which are either directly impacting the metrics, and have been reflected in the heatmaps, or are impact assessed and immaterial to the metrics
representation.
4
UBS continues to collaborate
to resolve methodological and
data challenges, and seeks
to integrate both impacts
to and dependency on
a changing natural and
climatic environment, in how it evaluates risks and opportunities.
5
Climate- and nature-related risks are scored between 0 and 1, based
on sustainability and climate risk transmission
channels, as
outlined in
the Supplement
to the
UBS Group
Sustainability Report
2023. Risk
ratings represent
a range
of scores
across five-rating
categories: low,
moderately low,
moderate, moderately high, and high. The climate- or nature-sensitive exposure metrics are determined based upon the top three of the five rated categories: moderate to high.
6
A
material change in risk profile (discrete risk score, weighted average per sub-sector) is considered as >5% shift up, or down year on year. Similarly, for absolute exposure.
7
Displayed
ratings represent
exposure-weighted averages
for a given
sector scope.
8
Nature-related risk
metric methodology
has been further
strategically enhanced,
as part of
an ongoing
collaboration between UBS and UNEP-FI.
9
Not classified represents the portion
of UBS's business activities where
methodologies and data are not
yet able to provide a rating,
e.g.
private Individuals.
Sustainability Report 2023
| Managing sustainability and climate risks
94
Risk management and control
In
2023,
UBS
continued
to
develop
solutions
to
integrate
sustainability
and
climate
risks
into
traditional
risk
categories,
such
as
UBS’s
credit,
market,
liquidity,
treasury,
and
other
non-financial
risk
frameworks.
We
progressively enhanced
our four-stage approach (defined above in the sustainability and climate risk management
framework)
by leveraging research on how sustainability and climate risk drivers may be transmitted to our clients
(and their assets) and ultimately to UBS
in the form of financial and non-financial
risks. Our approach supports the
ongoing management of sustainability and climate risks as they manifest across traditional risk categories and has
been built in line with principles outlined by the Basel Committee
on Banking Supervision (the BCBS) and the Task
Force on Climate-related Financial Disclosures (the TCFD, now organized
under the ISSB).
›
Refer to the “Supplement to Strategy” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for our materiality methodology diagram
Our progress is summarized in the following
table.
Managing sustainability and climate risks
within traditional risk categories
Traditional risk
category
Sustainability and climate risk
transmission channels to UBS
Our progress in 2023 and looking ahead to 2024
Credit risk
Potential credit losses to UBS driven by risks
from a changing physical climate, the
transition to a low-carbon economy or
impacts and/or dependencies on our natural
environment (e.g., biodiversity, clean water
and fresh air).
Climate and nature risk drivers can impact
household, corporate, or sovereign income
and/or wealth. Physical and transition risk
drivers increase potential losses to UBS as
soon as they have a negative effect on a
borrower’s ability to repay and/or fully
recover the value of a loan in the event of
default.
Over the course of 2023, we further embedded
climate and nature risks into our
credit risk management frameworks. By collaborating
across business divisions and
between both the first and second lines of
defense, we developed innovative solutions
tailored to the risk profiles and material drivers of risk within
our businesses:
–
Investment Bank:
The current credit-granting process has been amended to
identify and measure the potential for credit losses driven by
climate and nature-
related risks for corporate lending and leveraged finance,
including counterparty
credit risk across relevant portfolios.
At the transaction level,
this is achieved by
integrating tools such as sector-level climate and nature heatmaps
and company-
level due diligence scorecards into the credit approval analysis and
decision-making
process. In addition, at the portfolio level, we have
established concentration
triggers for all relevant counterparties.
Furthermore, efforts were made to enhance
and automate reporting of the full Investment Bank
lending portfolio, on a
quarterly basis. Finally, further monitoring and reporting of lending to specific
sectors under the firm’s net-zero commitment were implemented
as part of the
risk control framework supporting UBS’s decarbonization
targets.
–
Global Wealth Management:
The current credit-granting process has been
amended to identify and measure the potential
for credit losses driven by climate
and nature-related risks for Lombard lending in Switzerland
and international
locations. This is achieved by integrating tools
such as sector-level climate and
nature heatmaps and company-level due diligence
scorecards into the credit
approval analysis and decision-making process, with a focus
on loans to operating
companies and those backed by concentrated
equity posted as
collateral. Furthermore, efforts were made to enhance and automate
reporting of
the full Global Wealth Management Lombard lending
portfolio, on a quarterly
basis, including the integration of heatmaps
using the "jump-to-zero” analytical
engine.
–
Personal & Corporate Banking
: The current credit-granting process has been
amended to identify the potential for credit losses
driven
by climate and nature-
related risks within the multinationals portfolio (managed
at the parent/group
level).
This is achieved by integrating tools such
as climate risk heatmaps into credit
due diligence towards supporting an informed
subsequent decision-making
process on financial risk.
Furthermore, efforts were made to enhance and
automate reporting of the full Personal & Corporate
Banking lending portfolio, on
a quarterly basis. Finally, further monitoring and reporting of lending to specific
sectors under the firm’s net-zero commitment were implemented
as part of the
risk control framework supporting UBS’s decarbonization
targets.
Looking ahead to 2024 and beyond
, we have identified three key areas for further
development:
–
UBS will begin planning an expansion of 2023
efforts, with the goal of rolling out
the approaches to other regions and portfolios,
in line with the multi-year SCR
initiative.
This includes solutions like integrating climate
and nature-related risk
ratings as inputs into the credit decision-making
process, defining quantitative risk
appetites at various levels, and training business
representatives in climate and
nature-related financial risk analysis.
–
Enhance 2023 methodologies with data
granularity and automation: UBS is
building capacity to be able to further differentiate risks
at the company/issuer
level. Through the new “climate risk rating model”,
UBS will incorporate third-
party data in an automated model,
so as to be able to further establish company-
level performance against inherent risks defined through
the sector-level heatmap.
–
Simplify various methodologies: UBS will
seek to simplify its approach by aligning
various risk-rating methodologies for transition
risk assessments.
Sustainability Report 2023
| Managing sustainability and climate risks
95
Market risk
(traded and
not traded)
Potential financial impacts to UBS from price
shifts and/or market volatility. A changing
physical environment (including climate
change) may affect the value of companies
reliant on the natural environment and/or
how the market perceives these companies.
The transition to a low-carbon economy
through climate policies, low-carbon
technologies, demand shifts and/or market
perception may also impact the value of
UBS’s positions and/or lead to a breakdown
in correlations between risk factors (e.g.,
prompting a change in market liquidity
and/or challenging assumptions in UBS’s
model).
In 2023, we assessed the risk from planned portfolios,
in line with our multi-year SCR
Initiative, and established solutions for integrating
climate and nature-related risks into
our market risk management framework. Progress on integrating
climate and nature-
related risks into our market risk management
was incrementally driven by
enhancing
analytical capacity, automating
UBS sector-level heatmaps in our market
risk
monitoring systems, and establishing
a
quantitative risk appetite.
Enhancing analytical capacity:
Leveraging existing sector-level heatmap
methodologies and our in-house scenario development
capacity, we sought to
perform a loss-driven materiality assessment.
By linking the risk ratings with adverse-
scenario-driven shocks, UBS was able to further
examine the correlations between risk
factors and understand the short-term loss potentials
for climate. For the first time in
2023, UBS was also able to review nature risk sensitivities,
following the introduction
of a nature risk heatmap.
Automation:
Market risks systems allow daily monitoring,
reporting and control. By
integrating these with our centralized climate
sector-level heatmaps, we are able to
understand and react to drivers of climate impacts
on our portfolios through the use
of a quantitative risk appetite for relevant portfolios.
Quantitative risk appetite:
For the relevant portfolios, climate risk concentration
triggers were introduced in 2023 based on the sector-level
climate risk heatmaps.
The
solution allows for daily monitoring of positions
that are considered inherently
sensitive to climate risks, including an automated
breach escalation process along with
the market risk escalation path for concentration
limits, providing an opportunity for
remediation actions. The triggers cover credit delta
and equity delta aggregated in
accordance with the “sensitivity,” as defined through the UBS heatmapping
methodology.
Looking ahead to 2024 and beyond
, UBS is building the capacity to be able to
further differentiate risks at the company/issuer level.
Through the new “climate risk
rating model”,
UBS will incorporate third-party data with
an automated model to be
able to further establish company-level performance
against inherent risks defined
through the sector-level heatmap. We have also started to adapt UBS in-house
long-
term scenarios to the specifics of short-term
market risk analytical requirements.
Further adaptation
and implementation of this short-term perspective
of UBS’s adverse
climate scenario is expected for 2024.
The capabilities and processes currently established and under
development are also
being planned for expansion to the UBS global
market risk portfolios in 2024.
Liquidity risk
The potential impact on liquidity adequacy is
driven by risks from a changing physical
climate, the transition to a low-carbon
economy, or impacts and/or dependencies
on our natural environment (e.g.,
biodiversity, clean water, fresh air). Climate
events have been proven to affect funding
conditions, and therefore liquidity buffers
across broader banks (BCBS). Climate-
related risks are considered as an additional
driver of liquidity risk. As such, they may
impact our liquidity adequacy directly or
indirectly through our ability to raise funds,
liquidate assets and/or our customers’
demand for liquidity. This could result in net
cash outflows or depletion of our liquidity
buffer.
In 2023, UBS enhanced its analytical capability
to assess the impact of climate shocks
on the liquidity position of planned portfolios,
in line with the multi-year SCR Initiative.
For the first time in 2023, UBS was also
able to review nature risk sensitivities,
following the introduction of a nature risk heatmap. As
part of the SCR Initiative, the
2023 climate and environmental assessment is being
developed further for global
rollout in the coming years,
2024 and 2025. In addition, a dedicated
Treasury Risk
Control team, focusing on sustainability and climate
risks, was established in Q3 2023
to support this work. The integration
of identified material climate-related risks into
the internal liquidity risk management framework
will be an iterative process as we
continuously improve the methodology, along with improving the availability and
quality of required data in the industry, and enhanced analytics and insights over
time.
Non-financial
risk (NFR)
Non-financial impact on UBS (compliance,
operational risk and financial crime) from
inadequate or failed internal processes,
people and systems and/or externally
due to
physical climate events or stakeholder legal
action
In 2023, we continued to integrate climate
considerations into the existing NFR
management framework. Specific climate risk
driver scenarios were defined for impact
on the exposure to taxonomy NFR, documented in
a consolidated Root Cause Library
to assess the completeness of controls against known
transmission channels. By the
end of 2023, 14 out of 18 taxonomies were assessed
(with a target to complete
across residual taxonomies by mid-2024). We also started to develop
a roadmap to
integrate climate-related considerations
into operational risk regulatory/economic
capital determination for inclusion in the GCRG
NFR measurement model governance
process with selective calibration applied initially to
Suitability and Product Lifecycle.
Given current strong capitalization, related ESG risks were assessed
as sufficiently and
inherently captured in their respective standalone capital exposures, but
GCRG will
continue to build on its modelling capabilities
by enhancing and expanding the risk
identification and materiality assessment to be
performed quantitatively across
relevant NFR categories and account for material
climate-related model dynamics.
Reputational
risk
Risk of an unfavorable perception,
or a
decline in UBS’s reputation,
from the point
of view of clients, industries, shareholders,
regulators, employees or the general public,
which may lead to potential financial losses
and/or loss of market share.
Risk is considered across all business
activities, transactions, and decisions.
We assessed the design of the reputational risk framework
to be generally robust in
terms of roles and responsibilities, escalation requirements, and
review and approval
authorities for sustainability-related risks. The reputational
risk dashboard now
captures the key risk indicators on a quarterly
basis, including metrics for financial
crime prevention, sustainability and climate risks,
client complaints, new business and
reputational risk cases.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about our
vision for integrating sustainability and climate risks
Sustainability Report 2023
| Managing sustainability and climate risks
96
We
manage
and
escalate
material
climate
risks
in
a
timely
manner,
following
our
standard
financial
and
non-
financial risk processes and defining key responsibilities and tools both at
the Group level and across our business
divisions. To promote the adoption of consistent
risk management practices across the Group,
we have conducted
climate risk-related training
for employees across
the business divisions
and Group Functions.
In 2023, the
SCR unit
provided
training
and
education
sessions
focused
on
sustainability
and
climate
risks
and
emerging
risks
such
as
greenwashing
. These
sessions were
delivered to
colleagues across
the firm
(44 training
sessions delivered to
over
25,000 colleagues across business divisions
and Group Functions).
At
Credit
Suisse,
climate
risk
management
has
been
underpinned
by
a
sector-specific
client
energy
transition
framework
(CETF),
which
was
leveraged
until
the
end
of
2023,
when
the
framework
was
decommissioned. A
group-wide approach is being developed by the combined firm to
assess clients’ energy transition readiness, with
further developments expected throughout
2024.
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for a
description of Credit Suisse’s CETF
Risk reporting and disclosure
Sustainability and
climate risk
updates are an
integral part
of UBS
Group’s quarterly
risk reporting
cycle. Information
shared
during
this
process
includes
the
number
of
transactions
referred
to
the
SCR
unit,
and
an
associated
breakdown by category.
Assessment outcomes and the underlying reason
s
are also reported. The
report includes
information on
exposure to climate-sensitive
sector activities
(our climate transition
risk heatmap),
leveraging a
fully
automated
process.
The
heatmaps
are
also
included
in
quarterly
internal
risk
reports
for
key
legal
entities
and
business divisions.
Internal risk
reporting in
our Asset
Management business
division is
facilitated by
a proprietary
ESG dashboard,
which uses physical and
transition climate risk data
to generate alerts across
several risk dimensions, highlighting
the highest risk issuers. This information is leveraged
in ESG risk recommendations and investment
decisions.
For
external
climate-related
risk
reporting,
we
have
prepared
our
annual
disclosures
across
the
key
areas
recommended by
the TCFD.
In addition,
we have
been leveraging
the framework
provided by
the TNFD
for the
disclosure
of
nature-related
risk.
Our
external
quantitative
and
qualitative
disclosures
are
being
progressively
extended to
include Credit
Suisse’s portfolio,
in order to
capture the
level of risk
of the
combined entity
and provide
relevant information for decision-making. With an internal reporting cycle similar to that of UBS, the Credit Suisse
Climate Risk team continued
to issue its
quarterly internal climate risk
report in 2023. From
2024, Credit Suisse’s
reporting cycles and
metrics will progressively
align with those
of UBS, in parallel
with the integration
of underlying
processes and controls.
›
Refer to “Appendix 3 – Entity-specific disclosures
for Credit Suisse AG” in the appendices to this report for a
description of Credit Suisse’s risk reporting
approach
The development of internal and external
climate risk disclosures will continue in
the coming years in the
context
of our
sustainability and
climate risk
road map,
in order
to address
regulatory expectations
and provide
leading
practice in this space.
Sustainability Report 2023
| Managing sustainability and climate risks
97
Our investment management approach to
sustainability and climate risks
UBS’s sustainability and climate
risk framework has been applied
across our existing business divisions
and is being
progressively extended to cover the former
Credit Suisse divisions. The following sections discuss
the approach to
sustainability and
climate risks
in
the Asset
Management and
Global Wealth
Management business
divisions of
UBS, and Asset Management (Credit Suisse) and
Wealth Management (Credit Suisse)
during 2023.
Assessing climate-related financial risks in client
portfolios
As a global financial institution, it is our responsibility to help
clients navigate the challenges of the transition to a
low-carbon economy. We address this by establishing
climate risk monitoring
and management systems
across our
asset management
and wealth
management businesses, offering
innovative products
and services
in investment
and financing, and providing transparent reporting and disclosures.
We strive
to integrate
climate-related
financial risk
considerations
into our
decision-making
and processes
pertaining
to
services,
strategies
or
products
offered
or
employed
by
third
parties,
including
delegates.
In
doing
so,
we
demonstrate
our
commitment
to
implementing
the
recommendations
of
the
TCFD.
We
perform
climate
risk
assessments on discretionary portfolios managed in Singapore (and booked
in Singapore or in Hong Kong), in line
with
the
Monetary
Authority
of
Singapore
(MAS)
Guidelines
on
Environmental
Risk
Management
for
Asset
Managers. We also disclose portfolio risk across
climate scenarios in the UK, in line with TCFD
recommendations.
›
Refer to the UK Climate Disclosures in the “Environment” section of the Supplement to the UBS Group
Sustainability Report 2023, available at
ubs.com/sustainability-reporting
We work collaboratively across
our industry and with
our clients, ensuring they
have access to best
practice, robust
science-based approaches,
standardized methodologies
and quality
data for
measuring and
mitigating climate
risks.
In the following
sections we
outline our approach
to quantifying
climate risk in
clients’ assets.
We then outline
how
climate risk information is applied to our asset
management and wealth management
divisions, respectively.
Quantifying climate risk: data and metrics
In order
to quantify
and integrate
climate risks
into our
investment processes,
we utilize
physical and
transition
climate risk data
projections and models
at the issuer level
from data providers, including
S&P Trucost. Our physical
risk assessment considers the potential impact of extreme climate events on an issuer’s or
direct assets, with each
physical risk score representing a
sensitivity-adjusted, weighted
average of risk scores
linked to all associated
assets
across different climate hazards, such as heat/cold wave, water stress, flooding, sea-level rise, hurricanes, wildfires
and drought.
Transition risk arises
from the process
of adjustment to
an environmentally sustainable
economy, including changes
in public policies,
disruptive technological developments and shifts
in consumer and
investor preferences. One of
the ways we
assess transition risk is
using an “Earnings
at risk” approach, which
analyzes the unpriced
carbon cost
to a company as % of its EBITDA
(Earnings before interest, taxes, depreciation, and amortization). We see carbon
earnings at
risk as
one of
the more
directly quantifiable and
comparable metrics across
industry sectors
globally,
which is more suited to reflecting the reach and complexity
of our investments.
For
both
physical
and
transition
risks,
the
projections
are
typically
built
on
publicly
reported
company
data,
restricting
coverage
to
corporate
issuers,
which
form
the
bulk
of
our
public
markets
portfolios.
Consequently,
exposures to sovereign or structured products,
for example, are not covered at this point.
Climate risk
data remains an
evolving area, and
best-practice standards or
norms have yet
to be
developed. This
results
in
acknowledged
limitations
in
data
coverage
and
quality,
such
as
issuer
type
and
the
use
of
proxy
or
estimation
techniques.
Financial
models
also
typically
project
up
to
three
years
in
advance,
with
significant
deterioration in
visibility beyond
one year.
As
such, long-term
projections used
to generate
data even
for 2030
introduce higher levels of uncertainty.
We work
closely with
our data
providers to
continuously enhance
the scope
and quality
of data
available to
us.
Climate risk data
has continued to
improve over the
past year. We
have seen expanding
coverage from our
data
provider on
sensitivity adjustments
to physical
risk scores,
which are
aimed at
enhancing the
quality of
the estimates.
As
our
data providers
continue to
improve on
their data
methodology and
coverage, in
line
with industry
best
practice, these changes may be reflected in
the climate risk analytics on our client portfolios.
Sustainability Report 2023
| Managing sustainability and climate risks
98
Application in UBS AG Asset Management
UBS AG Asset Management’s ESG (environmental, social and
governance)
integration approach identifies climate-
related risks and opportunities
which can be applied
in managing existing investment strategies and
constructing
new portfolios.
The construction criteria for portfolios
are applied based on the
intended objectives of the strategy. Portfolios
are
classified
based
on
their
sustainability
characteristics,
including
sustainability
key
performance
indicators
and
minimum sustainability
safeguards.
Exclusion criteria
address elevated
sustainability
risks, and
the scope
of portfolios
to which such exclusions are applied is described in UBS AG Asset Management’s Exclusion Policy.
The investment
policies
contained
in
fund
documentation
describe
the
extent
to
which
a
strategy
targets
particular
risk
or
opportunity outcomes.
UBS
AG
Asset Management
includes disclosure
of
portfolio-level metrics
for
sustainable
investment portfolios in fund factsheets and
client reporting. It also discloses various climate-related
metrics in line
with the TCFD’s Supplemental Guidance
for Asset Managers.
›
Refer to the “Environment” section of this report for aggregated asset class-level figures for weighted average
carbon intensity and carbon footprint as well as total emissions
Asset Management’s Real
Estate & Private Markets
(REPM) business typically
holds
majority ownership in the
direct
real assets in
which it invests,
making it
possible to positively
influence outcomes through
active ownership. This
includes collaboration with
tenants, 3rd party companies,
employees, communities and other
stakeholders (via, for
example,
green
lease
clauses,
tenant
satisfaction
surveys,
tenant
reach-outs)
to
drive
and
achieve
emission
reductions and other climate risk mitigations.
Where we do not have control,
we actively engage with owners and
stakeholders to address climate-related
risks and monitor
progress accordingly. Engagement
topics include physical
risk exposure and mitigation, transition plans,
disclosures and net-zero alignment.
UBS AG Asset Management’s overall strategy for managing climate risks is to integrate risk data
and insights into
the investment management processes. In our public
markets’
investments, this starts
with an assessment of ESG
issues based on our ESG Material Issues framework. This identifies the most relevant issues per sector, making the
connection to
key
value
drivers that
may impact
the investment
thesis across
sectors. The
framework reflects
a
sector-based view of exposure to physical and transition
climate risks.
In our REPM business,
we consider key transition
risks using our proprietary
in-house ESG Dashboard.
This assesses
directly controlled real
estate assets’ environmental
performance against
pathways and targets.
On the physical
risk
side, for our
direct investments in
real estate, we
use a third-party
location risk intelligence tool
to analyze asset-
level physical risk. We also use third-party data to inform our assessment of physical risk in
our indirect real estate
investments. These
tools identify
each asset’s
potential physical risks
under a
variety of
climate change
scenarios
and timelines.
Active ownership
The transition of
investment portfolios will
require real-economy emission reductions.
We see our active
ownership
strategy
as
a
powerful
tool
in
influencing
corporate
and
other
stakeholder
behavior
to
achieve
real-economy
outcomes.
UBS AG Asset Management has
had a dedicated climate engagement
program in place for more
than five years,
addressing climate-related risks
in companies and tracking measurable
progress. It covers high-emitting
companies
in
our
listed equity
and
corporate bond
universe, taking
into account
a
range
of sectors
and
geographies. This
includes companies from the oil and
gas, electricity and other utilities, metals
and mining, construction materials,
chemicals, and automotive sectors. The program is focused on driving ambitious and credible
transition strategies
across
portfolio
holdings,
covering
climate
governance,
targets,
transition
plans
and
relevant
business
model
objectives. Since the
start of our
engagement program,
we have increased
the range of
our expectations to
include
more
ambitious
emissions-reduction
target-setting,
quantified
disclosures
on
decarbonization
measures,
capital
deployment in line with a net-zero pathway
and reporting of progress toward stated
commitments.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about our
environmental risk analysis for the Hong Kong SAR and Singapore
Sustainability Report 2023
| Managing sustainability and climate risks
99
Application in UBS AG Global Wealth Management
Our overall
investment decision-making
process is
largely driven
top-down. While
corporate-level data
sourced from
S&P Trucost
has been chosen
for UBS AG
Global Wealth Management portfolios,
given its credibility,
complexity
and
coverage,
this
bottom-up
dataset
cannot
be
directly
integrated
into
UBS
AG
Global
Wealth
Management
investment processes without the use of significant
aggregation and proxies.
Considering the above, within
UBS AG Global
Wealth Management, climate risk analyses
are not used
to inform
investment decisions, either
at the asset allocation or instrument
selection levels at this point
in time. This is due to
investment scope, limitations of
data availabilities, modeling uncertainties
and implementation hurdles. However,
we continue to
make progress on
capacity building and
making climate risk
assessment findings available
across
the investment value chain.
Industry engagement
Most of
our discretionary
portfolios comprise
investment funds
from third-party
fund managers,
including the
Asset
Management business division. Generally,
Global Wealth Management acts as
an asset allocator and manager of
these
portfolios
but
does
not
control
portfolio
construction
and
management
within
the
underlying
fund
investment solutions. Consequently,
as well as
developing a climate
risk assessment management framework for
overall portfolios
based on
underlying investment
holdings, we
also aim
to understand
the climate
risk management
practices established by the managers of the
underlying funds.
