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 5, 2020
UBS Group AG
Commission File Number: 1-36764
UBS AG
Commission File Number: 1-15060
(Registrants' Name)
Bahnhofstrasse 45, Zurich, Switzerland and
Aeschenvorstadt 1, Basel, Switzerland
(Address of principal executive offices)
Indicate by check mark whether the registrants file or will
file annual reports under cover of Form 20‑F or Form 40-F.
This Form 6-K consists of UBS Group AG and UBS AG's
Sustainability Report 2019, which appears immediately following this page.
Sustainability
Report 2019
Based on GRI Standards
Table of contents
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Driving change that matters
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3
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Chairman’s statement
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5
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Sustainability at UBS
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Our strategy, business model and
environment
(Extracts from the UBS Annual
Report 2019 supported by additional information for GRI purposes)
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7
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Our strategy
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8
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Our sustainability strategy
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9
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Performance targets and measurement
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9
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Sustainability objectives
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10
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Our businesses
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21
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Our environment
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25
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How we create value for our stakeholders
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29
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Clients (additional information)
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34
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Shareholders and investors (additional information)
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38
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Employees (additional information)
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49
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Stakeholder relations (additional information)
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Our governance and principles
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51
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Sustainability governance
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51
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Key policies and guidelines
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54
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Our climate strategy
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64
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Sustainability-related training and
raising awareness
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64
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Sustainable performance and compensation
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Materiality under GRI Standards
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66
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GRI-based materiality assessment
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67
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Material GRI topics 2019
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Driving change in finance
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70
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Sustainable investing
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72
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Key sustainable investing products and
services in 2019
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Driving change in philanthropy
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75
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UBS Philanthropy
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Driving change in business
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76
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Advancing sustainability in the
financial sector – UBS’s key activities in 2019
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78
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Environment and human rights
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79
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Management of environmental and social
risks
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82
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In-house environmental management
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93
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Responsible supply chain management
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94
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Combating financial crime
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95
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Ratings and recognitions
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97
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External commitments and memberships
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Driving change in communities
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98
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Overview
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100
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Progress against 2020 target
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102
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Impacting organizations in 2019
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102
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2025 goal
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Our sustainability track record
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103
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Our sustainability track record
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Assurance and certification
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105
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Independent assurance report by EY
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107
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ISO 14001 and 50001 certificates
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111
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ISO 37001 certificate
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Appendix 1 – Governance and
policies
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112
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Charter of the Corporate Culture and
Responsibility Committee
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113
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Our Code of Conduct and Ethics
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117
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UBS in society constitutional document
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120
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Environment and social risk policy
framework
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127
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Health and safety statement
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Appendix 2 – Additional
information for GRI
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128
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UBS in society management indicators
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129
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Information for management approaches
for material topics
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131
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Impact of material GRI topics
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132
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Calculating and reporting on climate
change-related financing and advisory activities
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133
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Direct economic value generated and
distributed by UBS Group AG consolidated in 2019
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134
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Financial literacy
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Appendix 3 – Sustainability
objectives and achievements
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135
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UBS sustainability objectives and
achievements 2019 and sustainability objectives 2020
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Appendix 4 – Global Reporting
Initiative content index
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143
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Global Reporting Initiative Content
Index 2019
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Appendix 5 – Sustainability Accounting Standards Board index
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161
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Sustainability Accounting Standards
Board Index 2019
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Appendix 6 – EU Non-financial
disclosures index
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165
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Risk evaluation
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166
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Non-financial disclosures in accordance
with German law implementing the EU directive 2014/95
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UBS Group
AG consolidated
About this Sustainability Report
We strive to report openly and
transparently about our firm’s sustainability approach and activities,
consistently applying our firm's information policy and disclosure principles. The
core medium for our sustainability disclosure is this Sustainability Report
2019, supplemented – as referenced in the GRI Content Index – by other relevant
information, which can be found in the UBS Annual Report 2019.
We have included the following sections
from the UBS Annual Report 2019 at the beginning of this document:
–
Our strategy
–
Performance targets and measurement
–
Our businesses
–
Our environment
–
How we create value for our stakeholders
Except
where clearly identified, all of UBS’s sustainability information included in
this Sustainability Report is presented for
UBS Group AG and all its subsidiaries. Information on our consolidated
subsidiaries can be found in Note 31 “Interests in subsidiaries and other
entities” in our Annual Report 2019. UBS AG consolidated information does not
differ in any material respect from UBS Group AG’s consolidated information.
We use the Global Reporting Initiative (GRI) as
the basis for our sustainability reporting and apply a careful process weighing
up the materiality and relevance of the information reported and the
expectations of all our stakeholders.
This document also includes our group’s
disclosures of non-financial information required by Germany’s implementation
law of EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz / CSR-RUG) (nichtfinanzieller
Konzernbericht). A table at the end of this document (page 166) provides
the references to such non-financial information.
This Sustainability Report has been reviewed by
Ernst & Young Ltd (EY) against the GRI Standards (limited assurance). The
content has been prepared in accordance with the GRI Standards, Comprehensive option,
as evidenced in the EY assurance report. Both, the GRI content index and the
assurance report, have been included in this document and can also be
downloaded from www.ubs.com/gri.
5 March 2020
UBS Group AG and UBS AG
Contacts
UBS Corporate
Responsibility Management
The Corporate Responsibility team
manages UBS’s sustainability
disclosure and also acts as information provider for sustainability-related
enquiries.
cr@ubs.com
Terms used in this report, unless the
context requires otherwise
“UBS,” “UBS Group,” “UBS Group AG
consolidated,” “Group,” “the Group,” “we,” “us” and “our”
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UBS Group AG and its consolidated
subsidiaries
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“UBS Group AG” and “UBS Group AG
standalone”
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UBS Group AG on a standalone basis
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Driving change
that matters
.
Chairman’s statement
In this statement,
UBS Chairman and Corporate Culture and Responsibility Committee Chairman Axel
A. Weber provides his views on UBS’s long-term value creation
In 2019, we again demonstrated our
commitment to advancing sustainability in our firm, for and with our clients,
and in our industry. We are proud of what our firm has achieved during the
course of last year – and of our ambitious plans going forward.