To that end,
we regularly ask
our investment fund
partners to provide
information on their
approach to climate
risk
issues. This includes the extent to which environmental-/climate-risk management processes have been developed
and implemented within their businesses with relevance
to frameworks such as the TCFD and the MAS Guidelines
on Environmental Risk Management for Asset Managers, where these are
required by relevant regulators. We are
committed to
ongoing regular
communications with
our
fund
partners
on
the development
of
environmental-/
climate-risk management processes, as they
apply to their strategies.
›
Refer to the Supplement to this report, available at available
ubs.com/sustainability-reporting
, for more
information about our climate risk assessment as applied to discretionary portfolios managed in Singapore
Sustainability Report 2023
| Appendix 1 | Governance
100
Appendix
Appendix 1 – Governance
Combating financial crime
UBS complies with applicable laws and regulations and is
committed to meeting industry standards regarding the
effective prevention
of money
laundering and
financing of
terrorism. UBS
takes comprehensive
measures to
prevent
and detect
non-compliance
with laws
and regulations
and does
not tolerate
or facilitate
criminal activity
or breaches
of the letter or spirit of applicable laws, regulations,
rules and policies designed to prevent such
activities.
UBS does
not engage
in business
activities that
pose unacceptably
high levels
of money
laundering, fraud,
sanctions
or corruption
risk. Additionally,
UBS does
not engage
in activities
that pose
risks that
cannot be
effectively managed
by
the existing
control environment.
Although it
is
not possible
to eliminate
such
residual risk
entirely, UBS
has
appropriate policies, procedures, controls
and processes in place to manage the relevant
risks.
UBS annually assesses the money laundering, fraud, sanctions and bribery
and corruption risks associated with all
of its
business operations
against its
control framework
and
takes action
where appropriate
to further
mitigate
these risks.
Public-private partnerships
We are a founding member of the
Wolfsberg Group,
an association of global banks that aims to
develop financial
services sector
standards for
the prevention
of financial
crimes such
as money
laundering, fraud,
corruption and
terrorist financing, as well as developing industry standards
for know-your-client (KYC) due diligence and ongoing
transaction monitoring.
The Wolfsberg
Group brings
together banks
from around
the world
at its
annual forum
and regional
out-reach
meetings focused on financial crime topics, and delivers an annual academy to support the development of junior
Financial Crime Prevention (FCP) officers. It
also works on guidance papers
in related key areas of
financial crime.
UBS is actively involved with this group. For example, during 2022 we co-chaired the Wolfsberg working group
to
update and re-issue its Anti-Bribery & Corruption
Programme guidance.
Together with
the other members
of the Wolfsberg
Group, we
work with the
Financial Action
Task Force
(the FATF),
an intergovernmental body that helps develop
national and international policies
on preventing money laundering
and terrorist financing through consultation
with the private sector.
In November 2020,
UBS joined
the World Economic
Forum’s Partnership Against Corruption
Initiative (the PACI).
The PACI
undertakes initiatives
to address
industry, country,
regional, and
global issues
linked to
anti-corruption
and compliance.
We contributed
to the
PACI’s
Gatekeepers in
the Fight
Against Illicit
Financial Flows
paper and
assessed its own framework as being compliant
with these standards.
We are
a member
of a
number of
public-private partnerships operating
globally that have
been set
up to
foster
closer
working relationships
between financial
institutions and
law
enforcement, most
notably
the Joint
Money
Laundering Taskforce
operations group
in the
UK, which
has worked
on a
number of
human trafficking
and modern
slavery cases.
A risk-based approach to combating financial
crime
Onboarding and ongoing monitoring
UBS
performs risk-based
initial
due
diligence
on
all
customers
which
is
designed
to
establish
their
identity
and
ownership, the nature of their business activities, and the source(s) of their wealth
and funds. This includes formal
processes for
mitigating the risk
of impersonation fraud
in circumstances
where we
are not
doing business on
a
face-to-face
basis.
Where
the
client
represents
a
potentially
elevated
risk
according
to
the
Group
anti-money-
laundering (AML) and KYC policy, enhanced due diligence is performed.
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| Appendix 1 | Governance
101
UBS
does
not
establish
or maintain
relationships with
parties
when
the KYC
information cannot
be
sufficiently
established or where
UBS has reason
to believe the
party has or
intends to use
UBS products or
services for illicit
activities. UBS does not open accounts for relationships
that do not meet our standards or that pose unacceptable
financial crime or reputational risk for the bank.
After a client onboarding is completed, ongoing due diligence and risk screening is performed during the lifecycle
of the client
relationship. Clients
are subjected
to regular risk
rating and client
activities and
transactions are
subject
to AML transaction monitoring. In addition, ongoing periodic KYC
reviews are conducted with varying frequency,
driven by the client risk rating.
Our Group AML
& KYC
Policy sets out
the process and
criteria relating to
the identification, senior
management
sign-off, periodic review
and ongoing monitoring
of clients deemed
to be Politically
Exposed Persons (PEPs),
as well
as other customers who have links with jurisdictions
or industries that pose elevated levels of financial
crime risk.
We apply KYC rules and use advanced technology to help identify suspicious transaction patterns
and compliance
risk issues. We continue to invest in our detection
capabilities and core systems as part of
our FCP program.
Red flags must
be referred
to FCP if
any UBS staff
become aware of
potentially suspicious
activities during
the client
lifecycle and this
may result in
investigation, suspicious activity report
filing and/or client
exit, as appropriate.
We
adhere to the global FATF standards with respect
to record-keeping.
Our
entire financial
crime framework
is
subject to
regular controls
testing,
in both
the first
and second
lines of
defense, which includes a
cycle of regular peer
review testing executed by
a designated team within
the Group’s
FCP function. Additionally, our Group Internal Audit team performs a rigorous cycle
of independent audit reviews
covering the financial
crime framework
globally and cross-divisionally
and we are
subject to ongoing
supervision by
regulatory authorities in all the markets
in which we operate.
Conduct and culture
The UBS Code of
Conduct and Ethics (the Code)
sets out the principles
and commitments that define our ethical
standards and the
way we do business.
The Code commits all
UBS employees to do
whatever we can to
combat
money laundering, fraud, corruption and terrorist
financing.
We have systems in place and hold ourselves accountable for detecting,
stopping and
reporting money laundering matters, including terrorist financing.
For example, we do not
tolerate any form of corruption
or bribery, including facilitating
payments,
nor do we offer
or accept improper gifts or payments.
Additionally, the Code
requires that UBS
employees do not
help or advise
its clients, or any
other party, to
evade
taxes
or
misreport taxable
income
and
gains.
It
also
states
that
we
should
not
contract
with
third
parties
who
provide services for UBS or on our behalf, where
those services help others improperly evade
taxes.
In 2023, all employees of
UBS including its senior management
and governance bodies received
adequate training
on Financial Crime Prevention
matters, which covers AML/KYC,
Sanctions, Fraud and Anti-Corruption.
New joiners
must receive training within
30 days of
joining UBS. All
staff are required to
complete the Global Financial
Crime
Prevention Refresher
module on
an annual
Basis which
includes an
assessment. The
frequency for
each training
course
is
specified by
the course
owner (one-time,
annual, bi-annual).
We
regularly update
web-based training
modules to address compliance issues, including financial crime standards, and to
incorporate learning from both
internal and
external events
and geopolitical
developments. In
addition, employees
in specific
areas receive
targeted
training on
specific financial
crime risks
associated with
the business
lines or
activities they
are involved
with as
needed. In 2023, Credit
Suisse managed their
own mandatory AML
training, however, all
Credit Suisse staff
will be
required to complete our mandatory Computer
Based Training beginning in 2024.
›
Refer to the Code of Conduct and Ethics of UBS, available at
ubs.com/code
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| Appendix 1 | Governance
102
Protecting data
Data is of enormous value to our firm. When treated
as a corporate asset, it enables our business
to run smoothly.
It can
also help
us to
grow and
prosper, by
giving us
the information
we need
to capture
new business
or react
quickly to new trends. As we continue to invest
in our digital solutions, we are similarly committed
to:
–
developing a robust command
and control framework to
manage and protect our offering
and the petabytes of
data that are inherently generated by it;
–
being stewards of data on behalf of our
clients and employees; and
–
requesting our third parties adopt equivalent
practices and meet our expectations.
It is our responsibility to protect data disclosed to us in an increasingly
complex and evolving
environment. We have comprehensive measures (relevant controls,
processes and policies)
in place for the protection of personal data.
We have also
introduced organizational and technical security
measures, underpinned by an
operational risk and
control framework, to safeguard personal data in accordance
with applicable laws and regulations. Access
to data
is protected through control mechanisms following the need-to-know principle and ensuring
revocation when no
longer required. Where applicable and required, de-identification solutions are used for some specific use cases of
sensitive client data.
Despite the complexities involved
with the integration of
Credit Suisse, we continue
to focus on the delivery
of our
services. This includes operating at the highest possible
standards to protect our information assets against
threats
while enabling the secure development and deployment
of innovative digital solutions.
›
Refer to
ubs.com/global/en/our-firm/cybersafe/cyber-security
for more information on how UBS safeguards
banking data, commercial information and financial assets
Governance
Our Board of Directors (the BoD) and the Group Executive Board (the GEB) recognize that cyber- and information-
security (CIS) capabilities are
critical in protecting the
firm and fostering an
appropriate risk management culture.
The BoD Risk
Committee and the
GEB oversee the
CIS program through regular
reviews and reporting
and are part
of the escalation chain for major and critical
cyber incidents. Additionally, cyber-specific systems and processes are
subject to continual review
and updates by
our internal control teams.
The BoD also
oversees the firm’s activities
pertaining to Artificial Intelligence (AI).
The Group
Data Management Office,
part of
the Group
Operations and
Technology Office,
works with
partners
across
the
firm
to
ensure
robust
governance
over
the
collection,
propagation
and
quality
of
the
firm’s
data.
Additionally, the Group Data Protection Office,
part of Group Compliance, Regulatory & Governance,
ensures that
the firm processes personal data and responds to data subject rights exercised by individuals (including
clients and
employees) in line with applicable data privacy
laws and regulations.
Policies and procedures (including training)
As a firm, UBS
operates to the highest possible
standard. Our principles and
policies guide how we use
data and
information, as well as how we develop and
deploy technological solutions. We maintain policies and procedures
to ensure everyone at UBS is aware
of threats and the importance of CIS. A CIS end
user and line manager policy
is available internally to all UBS employees
and consultants.
In recognition of the pace
of digital change globally,
our Code of Conduct and
Ethics (the Code) includes a
section
on the lawful and ethical use of data. The primary focus of this section is preparing employees for greater
reliance
on big data, data models and artificial intelligence.
In
2023,
we
updated
our
UBS-internal
Group
Data
Ethics
Policy,
which
sets
out
the
group-wide
data
ethics
requirements.
While the principles set out
in the policy apply to the
processing or use of any client-identifying
data
and/or personal data,
specific data ethics
requirements apply for
the use of (i)
AI including machine learning
and/or
(ii) data analytics including both models and non-models (jointly referred to as Processing
Activities). They must be
considered
during the
design,
development
and
deployment of
new
products,
processes,
or
services
and
must
consider both input and output data.
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| Appendix 1 | Governance
103
The requirements
must be
assessed, and
Processing Activities
approved as
part of
the central
data ethics
review
process prior to commencing the Processing Activities. Data ethics requirements encompass the following: human
agency and oversight;
technical robustness
and safety;
data privacy;
explainability;
diversity, non-discrimination
and
fairness;
social and environmental wellbeing;
accountability.
We run a comprehensive,
Group-wide education
and awareness program,
including addressing
risks related to
CIS.
The
program features
mandatory computer-based
training modules
(recurring,
and
requiring exam
completion),
newsletters, and global and
targeted awareness campaigns
to all staff who have
access to UBS systems.
Additional
educational campaigns, covering subjects such as phishing, malware infections, social engineering,
tailgating, and
data classification and leakage, are deployed several
times per year.
Additionally, we provide
training specifically tailored
for certain staff.
Employees are also
required to review policies
and affirm compliance
in our
web-based Affirmation
Online portal
on an annual
basis. All UBS
employees can
easily
access
UBS’s
information
security
portal
to
learn
about
information
security
threats.
Selected
management
employees are sent regular updates regarding
cybersecurity developments and trends.
We also
maintain a set
of requirements for
our third parties
that stipulate our
expectations and ensure
these are
formally acknowledged through a dedicated
contractual annex.
Handling data
Our
data protection
policy framework
covers the
standards we
commit to
when processing
personal data.
This
includes that data is
processed only for
specific and explicit purposes and
is adequate, relevant and
not excessive
(data
minimization). Other
key
principles
include
that
data
subjects
are
informed
of
how
their
personal
data
is
processed
and
that
it
is
not
processed
for
longer
than
necessary
for
the
given
processing
purposes.
UBS
has
implemented
processes
to
respond
to
data
subjects
exercising
their
rights,
while
adhering
to
applicable
legal
requirements.
We communicate our client
data use and
storage policies to clients
and seek consent for
data use as required
by
local
regulations. In
these communications
we are
clear what
this
consent
means, and
which
use
cases do
not
require consent,
for example
certain legal
obligations. We
provide reasonable
options for
clients to
be able
to revoke
this consent.
Dealing with incidents
Our Code sets out the principles and behaviors that define our ethical practices and the way we
do business. Any
violation, whether
it is
of our
Code, UBS
policies or
external laws,
rules or
regulations, may
result in
disciplinary
action, up to and
including dismissal. This includes information security
incidents. Also, employees are, as
part of
their year-end performance rating,
evaluated on their
integrity.
This includes doing
the right thing,
self-declaring
incidents and issues,
adhering to policies,
challenging the status
quo and
raising their hand
when things are
not
right, including potential security threats, and collaborating
across teams, departments and divisions.
We aim to make
the information security incident escalation
process as simple as possible.
For example, phishing
emails
can
easily
be
reported
by
means
of
a
dedicated
button
integrated
within
Outlook
and
available
on
all
devices.
Our Group-wide incident-handling
process enables any
UBS person
to report
incidents and
data breaches. Data-
breach-prevention processes, such as
blocking of communication and
proactive remediation of misplaced data
in
unprotected areas,
are in place.
Additionally, we encourage
employees to report
any issues and
incidents as per
the
incident-handling
process,
or
to
their
line
managers,
and
to
follow
up
to
ensure
the
matter
is
addressed.
Any
compliance incidents can also be escalated
through the whistleblowing
process.
We also
extend these
processes to
cover adverse
information security
events that
take place
at third
parties but
have relevance to UBS’s information.
Sustainability Report 2023
| Appendix 2 | Environment
104
Appendix 2 – Environment
Our transition plan
Our transition plan supports
our current decarbonization targets
and ambition to achieve net-zero
greenhouse gas
(GHG) emissions across our scope
1 and 2, and
specified scope 3, activities. The structure
of our plan follows the
recommendations of
the Glasgow
Financial Alliance
for Net
Zero (GFANZ)
outlined in
the “Financial
Institutions Net-
zero
Transition
Plans”
guidelines.
GFANZ
published
these
guidelines,
to
which
UBS
contributed
during
their
development,
at the 27
th
session of the Conference
of the Parties of
the United Nations Framework
Convention on
Climate Change (the UNFCCC)
(COP 27).
UBS’s contribution to the development of these
guidelines forms part of the Group’s
industry engagement in the
financial services sector to
determine how best to
support and finance
clients’ transition to a
low-carbon economy.
Contributing to such frameworks, in turn forms an important
basis for developing our own approach to transition
finance.
We
consider
the
GFANZ
guidelines
to
be
comprehensive
and
relevant
for
the
financial
sector
but
continue
to
monitor other emerging standards
that are compatible and
have the potential to
enhance our continued transition
plan development.
Our transition
plan touches
on numerous
aspects within
this Sustainability
Report, which
are
referenced in the table below.
›
Refer to
gfanzero.com/our-work/financial-institution-net-zero-transition-plans
for GFANZ’s recommendations
on
transition plans
#
Theme
Principles and key activities engaged in
by UBS
References for more information
Foundation
1
Objectives
and
priorities
–
It is our ambition to support clients through the world’s
transition to
a low-carbon economy and embed considerations
of climate change
risks and opportunities across the bank for the
benefit of our
stakeholders, now and in the future.
–
Helping our clients navigate the challenges
of an orderly transition to
a low-carbon economy and build climate-resilient
business models, as
well as mobilizing private and institutional capital
toward this
transition, is at the core of this ambition and our
approach to climate.
–
We have updated our sustainability strategy
and approach to climate
to better support our own transition as
well as the transition of our
clients, and we continue to refine and enhance our
transition plan in
line with evolving client needs and industry guidance
to ensure it
remains appropriate for our business activities and
aligned to external
market practice and standards.
–
By 2050, our ambition is to achieve net-zero greenhouse
gas (GHG)
emissions across our scope 1 and 2, and specified
scope 3 activities.
–
We aspire to address our financed emissions by aligning specified
sectors to decarbonization pathways. In line
with this, we aim to
reduce the emission intensity of our loan book across
sectors that
account for a sizable share of our credit portfolio and financed
emissions and have set 2030 lending sector
decarbonization targets
for the following sectors: Swiss residential real estate,
Swiss
commercial real estate, fossil fuels (oil, gas and coal), power
generation, iron and steel and cement (for shipping
we currently
disclose our Credit Suisse AG in-scope shipping
portfolio climate
alignment to the Poseidon Principles decarbonization
index).
–
We provide our financing and investing clients with
the choices they
need to meet their sustainability and impact objectives,
including
climate impact, where that is their priority and in
line with our
fiduciary duties.
–
Our transition plan for financing activities prioritizes
emissions
reductions in line with science-based climate
targets and credible
trajectories to achieve these targets. In addition,
we anticipate that
the deployment of carbon-removal solutions will be
needed to
counterbalance hard-to-abate emissions and supplement
the
reduction strategies of some of our clients. As best practice
guidance,
regulation, methodologies and technologies develop,
our approach
to decarbonization, including offsets, will continue
to evolve.
–
As we work toward our targets and further develop
our transition
strategies, we aim to consider a just transition
to a low-carbon
economy, one that is as fair and inclusive as possible.
–
We continue to integrate sustainability and climate
risk considerations
into our firm’s various traditional financial
and non-financial risk
management frameworks.
–
Refer to the “Strategy” section, “Our aspirations
and progress” sub-section of this report for a
description of our targets and progress on
financing, investing and own operations.
–
Refer to the “Environment” section, “Our climate
roadmap” sub-section of this report for an
overview of what we are aiming for to support
the transition to a low-carbon economy.
–
Refer to the “Our approach to climate” sub-
section of the Supplement to the UBS Group
Sustainability Report 2023 for more information
about our approach and key objectives to
support our climate-related ambitions.
–
Refer to the “Environment” section, “Supporting
our clients’ low-carbon transition” sub-section
of
this report for an overview of how we support
our clients’ transition.
–
Refer to the “Environment” section, “Supporting
our financing clients’ low-carbon transition”
–
“Carbon reduction and removal” sub-section of
this report for more details on our approach to
carbon markets and carbon-removal solutions.
–
Refer to the “Overview of climate-related targets
and actions” section in “Appendix 2 –
Environment” in the appendices to this report for
an overview of our targets and actions that
we
strive to implement in the short-, medium-
and
long-term.
–
Refer to the “Managing sustainability and
climate
risks” section of this report and the “Supporting
our approach to climate – our climate-related
materiality assessment” sub-section of the
Supplement to the UBS Group Sustainability
Report 2023 for an overview of our reviews of
risks, opportunities in the climate materiality
assessment and impacts expected from
implementation.
Sustainability Report 2023
| Appendix 2 | Environment
105
Implementation strategy
2
Products
and services
–
One of the four key objectives of our sustainable
finance product and
service offering is to support our clients in their transition
to a low-
carbon economy, and we strive to provide them with the choices they
need to meet their specific sustainability objectives.
–
We are developing innovative advisory, lending, basic banking and
transition financing solutions, and are offering our clients
access to
various sustainable investment (SI) solutions.
–
Our climate-related client offering provides investors with
solutions
that contribute to a lower-carbon economy while satisfying various
risk and return objectives.
–
Our Investment Bank offers our clients global
advice and access to
the world’s primary, secondary and private capital markets through
an extensive array of sustainability-
and climate-focused services,
products, research and events.
–
By offering research and thematic insights, as well as data and
analytics services - combined with targeted
advice – we aim to help
clients better understand and mitigate risks and
identify new
opportunities. Further, we provide support in the form of tools,
platforms and education.
–
We continue to develop and refine our solutions and
approaches on
an ongoing basis and strive to support our
clients to orient their
business efforts toward the objectives of the Paris Agreement.
We
aim to do this by further strengthening our operating
model and
increasing our efforts in the field of transition and green finance.
–
Refer to the “Supporting opportunities” section
of this report for more information about our
sustainable finance ambitions, our approach to
sustainable finance and our sustainable
finance
products and services offerings.
–
Refer to the “Environment” section, “Supporting
our clients’ low-carbon transition” sub-section
of
this report for more information about how we
are embedding climate considerations into
products and services for financing and investing.
–
Refer to “Supporting our approach to climate –
our climate-related materiality assessment” sub-
section of the Supplement to the UBS Group
Sustainability Report 2023 which speaks to
how
we think about future climate-related
opportunities.
3
Activities
and
decision-
making
–
To deliver our transition plan and operationalize our approach to
climate, it is important to embed sustainability
and climate
considerations into our operating model, leading
to regular
adjustments of evaluation and decision-making
frameworks,
governance structures, control and monitoring processes
and
underlying systems.
–
For example, following the integration of Credit
Suisse, UBS
reassessed the lending emissions and targets for
sectors with a high-
carbon impact for the combined organization.
To operationalize our
target approach, we are reviewing whether our planning
and
governance processes, risk appetite, sector
strategies and so on are
still appropriate. In parallel, we are assessing required enhancements
to our loan origination, credit granting, monitoring
and reporting
processes.
–
In addition, Group Risk Control manages our sustainability
and
climate risk program to further integrate sustainability
and climate
risk into our various traditional financial and
non-financial risk
management frameworks and related processes. This
ensures that
sustainability and climate risks are identified, measured,
monitored,
managed, reported and escalated in a timely
manner. Such
integration covers processes including client onboarding,
transaction
due diligence, product development and investment
decision
processes, own operations, supply chain management,
and portfolio
reviews.
–
We have a systematic approach in place aimed at better
understanding UBS’s future opportunities around climate.
On an
annual basis, and in line with the TCFD’s recommendations,
we are
assessing potentially relevant climate-related opportunities
for UBS,
encompassing commercial products and services,
social finance,
resource efficiency and energy consumption, operational resilience
and climate-related funding.
–
Refer to the “Environment” section, “Supporting
our financing clients’ transition to a low-carbon
economy” – “Sustainable lending operating
model” sub-section of this report for more
information about how we operationalize
our
approach to climate and the “Our lending sector
decarbonization targets” sub-section for
more
information about our emissions and targets
for
specified sectors.
–
Refer to the “Managing sustainability and
climate
risks” section of this report for a description of
our sustainability and climate policy risk
framework.
–
Refer to the “Supporting opportunities” section
of this report for an overview of our sustainable
finance products and services offerings.
4
Policies and
conditions
–
Our sustainability and climate risk policy framework:
–
applies Group-wide to relevant activities, including client
and supplier
relationships;
–
is integrated into management practices and control
principles and
overseen by senior management; and
–
supports the transition toward a low-carbon future.
–
Our sustainability and climate risk policy framework
will continue to
evolve to address regulatory guidance and market practices.
–
We conduct reviews of our voting, stewardship and exclusion
policies
to reflect our latest approaches in UBS AG Asset Management.
–
Refer to the “Sustainability and climate risk policy
framework” sub-section of the Supplement
to
the UBS Group Sustainability Report 2023 for
more information about how we are setting our
standards including “Controversial activities –
where UBS will not do business” and “Areas of
concern – where UBS will only do business under
stringent criteria.”
–
Refer to our
Asset Management Sustainability
Exclusion policy
for more information about AM’s
exclusion approaches where we exclude
individual companies or industries from a
portfolio, either because their activities do
not
meet certain ESG criteria, and/or they do not
align with the client’s values and/or UBS’s.
Sustainability Report 2023
| Appendix 2 | Environment
106
Engagement strategy
5
Clients and
portfolio
companies
–
Understanding the needs and expectations of
our clients and
investors enables us to best serve their interests
and to create value
for them. Through engagement and collaboration,
we help our
clients and portfolio companies access best practice,
robust science-
based approaches, standardized methodologies and quality
data that
enable them to better measure and mitigate climate-related
risks and
act on climate-related opportunities.
–
For our lending activities, we have assessed where
our corporate
clients currently stand on their journey toward
a low-carbon economy
and climate-resilient business models. By establishing
a view on their
current decarbonization ambitions and activities,
we aim to work
alongside them to support their transition
efforts. This can include
the disclosure of current emissions, the setting of future
decarbonization targets in line with Paris-aligned
pathways and the
development of credible transition plans.
–
We recognize that the transition of investment portfolios
requires
real-economy emission reductions, and see our active ownership
strategy as a powerful tool in influencing corporate
behavior to
achieve real-economy outcomes. For example, our
UBS AG Asset
Management business has been running
a dedicated climate
engagement program for more than five years to address climate-
related risks with measurable progress tracked. We have also aligned
our voting policy with our climate engagement
efforts and objectives.
UBS AG Asset Management is using evidence-based
metrics to assess
transition plans and set engagement objectives
with a focus on
engagement outcomes. In situations where
an engagement has not
achieved set objectives, escalation steps are taken.
–
Refer to the “Environment” section, “Supporting
our clients’ low-carbon transition” – “Supporting
our financing clients’ low-carbon transition”
sub-
section of this report for more information about
how we are engaging with our corporate clients
and “Supporting our investing clients’ low-
carbon transition” for more information about
how we are engaging with our investees.
–
Refer to the “Supporting opportunities” section,
“Asset Management” sub-section of this report
for more information about how we approach
active ownership and our climate engagement
program.
–
Refer to the
Asset Management Stewardship
Website
and our
Global Stewardship Policy
for
more information about our active approach to
stewardship as a crucial part of any sustainable
investing strategy across asset classes through
engagement, proxy voting and advocacy,
enabling us to work with firms to influence
behaviors, drive changes and achieve better
outcomes.
6
Industry
–
Partnerships within the financial services
sector are a critical part of
our sustainability strategy and approach to climate,
underpinning our
efforts to progress toward our stated ambitions.
–
We actively engage in regular discussions relating to corporate
responsibility, sustainability and climate with peers, and more widely
through trade bodies and associations. Sharing
experiences and
assessments of corporate responsibility and sustainability
issues helps
us to compare and improve our strategy, approach and tools and
processes.
–
Through proactive engagement we aim to: (i) as appropriate
and in
line with local rules and regulations, exchange
transition expertise
and collectively work on finding solutions to
common challenges; and
(ii) represent the financial sector’s views cohesively to
external
stakeholders, such as clients and governments.
–
At the end of 2023, we were engaged in a variety
of sustainability-
and climate-related memberships and commitments,
either at Group
level or the level of the business divisions or
Group Functions.
–
For example, UBS is a founding member or current
signatory of
groups such as the Task Force on Climate-related Financial
Disclosures (the TCFD), the Net-Zero Banking Alliance
(the NZBA), the
Net Zero Asset Managers (the NZAM) initiative, the
Glasgow Financial
Alliance for Net Zero (GFANZ) and the Partnership for Carbon
Accounting Financials (PCAF). Members of UBS
senior management
contribute to many of the working groups within these
bodies and
our Group CEO joined the GFANZ Principals Group in 2023.
–
We have thorough processes in place for renewing existing
memberships and for vetting new ones.
–
Refer to the “Supporting our strategy through
stakeholder engagement” sub-section of the
Supplement to the UBS Group Sustainability
Report 2023 for more information about our
approach to engaging with our clients, investors,
peers, governments and regulators, political
parties, communities and further stakeholders.
–
Refer to the “Helping to achieve our strategy by
working with key climate-
and nature-related
organizations”, “Supporting our strategic
goals –
our engagement in partnerships” and “Our
contributions to the advancement of
sustainability and culture” sub-sections of the
Supplement to the UBS Group Sustainability
Report 2023 for an overview of our partnerships.
Sustainability Report 2023
| Appendix 2 | Environment
107
7
Government
and public
sector
–
We actively participate in political discussions to
share our expertise
on proposed regulatory and supervisory changes (e.g.
via the
International Institute of Finance (IIF),
the Association for Financial
Markets in Europe (AFME) and the Swiss Bankers
Association (SBA)).
Sustainability and sustainable finance continue
to remain key focus
topics in our interactions with our financial regulators
and
supervisors.
–
We also engage in political initiatives and discussions
relating to
corporate responsibility, sustainability and climate, in line with our
approach to climate and decarbonization planning.
We supported the
Climate Protection and Innovation Act, proposed by the
Swiss Federal
Council and accepted by the Swiss population
in a 2023 referendum,
to enshrine the Swiss net zero commitment into law
and establish
pathways for transition in key sectors of the
Swiss economy.
–
Regarding climate, our engagement aims to share expertise
on an
orderly transition that is aligned with the Paris Agreement
and we
welcome regulatory requirements that would harmonize reporting
standards to create transparency and comparability across companies.
Thus, UBS supported the work of the International
Sustainability
Standards Board to establish a global baseline for sustainability
and
climate reporting in 2023.
–
UBS was also part of the working group that further
developed the
Swiss Climate Scores in 2023 as a key instrument
to further increase
transparency on the climate alignment of financial
products. During
2023 we published the first set of Swiss Climate
Scores for 136 of
our Swiss investment funds.
–
On a regional basis, we engage with policy makers
in the EU, UK,
Americas and key Asia Pacific jurisdictions.
–
We maintain a regular dialogue with politicians globally
and strive to
establish long-term relationships with political representatives.
Metrics and targets
8
Metrics and
targets
–
It is our ambition to align our own operations
and business activities
with the objectives of the Paris Agreement.
–
To support this ambition, we have established a suite of metrics and
targets across financing, investing and own operations
to drive
execution of our transition plan and monitor
progress of results.
–
For example, we measure our financed emissions
and emissions
intensity for most material carbon-intensive
sectors, have established
2030 lending sector decarbonization targets
and are continuously
tracking our progress toward these targets.
–
We also conducted a preliminary analysis of the facilitated
emissions
from our capital markets activities for select carbon-intensive
sectors.
–
To underpin our targets, we have defined various actions that we
strive to implement in the near-, medium-
and long-term.
–
UBS has a strategic multi-year and Group-wide
ESG data and
technology strategy in place and we are leveraging
best-in-class
solutions to further accelerate our strategic
ESG ambitions.
–
Our Group ESG (data) architecture supports our business users’
ESG
needs, and we continue to enhance data
acquisition, analytics
capabilities and systems to monitor climate-related
metrics and
enhance associated climate disclosures.
–
Refer to the “Strategy” section, “Our aspirations
and progress” sub-section of this report for a
description of our targets and progress for
financing, investing and own operations.
–
Refer to the “Environment” section, “Our climate
roadmap” sub-section of this report for an
overview of what we are aiming for to support
the transition to a low-carbon economy.
–
Refer to the “Environment” section, “Supporting
our clients’ low-carbon transition” sub-section
of
this report and “Environment” section of the
Supplement to the UBS Group Sustainability
Report 2023 for more information about
methodologies, metrics and targets for lending
and investing and to the "Basis of Reporting”
sub-section of the Supplement to the UBS
Group
Sustainability Report 2023 for capital markets.
–
Refer to the “Environment” section “Reducing
our environmental impact” sub-section of this
report for a description of how we will manage
any residual scope 1 and 2 emissions that cannot
be mitigated through reducing at source.
–
Refer to the “Environment” section, “Monitoring
the environmental impact of our supply chain”
sub-section of this report and the “Social”
section, “Managing our supply chain
responsibly” sub-section of this report for our
actions pertaining to our supply chain.
Sustainability Report 2023
| Appendix 2 | Environment
108
Governance
9
Roles,
responsibili-
ties and
remunerat-
ion
–
The UBS Group Sustainability and Impact (GSI) framework
provides
an overview of the governance and key
Group-wide policies,
guidelines, and key topics applying to sustainability
and impact at
UBS, including climate.
–
Our approach to climate and related activities is overseen
at the
highest level of UBS Group. The Board of Directors’ Corporate
Culture and Responsibility Committee (CCRC) is the
body primarily
responsible for corporate culture, corporate responsibility
and
sustainability including climate. It oversees our
firm-wide sustainability
and impact strategy and activities and approves
related objectives.
–
The responsibility for setting the firm-wide
sustainability and impact
strategy and developing associated objectives, in
agreement with
fellow GEB members, has been delegated
to the GEB Lead for
Sustainability and Impact by the Group Chief
Executive Officer (the
Group CEO). Progress against strategy and the associated objectives
are reviewed at least once a year by the GEB and the CCRC.
–
The Group CEO and GEB performance scorecards include
sustainability objectives, comprising climate-related
goals, and their
progress is measured via robust quantitative metrics and qualitative
criteria. Sustainability objectives are individually
assessed for each GEB
member, and consequently directly impact their performance
assessments and compensation decisions.
–
Our management of sustainability and climate
risk (SCR) is steered at
the GEB level. The Sustainability and Climate
Task Force (the SCTF) is
the cross-divisional and cross-functional authority for sustainability
and climate governance, as well as the
Group’s sustainability and
climate governance body.
–
We have dedicated teams and individuals assigned
to ensure an
effective delivery of our transition plan. The net-zero workstreams
within the Group Sustainability and Climate Initiative
coordinate the
implementation of our net-zero ambitions, with
a specific focus on
addressing emissions related to our financing activities
and own
operations and in the context of clients’ investments
focuses on
managing specified assets in line with net-zero.
–
In 2023, Ernst & Young has provided independent assurance on
certain sustainability metrics and information.
–
We are continuously improving the governance, execution
and
control of the processes in place to support our decarbonization
and
sustainability efforts.
–
Refer to the “Governance” section, “Our
sustainability governance” sub-section
of this
report for a description of how UBS governs
its
sustainability strategy and approach to climate.
–
Refer to “Appendix 4 – Other supplemental
information“ in the appendices to this report for
the independent assurance report by Ernst &
Young.
–
Refer to the “Compensation for GEB members”
section, “GEB performance assessments” sub-
section of the UBS Group Annual Report 2023
for more information about the GEB
performance measurement process.
–
Refer to the “Compensation philosophy and
governance” section, “Environmental, Social
and
Governance considerations” sub-section of
the
UBS Group Annual Report 2023 for more
information about how ESG is included in the
compensation process.
10
Skills and
culture
–
To support the development and implementation of our transition
plan, we implemented the Group Sustainability and
Climate Initiative
to ensure alignment therewith and embed the plan into
our culture
and practices.
–
Our initiative is underpinned by current and future resource
requirements and specified roles and responsibilities, and we are
providing support to individuals so that they have
sufficient skills and
knowledge to perform their roles.
–
Helping our workforce understand why sustainability
and sustainable
finance is a strategic priority, for both the Group and our
stakeholders, is an important part of ensuring
we meet our
sustainability and climate ambitions.
–
At the end of 2022, we made a Foundational
Sustainability Training
Program available to all staff at UBS. This training
complements the
specialist sustainability training delivered by the
business divisions to
targeted cohorts, such as client advisors and
risk specialists.
–
In 2023, the number of headcount instances
of specialized training
totaled 54,364 , while headcount instances
of awareness training on
sustainability and climate totaled 177,585
.
For example, in 2023 the
SCR team provided training and education sessions
focused on
sustainability and climate risks as well as
emerging risks, such as
greenwashing risk. These sessions were delivered to relevant
colleagues.
–
We expect sustainability training and education to
become an
increasing focus for regulators in the coming years.
We keep abreast
of this changing landscape through regular updates with
our
regulatory monitoring teams and strive to continue
developing and
prioritizing the roll-out of climate-
and net-zero-specific training for
employees and the Board of Directors.
Through
regular,
Group-wide
Town
Halls,
hosted
by
the
GEB
Lead
for
Sustainability and Impact,
the Chief Sustainability
Officer and
the Head of
Social Impact, staff are provided with updates on our net zero strategy and
progress.
In
addition,
our
key
ambitions
and
progress
against
those
ambitions are published on our external
website,
ubs.com
.
–
Refer to the “Supporting our approach to
climate: key enablers” sub-section of the
Supplement to the UBS Group Sustainability
Report 2023 for more information about training
provided to employees.
–
Refer to the “Managing sustainability and
climate
risks” section, “Risk management and control”
sub-section of this report for more information
about training provided to employees with
regard to climate risk.
–
Refer to the “Sustainability-related training and
raising awareness” sub-section of the
Supplement to the UBS Group Sustainability
Report 2023 for more information about how we
engage in education and awareness raising for
staff, clients and local communities, regarding
corporate responsibility and sustainability topics
and issues.
Sustainability Report 2023
| Appendix 2 | Environment
109
Overview of climate-related targets and actions
As part
of our
transition plan, which
outlines principles supporting
our ambition to
achieve net-zero
greenhouse
gas (GHG) emissions across our scope 1, scope 2 and specified scope 3 activities, we have set targets in financing,
investing
and
own
operations.
To
underpin
these
targets,
we
have
defined
various
actions
that
we
strive
to
implement in the short-, medium- and long-term. In line
with our continued transition plan development, we will
continue to define additional actions and
refine current plans to further drive progress
toward our targets.
Area
Planned actions, targets and ambitions
Overarching
Transition plan:
–
Continue to refine and enhance our transition plan
in line with evolving client needs and industry
guidance –
outlining how we aim to achieve net-zero GHG emissions
across our scope 1 and 2, and specified scope 3, activities
while supporting our clients through their own
transitions.
2050
ambitions:
–
Net-zero
GHG
emissions
across our
scope 1
and 2, and
specified
scope 3,
activities.
Financing
Targets:
–
Aim to develop additional targets
for remaining material carbon-
intensive sectors in line with NZBA
commitment and as data and
applicable methodologies become
available.
Frameworks and tools:
–
Incorporate criteria into pre-deal
assessments to understand climate
impacts and identify associated
risks and opportunities.
–
Develop transition framework to
understand where corporate
clients are on their lower-carbon
journey and inform appropriate
actions to support.
Policies:
–
Continue to enhance and develop
standards aimed at supporting
mitigation and de-risking of the
Group’s risk profile, aligned to
climate objectives.
Engagement:
–
Formalize approach to client
engagement to support their
transition efforts.
By 2030:
–
Reduce emissions intensity
associated with UBS in-scope
lending from 2021 levels for Swiss
residential real estate by 45%;
Swiss commercial real estate by
48%; power generation by 60%;
iron and steel by 27%; cement by
24%.
1
–
Reduce absolute financed
emissions associated with UBS in-
scope lending from 2021 levels for
fossil fuels (oil, gas and coal) by
70%.
1
–
Continue disclosing in-scope ship
finance portfolios according to
Poseidon Principles trajectory with
the aim of aligning.
2
–
Continue to reduce emissions
intensity / financed emissions for
in-scope sectors and enhance
approach in line with our
transition plan and evolving
market practice and standards.
–
Supplement emissions reductions
with carbon removals to
counterbalance hard-to-abate
residual emissions in-line with net-
zero guidelines.
Framework and tools:
–
Continue to embed sustainability and
climate considerations into sustainable lending
operating model.
Products and services:
–
Continue to build our offering of sustainability-focused
analysis, advisory and on-balance sheet (e.g.,
green or
sustainable loans and mortgages) or off-balance
sheet (such as access to debt and equity capital
markets) financing
solutions.
Investing
Frameworks and tools:
–
Conduct climate stress testing for
current in-scope portfolios,
–
Measure and track in-scope
portfolio alignment.
By 2030:
–
Aiming, by 2030, to align 20% of
UBS AG Asset Management’s total
assets under management (AuM)
with net zero. This Pre-acquisition
UBS aspiration will be reassessed in
2024.
–
Continue to align our approach
and aim to increase the scope of
AuM that are subject to net-zero
targets, as methodologies and
market practice and standards
evolve over time.
3
Policies:
–
Conduct annual review of voting and stewardship policies
to continue to evolve our approach.
Engagement:
–
Continue to engage with clients, investees
and third-party fund managers.
Products and services:
–
Continue to build our investment solutions for
private and institutional investors to help them
navigate climate-
related risks and opportunities.
Sustainability Report 2023
| Appendix 2 | Environment
110
Operations
Energy consumption and
sustainable buildings:
–
Continue to reduce operational
energy consumption and
optimize corporate real estate
portfolio.
–
Continue to invest in more
sustainable buildings and
upgrading existing buildings.
–
Continue to increase share of
renewable energy.
–
Source 100% renewable
electricity according to RE100.
Waste:
–
Continue to reduce overall
waste and improve recycling
rates.
Travel:
–
Update travel policy and
continue to reduce air travel-
related CO
2
emissions.
By 2025:
–
Minimize our scope 1
and 2 emissions
through energy
efficiencies and by
switching to more
sustainable energy
sources. After which,
procure
credible
carbon removal credits
to neutralize any
residual emissions
down to zero by
2025.
4
–
Reduce our own
energy consumption
by 15% from 2019
levels.
–
Use 100% paper from
sustainable sources.
–
Offset historical
emissions from scopes
1 and 2 (own
operations) back to
2000 (UBS AG
consolidated).
By 2035:
–
Engage with our GHG
key vendors, for
100% of them to
declare their
emissions and set net-
zero-aligned goals by
2026, and reduce
their scope 1 and 2
emissions in line with
net-zero trajectories
by 2035.
5
–
Continue to drive
direct (scope 1) and
indirect (scope 2)
emissions reductions
through energy
efficiencies and by
switching to more
sustainable energy
sources, thus reducing
our reliance on carbon
removal credits over
time.
–
Continue to monitor
key vendors and
expand ambition to
reduce emissions in
line with net-zero
trajectories to
additional vendors.
Frameworks and tools:
–
All environmental activities for UBS Group, including the
entire scope of in-house operations are subject to our
environmental management system (EMS) run in
accordance with ISO 14001.
–
Quantify and manage relevant scope 3 emissions from
categories 1 to 14 to inform appropriate actions.
Engage with key vendors:
–
Capture climate information, monitor progress on
reductions and incorporate ESG criteria into vendor
selection.
Framework and tools:
–
Continue to disclose the environmental impact
from joint operations, with clear commitments
to sustainability and
the reduction of environmental impact.
Travel:
–
Strengthen reporting incl. comprehensive insights into travel-related
emissions to measure and manage our travel
footprint, incentivize employees to opt for
eco-friendly transportation.
Enablers
Governance and accountabilities:
–
Continue to ensure suitable governance processes
and accountability for decarbonization targets.
Engagement and partnerships:
–
Continue to engage with industry, governments, regulators, and other
relevant external stakeholders on exchanging
transition expertise, developing standardized guidance
and implementing policies that support
an orderly transition;
participate in advocacy groups to drive necessary
changes.
Training and culture:
–
Continue to develop and prioritize roll-out of climate-
and net-zero-specific training for employees
and the Board of
Directors.
Climate data and analytics:
–
Continue to enhance data acquisition, analytics
capabilities and systems to monitor climate-related
metrics and
enhance associated climate disclosures.
1
While we continue to take steps to align our business
activities to our targets, it is important to note that progress towards our targets
may not be linear and
that the realization of our own targets and ambitions is dependent on various factors which are outside of our direct influence. We will continue to adjust our
approach
in line
with external
developments, as
well as
evolving best
practices for
the financial
sector and
climate science.
Refer to
the “Climate-related
methodologies – decarbonization approach for
our financing activities” section of
the Supplement to the
UBS Group Sustainability Report
2023, available at
ubs.com/sustainability-reporting
, for more information about parts of the value
chain within sectors covered by metrics
and targets. Metrics are based on gross
exposure, which includes
total loans and
advances to customers,
fair value loans
and guarantees as
well as irrevocable
loan commitments. Exclusions
from scope
of analysis primarily comprise Financial Services and
other exposure to private individuals.
2
As part of our ship
finance strategy, ships
in scope of Poseidon
Principles are
assessed on
criteria which
aim at
portfolio´s alignment
to
the Poseidon
Principles decarbonization
trajectories.
The Poseidon
Principles are
a
framework for
assessing and
disclosing, on
an annual
basis, the
climate alignment
of in-scope
ship finance
portfolios to
the ambition
of the
International
Maritime Organization (the IMO), including
its 2023 Revised GHG Strategy for
GHG emissions from international shipping to
decrease to net zero by or around
2050 (compared to 2008 levels).
3
In line with the Net Zero
Asset Managers initiative, we acknowledge that the scope
for asset managers to invest for
net
zero depends on the mandates agreed with clients and clients’ and managers’ regulatory environments. Also, on the expectation that governments
will follow
through on their own commitments to ensure the objectives of the Paris Agreement are met, including increasing the ambition of their Nationally Determined
Contributions, and in the context of investing, our
legal duties to clients and unless otherwise prohibited by
applicable law. In some asset
classes or for some
investment strategies,
agreed net-zero methodologies
do not yet
exist. Where our
ability to
align our
approach to investments
with the
goal of net
zero emissions
by 2050 is, today,
constrained, we commit to embark with determination and ambition on a
journey, and to
challenge and seek to overcome the
constraints
we face.
4
Scope 2 emissions are
market-based emissions. The remaining scope 1
and 2 emissions may
be in excess of
the approximately 5–10% residuals
required for
net zero
(per the
definition of a
“net-zero target”
by the
ESRS E1
Climate Change per
delegated act, adopted
on 31
July 2023),
which is
our
ambition for 2050. In 2024, we will be reviewing our 2025 scope 1 and 2 target for achievability for the combined organization
and for alignment with latest
guidance.
5
In 2024, we may review
our target for GHG key
vendors for the combined organization and for
alignment with latest guidance. Our GHG key
vendors are those vendors that collectively account
for more than 50% of our estimated vendor
GHG emissions.
Sustainability Report 2023
| Appendix 2 | Environment
111
Our approach to nature
Why nature is important to us
Climate and nature are deeply
intertwined. Just as in the
financial world, where assets give
rise to revenue flows,
the natural
environment consists of
stocks of assets
(i.e., natural
capital) that provide
benefits to people
and the
economy (i.e.,
ecosystem services). Biodiversity
is an
essential characteristic of
nature, critical
for maintaining the
quality, resilience
and
quantity of
ecosystem assets
and the
provision of
ecosystem services
that businesses
and
society
rely
upon.
This
has
been
documented
through
a
range
of
research
initiatives,
including
the
Global
assessment report on
biodiversity and ecosystem
services
from the
Intergovernmental Science
–
Policy Platform on
Biodiversity
and
Ecosystem
Services
and
the
UK
Government-sponsored
The
Economics
of
Biodiversity:
The
Dasgupta Review
.
We recognize the
importance of understanding
human dependencies and
impacts on nature,
to better understand
the
transmission
channels
through
which
our
clients
and
UBS
may
face
risks
and
opportunities.
We
view
nature,
alongside climate, as a risk driver that
may manifest in transition and physical risks that
both we and our clients need
to manage.
›
Refer to the “Strategy” section of this report for more information about our sustainability strategy
Our governance
Our
sustainability
activities,
including
nature-related
matters,
are
overseen
at
the
highest
level
of
the
firm
and
managed by
the Group
Sustainability and
Impact organization.
Our Chief
Sustainability Office
leads a
cross-firm
Nature Working Group
that meets monthly
to consider nature-related
activities, including regulatory
and market
developments, and to coordinate activities across
the firm.
›
Refer to the “Governance” section of this report for more information about our sustainability governance,
including on nature
Our strategy
The Planet pillar of our overarching sustainability strategy encompasses our approach to nature, mirroring that for
climate, and is underpinned by three key objectives:
–
supporting our clients’ low-carbon transition;
–
reducing our climate impact;
–
managing the risks of climate change to
our business.
To
address
the needs
of our
clients, manage
risks and
contribute to
positive impact,
we have
set standards
for
financing, investments
and supply chain
management decisions,
including explicit
aspects related to
nature. Within
our business divisions, we
help our clients
explore
the opportunities related to
natural capital and nature-positive
solutions.
We
believe
our
work
on
nature
is
just
beginning
and
will
rapidly develop
in
line
with
market needs,
regulations, data methodology developments
and voluntary commitments.
Our strategy
will further
evolve as
our understanding
of the
risks and
opportunities connected to
nature-related
impacts and dependencies deepens. As data and methodologies
continue to improve, this will support the further
analysis of impacts and
dependencies and the resulting
risks and opportunities. We
believe the release of
the TNFD
recommendations
and
the
European
Sustainability
Reporting
Standards
on
nature
will
encourage
further
developments
in
data
and
methodologies.
We
continue
to
engage
with
providers
of
nature-related
data
and
methodologies that may support our own
work.