The Corporate Culture and
Responsibility Committee (CCRC) regularly monitors our firm's sustainability
activities and ambitions and approves its strategy and goals. In 2019, we
witnessed an accelerated momentum in our UBS in society program as well as in our sustainable finance activities. A key
indicator is the development of our Core SI (sustainable investing) assets
under management where we managed to more than double penetration from 5.6% of
total invested assets in 2017 to 13.5% in 2019 – and thus reached the goal we
set ourselves then one year earlier than planned.
Highlights presented to the CCRC
included the further strengthening of our firm's sustainability strategy.
Notable examples include the integration of sustainability topics in our
employee lifecycle activities – with the explicit ambition (included in our UBS in society constitutional document) of being an employer of choice, as well as
the expansion of sustainable finance activities across our firm.
At UBS, we are convinced that this
momentum will continue to accelerate during the coming years. Continually
growing interest by our clients in sustainable finance solutions is evidenced
in major surveys that we conducted among our private and institutional clients,
as well as in our biannual stakeholder survey. I also experience it in my
regular, personal interactions with clients across all of our firm's businesses
and regions.
As we move into the 2020s, we will
further expand our firm's sustainability efforts, shaping them in particular
around three interconnected frameworks: the United Nations Sustainable
Development Goals (SDGs); the recommendations of the Financial Stability Board's
Task Force on Climate-related Financial Disclosures (TCFD); and the UN-backed
Principles for Responsible Banking (PRB).
We were among the very first banks
that shone a light on the importance of the SDGs – and specifically on what it
takes to make them investable for clients, recognizing the major investment gap
associated with their achievement with estimates ranging from USD 2 trillion to
as high as USD 7 trillion annually. This gap needs to be closed if the world
wants to successfully tackle the enormous societal and environmental challenges
expressed through the SDGs. We are keen to help develop solutions in this
regard, building on our successful and sometimes pioneering work aimed at mobilizing
private and institutional capital towards the Goals.
Secondly, the
TCFD's recommendations, focusing on the risks associated with climate change,
try to help address in particular information gaps that prevent investors from
properly assessing related financial risks for their portfolios and thus to
direct capital flows to more sustainable uses. Following the launch of these
recommendations in 2017, we have continuously improved and expanded our
climate-related disclosures to demonstrate our active engagement for an orderly
transition to a low-carbon economy. A key component of our comprehensive
climate strategy is to offer innovative products and services in the areas of
investments, financing and research as well as to encourage more transparency
by companies. At the same time, we are working on further restricting assets
that are associated with climate-related risks. We continue to be successful on
both fronts, increasing our climate-related SI by 23% to
USD 108 billion from 2018 to 2019 while reducing our carbon-related assets from
USD 3.2 billion to USD 1.9 billion.
Finally, in 2019 we became a founding
signatory of the PRB, a framework that is meant to support banks in integrating
society's goals into their business strategy – and that incorporates both the
SDGs and the Paris Agreement on Climate Change. For the PRB's four-year
implementation period, we have committed to set, publish and work towards
ambitious targets. This commitment reinforces our long-standing focus on
maximizing positive effects through our sustainable business activities and on
minimizing negative impacts, notably through our management of environmental
and social risks.
This Sustainability Report provides
comprehensive information on all of the aforementioned commitments and
activities – and more. I invite you to read it, in particular as it demonstrates
how our employees contribute to UBS's sustainable performance.
UBS’s commitment to the UN Global
Compact
UBS was among the 43 companies that
first signed the UN Global Compact upon its launch in 2000 and is committed to
its principles on human rights, labor standards, the environment and
anti-corruption. We are also a member of the UN Global Compact Network
Switzerland. As reflected in detail in this document, we have a comprehensive
set of commitments and activities in place pertaining to the principles of the
UN Global Compact.
Axel A. Weber
Chairman of the Board of Directors
Sustainability
at UBS
Our concept of sustainability is
guided by the United Nations (UN) Sustainable Development Goals (SDGs), which
bring together the enormous societal and environmental challenges the world
faces. We recognize that it is important to understand these challenges as well
as the opportunities arising from them, to consider their relevance to UBS and
to identify potential actions our firm may need to take.
Our commitment to the SDGs
As a founding signatory of the
UN-backed Principles for Responsible Banking, UBS has committed to aligning our
business strategy to be consistent with and contribute to society’s goals. By
doing so, we pledged to strategically align our business with the SDGs and the
Paris Agreement on Climate Change.
What are the SDGs?
The 17 SDGs provide a global roadmap
to address environmental, economic, and social imbalances that affect the
world’s population and its institutions. Such sustainability aims are relevant
to everyone. The SDGs were agreed upon by 193 states in 2015 and officially
launched by the UN on 1 January 2016.
How do they pertain to UBS?
We were among the very first banks
that shone a light on the importance of the SDGs. Already in 2015, before their
official launch, we published a paper on what it takes to make the SDGs
investable for clients. Our focus has continued to be on investability as this
is consistent with a key message that accompanied the launch of the SDGs – the
recognition of a major investment gap (with estimates ranging from USD 2
trillion to as high as USD 7 trillion annually) that will need to be closed if
the world was to achieve the Goals by 2030.
We have refined our analysis of and
commitments to the SDGs ever since, not least in four successive white papers
for the World Economic Forum (WEF) Annual Meeting. In our 2017 white paper we
set out commitments to sustainable and impact investing, which we executed on
by working with other institutions to create innovative solutions that can help
private and institutional clients achieve their financial and societal
objectives.
We have also executed on our 2018 white paper
commitments to partnership for the Goals, by working more closely with
multilateral development banks, through our partnership with the World Bank, to
offer development bank bond solutions for private clients; by collaborating to
fill gaps in the sustainable investing landscape with innovative new solutions;
and by acknowledging the demand and impact of collaborative philanthropy.