As part
of this
effort in
2023, UBS
joined a
bank-specific working
group aimed
at addressing
risks and
opportunities
in the agricultural sector. The
working group is convened by
the World Economic Forum’s Tropical Forest
Alliance
(TFA) finance sector engagement team.
›
Refer to the “Strategy” section of this report for more information about our sustainability strategy
Seeking nature-related opportunities
We already
support our
clients in
identifying climate-related opportunities
and look
to provide
similar support in
relation to nature, albeit that work is at an early stage.
Sustainability Report 2023
| Appendix 2 | Environment
112
As
part
of
this
effort,
the
UBS
Sustainability and
Impact
Institute
(the
Institute) has
published
various
thought-
leadership reports focusing
on the topic of nature.
These include
From Ozone to Oxygen
– Opportunities and Risks
in Natural
Capital,
published in
2022,
which offered
a detailed
review of
the importance
of nature
and made
a
number of
recommendations
for key
stakeholders to
help address
nature-related issues
through financing,
investing
and
advising.
More
recently,
in
July
2023,
the
Institute
published
Taking
root
–
Mainstreaming
natural
capital
accounting to meet global biodiversity goals
. That report suggests that natural capital
accounting (NCA) could be
integral to
reversing biodiversity
loss by
2030 if
its development
speeds up
and presents
a set
of strategies
that
investors and financers, NGOs,
corporations and other stakeholders
could pursue to help
mainstream NCA. Also in
2023, the
Credit Suisse
Research Institute
contributed to
the dialogues
on a
global plastic
treaty by
publishing
Plastic
pollution:
Pathways
to
net
zero
.
Highlighting
the
challenges
of
ever-increasing
plastic
waste,
including
for
biodiversity, this report
discussed strategies for
mitigation and adaptation,
including waste management
and the
possibility of a global plastics treaty.
Managing nature-related risks
Nature-related risks refer to how organizations
and people depend on and
impact natural capital, which
is defined
as natural resources that combine to yield a flow of benefits
to people.
›
Refer to the “Managing sustainability and climate risks” section of this report for a description of our climate and
nature risk management
We have established criteria to assess nature-related risks through our firm’s standards. They address controversial
activities and
areas of
concern (including
sensitive locations),
recognizing that
UBS is
both directly
and indirectly
exposed through
our business
activities. We
limit business
with clients
or suppliers
that may
endanger animal
species
and/or contribute to deforestation and its related
impacts, such as forest degradation.
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more information about
the sustainability and climate risk policy framework
Our sustainability and climate risk
framework includes stipulation of controversial activities
we will not knowingly
engage in, and areas of concern where we will
only engage subject to stringent criteria.
Clients, transactions or suppliers potentially in breach of our standards, or otherwise
subject to significant climate,
environmental and human
rights controversies, are
referred to our
SCR unit,
which approves or
rejects the cases
after
assessing
their
compliance with
the
firm’s
risk
appetite
standards. Advanced
data
analytics
on
companies
associated with such
risks is integrated
into the web-based
compliance tool used
by our staff
before they enter
into
a client or supplier
relationship, or a
transaction. The systematic
nature of this
tool significantly
enhances our ability
to
identify
potential
risk.
In
2023,
the
Stainability
and
Climate
Risk
unit
performed
3,297
assessments,
these
included 419 assessments focused on the
agribusiness sector.
›
Refer to the Supplement to this report, available at
ubs.com/sustainability-reporting
, for more information about
the sustainability and climate risk assessment table
Our investing clients and client assets
In our wealth management business, it has been our long-standing view that sustainable investing strategies look
beyond environmental,
social and
governance (ESG) integration.
Thus, integrating material
ESG information into
investment analysis and decisions
is increasingly seen
as a requirement
for the investment management
industry.
Exclusions,
ESG
integration
and
stewardship
are
a
set
of
effective
tools
that
can
be
incorporated
not
only
in
sustainable but also
in conventional investment strategies:
they could also
be paramount in
addressing nature as
part of investments more broadly.
To
facilitate
a
better
use
of
these
tools,
our
wealth
management
Chief
Investment
Office
has
identified
six
sustainability topics that encompass the major challenges that both impact and are impacted by corporations and
governments, and can help inform investment
decisions where relevant:
–
pollution and waste
–
climate change
–
water
–
people
–
governance
–
products and services
Sustainability Report 2023
| Appendix 2 | Environment
113
These topics
are selected
on the
basis of
industry best
practices, relevance
to company
financial outcomes, data
availability and reliability, and client feedback on the issues they care most about. Five of
the topics (pollution and
waste, climate change, water, people, and governance) focus on how well companies manage these issues
within
their
operations
and,
therefore,
reflect
a
company’s
operational
footprint.
This
is
where
issues
such
as
the
advancement of
corporate policies
and
practices on
biodiversity
preservation and
pollution reduction
would
be
captured
and
subsequently inform
investment
decisions
where
relevant.
The
sixth
topic
(products
and
services)
focuses
on
whether the
company’s offering
and
its
supply
chain
management address
sustainability challenges
directly and it therefore captures
a company’s delivery of solutions
that directly mitigate environmental
(and social)
challenges, for instance within
climate change mitigation and
adaptation, pollution management and addressing
water scarcity.
The six-topic framework is designed to offer a more simplified and targeted approach to sustainability challenges,
including
those
related
to
nature,
and
specifically
to
inform
the
decisions
of
private
investors.
They
represent
universal sustainability challenges, although
the priority of each topic may differ across
industries. Additionally, the
companies that manage these topics
well are not necessarily those with
the least-adverse environmental or social
impact.
In
fact,
sectors
with
the
greatest exposure
to
sustainability
risk
factors
often
have
a
greater imperative
(regulatory or reputation-driven) to work to
minimize their negative impact.
Global Wealth
Management
uses these
topics to
score companies,
inform investment
analysis, allocate
discretionary
capital
where
relevant,
and
provide
targeted
advice
to
private
and
family
office
clients
based
on
their
stated
sustainability preferences. For example, when considering
nature-related information, the portfolio managers,
and
subsequently investors,
would turn towards
the topics of
climate change, pollution
and waste, water,
and products
and services to
identify potential nature-related risks
or opportunities that were
not apparent from
their financial
analysis.
Investors
could
also
use
the
scores
to
assess
the
sustainability
profile
of
their
portfolios,
to
better
understand their exposure
to potential sustainability
risks and opportunities,
as well
as to
evaluate whether their
investments are aligned with
their personal values and
interests. UBS also sources
indicators of whether companies
are involved in
a range of activities,
including environmental
ones, such as
use of genetically
modified organisms
or
involvement in severe pollution actions, that
some investors may wish to exclude.
How we approach natural capital risks in our
investments
As an asset manager,
we recognize that biodiversity loss and degradation
is a source of material financial risk, and
managing this risk is
integral to fulfilling our
fiduciary duties toward our
clients. We also
recognize that investing
sustainably can
promote actions that
contribute to the
preservation and restoration
of natural capital
of our planet.
Currently, we manage nature-related risks as part of our ESG integration processes. We use a proprietary ESG risk
dashboard that combines multiple
data sources to identify companies
with material ESG risks. Natural
capital risks,
such
as
water
and
forest
risks,
are
embedded
in
the methodologies
of
these
underlying
data
sources,
and
our
investment
teams
utilize
these
ESG
factors
alongside
traditional
financial
metrics
and
proprietary
ESG
sector
materiality maps to assess the risk-return profile
in the investment process.
In 2023, we built on
efforts started in 2022
to develop an investor
thematic engagement program
that works with
investee companies to
encourage actions that
ensure natural capital
is accounted for
and included in their
financial
and economic decision-making. We developed this program by consulting with our clients, investment teams and
a wide
array of
external experts
to shape
our priorities
and approach
to natural
capital. In
addition to
our proprietary
ESG sector materiality
maps, we also
conducted a heatmap
assessment,
mapping ENCORE
data to our listed
equity
and
fixed
income
corporate
investments
to
understand
exposure
to
biodiversity risks
at
the
industry
level.
This
process has led
us to identify
three specific areas
that form the
basis of our
engagement program
on natural capital
risks and opportunities: forests, water,
and the climate-diversity nexus.
In 2023,
we also
joined Nature
Action 100
and PRI’s
Stewardship Initiative
Spring
to support
the Asset
Management
stewardship
strategy.
Nature
Action
100
is
a
global
investor
engagement
initiative
focused
on
driving
greater
corporate
ambition
and
action
to
reverse
nature
and
biodiversity
loss.
The
initiative
engages
companies
in
key
sectors that are deemed to be systemically important in reversing nature and biodiversity loss by 2030. UBS is also
one of the members of the Advisory Committee.
Natural capital
risks are
considered across
our real
estate and
private market
investments. For
example, our
farmland
business
is
a
founding
member
of
Leading
Harvest,
an
outcomes-based
sustainability
standard
that
addresses
economic,
environmental,
social,
and
governance
matters
through
farm
management.
The
Leading
Harvest
Farmland Management
Standard comprises
13
objectives, 33
performance measures
and 71
indicators that
are
core
to
farmland
sustainability.
Such
nature-based
objectives
and
performance
measures
include
biodiversity
conservation through species protection,
wildlife habitat conservation, avoided
land conversion, and crop diversity.
Sustainability Report 2023
| Appendix 2 | Environment
114
Since 2020, the inaugural year
of the standard, 100% of
the farmland acres we manage
have been enrolled and
as of 2023, 100%
of the farmland
acres we manage
are certified. Conformance
to the standard
is assured through
independent, third-party certification.
During 2023,
Asset Management
(Credit Suisse)
had thematic
engagements with
a specific
focus on
the three
areas
of food systems, water and forest conservation.
Going forward, the stewardship and engagement
activities will be
progressively integrated.
›
Refer to
ubs.com/global/en/assetmanagement/capabilities/sustainable-investing/stewardship-engagement
for our
approach to stewardship
›
Refer to
am.credit-suisse.com/ch/en/asset-management/insights/sustainable-investing/active-ownership.html
for
Asset Management (Credit Suisse)’s approach to stewardship
Our vendors and operational impact
Our firm-wide Responsible Supply
Chain Management (RSCM) framework is
based on identifying, assessing, and
monitoring vendor practices
on environmental and social
topics. We have taken
steps to protect biodiversity
across
our
offices,
mitigate
the
impact
of
our
operations
and
raise
awareness
among
our
staff.
Initiatives
include
the
installation of green roofs featuring rooftop vegetable
gardens and beehives at selected office locations,
as well as
organizing
tree
planting activities
across
Europe.
Additionally,
we obtained
recertification for
one
of our
Zürich
offices from Natur & Wirtschaft, a Swiss foundation focused on promoting biodiversity conservation in settlement
areas. Our
portfolio includes
further certified
areas, highlighting
a focus
on green
spaces with
native plants
and
additional
biodiversity
features.
We
also
organized
annual
events
such
as
Clean-Up
Day,
during
which
UBS
volunteers join forces to clean up street litter in their respective cities, and World Bee Day,
featuring webinars and
awareness campaigns highlighting the critical role of bees
to our natural ecosystem.
Finally, in
our corporate
carbon offsetting
activities,
we make
use of
nature-based solutions,
as well
as technological
carbon capture and
storage solutions. As
standards in this
area continue to
evolve (e.g.,
the Core Carbon Principles
from the Integrity Council for Voluntary Carbon
Markets),
we will seek to apply them to our activities.
›
Refer to the “Social” section of this report for a description of our Responsible Supply Chain Management
Mobilizing capital for nature
In
order
to support
our
investing clients,
we continue
to explore
products
and solutions
that have
a
significant
nature-related
sustainability focus
or may
even be
able to
generate more
net nature
-positive impacts.
In Global
Wealth Management, for example, an investment solution that was launched in 2021 and aligns
to our Future of
Earth publication promotes environmental objectives built around
the themes of sustainable land use, sustainable
water
use,
the
shift
to
clean
energy
and
provision
of
health
solutions
that
may
help
mitigate
the
impacts
of
environmental degradation on human health.
We also
have the
opportunity to
add certain
environmental and
nature-aligned products
solutions to
the GWM
offering
as
a
result
of
the
acquisition
of
the
Credit
Suisse
Group.
One
example is
an
ocean
engagement fund
strategy, focused on public company engagement to drive ocean health. We continue to
explore ways to develop
further products and solutions in our wealth
and asset management businesses.
We also continue to look for ways in
which clients may be able to have more direct
impact. This work is centered
in the
UBS Optimus
network of foundations
and other
philanthropic services that
provide opportunities for
high
net worth clients
who may wish to
undertake net-positive nature activities and
are willing to
do so in
a way that
generates less-than-market returns.
The work
of the
UBS Optimus
network of
foundations on
mangrove conservation and
blue carbon
continued in
2023, as the
UBS Optimus network of
foundations believes that mangrove restoration
can not only
be a form
of
climate action
through carbon
sequestration but
can also
provide broader
natural capital
benefits through
flood
protection, and even have social co-benefits by
supporting ecotourism in critical areas.
Further
exploring
the
power
of
philanthropy
to
deliver
change
at
scale,
the
UBS
Climate
Collective,
an
impact
network for philanthropists
and organizations, addresses
the issue of climate
mitigation and adaptation
globally by
tackling problems locally and enabling replication and
scale to other countries. The Collective supports and invests
in mangrove
conservation and
blue carbon
projects in
Southeast Asia,
which is
particularly vulnerable to
climate
change, through a
portfolio of nine
impact-led organizations
in Vietnam and
Indonesia focused
on building coastal
resilience
to
mitigate
climate
change
and
maximize
social
and
biodiversity
benefits.
In
2023,
the
Collective
established 42
partnerships, including
with
local
and
national
governments, as
well
as
private
sector, local
and
international NGOs and funding partners, with
the aim of generating systemic impact through
collective action.
Sustainability Report 2023
| Appendix 2 | Environment
115
In 2023, the UBS Optimus network
of foundations agreed to fund its
nature-based solutions partner,
Terratai, over
a
three-year
period.
Terratai
is
creating
and
supporting
businesses
that
are
tackling
the
systemic
food
system
challenges contributing to nature and biodiversity
loss in Asia.
This fits squarely with the UBS
Optimus network of foundations’
ecosystem development approach to supporting
and fostering
the incubation,
growth and
scaling of
impactful enterprises
and fills
a gap
we have
identified for
investment opportunities in innovative nature-based
solutions.
The UBS Optimus
network of
foundations has
also been
exploring the
use of blended
finance structures
to mobilize
capital for nature.
In 2022, it
closed its first
impact and blended
deals in nature:
one of
them supporting marine
protected area governance,
sustainable fisheries
and ecotourism, with
Blue Alliance
in the Philippines.
Blue Alliance
works across a
network of nine
Marine Protected
Areas (MPAs)
in the Philippines
covering 5,200
hectares of
coastal
and marine ecosystems.
For our financing clients,
we include nature considerations alongside
other topics as part of
our ambition to be
a
sustainable finance partner of choice. In
2023, Credit Suisse Group
helped facilitate a foreign
debt conversion by
the government
of Ecuador
replacing USD 1.62
billion of
external debt
with new
debt of USD 652
million on
better
terms. Associated with that,
Ecuador agreed to
provide an estimated
USD 323 million for marine
conservation in
the Galápagos Islands over the next 18.5 years
by endowing an independent Galapagos Life
Fund.
Finally, in 2023, Credit Suisse
Group hosted the 10th annual
Conservation Finance Conference
in conjunction with
longstanding partners at Cornell University and The Nature Conservancy. The 2023 conference focused on nature
action catalyzed across the
private and public
sectors and explored how institutional
investors and businesses are
stepping up to protect nature.
Our engagement and outlook
Participation in various
industry collaborations
is part of
our effort to
support our clients
and further develop
nature
markets. In
addition to
our work
in the
global TNFD
network, we
helped Swiss
Sustainable Finance
and the
UN
Global Compact’s Swiss network to establish a Swiss
TNFD national consultation group in 2022. In 2023,
we gave
presentations on
the TNFD
several times
to support capacity
building in
our home
market. In the
same year, we
also
co-chaired the UNEP
FI Principles for
Responsible Banking Nature
working group that
developed initial guidance
on
nature target setting
for financial institutions.
Also in 2023,
we joined a World
Economic Forum and
Tropical Forest
Alliance industry working group and a local Brazil working group with
Global Canopy to explore collaboration on
the critical issue of deforestation.
To support the
development and
growth of the
conservation finance
market, Credit
Suisse Group was
a co-founder
of the
Coalition for
Private Investment
in Conservation
(CPIC) in
2016. CPIC’s
members included
leading civil
society
organizations,
private
and
public-sector
financial
institutions,
and
academia,
with
the
shared
aim
of
working
together to deliver
a material increase
in private, return-seeking
investment in conservation.
We are continuing
this
long-standing relationship going forward as
UBS.
We
also
engage
with
policymakers
and
regulators
regarding
nature-related
risk
management.
Through
our
leadership
of
the
Institute
of
International
Finance
Sustainable
Finance
Working
Group,
we
engaged
with
the
Network for
Greening the
Financial
System, the
G20 Sustainable
Finance Working
Group
and
the International
Platform for Sustainable Finance (among others
working on the topic).
In
future years,
we expect
rapid
improvements in
data and
methodologies, as
well
as the
development of
new
financing and investing approaches. In particular, we expect an increased
focus on location-
and company-specific
aspects of nature and a shift away from sector and country averages that form the
basis for most of the portfolio-
level
analytical
approaches today.
We
are
exploring
the
application
of
emerging
analytical
approaches, such
as
biodiversity footprints
and nature
value-at-risk methodologies.
We will continue
to engage
with regulators,
industry
peers, collaborative platforms and
individual service providers, and
vendors to understand
and support emerging
practices and offerings in the market.
Sustainability Report 2023
| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
116
Appendix 3 – Entity-specific disclosures for Credit
Suisse AG
During
2023,
certain
sustainability-related
policies,
processes
and
activities
have
continued
at
Credit
Suisse,
following
the
acquisition of
the
Credit
Suisse
Group
by
UBS
Group.
This
appendix
therefore
sets
out
pertinent
information and data where it has not been integrated in the information and data set out in the core part of this
report (and indicated,
for example,
via footnotes therein).
In strategic terms, following the acquisition, the sustainability (and impact) strategy of UBS Group has superseded
that of
Credit Suisse.
Credit Suisse
AG does
not
maintain a
separate sustainability
strategy, but
its
activities are
integrated within the strategy of UBS Group.
Sustainability Report 2023
| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
117
Sustainability governance at Credit Suisse
Until
its
acquisition
by
UBS
Group
AG
in
June
2023,
Credit
Suisse
Group
AG
had
an
established
sustainability
governance system. It was
exercised at its Board of
Directors, Executive Board,
and senior management levels,
thus
integrating sustainability into line processes and
structures, as well as through
boards and committees specifically
focused on sustainability topics. With the integration of Credit Suisse
into UBS Group in the second half of
2023,
this
governance
was
adapted
for
Credit
Suisse
and
integrated
into
UBS
Group,
which
included
the
successive
retirement of certain CS governance bodies.
Credit Suisse AG sustainability governance
The following
tables illustrate
the main
corporate bodies
that have
been involved
in maintaining
robust sustainability
governance at Credit Suisse. Alignment with UBS
Group’s strategies, objectives, and guidelines has been
ensured
through
appropriate representation
of
UBS
Group
on
the
Credit
Suisse
Board of
Directors,
which
includes UBS
Group and UBS
GEB members.
As set out
in the Organization
Regulations of UBS
and its annexes,
the UBS GEB
has
executive management
responsibility for
the steering
of
UBS
Group and
its
business. Consequently,
for matters
affecting Credit Suisse, the primary counterparty / escalation path for Boards of Credit Suisse or committees is the
UBS GEB.
Active sustainability governance bodies (as of
31 December 2023)
Governance
body
Lead and other membership
information
Meeting frequency
Purpose and responsibilities related to sustainability-
and climate-related issues
Board of
Directors (active)
–
Chairman of Credit Suisse AG
–
Meetings are normally held with
the participation of the CEO and
the ExB (with regular private
sessions of the Board)
–
As often as its business
requires, but at least six
ordinary meetings per
year
–
Responsible for the overall direction, supervision and
control of Credit Suisse and its management taking into
account the UBS Group’s strategy and interests.
Board Audit
Committee
(active)
–
Chair of the Audit Committee
–
Meetings are normally held with
the participation of the CEO, the
CFO, the Head of IA,
–
As often as its business
requires, but at least
four times a year
–
Supports the BoD in fulfilling its oversight
duties relating
to financial reporting and internal controls over financial
reporting, the effectiveness of the external and
internal
Sustainability Report 2023
| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
118
Governance
body
Lead and other membership
information
Meeting frequency
Purpose and responsibilities related to sustainability-
and climate-related issues
representatives of the external
auditors and periodically, only
with the participation of the Head
of IA, the external auditors, or
with members of management,
or a combination of any of the
aforementioned
–
Regular joint meetings
with the Board Risk
Committee
audit functions, and the effectiveness of whistleblowing
procedures and legal and regulatory matters as relevant.
–
Provided sign-off on the 2022 Credit Suisse Sustainability
Report.
Board Risk
Committee
(active)
–
Chair of the Risk Committee
–
Meetings are normally held with
the participation of the CEO, the
CFO, the CRO, the CCO, the CTO
and the Head of IA
Representatives of the external
auditors participate (to the extent
necessary) in the RC meetings
–
As often as its business
requires, but at least
four times a year
–
Regular joint meetings
with the Board Audit
Committee
–
Annual meetings with
the Governance,
Nominations, and
Compensation
Committee
–
Assists the BoD in fulfilling its risk management
responsibilities in the areas of financial and non-financial
risks (regulatory, compliance, financial crime,
conduct,
governance and operational risk),
considering the
potential effects of the afore-mentioned risks to Credit
Suisse’s reputation.
Board
Governance,
Nominations,
and
Compensation
Committee
(active)
–
Chair of the Governance,
Nominations, and Compensation
Committee
–
Meetings are normally held with
the participation of the CEO, the
Global Head of People, and senior
representatives of the
Performance and Reward
function
–
As often as its business
requires, but at least
four times a year
–
Annual meetings with
the Risk Committee
–
Formed by merging the former Credit Suisse
Group AG
Board Governance and Nominations Committee
and the
Board Compensation Committee
–
Supports the BoD in fulfilling its duties with
respect to
overseeing the corporate governance
and compensation
practices of Credit Suisse, including the organization
and
composition of the BoD and the selection
and
nomination of new BoD members, the appointment
of
new ExB members, and the determination of
compensation for Credit Suisse.
Executive Board
(active)
–
Chaired by the Credit Suisse CEO
–
As often as its business
requires, but at least
monthly
–
The Executive Board is appointed by the Board of
Directors and acts in accordance with the Group’s
strategies, objectives and guidelines.
–
Most senior management body of Credit Suisse AG
and
is responsible for the day-to-day operational
management under the leadership of the CEO.
Risk
Management
Committee
(active)
–
Co-chaired by the Credit Suisse
CEO, the CRO,
and the CCO
–
As often as its business
requires, but at least
monthly
–
Acts in accordance with the Group’s strategies,
objectives and guidelines.
–
Steers and monitors the development and
execution of
the Credit Suisse AG’s risk strategy, approving risk
appetite under ExB RMC authority across all risk types
and its divisions, as well as reviewing the aggregate and
highest risk exposures, key risk concentrations,
and key
non-financial risks.
–
Monitors the execution of the overall approach to
climate, jointly with legal entity Board of Directors’ risk
committees where relevant.
ESG Disclosure
and Reporting
Committee
–
Chaired by the Credit Suisse CFO
and CSO
Subject to actual needs
and circumstance
–
1H23 meetings: 2
–
2H23 meetings: 2
–
Seeks to ensure that appropriate levels of control and
governance are in place for our ESG disclosures.
Sustainability
Framework
Committees
–
The Sustainable Classification
Committee (SCC)
–
The Green Finance Committee
–
SCC meets bi-weekly
–
Green Finance
Committee meets ad-
hoc as required
–
The SCC is the governing body of the
Sustainable
Investment Framework and oversees the investment
product classification
–
The Green Finance Committee is the governing
body of
the Green Finance Framework and oversees the issuance
of green finance products and green asset pool, and the
reporting related to green issuances
Paused or retired sustainability governance
bodies
Governance
body
Lead and other membership
information
Meeting frequency
Purpose and responsibilities related to sustainability-
and climate-related issues
Board
Sustainability
Advisory
Committee
(retired April
2023)
–
Chair of the Sustainability Lead of
the Board of Directors
As often as its business
requires, but at least four
times a year
–
1H23 meetings: 1
–
2H23 meetings: n/a
(retired in April 2023)
–
Retired in April 2023; assisted the Board, in an advisory
capacity, in fulfilling its oversight duties in respect of the
development and execution of the Credit Suisse
Group’s
sustainability strategy and ambitions and
monitoring and
assessing the effectiveness of the respective sustainability
programs and initiatives.