In 2019 we highlighted the need for people to
become more aware of the SDGs; for sustainability to be easier understood; and
for more solutions that enable the public to make a real contribution to people
and planet. We outlined eight potential solutions on how to improve the
sustainable investing, giving, and consumption ecosystems to mobilize greater
support for tackling world's most urgent challenges.
In 2020 we again published a white paper on
the occasion of the WEF Annual Meeting, focusing on SDG 13, Climate action, and
on ways in which investors can align their investments towards a climate-smart
future.
Through the #TOGETHERBAND campaign, which we
launched jointly with BOTTLETOP in 2019, we raise public awareness and inspire action
to achieve the SDGs. The campaign is supported by a group of high-profile
ambassadors and experts with a strong commitment to sustainability.
® Refer to www.ubs.com/wef-2020 for more information about our
white paper
® Refer to www.ubs.com/togetherband for more details about the
campaign
What do we do?
At UBS we see a strong business
rationale for catering to the growing importance of and demand for
sustainability – as embodied by the SDGs. We are committed to play a leading
role in providing both finance and expertise to meet these ambitious global goals.
As the largest truly global wealth manager to high net worth and ultra high net
worth clients, we regard it as particularly critical to help private wealth
contribute to fund the development of a more sustainable world.
UBS has touchpoints to the SDGs across the entire
firm. With a business model covering retail, private and institutional clients
we have links to every single SDG through one or more of our firm’s activities.
Some of the key examples include the UBS Optimus Foundation’s support for The
Power of Nutrition foundation (SDG 2), the UBS Oncology Impact Fund (SDG 3),
and the Gender Equality ETF (SDG 5).
We believe, however, that five SDGs (4, 8,
12, 13, 17), as per the table below, are of particular pertinence to our firm.
In particular due to our strategy and business model and (business) focus areas
it is with these five that we see the most material impacts across our value
chain – notably by helping to advance positive developments through sustainable
finance & investing and ESG expertise as well as minimizing negative
impacts through the management of environmental and social risks.
We have captured these five SDGs, our
rationale for each one and key focus areas pertaining to each of them in the
graph on the following page. Over the coming years, we will continue to refine
our analysis of our firm’s links to the SDGs – in order to better understand
and depict positive and negative impacts across our value chain and to set
objectives accordingly.
Sustainable
Development Goals in our focus
Our strategy
We aim
to drive higher and superior returns by growing and leveraging our unique,
integrated and complementary business portfolio and geographic footprint.
UBS is the largest truly global wealth
manager and a leading personal and corporate bank in Switzerland, with focused
investment bank and asset management divisions. We concentrate on
capital-efficient businesses in our targeted markets, where we have a strong
competitive position and an attractive long-term growth or profitability
outlook. We view capital strength as the foundation of our strategy.
In delivering all of UBS as one firm to our
clients, we intend to: strengthen our leading client franchises and grow share;
position UBS for growth by expanding our services and capabilities; drive
greater efficiencies and scale; and further intensify collaboration for the
benefit of our clients.
Driving increasing returns
We manage UBS for the long term,
focusing on sustainable profit growth and responsible resource deployment. We
aim to balance growth opportunities with cost and capital efficiency in order
to drive attractive risk-adjusted returns and sustainable performance.
For the years 2020–2022, we have seven
strategic priorities, which are outlined below.
Priority I We aim to increase profit before tax in our Global Wealth
Management business by 10–15% and drive higher pre-tax margins by elevating our
leading franchise. We are adjusting our coverage across the client spectrum to
deliver more tailored services and solutions. We are reorganizing ourselves to
be closer to clients, in order to increase time spent with them, empowering
regions, improving our responsiveness and speed to market, as well as
delivering on all of the firm’s capabilities through expanded strategic partnerships
with the Investment Bank and Asset Management. Furthermore, we are expanding
our product offering while becoming more efficient, leveraging scale through
partnerships and optimizing processes to increase productivity.
Priority II In our Investment Bank, we intend to improve returns by driving profitable growth, by further optimizing resources and
through collaboration. We will maintain our capital-light business model that
is focused on advice and execution and leverages our digital capabilities.
Together with our other business divisions and through external partnerships,
we aim to deliver market-leading digital, research and banking capabilities to
our clients, while consuming up to one-third of Group resources.
Priority III In Asset Management, we intend to capitalize on our differentiated
client offering for further growth,
performance and scale. We plan to build on our strengths in fast-growing areas
of the industry, such as sustainable investing, private markets and
alternatives.
Priority IV Personal & Corporate Banking aims to deliver steady profit
growth by enhancing its digital initiatives and services, while improving
efficiency. By expanding our leading position in digital services in
Switzerland, along with broadening our advisory solutions and product offering,
we expect to increase profits despite the current negative interest rate
environment.
Priority V We want to deliver more as one firm to our clients. 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; for example, in the ultra high net worth and Global
Family Office space.
Another area where collaboration between our
business divisions can bring more value to clients is in sustainable finance.
As the largest truly global wealth manager, we have a responsibility to take a
leading role in shaping a positive future, and our goal is to be the financial
provider of choice for clients who wish to mobilize capital toward the
achievement of specific environmental or social outcomes. We are shaping the landscape of sustainable finance by using thought
leadership, innovation and partnerships to support clients in their
sustainability efforts.
® Refer to “Society” and “Our focus on ESG” in the “How we create
value for our stakeholders” section of this report for more information about
our engagement and leadership in sustainability matters
Priority VI We aim to drive improvements in firm-wide
efficiency to fund growth and enhance returns. We believe continued
optimization of processes, platforms, our organization and capital resources
will help us to achieve this.
We will continue to invest in technology with
the goal of improving efficiency and effectiveness, driving growth and better serving
our clients.
We also intend to realize the benefits of
existing external partnerships and to explore selected new opportunities.
Priority VII We plan to maintain an attractive capital
return profile through dividends and share repurchases. Our capital strength
and capital-accretive business model allows us to grow our business while
delivering attractive capital returns to our shareholders.
We aim to increase our ordinary dividend per
share by USD 0.01 each year, and to return excess capital through share
repurchases. We consider business conditions and any idiosyncratic developments
when determining excess capital available for share repurchases.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our strategy
Our sustainability strategy
Our firm's sustainability strategy is
guided by our goal to be the financial provider of choice for clients wishing
to mobilize capital towards the achievement of the SDGs and the orderly
transition to a low-carbon economy. We work towards this goal by integrating
sustainability into our mainstream offerings, through new and innovative
financial products with a positive effect on the environment and society, and
by advising clients on their philanthropic works. And it is through the
management of environmental and social risks, the management of our
environmental footprint and our sustainability disclosure that we continue to
set standards in our industry.
® Refer to the UBS in society constitutional document in the Appendix
1 for more information about our sustainability strategy
® Refer to ”Society” in this section for more information about our
sustainability strategy
Performance targets and measurement
Targets and capital
guidance
In January 2020, we updated and
simplified our performance target framework. We reduced the number of targets
to concentrate primarily on the Group rather than our business divisions,
underlining our focus on cross-divisional collaboration. Our targets are
underpinned by the latest three-year strategic plan, which reflects our
strategic initiatives, management actions, as well as certain economic and
market assumptions. The return and efficiency targets have been revised to
reflect changes in the market outlook since the previously communicated targets
were set in October 2018.
The table below shows the performance targets
and capital guidance for the 2020–2022 period. Our updated performance targets
are based on reported results. From the first quarter of 2020, we will no
longer disclose adjusted results in our financial reports. We will continue to
provide disclosure of restructuring and litigation expenses as well as other
material profit or loss items that management believes are not representative
of underlying business performance in our management’s discussion and analysis.
Performance against targets is taken into
account when determining variable compensation.
® Refer to “Performance and compensation at a glance” in the
“Compensation” section of this report for more information about variable
compensation
® Refer to “Alternative performance measures” in the appendix to this
report for definitions of and further information about our performance
measures
Targets and capital guidance 2020–2022
(on a reported basis)
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Group
returns
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12–15% return on CET1 capital (RoCET1)
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Cost
efficiency
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Positive operating leverage and 75–78%
cost / income ratio
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Growth
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10–15% profit before tax growth in Global Wealth Management
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Capital
allocation
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Up to 1⁄3 of Group RWA and
LRD in the Investment Bank
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Capital
guidance
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~13% CET1
capital ratio
~3.7% CET1 leverage ratio
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Sustainability
objectives
We have set strong overarching
ambitions that guide our sustainability performance. We are transparent about
our aims and progress wherever possible to demonstrate our commitment. We set
annual sustainability goals, which are reflected in the comprehensive set of
GRI objectives included in this document.
In addition, our firm's sustainability aims,
i.e., beyond the 2020 time horizon, reflect our focus on the mid- to long-term.
® Refer to “Society” in this section for more information about our
sustainability aims and key goals
® Refer to the Appendix 3 for our sustainability objectives and
achievements 2019 and sustainability objectives 2020
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
Our businesses
Working in partnership
We operate through four business
divisions – Global Wealth Management, Personal & Corporate Banking, Asset
Management and the Investment Bank. Our
global reach and the breadth of our expertise are major assets that set us
apart from our competitors. We see partnership as key to our growth,
both within and between business divisions. We are at
our best when we combine our strengths to provide our clients with more
comprehensive and better solutions through, for example, the creation of a unified
capital markets group across Global Wealth Management and the Investment Bank,
and a Global Family Office joint venture.
Combining our
strengths makes us a better firm. Initiatives such as the Group Franchise Awards encourage
employees to look for ways to build bridges between areas and offer the whole
firm to our clients.
Global Wealth Management
We are the largest truly global
wealth manager, with USD 2.6 trillion in invested assets. Our goal is to provide
tailored advice and solutions to private clients and family offices.
Since the combination
of Wealth Management and Wealth Management Americas in 2018, we have continued
to deliver comprehensive services to clients, capture operational efficiencies, and invest in our
business. More than 22,000
Global Wealth Management employees assist our clients with achieving their goals. Our presence
in the ultra high net worth segment is particularly strong, and we have access to the majority of the world’s billionaires.
In Japan, we
have entered into a comprehensive strategic wealth management partnership with
Sumitomo Mitsui Trust Holdings, Inc. (SuMi Trust Holdings). The new joint venture will combine
UBS’s wealth management capabilities with SuMi Trust Holdings’ stature as Japan’s largest
independent trust bank. SuMi Trust Holdings offers a range of services, including
banking, real estate, asset and wealth advisory services, and has strong client
access and brand name awareness in Japan.
Global Wealth Management organizational
changes
In January 2020, we announced several
initiatives designed to achieve Global Wealth Management’s growth ambitions and
to elevate the quality and value of the service we deliver to our clients. First,
we have reframed our offering around each client’s needs to deliver more
tailored services and solutions. Second, we have made it easier for advisors to
spend more time with clients and to better understand their needs and
preferences, and we have taken measures to improve our responsiveness and speed
to market. We created three distinct business units in
EMEA – Europe; Central and Eastern Europe; and the Middle East and Africa – to
better capture the diverse opportunities in these markets. Finally, we intend to deliver all of the firm’s capabilities through
strategic partnerships with the Investment Bank and Asset Management.
Our focus
We serve high net worth and ultra
high net worth individuals, families and family offices around the world, as
well as affluent clients in selected markets. Through our organizational
changes, we are making our Global Family Office capabilities, which are provided
to ultra high net worth individuals, available to more clients, targeting
coverage of around 1,500 in total.
While we are already a market leader in the
ultra high net worth segment outside the US,1 we believe that we can also become the firm of choice for the
wealthiest clients in the US,
many of whom already have a relationship with UBS. Our globally diversified footprint allows
us to capture growth both in the largest (the US) and the fastest-growing (Asia
Pacific) wealth markets.