Conduct and
Financial Crime
Committee
(retired October
2023
–
Chair of the Conduct and
Financial Crime Control
Committee
As often as its business
requires, but at least four
times a year
–
Retired in October 2023; and duties primarily
embedded
into the Board Risk Committee.
–
Assisted the Board in fulfilling its oversight
responsibilities with respect to Credit Suisse’s exposure
to financial crime risk.
Sustainability Report 2023
| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
119
Governance
body
Lead and other membership
information
Meeting frequency
Purpose and responsibilities related to sustainability-
and climate-related issues
Compensation
Committee
(integrated into
the GNCC June
2023)
–
Chair of the Compensation
Committee
As often as its business
requires, but at least four
times a year
–
Retired in June 2023 and duties integrated into the
new
Governance, Nominations, and Compensation
Committee.
–
The Compensation Committee was responsible for
proposing the compensation structure and plans for the
Executive Board and the broader employee population,
as well as determining the respective variable
compensation amounts, based on an assessment
of both
financial and non-financial performance, for
approval by
the Board.
Credit Suisse
Conduct Board
(retired in
December 2023)
–
Co-chaired by the Global Head of
People and another ExB member
–
Minimum of five members from
the ExB and senior management
appointed by the CEO
As often as its business
requires, but at least
monthly
–
Acted in accordance with the Group’s strategies,
objectives and guidelines
–
Established
and determined
a governance framework for
the management of conduct matters throughout
the
Credit Suisse entities.
–
Oversaw and reviewed the global disciplinary
process of
Credit Suisse entities, ensuring it was applied in
a fair
and consistent manner.
Culture and
Values Board
(retired August
2023)
–
Co-chaired by the CEO and the
Global Head of People
Monthly
–
Retired in August 2023; led the Group-wide culture
strategy and design efforts, including a regular review of
the Code of Conduct, and championing the
implementation of the Group’s culture agenda in the
divisions, regions and functions.
Sustainability
Leadership
Committee
(paused since
August 2023,
retired in
January 2024)
–
Chief Sustainability Officer
–
Sustainability Leaders in Business
Divisions and representatives from
CCO, CRO, GC and IA
Monthly (subject to actual
needs and circumstance)
–
1H23 meetings: 4
–
2H23 meetings: 1 plus
1 written update
(paused from August
2023; retired in January
2024)
–
Paused since 2023, retired in January 2024.
–
Steered the implementation of the sustainability
strategy
across the bank, ensured bank-wide engagement on
sustainability and oversaw the progress towards
commitments and strategic priorities. It discussed
growth
opportunities, risks and the impact of the
market
environment on the sustainability strategy.
–
From April 2023, provided oversight on the execution
progress of Sustainability initiatives and projects
Sustainability
Operational
Committee
(retired March
2023)
–
COO of Global Sustainability
–
Representatives from each
Business Divisions and CRO, CCO,
and GC
Monthly (subject to actual
needs and circumstance)
–
1H23 meetings: 3
–
2H23 meetings: n/a
(retired in March 2023)
–
Retired in March 2023 and responsibilities integrated
into the Sustainability Leadership Committee
from April
2023
–
Provided oversight on the execution progress of
Sustainability initiatives and projects
Climate Risk
Strategy
Steering
Committee
(retired
September 2023)
–
Co-chaired by the Chief Risk
Officer and the Chief
Sustainability Officer
–
Senior management
representation, including a subset
of Executive Board members from
across business divisions, General
Counsel, Risk and Global
Sustainability reporting to the
Executive Board Risk
Management Committee
Monthly (subject to actual
needs and circumstance)
–
1H23 meetings: 2
–
2H23 meetings: 0
(retired in September
2023)
–
Retired in September 2023
–
Provided overarching governance and guidance
for
Credit Suisse’s Climate Risk Strategy program and was
mandated to develop comprehensive strategies to
address climate-related risks.
Sustainability
(Climate) Risk
Executive
Leadership
Committee
(retired
September 2023)
–
Chaired by the Head of Corporate
Risk
Monthly (subject to actual
needs and circumstance)
–
1H23 meetings: 6
–
2H23 meetings: 0
(retired in September
2023)
–
Retired in September 2023
–
Provided oversight on the implementation of the
Group’s strategy with respect to managing sustainability
and climate-related risks.
–
Reported to the Climate Risk Strategy Steering
Committee, which in turn had a reporting
line to the
Executive Board Risk Management Committee.
Net Zero
Steering Board
(retired
September 2023)
–
Chaired by the Chief
Sustainability Officer
Monthly (subject to actual
needs and circumstance)
–
1H23 meetings: 2
–
2H23 meetings: 0
(retired in September
2023)
–
Retired in September 2023
–
Provided oversight and strategic guidance for developing
the Group’s science-based goals and transition
strategies
that underpin Credit Suisse’s net-zero 2050 ambition.
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| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
120
Environmental matters at Credit Suisse
Credit
Suisse
Group
AG’s
net-zero
ambition
included
investment
activities
on
behalf
of
clients
within
Asset
Management (Credit Suisse) and Investment Solutions & Sustainability (IS&S), part of Wealth Management (Credit
Suisse). It included a
2030 interim goal for
the reduction of investment-associated emissions in
intensity terms by
50%
by
2030
across
Credit
Suisse’s
listed
equities
and
corporate
bonds
investments.
The
goals
of
Asset
Management (Credit Suisse)
and IS&S
aimed to consider
the scope 1
and 2
emissions of portfolio
companies, as
well as scope 3 emissions for portfolio companies in the
energy sector. Given the reliance on companies to report
their emissions, at this point in time, Credit Suisse
can only report progress on this target
for 2022.
As previously disclosed
in the 2022 Credit
Suisse Group Sustainability
Report, Credit Suisse’s
investment-associated
emissions disclosures require restatement each year as further assets come into scope and as more emissions data
is reported
by investee
companies. As
a result,
prior years
have been
recalculated and re-baselined
to reflect
the
updated emissions
reported in
the MSCI
database. We
have aligned
the currency
for this
disclosure to
the UBS
reporting
currency
of
USD
(with
Credit
Suisse
having
previously
reported
this
disclosure
in
CHF).
Comparative
periods are converted at the spot rate as
of December 31 in the relative period.
The Asset
Management (Credit
Suisse) and
Investment Solutions
& Sustainability
disclosure was
previously reported,
using USD equivalents, as
30,578,651 for 2021, 31,439,331
for 2020 and
32,045,782 for 2019 for
“Investment
associated emissions (absolute) (t
CO
2
e)” and 130
for 2021, 151
for 2020 and
190 for
2019 “Emission intensity
(t CO
2
e per USD
million invested)”.
In addition, the
previously reported
“Assets under
management (AuM)
in scope
%” and “In-scope AuM with emissions data %”
was 44% and 39% for 2021, 44% and 36%
for 2020 and 41%
and 32% for 2019.
The investment-associated emissions
of a listed equity
and corporate bond portfolio
are calculated as the company
emissions weighted by
the outstanding amount
divided by the enterprise
value including cash,
summed up over all
investee companies. The
emissions intensity corresponds to
the total investment-associated emissions
normalized
by the
invested amount. For
2022, Asset
Management (Credit Suisse)
and IS&S
measured investment-associated
emissions
in
intensity
terms
as
126
t
CO
2
e
per
million
US
dollars
invested.
This
represents
a
decrease
of
7%
compared with
2021 and
compares with
an annual
target reduction of
6% for
both Asset
Management (Credit
Suisse) and IS&S compared with 2019 as the
baseline year.
Portfolio emissions (Credit Suisse)
For the year ended
Credit Suisse Asset Management
31.12.22
31.12.21
31.12.20
31.12.19
Investment associated emissions (absolute)
(tCO
2
e)
19,167,144
26,212,036
27,442,394
25,008,330
Emissions intensity (tCO
2
e per USD million invested)
124
129
151
172
AuM in scope %
42%
44%
44%
41%
In-scope AuM with emissions data %
35%
39%
37%
32%
Credit Suisse Asset Management and Investment
Solutions & Sustainability (IS&S)
Investment associated emissions (absolute)
(tCO
2
e)
22,462,090
31,977,454
32,807,157
29,778,625
Emissions intensity (tCO
2
e per USD million invested)
126
136
157
176
AuM in scope %
42%
44%
44%
41%
In-scope AuM with emissions data %
35%
39%
37%
33%
Between
2021
and
2022,
absolute
investment-associated emissions
decreased
by
30%
for
Asset
Management
(Credit Suisse) and Wealth Management (Credit Suisse)
combined. This is driven by
a reduction in managed AuM
during this period as the emission intensity only
decreased
by 7%. The major factor contributing to the
reduction
in
emission
intensity
is
the
general
increase
in
market
values
for
positions
in
the
energy
sector,
mostly
due
to
geopolitical tensions. These market value
increases introduce a dilution effect.
Due
to
the
current lack
of available
data
(fund
look-through data
as
well
as
carbon
data),
it
is
not
possible
to
accurately measure the
investment-associated emissions of all
our in-scope assets.
Overall, investment-associated
emissions were calculated
for 178 (USD
billion) of total
AuM in 2022 within
Asset Management (Credit
Suisse) and
IS&S that relate to discretionary mandates. The 35% figure refers
to the AuM marked as in scope with data (listed
equities and corporate bonds).
In-scope AuM
are expressed
as a
share of
the total
AuM of
Asset Management
(Credit Suisse)
including pooled
funds and discretionary
mandates, and Wealth Management
(Credit Suisse) for
discretionary mandates managed
within IS&S. Excluded locations for Asset Management (Credit Suisse) include Americas and Asia Pacific.
Excluded
locations for Wealth Management (Credit
Suisse) include Spain, Brazil, and Mexico.
Sustainability Report 2023
| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
121
As we strive to operate seamlessly as one organization and to publish a target which will cover
the combined UBS
and
Credit
Suisse
Asset
Management
business,
the
previous
interim
targets
for
the
reduction
of
investment-
associated emissions announced by Credit Suisse and the corresponding Climate Action Plan will be withdrawn in
2024.
Credit Suisse-specific environmental
footprint
The table below contains the
2023 annual environmental data across the
Credit Suisse operational footprint. The
table contains instances
where units
and indicator names
have changed compared
to prior Credit
Suisse disclosures
in order to
align with the
corresponding UBS terminology. To enable
the integration within the
consolidated UBS
Group figures, the figures contained within
this table have been recalculated
to align with the methodology
in use
at UBS.
Credit Suisse-specific environmental
footprint
Environmental indicators (Credit Suisse)
1,3,4,5
2023
2022
2021
GRI
2
Energy
Total direct and intermediate energy consumption
(GWh)
302
353 GWh
395 GWh
388 GWh
Electricity
GWh
274 GWh
306 GWh
289 GWh
Share of electricity from renewable sources
(%)
302
90.5%
83.1%
84.9%
Paper
Total paper consumption
(tons)
301
669 t
832 t
1,160 t
Paper consumption in kg per FTE
(kg/FTE)
14 kg
16 kg
23 kg
Water
Total water consumption
(m m³)
303
0.47 m m³
0.46 m m³
0.38 m m³
Water consumption m³ / FTE
(m³/FTE)
10 m³
9 m³
7 m³
Greenhouse Gases (GHG)
Direct greenhouse gas (GHG) emissions (scope 1)
6
(t CO
2
e)
305-1
11,063 t
13,584 t
13,537 t
Gross location-based energy indirect GHG emissions
(scope 2)
7
(t CO
2
e)
305-2
68,467 t
75,324 t
85,821 t
Market-based energy indirect GHG emissions
(scope 2)
8
(t CO
2
e)
305-2
15,309 t
24,153 t
21,274 t
Gross other indirect GHG emissions (gross scope 3)
9,10
(t CO
2
e)
305-3
42,337 t
52,947 t
32,943 t
Purchased goods and services (scope 3 cat 1)
(only paper and water)
(t CO
2
e)
688 t
820 t
1,327 t
Scope 3 cat 3 Fuel- and energy-related activities
(not included in scope 1
or scope 2)
(t CO
2
e)
22,632 t
25,365 t
23,369 t
Emissions from waste - (scope 3 cat 5)
(t CO
2
e)
545 t
968 t
895 t
Travel emissions - (scope 3 cat 6)
(t CO
2
e)
18,472 t
25,794 t
7,352 t
Total Gross GHG Emissions
11
(t CO
2
e)
121,868 t
141,855 t
132,301 t
Total Net GHG Emissions (GHG Footprint)
12
(t CO
2
e)
68,710 t
90,684 t
67,754 t
Greenhouse gas (GHG) footprint (t CO
2
e / FTE)
(t CO
2
e/FTE)
305-4
1.4 t
1.6 t
1.2 t
Legend: GWh = gigawatt hour; km = kilometer; t = metric ton; m³ = cubic meter; m = million; CO
2
e = CO
2
equivalents
1
Reporting periods: 2023 (1 January 2023
to 31 December 2023), 2022 (1 January
2022 to 31 December 2022), 2021
(1 January 2021 to 31 December
2021).
2
Reference to GRI
Sustainability Reporting Standards (see also globalreporting.org).
3
Metrics relate to the activities under the operational control of Credit Suisse, therefore excludes any environmental
impacts resulting from
the products, services,
or other downstream
client activities.
4
GHG emissions pertain
to Credit Suisse.
5
FTEs used for
intensity metrics are
calculated on
monthly / quarterly average basis as applicable and include Credit Suisse employees and contractors to
provide a more representative number of individuals using Credit Suisse facilities.
6
Previously reported as "Total scope 1 emissions"
by Credit Suisse.
7
Previously reported as "Total scope 2 (location-based) GHG
emissions" by Credit Suisse.
8
Previously reported
as "Total scope 2 (market-based)
GHG emissions (t CO2e)" by Credit Suisse.
9
Previously reported as "Total
scope 3 emissions" by Credit Suisse.
10
Due to limited data availability
a full GHGP-aligned Scope
3 emissions report
is not currently possible
to produce. The reported
Scope 3 emissions figures
are limited to
the following categories only:
3.1 Purchased
goods and services (water and paper only), 3.3 Fuel and
energy-related emissions, 3.5 Waste generated in
operations, 3.6 Employee business travel.
11
Previously reported as "Total
scope 1, 2 (location based), 3 GHG emissions" by Credit Suisse.
12
Previously reported as "Total
scope 1, 2 (market based), 3 GHG emissions" by Credit Suisse.
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122
2025 objectives
1
2023 progress toward
2025 objectives
2022 progress toward
2025 objectives
2021 progress toward
2025 objectives
75% reduction in GHG emissions (compared with 2010
levels on reported
operational aspects)
n/a
77.2%
83.0%
100% renewable electricity (consistent with RE 100)
90.5%
83.1%
84.9%
50% green label office space (in m
2
) certified to a green building standard
2
48%
47%
37%
1.5% annual energy efficiency improvement (on a year-on-year
basis)
1.4%
0.7%
N/A
Reduce single-use plastic items (and increase the
share of products made
from recycled material and reusable materials
We have identified single-use plastic (SUP) categories
and alternatives in
partnership with our global FM provider. Phase 1 of the project, launched in
2023, encompassed 7 locations and resulted in
the implementation of
sustainable alternatives for almost half
the SUP items identified.
10% paper reduction (on an FTE basis, compared to
2018 baseline)
Has not previously been, and will continue to not
be, disclosed due to a
combination of poor quality data and
long-term distortion in the data arising
from changes to working patterns as a result of the
COVID pandemic.
100% environmental label paper
10% water efficiency improvement (on a per FTE basis,
compared to 2018
baseline)
2030 enterprise goal
61% reduction in scope 1 and scope 2 enterprise
GHG emissions (against
2019 baseline)
58%
3
n/a
n/a
1
All figures have
been retrospectively aligned
to the prevailing
UBS reporting methodology
which has resulted
in deviations to
the previously reported
figures.
2
Scope limited to
Credit Suisse facilities that contain office space. “Green”
office space refers to third-party accredited
certifications such as LEED, BREEAM, DGNB, Minergie as well as the
Credit Suisse
green property quality
seal.
3
All figures have
been retrospectively aligned
to the prevailing
UBS reporting methodology
which has resulted in
deviations to the previously
reported
figures. Retrospective changes to the 2019 Scope 2 market based emissions baseline methodology to align with the prevailing UBS methodology have resulted in significant changes to
the 2019 Scope
1 and 2
baseline used to
calibrate the 61%
reduction target. The
original baseline adopted
a GHGP-aligned renewable
electricity definition which
has subsequently
been changed to
a more stringent
RE-100 definition. The
impact of this
is a reduction
in the renewable
electricity coverage across
our updated 2019
baseline, and a
corresponding
increase in our Scope 2 market based emissions figures. As such the 2023 performance against this target now appears much higher.
This target will be retired in 2024 as the business
aligns under a single suite of consolidated environmental targets.
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123
People at Credit Suisse
As part of the integration of Credit Suisse, we examined
our people management landscape. Our analysis
showed
that nearly
all of
Credit Suisse’s workforce
and demographic data
is compatible
with ours,
allowing us
to report
consolidated figures, unless otherwise stated.
›
Refer to the “Supplement to Social” section of the Supplement to the UBS Group Sustainability Report 2023,
available at
ubs.com/sustainability-reporting
, for more information about “Workforce by the numbers”
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| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
124
Supporting opportunities at Credit Suisse
As part of the integration of Credit Suisse, UBS has retired the Credit Suisse Sustainable Activities Framework (the
SAF), as well
as its related
external USD
300 billion sustainable
finance commitment.
The SAF and
its corresponding
sustainable finance target were originally introduced in 2020 to classify transactions
for reporting purposes,
in the
absence of established external guidance and peer
practice. However, since then Credit Suisse’s business
strategy
and operating model
have undergone significant
changes and
market and regulatory
standards have progressed
considerably. Accordingly, the
SAF framework was put
operationally on hold in early
2023, prior to the acquisition.
Since UBS’s
taxonomy and
frameworks will
be the
standard for
future sustainable
finance business
and product
development, the SAF was discontinued
in 2023.
By contrast, the Credit
Suisse Sustainable Investment Framework (the SIF) continues
to be in operational
use. It is
part of the
Credit Suisse AG product
offering directly to
clients as well as
a reporting tool. As
such, the SIF fulfils
an
important role
in meeting
certain regulatory
requirements in relation
to clients’
preferences around
sustainability
and
will
only
be
decommissioned
in
due
course
as
the
parent
banks
are
merged
and
the
product
offering
is
harmonized.
Credit Suisse Sustainable Investment Framework
The SIF was established in 2020 and is utilized to classify investment solutions in an effort to seek consistency and
set minimum standards across different asset classes,
geographies, and regulatory regimes. Classification can also
help
match
clients’
interests
with
relevant
investment
solutions.
The
SIF
classification
does
not
supersede
any
regulatory commitment, nor does
the SIF classification determine
or indicate whether an
investment solution will
be labelled as “sustainable” (or other such
term) under any given regulatory regime.
The SIF focuses on the following primary approaches.
–
Exclusion: Positions assessed not to be significantly
involved in controversial business fields or
incidents.
–
Integration: Positions assessed to be integrating
environmental, social, and governance into their
strategy.
–
Thematic: Positions
assessed to
be in
alignment with
specific United
Nations’ Sustainable
Development Goals
(the SDGs).
–
Impact: Positions assessed to be explicitly and
intentionally contributing towards specific
SDGs.
The following table
shows assets
under management
(AuM) according
to their SIF
classification and their
year-over-
year change.
AuM classified according to the SIF (Credit Suisse AG)
For the year ended
% change from
USD billion
1
31.12.23
31.12.22
31.12.22
By SIF category
2,3,4
Exclusion
24.7
27.0
(9)
Integration
112.2
104.3
8
Thematic
10.0
9.9
1
Impact
1.4
1.6
(11)
Total AuM classified according to SIF
148.3
142.9
4
of which Thematic and Impact
11.5
11.6
(1)
1
Numbers include AuM positions from managed solutions and structured products that have been classified
according to the SIF.
2
The Credit Suisse AG Sustainability Classification
Committee oversees investment product classification and governs the Sustainable Investment Framework for Credit Suisse
AG.
3
In reporting sent to Credit Suisse clients, additional
instruments may be classified under the SIF,
such as single securities.
4
In reporting sent to Credit Suisse clients,
synonymous terminology may be used. “Exclusion” is synonymously
referred to as “Avoid Harm”; “Integration” as “ESG Aware”;
“Thematic” as “Sustainable Thematic” and “Impact” as “Impact Investing.”
As of
December 31
st
, the
AuM according
to the
SIF (Exclusion,
Integration, Thematic,
or Impact)
reached 148.3
billion,
representing
a
year-on-year
increase
of
4%.
Significant
drivers
of
the
increase
were
positive
market
conditions
and
foreign
exchange
movement,
new
product
classifications
according
to
SIF,
and
flows
into
new
products.
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125
Managing sustainability and climate risk at Credit Suisse
Credit
Suisse’s
approach
to
the
management
of
sustainability
and
climate
risk
consists
of
four
phases,
(1)
risk
identification, (2) monitoring, (3) management, and (4) reporting. This approach has been
further operationalized
through
a
dedicated
climate
risk
strategy
program,
launched
in
2020.
Since
its
inception,
this
program
has
underpinned
the
progressive
expansion
of
policies,
frameworks
and
capabilities
to
manage
the
transition
and
physical risks arising from a
changing climate. In 2023,
the program continued to deliver
on different fronts: at
the
Credit Suisse Group level (prior to the acquisition by UBS Group), key developments included the enhancement of
data analytics and
quantitative capabilities
to integrate
climate risk into
risk management
models; in parallel,
Credit
Suisse continued to work
on embedding sustainability
and climate risk considerations
into its legal entities’ policies
and
frameworks, refining
Credit
Suisse Group’s
frameworks to
reflect
specific local
regulatory provisions.
These
activities were
underpinned by
an increased
focus on
regulatory monitoring
to ensure
alignment with
emerging
legislative
requirements
across
different
locations,
while
continuing
to
inform
business
strategy
and
risk
management decisions.
Client Energy Transition Framework (CETF)
Launched in
2020 and
progressively expanded over
time as part
of Credit
Suisse’s climate risk
strategy program,
the CETF
has been
part of
Credit
Suisse’s risk
management practices
aimed at
addressing
the diverse
risks that
could arise
from its
business activities, in
line with legal
and regulatory
obligations. The underlying
methodology
categorizes clients
operating in
eight priority
sectors, according
to the
clients’ energy
transition readiness.
They
include oil and
gas, coal mining,
power generation
(fossil-fuel-related), shipping,
aviation, commodity
trade finance
(fossil-fuel-related), petrochemicals, and agriculture.
Internal criteria have been applied by the Credit Suisse Sustainability & Climate Risk (SCR) team to define in-scope
clients and
to assess their
level of
readiness for a
low-carbon transition, leveraging
quantitative key performance
indicators, third-party ratings, and qualitative
assessments based on climate-related questions.
Clients active in the
priority sectors
have been
assigned to
one of
five categories
of transition
readiness, spanning
“unaware,” “aware,”
“strategic,” “aligned”
and “green”.
This approach
has enabled
Credit Suisse
staff to
engage in
critical sustainability
discussions with clients,
opening the door
to financing potential
solutions that can
contribute toward a
low-carbon
transition, as well as
to further expansion of
our services. Under the
framework, Credit Suisse
would not engage in
new lending or
advisory activities
with clients
having the
lowest level categorization
in terms of
transition readiness.
Until the
decommission of
the CETF
at the
end of
2023,
Credit Suisse
continued to
leverage the
framework to
engage
with
clients
to
understand
their
approach
to
managing
environmental and
social
risks,
as
well
as
their
transition strategy.
Climate risk materiality assessment
During 2023, Credit Suisse continued to
leverage the climate-related materiality
matrix that was developed as
part
of its Risk Identification and Assessment Framework (RIAF). This matrix classifies climate-related risks by looking at
their potential financial and non-financial impacts, providing an indication
of how they might affect the
business.