We are focusing on increasing mandate and
lending penetration, delivering innovative solutions for our clients (e.g.,
structured solutions, private markets, sustainability and thematic investing), as
well as enhancing our advisors’ productivity by making operational processes
more efficient. Additionally, we aim to maintain low attrition and to increase
our share of clients’ business.
We are investing in our operating platforms
and tools to support our clients and client advisors, in order to better serve
our clients’ needs and improve our efficiency. As of 31 December 2019, approximately
80% of invested assets booked outside the Americas were on the Wealth Management
Platform as we continue to consolidate our
operating platforms there. In the US, and in collaboration with our
third-party software provider Broadridge, we are building the Wealth Management
Americas Platform, which
we expect to become operational in 2021. The development of our platforms is
happening alongside enhancements to our digital capabilities for the benefit of
our clients and advisors.
® Refer to “Clients” in the “How we create value for our stakeholders”
section of this report for more information about innovation and digitalization
How we operate
We have a global footprint, with a
presence in the world’s largest and fastest-growing markets and are well
positioned to serve clients with global interests and demands. The US is our
largest market, accounting for more than 50% of our invested assets. We are the
largest wealth manager in Asia Pacific and the second largest in Latin America
in terms of invested assets.1
In Switzerland, we hold a leading market
position1 and can deploy the full range of the Group’s products and
services across Personal & Corporate Banking, Asset Management and the
Investment Bank.
Our broad domestic footprint in Europe
enables us to provide locally adapted offerings, and our local offices across
Central Europe, the Middle East and Africa keep us close to our clients.
Through strategic partnerships with the Investment Bank and Asset Management, we provide clients with
broad access to financing, global capital markets and portfolio solutions.
® Refer to “Working in partnership” in this section for examples of collaboration between the business divisions
1 Statements of market
position for Global Wealth Management are UBS’s estimates based on published
invested assets and internal estimates.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
As part of our organizational changes, ultra
high net worth client relationships and advisors were integrated into regional
business units to increase speed and proximity to clients. In our newly established Global Capital Markets
team, we combined our Investment Product Services (IPS) unit and Investment
Bank teams and their respective expertise. The Global Capital Markets team
provides clients with an enhanced offering, faster execution, and more
competitive conditions.
Our main competitors are either large US
players that have a smaller presence outside the US (including Bank of America,
JPMorgan Chase, Morgan Stanley and Wells Fargo) or geographically diverse firms
with a smaller presence in the US (including BNP Paribas, Credit Suisse, HSBC and
Julius Baer). Our size, geographic presence and diversified client portfolio
are exceptional and would be difficult for other wealth managers to replicate
organically.
What we offer
Our distinctive approach to wealth
management is designed to strengthen engagement with our clients and to help
them pursue what matters most to them.
By operating as a unified business, we aim to
offer our clients the best wealth management solutions, services and expertise
globally. Our experts provide our clients with thought leadership, investment
analysis and formulated investment strategies, as well as develop and source solutions
for them. The Chief Investment Office (CIO) provides the concise, comprehensive
UBS
House View, which identifies and communicates
investment opportunities designed to protect and increase our clients’ wealth
over generations. Regional client strategy teams deepen our understanding of
clients’ needs, behaviors and preferences, enabling us to tailor our offerings
to serve them better. Our product specialists deliver investment solutions,
including our flagship investment mandates, innovative long-term themes and
sustainable investment offerings.
® Refer to “Clients” in the “How we create value for our stakeholders”
section of this report for more information about innovation and digitalization
Clients benefit from
our comprehensive set of capabilities and expertise, including wealth planning,
investing, philanthropy, corporate and banking services, as well as family
advisory services. We also offer considerable expertise
across structured, mortgage and securities-based lending.
We work to improve our offerings and respond
to changing client needs. In 2019, we launched a new line of UBS Manage offerings in Switzerland. In addition, to meet growing demand, we
expanded the number of exclusive private markets opportunities for clients. Our
sustainable investing solutions continue to be well received. Currently, invested
assets in 100% sustainable investing solutions and bespoke sustainable
investing solutions have grown to over USD 9 billion. We also broadened
our sustainable investing offering, teaming up with external partners such as
BMO Global Asset Management, Generation Investment Management and KKR & Co.
Inc. to offer clients innovative sustainable development-related investment
opportunities.
How we serve our
clients
We serve our clients through local
offices, dedicated advisors and experienced specialists. We use a mix of
digital and non-digital channels (including marketing campaigns, events, advertising, publications and
digital-only solutions) to help drive greater awareness of UBS among prospects and
reinforce trust-based relationships between advisors and clients.
How we are organized
Our business division is organized
into regional business units: the US and Canada; Latin America; Europe; Central
and Eastern Europe; the Middle East and Africa; Asia Pacific; and Switzerland. We
also have a business unit for our Global Family Office clients. Central
functions for global capabilities supporting these business units are the CIO,
Global Banking, Global Capital Markets and the Chief Operating Office. We are
governed by the executive, risk, operating, and asset and liability committees.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
Personal & Corporate Banking
As a leading personal and corporate
bank in Switzerland, we provide comprehensive financial products and services
to private, corporate and institutional clients. We are among the country’s
foremost players in the private and corporate loan market, with a substantial lending
portfolio. Personal & Corporate Banking is at the core of our universal
bank delivery model in Switzerland.
Our focus
We are a leading personal and
corporate bank in Switzerland, providing a superior client experience and
combining technology with a personal touch.
We have established a strong pipeline of
growth initiatives across our business areas. Effective
1 November 2019, we have set up a new business area, Digital Platforms &
Marketplaces, to rapidly extend our platform offering for mortgages.
We also aim to improve efficiency by
streamlining processes and introducing new digital self-service tools. For
example, we have rolled out an integrated mortgage workflow for extensions, which
significantly reduces the time it takes to set up a contract. In addition, we have
further optimized our contact center setup, increased automation of repetitive
processes, and launched a pilot for a digital mailroom that reduces processing
time by digitizing incoming physical mail and documents. Technology plays a key
role in our client-centered operating model and we aim to expand our digital
leadership. Our multi-year digitalization program enables us to further enhance
the client experience. Thanks to technological solutions, we are able to offer
clients new products and identify new cross-selling opportunities in a more
targeted way.
® Refer to “Clients” in the “How we create value for our stakeholders”
section of this report for more information about innovation and digitalization
Operationally, we strive for excellence in execution, focusing on
efficiency while improving our service quality and overall agility. To scale
our digital transformation efforts, in 2019 we opened our second digital
factory in Switzerland, which is larger than our first one. These digital
factories are now home to approximately 1,100 employees across various
functions. Moreover, we introduced an agile academy and quick-launch formats to
drive innovation and attract key talent.
How we operate
While we
operate primarily in our home market of Switzerland, we also provide
capabilities to support the growth of the international business activities of
our Swiss corporate and institutional clients through our local hubs in
Frankfurt, New York, Hong Kong and Singapore. We are the only Swiss bank
providing local banking capabilities abroad to its corporate clients.
In the Corporate & Institutional Clients
business, our main competitors are Credit Suisse, the cantonal banks and
globally active foreign banks. We compete in areas covering basic banking
services, cash management, trade and export finance, asset servicing, investment
advice for institutional clients, corporate finance and lending, and cash and
securities transactions for banks.
In the Swiss Personal Banking business, our
competitors are Credit Suisse, PostFinance, Raiffeisen, the cantonal banks and
other regional and local Swiss banks. In addition to those traditional players,
we also face competition from international players entering the Swiss market and
neobanks. We compete in areas such as basic banking, mortgages and foreign
exchange, as well as investment mandates and funds.
What we offer
Our personal banking clients have
access to a comprehensive, life cycle-based offering and convenient digital
banking. We deliver a broad range of basic banking products, from payments to
deposits, cards, online and mobile banking, as well as lending (predominantly mortgages),
investments and retirement services. The overall service range is complemented by
our UBS
KeyClub reward program, which provides clients
residing in Switzerland with exclusive and attractive offers, including those from
third-party partners. In close collaboration with Global Wealth Management, we
offer leading private banking and wealth management services.
Our corporate and institutional clients
benefit from our financing and investment solutions, particularly access to
equity and debt capital markets, syndicated and structured credit, private
placements, leasing, and traditional financing. Our transaction banking offers
solutions for payment and cash management services, trade and export finance,
as well as global custody solutions for institutional clients.
We collaborate closely with the Investment
Bank to offer capital market and foreign exchange products, hedging strategies
and trading capabilities, as well as corporate finance advice. In cooperation
with Asset Management, we also provide fund and portfolio management solutions.
® Refer to “Working in partnership” in this section for examples of
collaboration between the business divisions
How we serve our clients
We are the recognized digital leader,
with the highest online and mobile banking penetration in Switzerland, and
continue to invest in a multi-channel distribution model to further enhance our
leading position.
We are adapting
existing branch formats to suit evolving client needs by converting some
locations to smaller, more agile branches that serve as digital support hubs
and are intended to ensure a strong local presence along with advice on basic
client needs. We aim to further reshape our physical footprint in an innovative
and client-centric way, particularly by defining future branch formats with
different purposes.
In addition, we continue to provide our
expertise to our clients through our contact center and our digital channels,
offering basic banking services and transactions. Dedicated client advisors
serve personal banking clients who need tailored solutions.
As part of our sustainability road map, we are
substantially expanding our offerings. Our personal banking and institutional
clients have access to a number of sustainable investment solutions, and we
promote innovative approaches for corporate banking clients. For example, we
issued the first green bond for a listed company in Switzerland.
For marketing
campaigns, we use online media (including social media and search engine
advertising), out-of-home media (posters and digital billboards) and, very
selectively, print, TV, radio and cinema advertising. In line with our position
as a digital leader in Swiss banking, and because of the channel’s cost-effectiveness,
we follow a digital-first media strategy. More than 50% of our media spending goes
into online channels.
How we are organized
Our business division is organized
into Personal Banking, Corporate & Institutional Clients, and Digital
Platforms & Marketplaces. Geographically, our business, with its 267
branches, is organized into 10 regions, covering distinct Swiss economic areas.
We are governed by the executive, risk and operating
committees, and operate mainly through UBS Switzerland
AG.
1 The size of the
circles on the map reflects the number of branches in each location.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
Asset Management
UBS Asset Management is a large-scale
and diversified global asset manager, with USD 903 billion in invested
assets. We offer investment capabilities and styles across all major
traditional and alternative asset classes, as well as advisory support to
institutions, wholesale intermediaries and Global Wealth Management clients
around the world.
Our focus
Our strategy is focused on
capitalizing on the areas where we have a leading position to drive further
profitable growth and scale.
Sustainable and Impact Investing remains a
key area, as clients increasingly seek solutions that combine their investment
goals with sustainability objectives. We continue the expansion of our
world-class capabilities in areas such as climate-aware solutions. We do this through:
product and service innovation; dedicated research; integration of
environmental, social and governance factors into our investment processes,
leveraging our proprietary analytics; and active corporate engagement.
In response to the increasing importance of
private markets and alternative investments, we are building on our existing
expertise in these areas, including our hedge fund and real estate businesses,
as well as our capabilities across infrastructure, private equity and private
debt.
We continue to develop our award-winning1 Indexed
and Alternative Beta business, including exchange-traded funds (ETFs) in Asia
Pacific, Europe and Switzerland. We provide customization while leveraging our
highly scalable platform, with a particular focus on key areas such as
sustainability and fixed income products. Since 2016, the Alternative Beta
business has seen growth in invested assets of approximately 85%.
Geographically, we are investing in our leading presence and
products in China, both onshore and offshore, one of the fastest-growing asset
management markets in the world, building on our extensive and long-standing presence
in the Asia Pacific region.
In the rapidly evolving and attractive
wholesale segment, we aim to significantly expand our market share through a
combination of continued client penetration, expansion of our strategic
partnerships with distributors and the build-out of our client service
offerings.