Risk prioritization
depends on
severity and
probability. The
financial and
non-financial materiality
assessments taken
together can
provide a
more comprehensive
understanding of
the risk
being considered
and can
help to
inform
decision-making. The
chart below
shows Credit
Suisse’s materiality
matrix for
assessing potential
financial and
non-
financial impacts of climate-related risks.
Specific thresholds were defined to
assess the potential impacts of climate-related risks
on financial items such as
profit and loss (P&L), leverage ratio, or balance
sheet. Based on such thresholds, four
main impact categories were
identified: minor, moderate, significant, and major.
Sustainability Report 2023
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Suisse AG
126
The assessment also includes potential non-financial
considerations, including:
–
regulatory impacts;
–
impact on clients;
–
impact on reputation;
and
–
impact on market and competition.
The
combination
of
impacts
(both
financial
and
non-financial)
and
likelihood
(remote
or
possible)
determines
whether the materiality
of a
risk should
be categorized as
low, medium,
high, or very
high. The
heatmap that is
generated following
this approach
enables Credit
Suisse to
identify critical
risk exposures
and areas
for prioritization
or mitigation.
During 2024,
Credit Suisse’s
approach to
assessing climate
risk materiality
will be
reviewed, with
the aim
of applying
a consistent approach across the UBS Group.
Climate-related risk methodologies and scenarios
Following an
approach similar
to UBS’s,
Credit Suisse
has been
assessing potential
manifestations of
climate-related
risks across
other risk categories
such as market/
liquidity risk, credit
risk, business risk,
pension risk, reputational
risk,
and
non-financial
risk.
This
approach
considered
the
most
likely
time
horizon
1
for
climate-related
risk
to
materialize across
these risk
categories and assessed
possible impacts
against the short,
medium and long
term. For
instance, non-financial risks are
more likely to
manifest in the
medium term, while
business risks are
expected to
manifest in the short term. The approach followed the overall RIAF, described above. In 2023 the RIAF assessment
was refreshed at Group
level and for
specific locations, and, where
appropriate,
jurisdiction-specific amendments
were applied to the framework. The results
of the assessment are shown in the following
chart.
1
Time horizons have been defined consistently
with the ones mentioned in the Explanatory
Report to the Ordinance on Climate Disclosures issued by the
Swiss
Federal Council on November 23, 2022:
– short term is 1–5 years
– medium term is 6–15 years
– long term is 16–30 years
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127
In 2023, Credit Suisse continued to work on the integration of climate-related risk into credit risk across all stages
of
the
transaction
cycle,
from
loan
origination
processes
to
ongoing
monitoring
of
counterparties.
Key
developments included the following:
–
Roll out of Credit Suisse’s ESG Risk Assessment tool to EBA- and PRA-regulated booking entities. The tool was
initially developed
and pilot
tested in
2022, enhancing
internal processes
by bringing
together different
ESG
frameworks, and highlighting key ESG risks and
mitigants. The aim of the tool was to enable
a more informed
assessment of potential climate-related impacts
on the creditworthiness of clients.
–
Expansion of
Credit Suisse’s
Single
Name Analysis.
The assessment
started in
response to
the UK
Prudential
Regulation Authority’s
Supervisory Statement
(SS3/19), and
in 2023 was
expanded to
include additional
entities
and branches such as
Singapore, Hong Kong, Australia, Luxembourg, Brazil, and
CS Deutschland. The aim
of
the analysis
is
to identify
clients that
are
significantly exposed
to climate-related
risk. For
each
counterparty
under the analysis, transition and physical risk materiality was determined through
a transition risk assessment
as
well
as
physical
risk
assessment, leveraging
information
from
several
data
sources,
including
MSCI
Low-
Carbon Transition (LCT) scores and data from the CDP.
Sustainability reports and other qualitative information
were also considered (emissions reduction
initiatives, risk framework and governance,
etc.).
Scenario analysis
At Credit Suisse, scenario-based
approaches have been
deployed to assess
transition and physical
risk, allowing the
organization
to
monitor
its
resilience
and
its
alignment
with
climate
commitments.
For
example,
this
analysis
included
an
assessment
of
the
resilience
of
critical
activities
across
different
locations,
and
the
firm’s
ability
to
continue
delivering
critical
services.
Following
evolving
regulatory
requirements
and
the
expansion
of
internal
methodologies,
the
scope
of
Credit
Suisse’s
scenario-based
analysis
in
2023
was
extended
to
include
new
jurisdictions
and
legal
entities.
The
following
table
summarizes
the
scenario
analysis
conducted
in
2023,
and
associated results.
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| Appendix 3 | Entity-specific disclosures for Credit
Suisse AG
128
Test/model
Purpose and
scope
Approach
Results
Stress test for
share-backed
lending
portfolio
Assessment of
transition risk for
the Lombard
and share-
backed lending
collateral
portfolio within
the Credit Suisse
Group
The model generates instantaneous price shocks
for shares, bonds and
equity and fixed income mutual funds. The shocks
represent a climate-
driven “Minsky moment” scenario (i.e.,
a scenario characterized by a
sudden collapse in asset prices). Under this
scenario, following
unforeseen announcements of strict climate policies
– such as punitive
carbon taxes – market participants re-price expected future
cash flows
for traditional and green businesses in light of the
realization that the
world is about to experience a rapid and disorderly
transition to a low-
carbon economy.
The analysis relies on two primary datasets:
–
MSCI LCT Score dataset at issuer level, which
measures companies’
exposure to, and management of, risks and opportunities
related to
the low-carbon transition
–
Network of Central Banks and Supervisors for
Greening the Financial
System (NGFS) Disorderly-transition scenario
The analysis performed in 2023
highlighted that Credit Suisse’s
Lombard and Securities-Based Lending
portfolio has low transition risk, due to
limited exposure to assets that have
high transition risk and conservative
collateral haircuts across the portfolio.
Equity and
credit market
concentration
analysis
Assessment of
equity and credit
concentration
risk across all
Credit Suisse
legal entities
This concentration analysis framework shocks
equity spot prices and
credit spreads on a monthly basis to evaluate the impact
of sudden
market moves across all Credit Suisse legal entities.
Positions with the
largest loss profile are identified, representing companies that
are
significantly exposed to carbon transition risk.
The analysis leverages MSCI LCT scores, which rank
companies between
zero and ten based on the carbon intensity of their
products and
processes as well as the policies and strategies in place
to help mitigate
the transition risk to a low carbon intensity business
model. Companies
with business that is primarily dependent on
fossil fuels are at the lower
end of the LCT score spectrum and are seen as most likely
to witness
asset stranding as the world evolves to lower
carbon alternatives.
The equity analysis showed that
exposure to risky companies is generally
moderate and kept well within internal
limits. The largest exposure generally
comes from derivative desks that are
required to reduce their risk, and so do
not stay in the books for a sustained
period. For credit, the level of risk to
companies with high carbon intensity is
moderate, with the highest exposures
generally having moderate estimated
losses. Given the moderate risks
assessed, remediation action was not
warranted.
Flooding risk
simulation
Scenario-based
simulation
model to assess
surface water
(pluvial) flooding
risk for Credit
Suisse (UK) Ltd,
as well as CS
Luxembourg and
Singapore.
The model simulates multiple future heavy-rainfall
events over the
selected areas, specifying peak intensity and geographical
extent. The
simulation is run on a daily frequency for the lifetime
of the relevant
mortgage books. The property level results are generated by
considering the impact of flooding events between
a chosen reference
date and the expiry date of each corresponding loan.
Floods are
assumed to have a negative impact on property value,
with successive
floods compounding the effect, and hence impact
the collateral value
of the mortgage book. The model aggregates property-level
impacts
from flooding into portfolio-level metrics such as total
collateral
devaluation and aggregate credit shortfall.
The analysis leverages the assumptions in the
Climate Biennial
Exploratory Scenario (CBES) defined by the Bank
of England.
The analysis performed showed that the
materiality of flooding risk for the real
estate collateral portfolio in scope is
low, and the potential for credit losses
is limited, even under conservative
assumptions on the level of flood
losses. Consequently, no remediation
actions were deemed necessary.
Non-financial
risk analysis
(NFR)
Assessment of
climate-related
physical and
transition
operational risks
for major offices
and data centres
globally
Dynamic monitoring of climate-related physical
and transition
operational vulnerabilities and dependencies,
as identified within the
Group-wide risk taxonomy. The analysis allows for the identification of
concentrations of high-value assets and critical
business processes
across geographies and determines risk ratings
with respect to business
continuity, impacts on physical infrastructure, and litigation risks. This
includes risks from damage to Credit Suisse premises, business
disruption, system failures, vendor failures, and litigation
risks. This
approach was developed to support the Group and legal
entity climate
Risk Identification and Assessment Frameworks
(RIAFs), as well as to
address applicable regulatory requirements.
The analysis relies on inputs from climate risk identification,
dashboards
and idiosyncratic (operational risk) scenario
analysis, combined with
qualitative risk assessments from local subject-matter
experts to
determine risk ratings with respect to business continuity
and litigation
risks.
Risk analyses were performed across
different locations combining
quantitative inputs (from climate risk
identification, dashboards, and scenario
analysis) and qualitative risk
assessments from local subject-matter
experts The overall assessment
considered existing monitoring and
escalation processes, along with past
experience and emerging trends with
regard to the different risks considered.
An overall “Medium risk”
categorization was assigned, reflecting
the challenges posed by the rapidly
evolving regulatory landscape, the
growing potential for business
disruptions due to climate-related
events, and the potential for
reputational impacts at a local level.
During 2024, Credit Suisse’s approach to scenario analysis will be reviewed, with the aim of
applying a consistent
approach across the UBS Group and enabling
a coherent assessment of risks across
the combined portfolio.
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129
Risk reporting and disclosure
With an internal reporting cycle similar to that of UBS, the Credit Suisse SCR team continued to
issue its quarterly
internal climate risk report in 2023, showing portfolio movements and performance across Credit Suisse’s climate
risk metrics. This quarterly report included divisional
and legal entity breakdowns, as well as
an update on climate-
related policy and major
regulatory developments.
Different Group Functions and
divisional teams were involved
in
the review and approval
process for the quarterly reports,
followed by a wider
distribution across the central Risk
function, as
well as
Credit Suisse’s
Executive Board
members. In
addition, Executive
Board members
received an
overview of high- and medium-sustainability-risk transactions
through the monthly Group Risk Report.
MAS Guidelines on Environmental Risk Management
for Banks (ERM) – implementation for
Asset
Management (Credit Suisse) and Investment
Management (Credit Suisse)
Credit
Suisse’s
SG
Capital
Allocation
and
Risk
Management
Committee
(SG
CARMC)
is
designated
to
oversee
environmental
risk
matters
across
Credit
Suisse’s
Singapore
entities
with
an
escalation
path
to
the
Singapore
Management Committee
and
the board
of directors
of
CS
(Singapore) Limited.
SG
CARMC had
representation
from
all
businesses including
Asset
Management (AM)
and
Investment Management
(IM).
Business
governance
committees
(AM
APAC
RMC/
IM
APAC
IRC)
were
responsible
for
the
business
oversight
of
the
AM/IM
ERM
Framework and escalation of significant environmental
risk issues to SG CARMC.
AM/IM implemented an ERM Framework to
embed environmental risk considerations in the portfolio
construction
process where
the risk
is
assessed to
be material.
The ERM
Framework leverages
MSCI ESG
data and
defines a
materiality trigger point on the exposure to environmental
laggards at portfolio level. Where the exposure
exceeds
the trigger point, the portfolio
managers consider what actions
would be necessary to address
the exposure. As of
end 2023, no portfolios were at or above the
defined trigger point.
In light of
the integration of Credit
Suisse by UBS,
legacy Credit Suisse discretionary portfolios
will start to follow
UBS’s environmental risk management methodology
in 2024.
Sustainability Report 2023
| Appendix 4 | Other supplemental information
130
Appendix 4 – Other supplemental information
Information on non-financial disclosures
Risk evaluation
Pursuant to the
requirements of the Swiss
Code of Obligations Art.
964b and of the
German law implementing
EU
directive
2014/95
on
non-financial
disclosures
(CSR-Richtlinie-Umsetzungsgesetz,
or
CSR-RUG),
this
section
includes an evaluation
of the risks
that have a
high probability of
potential negative impacts upon
the “aspects”
covered by said laws.
Developments in
sustainability, climate,
environmental and
social standards
and regulations
may affect
our business
and impact our ability to fully realize our goals. These goals include our ambitions for environmental sustainability
in our
operations, including carbon
emissions, in
the business
we do
with clients
and in
products that
we offer.
They also include goals
or aspirations for diversity
in our workforce and
supply chain, and
support for the United
Nations Sustainable
Development Goals.
There is
substantial uncertainty
as to
the scope
of actions
that may
be
required of us,
governments and
others to achieve
the goals we
have set, and
many of our
goals and objectives
are
only achievable
with a
combination of
government and
private action.
National and
international standards and
expectations, industry and scientific
practices, regulatory taxonomies, and
disclosure obligations addressing these
matters are
relatively immature
and are
rapidly evolving.
In addition,
there are
significant limitations
in the
data
available to measure our climate and
other goals. Although we have
defined and disclosed our goals
based on the
standards
existing
at
the
time
of
disclosure,
there
can
be
no
assurance
(i)
that
the
various
ESG
regulatory and
disclosure
regimes
under
which
we
operate
will
not
come
into
conflict
with
one
another,
(ii)
that
the
current
standards
will
not
be
interpreted
differently
than
our
understanding
or
change
in
a
manner
that
substantially
increases the cost or effort for us to achieve such
goals or (iii) that additional data or methods, whether voluntary
or required by
regulation, may substantially change
our calculation of
our goals and
ambitions. It is
possible that
such goals may prove to be considerably more difficult or even impossible to achieve. The evolving standards may
also require us to substantially change
the stated goals and ambitions. If
we are not able to
achieve the goals we
have set,
or can
only do
so at
significant expense
to our
business, we
may fail
to meet
regulatory expectations,
incur damage to our reputation or be exposed
to an increased risk of litigation or other
adverse action.
While ESG regulatory regimes and international standards are being developed, including to require consideration
of
ESG
risks in
investment decisions,
some
jurisdictions, notably
in
the US,
have
developed rules
restricting the
consideration of ESG factors in investment and business
decisions. Under these anti-ESG rules, companies
that are
perceived
as
boycotting or
discriminating
against
certain
industries
may
be
restricted
from
doing
business with
certain
governmental entities.
Our
businesses may
be
adversely
affected if
we
are
considered as
discriminating
against companies based on ESG considerations,
or if further anti-ESG rules are developed or broadened.
A major focus of US and other countries’
governmental policies relating to financial
institutions in recent years has
been
on
fighting
money
laundering
and
terrorist
financing.
We
are
required
to
maintain
effective
policies,
procedures and controls to detect, prevent and
report money laundering and terrorist financing, and to
verify the
identity of our
clients under the
laws of many
of the
countries in which
we operate. We are
also subject to
laws
and regulations related to
corrupt and illegal payments to
government officials by others,
such as the US
Foreign
Corrupt Practices Act
and the UK Bribery
Act. We have implemented
policies, procedures and
internal controls that
are designed
to comply
with such
laws and
regulations. Notwithstanding
this, US
regulators have
found deficiencies
in
the
design
and
operation
of
anti-money-laundering programs
in
our
US
operations.
We
have
undertaken
a
significant program to address
these regulatory findings
with the objective of
fully meeting regulatory
expectations
for our
programs. Failure
to maintain
and implement adequate
programs to
combat money
laundering, terrorist
financing or corruption, or any failure of our programs in these
areas, could have serious consequences both from
legal
enforcement
action
and
from
damage
to
our
reputation.
Frequent
changes
in
sanctions
imposed
and
increasingly complex sanctions
imposed on countries,
entities and
individuals, as exemplified
by the
breadth and
scope of the
sanctions imposed in
relation to the
war in Ukraine,
increase our cost
of monitoring and
complying
with sanctions requirements and increase the risk that we will not identify in a timely manner client activity that is
subject to a sanction.
Sustainability Report 2023
| Appendix 4 | Other supplemental information
131
The financial services
industry is characterized by
intense competition, continuous innovation, restrictive,
detailed
and sometimes
fragmented
regulation and
ongoing consolidation.
We face
competition at
the level
of local
markets
and
individual
business
lines
and
from
global
financial
institutions
that
are
comparable
to
us
in
their
size
and
breadth, as
well as
competition from
new technology-based
market entrants,
which
may not
be
subject to
the
same
level
of
regulation.
Barriers
to
entry
in
individual
markets
and
pricing
levels
are
being
eroded
by
new
technology. We expect these
trends to continue
and competition to increase.
Our competitive strength
and market
position could
be eroded
if we
are unable
to identify
market trends
and developments,
do not
respond to
such
trends and developments by devising and implementing adequate business strategies, do not
adequately develop
or update our technology, including our
digital channels and tools, or
are unable to attract or
retain the qualified
people needed.
The amount and
structure of our employee
compensation is affected not only
by our business results
but also by
competitive factors and regulatory considerations.
In response to
the demands
of various stakeholders,
including regulatory
authorities and shareholders,
and in order
to better
align the
interests of
our staff
with other
stakeholders, we
have increased
average deferral
periods for
stock
awards, expanded
forfeiture provisions
and, to
a
more limited
extent, introduced
clawback provisions
for
certain awards linked to business
performance. We have also
introduced individual caps on
the proportion of fixed
to variable pay for the members of the
Group Executive Board (GEB), as well as certain other employees. UBS
will
also be required
to introduce and
enforce provisions requiring
UBS to recover from
GEB members and
certain other
executives a
portion of
performance-based incentive compensation
in the
event that
the UBS
Group or
another
entity with securities listed on a US national securities exchange, is required to restate its financial statements as a
result of a material error.
›
Refer to the “Risk factors” and “Risk management and control” sections of our UBS Group Annual Report 2023 for
more information
Sustainability Report 2023
| Appendix 4 | Other supplemental information
132
Non-financial disclosures pursuant to the
German law implementing EU directive
2014/95 (CSR-RUG)
and Swiss Code of Obligations Art. 964b.
This report
comprises the
“non-financial” disclosures
required for
UBS Group
AG, and
its subsidiaries,
including
UBS AG
and Credit
Suisse AG,
under the
Swiss Code
of Obligations
Art. 964b.
It also
comprises disclosures
required
for UBS AG by the German law implementing EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz
/ CSR-RUG)
(nichtfinanzieller Konzernbericht) (the EU
Non-Financial Reporting Directive). These
disclosures can be found in the
sections
and
the
pages
indicated
below.
Due
to
the
differing
materiality
requirements
of
the
Global
Reporting
Initiative (GRI) standards
and of CSR-RUG and
the Swiss Code
of Obligations Art.
964b, the material
topics listed in
the index
are limited
to the
matters (“
Belange
”) addressed
by CSR-RUG
and the
Swiss Code
of Obligations
Art.
964b.
For
material
matters, we
assess
the
effectiveness
of
our
management
approaches
through
a
number
of
measures as described in the Supplement to
this report.
›
Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about
“Information on UBS Group AG pursuant to the Swiss Ordinance on Due Diligence and Transparency
in relation to
Minerals and Metals from Conflict-Affected Areas and Child Labor”
›
Refer to the “Information on management approaches for material topics” section of the Supplement to the UBS
Group Sustainability Report 2023, available at
ubs.com/sustainability-reporting
, for more information about how
we evaluate our management approaches
Section in Sustainability Report 2023 (SR
2023)
Page(s)
About this report
(including
framework)
About this report
SR 2023 / 5
–
7
Description of the
business model
1
Our sustainability and impact strategy
Our business model
SR 2023 / 14
SR 2023 / 11
–
12
Material risks
Risk evaluation
SR 2023 / 130
–
131
Non-financial
aspects
Section in Sustainability Report 2023
(SR 2023)
Page(s)
Broad thematic
issues affecting all
non-financial aspects
The importance of sustainability and culture to UBS
SR 2023 / 3
–
4
Governance
SR 2023 / 17
–
20
Key policies and principles
SR 2023 / 13
Supporting opportunities
SR 2023 / 61
–
74
UBS Sustainability objectives and achievements
2023
and objectives 2024
SR 2023 / 14
Environmental and
human rights matters
(Material topics:
Climate and nature;
Social impact and
human rights;
Sustainable finance)
Our sustainability and impact strategy
SR 2023 / 14
–
16
Supporting our strategy – our stakeholder
engagement / vendors
SR 2023 / 57
Managing our supply chain responsibly
SR 2023 / 58
–
60
Environment
SR 2023 / 21
–
44
Our sustainability and climate risk policy framework
SR 2023 / 76
–
99
Driving social impact
SR 2023 / 54
–
56
Respecting human rights
SR 2023 / 57
Reducing our environmental impact
SR 2023 / 38
–
41
Social and employee
matters
(Employees)
Our sustainability and impact strategy
SR 2023 / 14
–
16
People and culture make the difference
SR 2023 / 45
–
53
Anti-corruption and
bribery matters
(Combating financial
crime as a subtopic
of Regulatory
compliance)
Combating financial crime
SR 2023 / 100
–
101
1
Further information on our business
model can be found in the UBS Group Annual Report
2023 section ‘Our strategy, business model and environment’,
available at
ubs.com/investors
.
Sustainability Report 2023
| Appendix 4 | Other supplemental information
133
Information on UBS AG standalone and
UBS Europe SE consolidated pursuant to
Art. 8 of the
EU Taxonomy Regulation
The
European
Commission has
set
out
the
EU
Taxonomy
classification
system
through
the
adoption
of
the
EU
Taxonomy Regulation
1
. Article 8 of that Regulation requires
entities that are subject to the
Non-financial Reporting
Directive
2
(NFRD) to provide information to investors about
the environmental performance of economic activities
associated with certain
of their balance sheet
and off-balance sheet
exposures. Under this
Regulation, UBS AG and
UBS
Europe SE are
required to
provide information
on
taxonomy-eligible activities,
and,
starting from
2023,
on
taxonomy-aligned
activities,
alongside
other
qualitative
information,
based
on
their
prudential
scope
of
consolidation, which for UBS AG is on a standalone basis (i.e. excluding subsidiaries), and for UBS Europe SE is on
a consolidated basis.
Taxonomy-eligible activities are
activities identified as
being in scope
for technical screening
under
the
Regulation.
Taxonomy-aligned
activities
represent
the
proportion
of
taxonomy-eligible
activities
that
satisfy the
requirements in
the Regulation,
meaning that
they contribute
substantially to
defined environmental
objectives, do not significantly
harm any other environmental
objectives, are carried out
in compliance with certain
minimum safeguards, and comply with certain
technical screening criteria.
These
disclosures
have
been
prepared
based
on the
requirements
applicable
to
credit
institutions,
which
is the
principal
business
activity
of
both
UBS
AG
at
a standalone
level
and
UBS
Europe
SE at
a consolidated
level.
Under
the
Regulation,
credit institutions
are required
to report
taxonomy Key
Performance Indicators
(KPIs) to
demonstrate the
extent to
which their
activities relate
to sustainable
economic activities,
as defined
by the
Regulation. The
Green Asset
Ratio
(GAR)
is
a
KPI
calculated
as
a
percentage
of
EU
taxonomy-aligned assets
as
a
proportion
of
total
covered
assets,
whereby:
–
the numerator is determined based on
loans and advances, debt securities, equities and
repossessed collateral,
where the counterparty or the issuer is subject to
NFRD reporting and
–
the denominator
includes total
covered assets,
which represent
total assets
irrespective of
whether the
associated
counterparty or issuer is
subject to NFRD reporting;
the denominator excludes financial assets
held for trading,
exposures to central banks, central governments
and supranational issuers.
Credit
institutions are
required to
calculate and
disclose KPIs
based upon
the turnover
KPIs and,
separately,
the
capital expenditure (CapEx) KPIs
reported by counterparties
and investees. Credit
institutions are also
required to
calculate and
disclose turnover-based
and CapEx-based
KPIs for
off-balance sheet
exposures,
including financial
guarantees issued but excluding loan commitments,
and assets under management.
GAR KPI
stock
is calculated on
period end exposures
while
GAR KPI flow
is calculated for
new exposures during
the
reported period.
All pre-defined templates,
as set out
on the following
pages, are presented
twice, leveraging
information published
by counterparties
and investees
on the
proportion of
their activities
associated with
environmentally sustainable
economic activities,
based on their turnover and based on their
CapEx.