® Refer to “Clients” in the “How we create value for our stakeholders”
section of this report for more information about innovation and digitalization
To drive further growth in our Investment
Solutions business, which provides access to and combines the breadth and depth
of our capabilities across public and private markets, we are
focused on delivering superior multi-asset strategies and white-label solutions
to meet the needs of clients around the world.
We also continue to intensify our
cross-divisional collaboration, in particular with Global Wealth Management, to
enable our teams to draw on the best ideas, solutions and capabilities from
across the firm to deliver superior investment performance and experiences for
our clients.
® Refer to “Working in partnership” in this section for examples of
collaboration between the business divisions
To support our growth, we are focused on
disciplined execution of our operational excellence initiatives. This includes
further automation, simplification, process optimization and offshoring /
nearshoring of selected activities, complemented by a continued modernization
of our platform and development of our analytics and data capabilities.
In January 2020, we announced a number of
changes to the operational setup of our Platforms businesses intended to
deliver greater scale and breadth of offering for our clients and ensure the
ongoing development of these world-class businesses in a highly competitive
marketplace. The changes include the proposed sale of a majority stake (51.2%)
in UBS Fondcenter to Clearstream, Deutsche Börse Group’s post-trade services
provider. The sale is expected to close in the second half of 2020, subject to
customary closing conditions. In addition, in order to fully leverage the
expertise and resources within the wider Group to accelerate the growth of the
business, we have decided to transfer UBS Partner,
our highly innovative white-label technology solution, to the Corporate & Institutional
Clients International business within the Personal & Corporate Banking
business division. UBS Partner will be part
of UBS’s “The Bank for Banks” client offering, and this is an exciting step in
our collaboration efforts across the firm to bring the best of UBS to our
clients.
With these changes, we are making a step
change in the proposition for our clients, who will have seamless access to
expanded platform capabilities, while at the same time enabling us to sharpen
our focus on the execution of our strategic priorities.
How we operate
We cover the main asset management
markets globally, and have a local presence in four regions: the Americas;
Europe, the Middle East and Africa; Switzerland; and Asia Pacific.
Our main competitors are global firms with
wide-ranging capabilities and distribution channels, such as Amundi, BlackRock,
DWS, Goldman Sachs Asset Management, Invesco, JPMorgan Asset Management, Morgan
Stanley Investment Management and Schroders, as well as firms with a specific
market or asset class focus.
1 Second largest
Europe-based indexed player based on peers’ public reporting (UBS calculation,
3Q19) and ranked fourth largest ETF provider in Europe as of December 2019
(source: ETFGI).
What we offer
We offer clients a wide range of
investment products and services in different asset classes in the form of
segregated, pooled or advisory mandates, as well as registered investment funds
in various jurisdictions.
Our traditional and alternative capabilities
include equities, fixed income, hedge funds, real estate and private markets,
and indexed and alternative beta strategies (including ETFs), as well as
sustainable and impact investing products and solutions.
Our Investment Solutions business draws on the
breadth of our capabilities to offer: asset allocation and currency investment
strategies across the risk / return spectrum; customized multi-asset solutions,
advisory and fiduciary services; and multi-manager hedge fund solutions and
advisory services.
How we serve our clients
We deliver our investment products
and services directly to institutional clients. High net worth and retail
clients are served through Global Wealth Management, third-party banks and
distributors.
Our teams are based in the key financial
markets, bringing our unique perspectives and global expertise to our clients around
the world. This, in combination with our presence on the ground, enables our
teams to develop long-term relationships with our clients and a deep
understanding of their specific needs.
How we are organized
Our business division is organized
along five areas: Client Coverage, Investments, Real Estate & Private
Markets, Products and the COO Area. We are based worldwide across four regions,
with nine main hubs: Chicago, Hong Kong, London, New York, Shanghai, Singapore,
Sydney, Tokyo and Zurich.
We are governed by executive, risk and
operating committees, supplemented by business
unit-specific committees.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
Investment Bank
The Investment Bank provides a range
of services to institutional, corporate and wealth management clients to help
them raise capital, grow their businesses, invest for growth and manage risks. We
are focused on our traditional strengths in equities, foreign exchange,
research, advisory services and capital markets, complemented by a targeted
rates and credit platform. We use our powerful research and technology
capabilities to support our clients as they adapt to the evolving market
structures and changes in the regulatory, technological, economic and
competitive landscapes.
We aspire to deliver market-leading solutions
to clients, using our intellectual capital and electronic platforms. We also
provide services to Global Wealth Management, Personal & Corporate Banking and Asset Management, while managing our
balance sheet, costs, risk-weighted assets and leverage ratio
denominator with discipline.
Our capital-light business model allows the
Investment Bank to deliver digital, research and
banking capabilities, consuming
up to one-third of Group resources.
Structural changes in the Investment
Bank
In January 2020, we realigned our
Investment Bank to meet the evolving needs of our clients and to further focus
resources on opportunities for profitable growth and digital transformation.
Corporate Client Solutions and Investor Client Services were renamed Global
Banking and Global Markets, respectively. Global
Banking moves to two product verticals (Capital Markets and Advisory), adopting
a global coverage model. Global Markets combines
Equities and Foreign Exchange, Rates and Credit, and introduces three product
verticals (Execution & Platform, Derivatives & Solutions, and
Financing) and three horizontal functions (Risk & Trading, Distribution and
Digital Transformation). The new Global Markets
structure is designed to facilitate the alignment of business processes and
operations and to reduce inefficiencies and duplication. It further permits a
more holistic understanding of our clients’ cross-product needs and is designed
to foster tighter coordination of client coverage and distribution. This will
allow for improved oversight of key risks and the allocation of resources. Investment
Bank Research and UBS Evidence Lab Innovations continue
to be a critical part of our advisory and content offering.
The changes are effective 1 January and we will provide restated prior-period information in advance of
our first quarter 2020 results.
Our focus
Our key priority is disciplined
growth in the capital-light advisory and execution businesses, while
accelerating our digital transformation. Global Banking has a global coverage model
and will utilize its deep global industry expertise to meet the emerging needs
of its clients. In Global Markets, we are focused on clients’ expectation of
excellence in execution, financing and structured solutions.