Under the
Regulation, there
is no
requirement to
report comparative
information when
reporting EU
Taxonomy
KPIs for 2023.
Trading book KPIs
and
Fee and Commission KPIs
are required to be reported from 1 January
2026.
Limitations in implementation of the European
Commission Draft Commission Notice
In
December
2023,
the
European
Commission
issued
a
Draft
Commission
Notice
on
the
interpretation
and
implementation of certain
legal provisions
of the
Disclosures Delegated
Act under
Article 8
of the
EU Taxonomy
Regulation (FAQs), which
contains guidance
on a
number of
aspects of
the Regulation.
These disclosures
have been
prepared
on
a
best-efforts
basis
after
taking
into
consideration,
to
the
extent
it
was
practicable,
the
guidance
provided in
the FAQs.
Given the
short lead
time available
for the
implementation of these
disclosures, the
2023
disclosures for UBS AG standalone and UBS Europe
SE consolidated do not reflect the following aspects
stipulated
by the draft FAQs:
–
The
Proportion of total new assets covered
that is required by the
GAR KPI flow
template is not presented, as it
was not
possible to
identify new
assets for
the purpose
of determining
the flow
for those
assets that
are not
subject
to taxonomy-eligibility
and
-alignment
assessment
for
the
current
reporting
period,
for
example
derivatives.
–
The template
KPI off-balance
sheet exposures
– Stock
is not
replicated for
the flow
of off-balance
sheet positions.
1
Delegated Act of EU Taxonomy
Regulation 2020/852;
Commission Delegated Regulation (EU) 2021/2178 supplementing Taxonomy Regulation;
Commission
Delegated Regulation (EU) 2023/2486 supplementing
Taxonomy Regulation and amending Disclosures Delegated Act
2
Directive 2014/95/EU
Sustainability Report 2023
| Appendix 4 | Other supplemental information
134
–
The Nuclear and Fossil Gas templates have not been produced for off-balance sheet exposures and for the flow
of new assets.
With the ongoing implementation of the
EU Taxonomy Regulation and the
development of market practices, the
availability and quality of relevant information
is expected to improve. This may affect
the basis of preparation and
result in disclosures in future periods being
refined.
Basis of preparation
In compliance with the Regulation,
the assets of UBS AG standalone
and UBS Europe SE consolidated
presented in
the
tables
below
have
been
determined based
on
IFRS
Accounting Standards
and
attributed to
the
taxonomy-
eligible
and
taxonomy-aligned
activities
of
relevant
investees
and
counterparties.
Where
financial
assets
and
financial liabilities
were presented
net, based
on
the requirements
of IAS
32
Financial Instruments:
Presentation
under IFRS Accounting
Standards,
the effect of
netting has been
reversed in arriving
at the disclosures
presented
below.
Taxonomy-eligibility and taxonomy-alignment
KPIs are required to be determined
by financial institutions based on
the actual information
sourced from counterparties and
investees. More specifically, when
the use of
proceeds is
unknown, the
taxonomy-eligibility and
taxonomy-alignment KPIs
presented below
are determined
based on
the
turnover and CapEx-based KPIs of non-financial counterparties and investees, and any applicable
KPIs of financial
counterparties and
investees. Residential
mortgages to
households are
assessed for
taxonomy-alignment for
the
Climate Change
Mitigation objective
based on
the use
of proceeds,
with alignment
being determined
based on
available Energy Performance Certificates (EPCs)
and physical risk.
Entities are
required to provide
disclosures on the
environmental objectives
Water and marine
resources
,
Circular
economy,
Pollution
,
and
Biodiversity
and
ecosystems
from
1 January
2024.
Consequently,
due
to
the
lack
of
availability of
information directly
reported by
counterparties
and investees
in respect
of their
activities in
the context
of these
environmental objectives,
disclosures in
the tables
below are
provided for
Climate change
mitigation
(CCM)
and
Climate
change
adaptation
(CCA)
environmental
objectives
only.
For
residential
mortgages
to
households
collateralized
by
residential
immovable
properties,
which
are
considered
taxonomy-eligible,
the
assessment
of
taxonomy-alignment was limited to UK mortgages
only, due to data availability.
Exposures to,
and investments
in, undertakings
not subject
to NFRD
reporting are
excluded from
the taxonomy-
eligibility
and
taxonomy-alignment
calculation
and
presented
separately.
Due
to
data
limitations
in
assessing
taxonomy-eligibility
and taxonomy-alignment,
several judgments,
assumptions and
simplifications have
been made.
More specifically:
–
Counterparties and
investees domiciled
in
the
EU
within
certain
industry groups,
according
to
our
judgment
exercised and
supported by
empirical evidence,
are considered
not to
be within
the scope
of NFRD
reporting
(e.g., hedge funds, collective investment
schemes, special purpose vehicles etc.).
–
Non-EU domiciled counterparties and investees
are assumed to not be subject to NFRD reporting.
Due
to
limitations
in
data
availability,
the
methodology
for
determining
taxonomy-eligibility
and
taxonomy-
alignment as set out in the tables below has
been developed on the basis of the following
assumptions:
–
In
the
most
recent
reporting
period,
non-financial
counterparties
reported
no
disaggregation
of
taxonomy-
eligibility per environmental objective.
As a consequence, no information has been reported in the tables below
in
respect
of
these
counterparties,
on
taxonomy-eligibility
for
each
environmental
objective,
with
the
entire
amount related to taxonomy-eligible activities
attributed to the Total (CCM+CCA)
column.
–
Only from
1 January
2023 were
financial institutions
required to
report taxonomy-alignment,
hence their
reported
taxonomy-related information that forms the basis of the disclosures did not include taxonomy-alignment KPIs,
and correspondingly,
the taxonomy-alignment
assigned to
these counterparties
in the tables
below is
zero; when
financial counterparties in their publicly available disclosures reported only one KPI, without specifying whether
that reported KPI is a turnover-based or a CapEx-based
measure, it is assumed to be a turnover-based KPI.
Sustainability Report 2023
| Appendix 4 | Other supplemental information
135
–
In respect
of the
exposures to
insurance and
reinsurance undertakings
that provide
both life
and non-life
services,
determination
of
the
turnover-based and
CapEx-based KPIs
was
based
on
the
actual
proportion of
revenues
attributable to
life and
non-life services
publicly reported
by these
insurance and
reinsurance undertakings,
unless
the information about the proportion
of revenues was not available, in which
case equal weighting was applied
to each of these services.
–
In
the
absence
of
actual
more
detailed
information
about
the
use
of
proceeds,
including
in
respect
of
environmentally sustainable
bonds, the
assessment of
the taxonomy-eligibility
and taxonomy-alignment
has been
performed at the issuer level.
–
For
securities-financing
transactions
transacted
through
central
clearing
houses,
the
counterparty
subject
to
taxonomy-assessment is considered to be
the central clearing house.
–
Cash positions included within
assets under management
have been excluded from
the taxonomy-eligibility and
taxonomy-alignment assessment (i.e. excluded
from the numerator).
Economic activities in the fossil
gas and nuclear energy sectors are
required to be reported in
separate templates.
UBS
AG
standalone
and
UBS
Europe
SE
consolidated
have
not
produced
these
templates
for
the
year
ended
31 December 2023 as the gross carrying
amounts of their exposures to these
sectors were in total USD 0.2bn for
UBS
AG
standalone,
and
USD 0.1bn
for
UBS
Europe
SE
consolidated,
which
is
considered
immaterial
to
these
entities’ operations.
Art. 8 of the EU Taxonomy
Regulation - Summary of Key Performance Indicators (KPIs) for
UBS AG standalone and UBS Europe SE consolidated
UBS AG standalone
UBS Europe SE consolidated
31.12.23
31.12.23
Main KPI
Additional KPIs
Main KPI
Additional KPIs
GAR stock
GAR flow
Financial
guarantees
Assets under
management
GAR stock
GAR flow
Financial
guarantees
Assets under
management
Total environmentally sustainable
assets - turnover based (USD m)
98
1
0
203
0
0
0
723
Total environmentally sustainable
assets - capex based (USD m)
98
1
0
464
0
0
0
1,786
Turnover KPI (%)
0.0%
0.0%
0.0%
1.5%
0.0%
0.0%
0.0%
2.1%
CapEx KPI (%)
0.0%
0.0%
0.0%
3.4%
0.0%
0.0%
0.0%
5.2%
Coverage over total assets (%)
69.9%
1.4%
65.1%
12.2%
Assets excluded from the numerator
of the GAR (%)
1
65.9%
52.8%
Assets excluded from the denominator
of the GAR (%)
2
30.1%
34.9%
1
Article 7(2) and (3) and Section 1.1.2. of Annex V of the Disclosures Delegated Act.
2
Article 7(1) and Section 1.2.4 of Annex V of the Disclosures Delegated Act.
UBS AG standalone
and UBS Europe
SE consolidated contribute
31.5% to the
total assets of
the UBS Group
AG
consolidated scope
under IFRS.
UBS AG
standalone and
UBS Europe
SE consolidated
have low
KPIs for
balance
sheet stock and flow, and off-balance sheet
financial guarantees because:
-
a significant proportion
of the
business,
and, correspondingly, the
total assets of
both entities,
is outside
the scope
of EU
taxonomy, i.e.
it is
transacted with
counterparties and
investees that
are not
subject to
NFRD
reporting,
for
example,
because
they
are
not
domiciled
in
the
EU
or
due
to
the
nature
of
their
underlying business activity, such as Global
Wealth Management Lombard lending to private
individuals;
-
UBS AG standalone and
UBS Europe SE consolidated include a
significant amount of
Group Treasury and
Investment
Bank
activities
in
their
scopes.
Most
assets
in
these
activities
are
within
categories
that
are
excluded from taxonomy-eligibility and taxonomy-alignment assessments (e.g., derivatives, trading assets,
etc.); and
-
for the
remaining assets
that are
included in
the taxonomy-eligibility
and taxonomy-alignment
assessments,
the
vast
majority
of
the
counterparties are
financial institutions
that
have
not
been
required
to
publish
alignment KPIs for
2022, and hence
UBS´s 2023 year-end
taxonomy-alignment KPIs for
counterparties in
the financial sector are reported as zero.
Business strategy
Business strategy,
product design and client
engagement efforts will also
be considered further in
future years in
line with regulatory requirements and other considerations, as
sustainable finance markets continue to develop.
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136
1 UBS AG standalone
1
1.1 UBS AG standalone - assets for the
calculation of the GAR (Turnover)
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
27,357
2,074
98
98
0
0
3,253
98
98
0
0
Financial undertakings
9,113
0
0
1,179
0
0
Credit institutions
8,640
0
0
1,068
0
0
Loans and advances
6,339
0
0
508
0
0
Debt securities
1,631
554
Equity instruments
669
7
Other financial corporations
473
110
of which investment firms
0
0
Loans and advances
0
0
Debt securities
Equity instruments
of which management companies
0
Loans and advances
0
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
30
0
0
0
0
0
0
0
Loans and advances
30
0
0
0
0
0
0
0
Debt securities
0
0
Equity instruments
0
0
Households
18,212
2,074
98
98
2,074
98
98
of which loans collateralized by residential immovable property
2,074
2,074
98
98
2,074
98
98
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
1
Table continues below.
1
Within tables in this section, blank fields generally indicate non-applicability
or that presentation of any content would not be meaningful.
Zero values generally indicate that the respective figure is zero on an actual
or rounded basis.
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137
Table
continued from above.
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
Assets excluded from the numerator for GAR calculation (covered in
the
denominator)
460,552
Financial and Non-financial undertakings
277,343
SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
14,301
Loans and advances
8,704
of which loans collateralized by commercial immovable property
of which building renovation loans
Debt securities
2,322
Equity instruments
3,274
Non-EU country counterparties not subject to NFRD disclosure
obligations
263,042
Loans and advances
208,010
Debt securities
7,906
Equity instruments
47,126
Derivatives
161,374
On demand interbank loans
8,928
Cash and cash-related assets
1
Other categories of assets
12,907
Total GAR assets
487,909
2,074
98
98
0
0
3,253
98
98
0
0
Assets not covered for GAR calculation
210,460
Central governments and supranational issuers
1
19,829
Central banks exposure
74,890
Trading book
115,742
Total assets
698,369
2,074
98
98
0
0
3,253
98
98
0
0
Off-balance sheet exposures - Undertakings subject to NFRD disclosure
obligations
2
Financial guarantees
1
0
Assets under management
13,488
195
1
96
8
2,978
203
1
96
of which debt securities
4,770
91
0
23
0
1,392
92
0
23
of which equity instruments
4,913
104
1
72
7
968
112
1
72
1 Includes local governments financing when the use of proceeds is unknown.
2 As required by the standardized template, the total gross carrying amount was
calculated on the basis of off-balance sheet exposures to undertakings subject to NFRD.
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138
1.2 UBS AG standalone - assets for the
calculation of the GAR (CapEx)
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
27,357
2,074
98
98
0
0
0
2,448
98
98
0
0
Financial undertakings
9,113
0
0
373
0
0
Credit institutions
8,640
0
0
332
0
0
Loans and advances
6,339
0
0
187
0
0
Debt securities
1,631
145
Equity instruments
669
0
Other financial corporations
473
0
0
42
0
0
of which investment firms
0
Loans and advances
0
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
30
0
0
0
0
1
0
0
0
Loans and advances
30
0
0
0
0
1
0
0
0
Debt securities
0
0
0
0
0
0
Equity instruments
0
0
0
0
Households
18,212
2,074
98
98
2,074
98
98
of which loans collateralized by residential immovable property
2,074
2,074
98
98
2,074
98
98
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
1
Table continues below.
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139
Table
continued from above.
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
Assets excluded from the numerator for GAR calculation (covered in
the
denominator)
460,552
Financial and Non-financial undertakings
277,343
SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
14,301
Loans and advances
8,704
of which loans collateralized by commercial immovable property
of which building renovation loans
Debt securities
2,322
Equity instruments
3,274
Non-EU country counterparties not subject to NFRD disclosure
obligations
263,042
Loans and advances
208,010
Debt securities
7,906
Equity instruments
47,126
Derivatives
161,374
On demand interbank loans
8,928
Cash and cash-related assets
1
Other categories of assets
12,907
Total GAR assets
487,909
2,074
98
98
0
0
0
2,448
98
98
0
0
Assets not covered for GAR calculation
210,460
Central governments and supranational issuers
1
19,829
Central banks exposure
74,890
Trading book
115,742
Total assets
698,369
2,074
98
98
0
0
0
2,448
98
98
0
0
Off-balance sheet exposures - Undertakings subject to NFRD disclosure
obligations
2
Financial guarantees
1
Assets under management
13,488
462
22
209
2
2,733
464
22
209
of which debt securities
4,770
189
2
65
2
840
191
2
65
of which equity instruments
4,913
273
21
144
0
1,522
273
21
144
1 Includes local governments financing when the use of proceeds is unknown.
2 As required by the standardized template, the total gross carrying amount was
calculated on the basis of off-balance sheet exposures to undertakings subject to NFRD.
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140
1.3 UBS AG standalone - GAR sector information
(Turnover)
Breakdown by sector - NACE 4 digits level
(code and label)
1
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCM + CCA)
of which
environmentally
sustainable
(CCM + CCA)
USD thousand
06.10 Extraction of crude petroleum
0
20.59 Manufacture of other chemical products
n.e.c.
0
1
0
24.10 Manufacture of basic iron and steel and of
ferro-alloys
0
30.12 Building of pleasure and sporting boats
59
23.51 Manufacture of cement
0
2
0
27.32 Manufacture of other electronic and electric
wires and cables
2
27.90 Manufacture of other electrical equipment
2
68.11 Buying and selling of own real estate
15
134
15
1 The information included in this table represents taxonomy-eligible and taxonomy-aligned amounts as reported in table 1.1, irrespective
of whether the NACE code for principle activity is associated with taxonomy-eligible or taxonomy-aligned economic acti
vities.
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141
1.4 UBS AG standalone - GAR sector information
(CapEx)
Breakdown by sector - NACE 4 digits level
(code and label)
1
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCM + CCA)
of which
environmentally
sustainable
(CCM + CCA)
USD thousand
06.10 Extraction of crude petroleum
1
20.59 Manufacture of other chemical products
n.e.c.
0
1
0
24.10 Manufacture of basic iron and steel and of
ferro-alloys
0
30.12 Building of pleasure and sporting boats
1
54
1
23.51 Manufacture of cement
0
2
0
27.32 Manufacture of other electronic and electric
wires and cables
5
26.30 Manufacture of communication equipment
0
0
0
27.90 Manufacture of other electrical equipment
3
68.11 Buying and selling of own real estate
43
135
43
86.99 Other human health activities n.e.c.
543
1 The information included in this table represents taxonomy-eligible and taxonomy-aligned amounts as reported in table 1.1, irrespective
of whether the NACE code for principle activity is associated with taxonomy-eligible or taxonomy-aligned economic acti
vities.
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142
1.5 UBS AG standalone - GAR KPI stock (Turnover)
31.12.23
Climate Change Mitigation (CCM)
1
Climate Change Adaptation (CCA)
1
Total (CCM + CCA)
Proportion
of total
assets
covered
2
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total covered assets in the denominator)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
7.6
0.4
0.4
0.0
0.0
11.9
0.4
0.4
0.0
0.0
3.9
Financial undertakings
0.0
0.0
12.9
0.0
0.0
1.3
Credit institutions
0.0
0.0
12.4
0.0
0.0
1.2
Loans and advances
0.0
0.0
8.0
0.0
0.0
0.9
Debt securities
34.0
0.2
Equity instruments
1.0
0.1
Other financial corporations
23.3
0.1
of which investment firms
1.0
0.0
Loans and advances
1.0
0.0
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
0.0
0.0
0.0
0.7
0.0
0.0
0.0
0.0
Loans and advances
0.0
0.0
0.0
0.5
0.0
0.0
0.0
0.0
Debt securities
98.7
0.0
Equity instruments
12.8
0.0
Households
11.4
0.5
0.5
11.4
0.5
0.5
2.6
of which loans collateralized by residential immovable property
100.0
4.7
4.7
100.0
4.7
4.7
0.3
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0.0
Total GAR assets
0.4
0.0
0.0
0.0
0.0
0.7
0.0
0.0
0.0
0.0
69.9
1
Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported in table 1.1.
2 Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported
in table 1.1 relative to Total Assets as reported in table 1.1.
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143
1.6 UBS AG standalone - GAR KPI stock (CapEx)
31.12.23
Climate Change Mitigation (CCM)
1
Climate Change Adaptation (CCA)
1
Total (CCM + CCA)
Proportion
of total
assets
covered
2
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total covered assets in the denominator)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
7.6
0.4
0.4
0.0
0.0
0.0
8.9
0.4
0.4
0.0
0.0
3.9
Financial undertakings
0.0
0.0
4.1
0.0
0.0
1.3
Credit institutions
0.0
0.0
3.8
0.0
0.0
1.2
Loans and advances
0.0
0.0
2.9
0.0
0.0
0.9
Debt securities
8.9
0.2
Equity instruments
0.0
0.1
Other financial corporations
0.0
0.0
8.9
0.0
0.0
0.1
of which investment firms
0.0
Loans and advances
0.0
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
0.1
0.0
0.0
0.0
2.4
0.1
0.0
0.0
0.0
Loans and advances
0.1
0.0
0.0
0.0
2.3
0.1
0.0
0.0
0.0
Debt securities
1.2
1.2
90.0
1.2
1.2
0.0
Equity instruments
0.5
45.9
0.5
0.0
Households
11.4
0.5
0.5
11.4
0.5
0.5
2.6
of which loans collateralized by residential immovable property
100.0
4.7
4.7
100.0
4.7
4.7
0.3
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0.0
Total GAR assets
0.4
0.0
0.0
0.0
0.0
0.0
0.5
0.0
0.0
0.0
0.0
69.9
1
Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported in table 1.1.
2 Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported
in table 1.1 relative to Total Assets as reported in table 1.1.
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144
1.7 UBS AG standalone - GAR KPI flow (Turnover)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to flow of total eligible assets)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading eligible for GAR
calculation
2.1
0.0
0.0
16.0
0.0
0.0
Financial undertakings
17.4
Credit institutions
17.1
Loans and advances
12.8
Debt securities
40.3
Equity instruments
Other financial corporations
27.8
of which investment firms
1.0
Loans and advances
1.0
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
Loans and advances
Debt securities
Equity instruments
Households
10.4
0.1
0.1
10.4
0.1
0.1
of which loans collateralized by residential immovable property
100.0
0.5
0.5
100.0
0.5
0.5
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable properties
Total GAR assets
1
0.0
0.0
0.0
0.2
0.0
0.0
1 Proportion calculated as a percentage of Total GAR assets as reported in table 1.1.
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145
1.8 UBS AG standalone - GAR KPI flow (CapEx)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to flow of total eligible assets)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading eligible for GAR
calculation
2.1
0.0
0.0
5.9
0.0
0.0
Financial undertakings
4.7
Credit institutions
4.9
Loans and advances
5.5
Debt securities
1.6
Equity instruments
Other financial corporations
of which investment firms
Loans and advances
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
Loans and advances
Debt securities
Equity instruments
Households
10.4
0.1
0.1
10.4
0.1
0.1
of which loans collateralized by residential immovable property
100.0
0.5
0.5
100.0
0.5
0.5
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable properties
Total GAR assets
1
0.0
0.0
0.0
0.1
0.0
0.0
1 Proportion calculated as a percentage of Total GAR assets as reported in table 1.1.
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146
1.9 UBS AG standalone - KPI off-balance sheet
exposures – Stock (Turnover)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total eligible off-balance sheet assets)
Financial guarantees (FinGuar KPI)
1.0
Assets under management (AuM KPI)
1.4
0.0
0.7
0.1
22.1
1.5
0.0
0.7
1.10 UBS AG standalone - KPI off-balance sheet
exposures – Stock (CapEx)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total eligible off-balance sheet assets)
Financial guarantees (FinGuar KPI)
Assets under management (AuM KPI)
3.4
0.2
1.5
0.0
20.3
3.4
0.2
1.5
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147
1.11 UBS AG standalone - Key Performance Indicators
on the activities related to Nuclear and Fossil
Gas – Stock
Row
Nuclear energy related activities
31.12.23
1
The undertaking carries out, funds or has exposures to research, development,
demonstration and deployment of innovative electricity generation facilities
that produce energy from nuclear processes with minimal
waste from the
fuel cycle.
No
2
The undertaking carries out, funds or has exposures to construction and safe
operation of new nuclear installations to produce electricity
or process heat, including for the purposes of district
heating or industrial processes such as
hydrogen production, as well as their safety upgrades, using best available technologies.
No
3
The undertaking carries out, funds or has exposures to safe operation of existing
nuclear installations that produce electricity or process
heat, including for the purposes of district heating or
industrial processes such as hydrogen
production from nuclear energy, as well as their safety upgrades.
No
Row
Fossil gas related activities
4
The undertaking carries out, funds or has exposures to construction or operation
of electricity generation facilities that produce electricity
using fossil gaseous fuels.
No
5
The undertaking carries out, funds or has exposures to construction, refurbishment,
and operation of combined heat/cool and power generation facilities
using fossil gaseous fuels.
Yes
6
The undertaking carries out, funds or has exposures to construction, refurbishment
and operation of heat generation facilities
that produce heat/cool using fossil gaseous fuels.
No
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148
2 UBS Europe SE consolidated
1
2.1 UBS Europe SE consolidated - assets for
the calculation of the GAR (Turnover)
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
6,424
186
0
0
505
0
0
Financial undertakings
3,615
0
319
0
Credit institutions
3,574
319
Loans and advances
2,974
173
Debt securities
600
146
Equity instruments
0
0
Other financial corporations
42
0
0
0
of which investment firms
42
0
Loans and advances
42
0
Debt securities
Equity instruments
of which management companies
0
0
Loans and advances
0
0
Debt securities
Equity instruments
of which insurance undertakings
0
0
0
Loans and advances
0
0
0
Debt securities
Equity instruments
Non-financial undertakings
0
0
0
0
0
0
Loans and advances
0
0
0
0
0
0
Debt securities
Equity instruments
Households
2,808
186
186
of which loans collateralized by residential immovable property
186
186
186
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0
Table continues below.
1
Within tables in this section, blank fields generally indicate non-applicability
or that presentation of any content would not be meaningful.
Zero values generally indicate that the respective figure is zero on
an actual or rounded basis.
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149
Table
continued from above.
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
Assets excluded from the numerator for GAR calculation (covered in
the
denominator)
27,364
Financial and Non-financial undertakings
6,538
SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
4,059
Loans and advances
3,033
of which loans collateralized by commercial immovable property
of which building renovation loans
Debt securities
1,025
Equity instruments
1
Non-EU country counterparties not subject to NFRD disclosure
obligations
2,479
Loans and advances
1,508
Debt securities
968
Equity instruments
3
Derivatives
17,755
On demand interbank loans
1,995
Cash and cash-related assets
0
Other categories of assets
1,076
Total GAR assets
33,788
186
0
0
505
0
0
Assets not covered for GAR calculation
18,084
Central governments and supranational issuers
1
2,246
Central banks exposure
11,922
Trading book
3,916
Total assets
51,872
186
0
0
505
0
0
Off-balance sheet exposures - Undertakings subject to NFRD disclosure
obligations
2
Financial guarantees
Assets under management
34,560
715
19
440
8
9,219
723
19
440
of which debt securities
7,014
264
7
130
5
2,258
269
7
130
of which equity instruments
25,372
451
13
310
3
6,623
454
13
310
1 Includes local governments financing when the use of proceeds is unknown.
2 As required by the standardized template, the total gross carrying amount was
calculated on the basis of off-balance sheet exposures to undertakings subject to NFRD.
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150
2.2 UBS Europe SE consolidated - assets for
the calculation of the GAR (CapEx)
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
6,424
186
0
0
0
351
0
0
0
Financial undertakings
3,615
166
Credit institutions
3,574
166
Loans and advances
2,974
124
Debt securities
600
42
Equity instruments
0
Other financial corporations
42
of which investment firms
42
Loans and advances
42
Debt securities
Equity instruments
of which management companies
0
Loans and advances
0
Debt securities
Equity instruments
of which insurance undertakings
0
Loans and advances
0
Debt securities
Equity instruments
Non-financial undertakings
0
0
0
0
0
0
0
0
Loans and advances
0
0
0
0
0
0
0
0
Debt securities
Equity instruments
Households
2,808
186
186
of which loans collateralized by residential immovable property
186
186
186
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0
Table continues below.
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151
Table
continued from above.
31.12.23
Total gross
carrying
amount
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which towards taxonomy relevant sectors
(Taxonomy-eligible)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
of which environmentally sustainable
(Taxonomy-aligned)
USD m
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
Assets excluded from the numerator for GAR calculation (covered in
the
denominator)
27,364
Financial and Non-financial undertakings
6,538
SMEs and NFCs (other than SMEs) not subject to NFRD
disclosure obligations
4,059
Loans and advances
3,033
of which loans collateralized by commercial immovable property
of which building renovation loans
Debt securities
1,025
Equity instruments
1
Non-EU country counterparties not subject to NFRD disclosure
obligations
2,479
Loans and advances
1,508
Debt securities
968
Equity instruments
3
Derivatives
17,755
On demand interbank loans
1,995
Cash and cash-related assets
0
Other categories of assets
1,076
Total GAR assets
33,788
186
0
0
0
351
0
0
0
Assets not covered for GAR calculation
18,084
Central governments and supranational issuers
1
2,246
Central banks exposure
11,922
Trading book
3,916
Total assets
51,872
186
0
0
0
351
0
0
0
Off-balance sheet exposures - Undertakings subject to NFRD disclosure
obligations
2
Financial guarantees
Assets under management
34,560
1,762
165
870
24
8,508
1,786
165
870
of which debt securities
7,014
660
24
325
16
2,101
676
24
325
of which equity instruments
25,372
1,102
141
545
8
6,243
1,111
141
545
1 Includes local governments financing when the use of proceeds is unknown.
2 As required by the standardized template, the total gross carrying amount was
calculated on the basis of off-balance sheet exposures to undertakings subject to NFRD.
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152
2.3 UBS Europe SE consolidated - GAR sector
information (Turnover)
Breakdown by sector - NACE 4 digits level
(code and label)
1
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCM + CCA)
of which
environmentally
sustainable
(CCM + CCA)
USD thousand
06.10 Extraction of crude petroleum
0
1
0
1 The information included in this table represents taxonomy-eligible and taxonomy-aligned amounts as reported in table 1.1, irrespective
of whether the NACE code for principle activity is associated with taxonomy-eligible or taxonomy-aligned economic acti
vities.
2.4 UBS Europe SE consolidated - GAR sector
information (CapEx)
Breakdown by sector - NACE 4 digits level
(code and label)
1
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Non-Financial corporates (Subject to
NFRD)
SMEs and other NFC not subject to
NFRD
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
Gross carrying amount
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCM)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCA)
of which
environmentally
sustainable
(CCM + CCA)
of which
environmentally
sustainable
(CCM + CCA)
USD thousand
06.10 Extraction of crude petroleum
2
2
2
1 The information included in this table represents taxonomy-eligible and taxonomy-aligned amounts as reported in table 1.1, irrespective
of whether the NACE code for principle activity is associated with taxonomy-eligible or taxonomy-aligned economic acti
vities.
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153
2.5 UBS Europe SE consolidated - GAR KPI stock
(Turnover)
31.12.23
Climate Change Mitigation (CCM)
1
Climate Change Adaptation (CCA)
1
Total (CCM + CCA)
Proportion
of total
assets
covered
2
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total covered assets in the denominator)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
2.9
0.0
0.0
7.9
0.0
0.0
12.4
Financial undertakings
0.0
8.8
0.0
7.0
Credit institutions
8.9
6.9
Loans and advances
5.8
5.7
Debt securities
24.3
1.2
Equity instruments
1.0
0.0
Other financial corporations
0.0
1.0
0.0
0.1
of which investment firms
1.0
0.1
Loans and advances
1.0
0.1
Debt securities
Equity instruments
of which management companies
59.7
0.0
Loans and advances
59.7
0.0
Debt securities
Equity instruments
of which insurance undertakings
27.9
27.9
0.0
Loans and advances
27.9
27.9
0.0
Debt securities
Equity instruments
Non-financial undertakings
1.3
1.0
7.5
1.3
1.0
0.0
Loans and advances
1.3
1.0
7.5
1.3
1.0
0.0
Debt securities
Equity instruments
Households
6.6
6.6
5.4
of which loans collateralized by residential immovable property
100.0
100.0
0.4
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0.0
Total GAR assets
0.5
0.0
0.0
1.5
0.0
0.0
65.1
1
Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported in table 2.1.
2 Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported
in table 2.1 relative to Total Assets as reported in table 2.1.
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154
2.6 UBS Europe SE consolidated - GAR KPI stock
(CapEx)
31.12.23
Climate Change Mitigation (CCM)
1
Climate Change Adaptation (CCA)
1
Total (CCM + CCA)
Proportion
of total
assets
covered
2
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total covered assets in the denominator)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading
eligible for GAR calculation
2.9
0.0
0.0
0.0
5.5
0.0
0.0
0.0
12.4
Financial undertakings
4.6
7.0
Credit institutions
4.6
6.9
Loans and advances
4.2
5.7
Debt securities
7.0
1.2
Equity instruments
0.0
Other financial corporations
0.1
of which investment firms
0.1
Loans and advances
0.1
Debt securities
Equity instruments
of which management companies
0.0
Loans and advances
0.0
Debt securities
Equity instruments
of which insurance undertakings
0.0
Loans and advances
0.0
Debt securities
Equity instruments
Non-financial undertakings
14.5
0.3
2.4
17.4
14.5
0.3
2.4
0.0
Loans and advances
14.5
0.3
2.4
17.4
14.5
0.3
2.4
0.0
Debt securities
Equity instruments
Households
6.6
6.6
5.4
of which loans collateralized by residential immovable property
100.0
100.0
0.4
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable
properties
0.0
Total GAR assets
0.5
0.0
0.0
0.0
1.0
0.0
0.0
0.0
65.1
1
Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported in table 2.1.
2 Proportions calculated as a percentage of Total Gross Carrying Amount of each individual line as reported
in table 2.1 relative to Total Assets as reported in table 2.1.
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155
2.7 UBS Europe SE consolidated - GAR KPI flow
(Turnover)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to flow of total eligible assets)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading eligible for GAR
calculation
0.6
5.2
Financial undertakings
5.8
Credit institutions
5.9
Loans and advances
4.3
Debt securities
24.0
Equity instruments
Other financial corporations
1.0
of which investment firms
1.0
Loans and advances
1.0
Debt securities
Equity instruments
1.0
of which management companies
59.7
Loans and advances
59.7
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
Loans and advances
Debt securities
Equity instruments
Households
2.8
2.8
of which loans collateralized by residential immovable property
100.0
100.0
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable properties
Total GAR assets
1
0.1
0.6
1 Proportion calculated as a percentage of Total GAR assets as reported in table 2.1.
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156
2.8 UBS Europe SE consolidated - GAR KPI flow
(CapEx)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors
(Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to flow of total eligible assets)
GAR - Covered assets in both numerator and denominator
Loans and advances, debt securities and equity instruments not held-for-trading eligible for GAR
calculation
0.6
1.8
Financial undertakings
1.6
Credit institutions
1.6
Loans and advances
1.0
Debt securities
8.8
Equity instruments
Other financial corporations
of which investment firms
Loans and advances
Debt securities
Equity instruments
of which management companies
Loans and advances
Debt securities
Equity instruments
of which insurance undertakings
Loans and advances
Debt securities
Equity instruments
Non-financial undertakings
Loans and advances
Debt securities
Equity instruments
Households
2.8
2.8
of which loans collateralized by residential immovable property
100.0
100.0
of which building renovation loans
of which motor vehicle loans
Local governments financing
Housing financing
Other local government financing
Collateral obtained by taking possession: residential and commercial immovable properties
Total GAR assets
1
0.1
0.2
1 Proportion calculated as a percentage of Total GAR assets as reported in table 2.1.
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2.9 UBS Europe SE consolidated - KPI off-balance
sheet exposures – Stock (Turnover)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total eligible off-balance sheet assets)
Financial guarantees (FinGuar KPI)
Assets under management (AuM KPI)
2.1
0.1
1.3
0.0
26.7
2.1
0.1
1.3
2.10 UBS Europe SE consolidated - KPI off-balance
sheet exposures – Stock (CapEx)
31.12.23
Climate Change Mitigation (CCM)
Climate Change Adaptation (CCA)
Total (CCM + CCA)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-eligible)
Proportion of total covered assets funding taxonomy relevant
sectors (Taxonomy-eligible)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
Proportion of total covered assets
funding taxonomy relevant sectors
(Taxonomy-aligned)
Proportion of total covered assets funding
taxonomy relevant sectors (Taxonomy-aligned)
of which
use of
proceeds
of which
transitional
of which
enabling
of which
use of
proceeds
of which
enabling
of which
use of
proceeds
of which
transitional
of which
enabling
% (compared to total eligible off-balance sheet assets)
Financial guarantees (FinGuar KPI)
Assets under management (AuM KPI)
5.1
0.5
2.5
0.0
24.6
5.2
0.5
2.5
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2.11 UBS Europe SE consolidated - Key Performance
Indicators on activities related to Nuclear
and Fossil Gas – Stock
Row
Nuclear energy-related activities
31.12.23
1
The undertaking carries out, funds or has exposures to research, development,
demonstration and deployment of innovative electricity generation facilities
that produce energy from nuclear processes with minimal
waste from the
fuel cycle.
No
2
The undertaking carries out, funds or has exposures to construction and safe
operation of new nuclear installations to produce electricity
or process heat, including for the purposes of district
heating or industrial processes such as
hydrogen production, as well as their safety upgrades, using best available technologies.
No
3
The undertaking carries out, funds or has exposures to safe operation of existing
nuclear installations that produce electricity or process
heat, including for the purposes of district heating or
industrial processes such as hydrogen
production from nuclear
energy, as well as their safety upgrades.
No
Row
Fossil gas-related activities
4
The undertaking carries out, funds or has exposures to construction or operation
of electricity generation facilities that produce electricity
using fossil gaseous fuels.
Yes
5
The undertaking carries out, funds or has exposures to construction, refurbishment,
and operation of combined heat/cool and power generation facilities
using fossil gaseous fuels.
Yes
6
The undertaking carries out, funds or has exposures to construction, refurbishment
and operation of heat generation facilities
that produce heat/cool using fossil gaseous fuels.
No
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Key terms and definitions
Sustainability
Is commonly defined as
“meeting the needs of
the present without compromising
the ability of future generations
to meet their own
needs“ (United Nations
(UN) Brundtland Commission,
1987). In this
way, we sometimes refer to
sustainability
to
imply
a
broader
scope
of
resources
that
may
be
exhausted
beyond
those
that
impact
climate
change. Our ambition
is to conduct
business and operations
without negatively
impacting the
environment, society
or the
economy as
a whole
and, through
our sustainability
disclosure, to
be transparent
about how
we are pursuing
this.
Sustainable Development Goals (the SDGs)
The
2030
Agenda
for
Sustainable
Development,
adopted
by
all
UN
member
states
in
2015,
provides
a
shared
blueprint for peace and prosperity for people and the planet. At its heart are the
17 UN Sustainable Development
Goals
(available on sdgs.un.org/goals),
the SDGs, which are
an urgent call for
action by all countries
– developed
and developing
– in a
global partnership.
They recognize
that ending
poverty and
other deprivations
must go
hand-
in-hand with
strategies that
improve health and
education, reduce
inequality, and spur economic
growth – all
while
tackling climate change and working to preserve our
oceans and forests.
ESG (Environmental, Social, Governance)
A framework to help stakeholders understand how
an organization is managing risks and opportunities related to
ESG criteria
or factors.
It is often
used in
the context of
investing, but
– beyond
the investment
community –
clients,
suppliers, and employees are also increasingly interested in how sustainable
an organization’s operations are.
Sustainable finance
Sustainability
focus:
Strategies
that
have
explicit
sustainable
intentions
or
objectives
that
drive
the
strategy.
Underlying
investments
may
contribute
to
positive
sustainability
outcomes
through
products
/
services
/
use
of
proceeds.
Impact investing: Investment strategies
that have an explicit
intention to generate measurable,
verifiable, positive
sustainability outcomes. Impact generated
is attributable to investor action and/or
contribution.
Green, social and
sustainability loans
and bonds are
instruments made
available exclusively
to finance or
re-finance,
in whole or in
part, new and/or existing eligible
green and/or social projects that
form part of a
credible program
from the borrower/issuer to improve their
environmental and/or social footprint.
Sustainability-linked
loans
and
bonds
are
any
types
of
instruments
which
incentivize
the
borrower
/
issuer’s
achievement
of
ambitious,
predetermined
Sustainable
Performance
Targets
(SPTs)
that
are
measured
using
predefined sustainability KPIs.
Low-carbon economy
Refers to a type of decarbonized economy
that is based on low energy consumption
and low levels of greenhouse
gas (GHG) emissions.
GHG emissions
Scope 1: Accounts for GHG emissions by UBS.
Scope 2: Accounts
for indirect GHG
emissions associated with
the generation of
imported /
purchased electricity
(grid average emission factor), heat or steam.
Scope 3: Accounts
for GHG emissions
resulting from
activities from
assets not owned
or controlled by
the reporting
organization, but that the organization indirectly
impacts in its value chain.
Net zero: Refers
to cutting GHG
emissions to
as close to
zero as possible,
with any
remaining emissions
re-absorbed
from the atmosphere.
GHG key
vendor: A
top GHG
scope 3
emitter relative
to UBS’s
overall scope
3 supply
chain emissions
and with
which UBS has a long-term ongoing relationship.
Sustainability disclosure
Global Reporting Initiative
(GRI): Provider
of the
world’s most widely
used sustainability disclosure
standards (the
GRI Standards).
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Task
Force
on
Climate-related
Financial
Disclosures
(TCFD):
Provider
of
climate-related
financial
disclosure
recommendations designed to help companies
provide better information to support
informed capital allocation.
Taskforce
on
Nature-related
Financial
Disclosures
(TNFD):
Provider
of
nature-related
financial
disclosure
recommendations designed to help companies
provide better information to support
informed capital allocation.
Value
Reporting
Foundation
SASB
Standards:
Disclosure
standards
to
guide
the
disclosure
of
officially
declared
material sustainability information by companies
to their investors.
World Economic Forum International
Business Council (WEF IBC):
Provider of the
Stakeholder Capitalism Metrics,
which offer a
set of universal, comparable disclosures
focused on people, planet, prosperity
and governance that
companies can report on, regardless of industry
or region.
Materiality assessments
With regard to the materiality
assessments included in
this report (GRI-based and
climate-related), the GRI requires
companies
to
determine
material
topics
that
“represent
the
organization’s
most
significant
impacts
on
the
economy,
environment, and
people, including
impacts on
their human
rights.” The
TCFD requires
companies to
conduct
a
double
materiality
assessment
that
looks
at
both
the
inside-out
impact
the
company
has
on
the
environment and the outside-in impact climate-related
activities might have on the company performance.
Aspiration
Desire to achieve a particular goal.
Ambition(s)
Ambitions are parts of a long-term vision detailing what
results a company aspires to accomplish and by when.
Target(s)
Targets
are smaller, interim steps or milestones towards an ambition
that are aligned with its
details. As individuals
and
teams
within
the
organization
reach
their
targets,
the
organization
makes
progress
towards
the ultimate
ambition(s).
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Abbreviations frequently used in our sustainability report
A
ADA
Artificial Intelligence and Data Analytics
AMAS
Asset Management Association Switzerland
AML
anti-money laundering
AuM
assets under management
ASIP
Association Suisse des Institutions de Prévoyance
B
BCBS
Basel Committee on Banking Supervision
BD(s)
Business division(s), organizational units of the UBS business: (i) Global Wealth Management, (ii) Personal & Corporate
Banking, (iii), Asset Management and (iv) the Investment Bank
B4SI
Business Investment for Societal Impact
BIS
Bank for International Settlements
BoD
Board of Directors
BoE
Bank of England
C
CCRC
Corporate Culture and Responsibility Committee
CCS
carbon capture and storage
CDP
formerly the Carbon Disclosure Project
CDR
carbon dioxide removal
CFO
Chief Financial Officer
CHF
Swiss franc
CIC
Corporate & Institutional Clients
CIO
Chief Investment Office
C&ORC
Compliance & Operational Risk Control
CPS
current policies scenario
CSRD
Corporate Sustainability Reporting Directive
D
DAF
donor-advised fund
DJSI
Dow Jones Sustainability Indices
E
EC
European Commission
EMS
environmental management system
eNPS
employee net promoter score
ESG
environmental, social and governance
EU
European Union
EUR
euro
ERA
Energy Reference Area
ESR
environmental and social risk
ETF
exchange-traded fund
EY
Ernst & Young
F
FATF
Financial Action Task
Force
FCT
foreign currency translation
FINMA
Swiss Financial Market Supervisory Authority
FTE
full-time employee
FX
foreign exchange
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G
GARP
Global Association of Risk Professionals
GCFO
Group Chief Financial Officer
GCRG
Group Compliance, Regulatory & Governance
GEB
Group Executive Board
GFA
Group Franchise Awards
GFANZ
Glasgow Financial Alliance for Net Zero
GHG
greenhouse gas
GIA
Group Internal Audit
GICS
Global Industry Classification Standard
GRI
Global Reporting Initiative
H
HR
human resources
I
IAS
International Accounting Standards
IASB
International Accounting Standards Board
ICMA
International Capital Market Association
ICMM
International Council on Mining and Metals
IFRIC
International Financial Reporting Interpretations Committee
IFRS
International Financial Reporting Standards
IIF
Institute of International Finance
IPCC
Intergovernmental Panel for Climate Change
ISO
International Organization for Standardization
K
KRT
key risk taker
L
LEED
Leadership in Energy and Environmental Design
LoD
lines of defense
LRD
leverage ratio denominator
LTIP
Long-Term
Incentive Plan
LTV
loan-to-value
M
MAT
Materiality Assessment Team
M&A
mergers and acquisitions
MiFID II
Markets in Financial Instruments Directive II
N
NFR
non-financial risks
NFRD
Non-Financial Reporting Directive
NGFS
Network for Greening the Financial System
NYSE
New York Stock Exchange
NZAMi
Net Zero Asset Managers initiative
NZBA
Net-Zero Banking Alliance
NZE
Net-Zero Emissions by 2050 Scenario
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O
OECD
Organization for Economic Co-operation and Development
ORF
operational risk framework
OTC
over-the-counter
P
PACI
Partnership Against Corruption Initiative
PACTA
Paris Agreement Capital Transition
Assessment
PCAF
Partnership for Carbon Accounting Financials
P&L
profit and loss
POCI
purchased or originated credit-impaired
PRA
UK Prudential Regulation Authority
PRB
Principles for Responsible Banking
PRI
Principles for Responsible Investment
Q
QED
Quant Evidence & Data Science
R
RSCM
responsible supply chain management
RSPO
Roundtable on Sustainable Palm Oil
RW
risk weight
RWA
risk-weighted assets
S
SBC
Swiss Bank Corporation
sCFO
Sustainability Chief Financial Officer
SCR
sustainability and climate risk
SCS
Swiss Climate Score
SDA
Sectoral Decarbonization Approach
SDC
Swiss Agency for Development and Cooperation
SDG
Sustainable Development Goal
SDS
Sustainable Development Scenario
SEC
US Securities and Exchange Commission
SECO
State Secretariat for Economic Affairs
SFDR
Sustainable Finance Disclosure Regulation
SFWG
Sustainable Finance Working Group (IIF)
SI
sustainable investment
SIFI
SDG Impact Finance Initiative
SII
UBS Sustainability and Impact Institute
SIX
SIX Swiss Exchange
SME
small and medium-sized entities
SNB
Swiss National Bank
SRI
socially responsible investment
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T
TBTF
too big to fail
TCFD
Task
Force on Climate-related Financial Disclosures
TNFD
Taskforce
on Nature-related Financial Disclosures
U
UN
United Nations
UNEP FI
United Nations Environment Programme Finance Initiative
UNGPs
UN Guiding Principles on Business and Human Rights
USD
US dollar
V
VaR
value-at-risk
W
WFSF
Wolfsberg Forum for Sustainable Finance
Note: This list of abbreviations is not deemed
to be comprehensive of all the abbreviations
used in this report.
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Cautionary Statement |
This report may contain statements that constitute
“forward-looking statements.” Refer to the Cautionary
Statement Regarding
Forward-Looking Statements in the UBS Group Annual Report
2023, available at ubs.com/investors, for
further details.
Notice to investors |
This report and the information contained herein are
provided solely for information purposes, and are not to
be construed as
solicitation of an offer to buy or sell any securities
or other financial instruments in Switzerland,
the United States or any other jurisdiction. No
investment
decision relating to securities of or relating to UBS Group AG,
UBS AG or their affiliates should be made on
the basis of this report. Refer to the UBS Group
Annual Report 2023, available at ubs.com/investors,
for additional information.
Rounding |
Numbers presented throughout this report may not add up
precisely to the totals provided in the tables and text.
Percentages and percent changes
are calculated on the basis of unrounded figures. Information
about absolute changes between reporting periods,
which is provided in text and which can be
derived from figures displayed in the tables, is calculated
on a rounded basis.
Tables |
Within tables, blank fields generally indicate
that the field is not applicable or not
meaningful, or that information is not available
as of the relevant
date or for the relevant period. Zero values generally indicate
that the respective figure is zero on an actual or rounded basis.
Percentage changes are presented
as a mathematical calculation of the change
between periods.
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly
caused this report to be signed on their behalf by the undersigned, thereunto
duly authorized.
UBS Group AG
By:
/s/ Beatriz Martin Jimenez
Name:
Beatriz Martin Jimenez
Title:
Head Non-Core and Legacy and
President UBS EMEA,
Group Executive Board Lead
for Sustainability and Impact
By:
/s/ Angus Graham
Name:
Angus Graham
Title:
Finance Chief Operating Officer
UBS AG
By:
/s/ Beatriz Martin Jimenez
Name:
Beatriz Martin Jimenez
Title:
Head Non-Core and Legacy and,
President UBS EMEA
Group Executive Board Lead
for Sustainability and Impact
By:
/s/ Angus Graham
Name:
Angus Graham
Title:
Finance Chief Operating Officer
Credit Suisse AG
By:
/s/ Christian Leitz
Name:
Christian Leitz
Title:
Lead Corporate Responsibility
By:
/s/ Simon Grimwood
Name:
Simon Grimwood
Title:
Chief Financial Officer
Date: March 28, 2024
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com