Our digital
strategy is led by our businesses, which harness technology to deliver superior
and differentiated client service and content. We established the UBS Investment Bank Innovation Lab to speed up innovation by facilitating proofs of
concept. In Global Markets, the new Digital Transformation horizontal function facilitates
adoption of best-in-class practices around trade idea generation, liquidity
management, pricing tools and risk management. In Investment Bank Research, we
continue to build UBS Evidence Lab Innovations to concentrate on data-driven
outcomes.
Our balanced
global reach gives us attractive options for growth across various regions. In
the Americas, the largest investment banking fee pool globally, we are focusing
on increasing our market share in our core Global Banking and Global Markets
businesses.
In Asia Pacific, we see opportunities
primarily from expected market internationalization and growth in China. We are
planning to grow by further strengthening Global Banking, both onshore and
offshore. Partnerships between the Investment Bank’s businesses and the Group,
including the creation of a unified capital markets group, and, externally,
joint ventures such as that with Banco do Brasil, are a key strategic focus. These
initiatives should lead to growth by delivering global products to each region,
leveraging our global connectivity across borders and sharing and strengthening
our best client relationships.
® Refer to “Working in partnership” in this section for examples of
collaboration between the business divisions
How we operate
Our geographically
balanced business has a global reach, with a presence in more than 30 countries
and principal offices in the major financial hubs.
Competing firms are active in many of our
markets, but our strategy differentiates us, with its focus on leadership in the
selected areas where we have chosen to compete, and a business model that
leverages talent and technology rather than balance sheet.
Our main
competitors are the major global investment banks, including Morgan Stanley,
Credit Suisse and Goldman Sachs, as well as corporate investment banks,
including Bank of America, Barclays, Citigroup, BNP Paribas, Deutsche Bank and
JPMorgan Chase. We also compete with boutique investment banks and fintech firms
in certain regions and with regard to certain products.
Through
strategic partnerships with Global Wealth Management and Asset Management, we
provide clients with broad access to financing, global capital markets and
portfolio solutions.
®
Refer to “Working in partnership” in this section for examples of collaboration between the business divisions
What we offer
Through our Global Banking business,
we advise our clients on strategic business opportunities and help them raise
capital to fund their activities.
Our Global Markets business enables our
clients to buy, sell and finance securities on capital markets across the globe
and to manage their risks and liquidity. Furthermore, in
Investment Bank Research, we offer clients key insights on major financial
markets and securities around the globe. Separately, our team of experts in UBS Evidence Lab Innovations specializes in
creating insightful data sets on diverse topics for companies of all sizes,
spanning more than 30 countries and 50 sectors. We seek
to develop new products and solutions that are consistent with our capital-efficient
business model. These are typically related to new technologies or changing
market standards.
® Refer to “Clients” in the “How we create value for our stakeholders”
section of this report for more information about innovation and digitalization
Since 2005, we have addressed increasing
client demand for sustainable investing by providing thematic and sector
research. We also provide investment solutions through socially responsible and
impact exchange-traded funds and index-linked notes. In addition, we offer
capital-raising and strategic advisory services globally to companies that make
a positive contribution to climate change mitigation and adaptation.
How we serve our clients
We interact with our clients
digitally and in person. In Global Banking, we leverage our intellectual
capital and relationships to deliver high-quality solutions for our clients. In
Global Markets, we use our execution capabilities, differentiated research
content, bespoke solutions, client franchise model, and our global platform to
expand coverage across a broad set of institutional and corporate clients. In Investment Bank Research, we deliver
high-quality differentiated research to our institutional clients using a wide
range of methods, including UBS Neo, our multi-channel platform.
How we are
organized
Our
business division is organized into the following three units: Global Banking,
Global Markets, and Investment Bank Research and UBS Evidence Lab Innovations.
We are governed by the executive, operating, risk, and asset and liability
committees. Each business
unit is organized globally by product.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our businesses
Corporate Center
Our Corporate Center provides
services to the Group, with a focus on effectiveness, risk mitigation and
efficiency. Corporate Center also includes the Non-core and Legacy Portfolio
unit.
How we are organized
Corporate Center
The major areas within Corporate
Center are Group Chief Operating Officer (Group Technology, Group Corporate
Services, Group Human Resources and Group Operations), Group Treasury, Group
Finance, Group Legal, Group Risk Control, Group Communications & Branding,
Group Compliance, Regulatory & Governance, UBS
in society, and Non-core and Legacy Portfolio.
Over recent
years, we have progressively aligned our support functions with our business
divisions. We operate the Group with the vast majority of these functions
either fully aligned or shared among business divisions, where they have full
management responsibility. By keeping the activities of the businesses and
support functions close together, we increase efficiency and create a working
environment built on a culture of accountability and collaboration
The Non-core
and Legacy Portfolio, a small residual set of activities in Group Treasury and
certain other function costs mainly related to deferred tax assets and costs
relating to our legal entity transformation program are retained centrally.
Since our first quarter 2019 report and in
compliance with IFRS 8, Operating Segments, we provide results for total
Corporate Center only and do not separately report Corporate Center – Services,
Group Asset and Liability Management (Group ALM) and Non-core and Legacy
Portfolio. Furthermore, we have combined Group Treasury operationally with
Group ALM and call this combined function Group Treasury.
® Refer to the “Significant accounting and financial reporting
changes” section and “Note 1 Summary of significant accounting policies” in the
“Consolidated financial statements” section of this report for more information
about the changes in the structure of Corporate Center
Group Treasury
Group Treasury manages the structural
risk of our balance sheet, including interest rate risk, structural foreign
exchange risk and collateral risk, as well as the risks associated with our
liquidity and funding portfolios. Group Treasury serves all business divisions
and its risk management is fully integrated into the Group’s risk governance
framework.
Non-core and Legacy Portfolio
Non-core and Legacy Portfolio manages
legacy positions from businesses exited by the Investment Bank, following a
largely passive wind-down strategy. It is overseen by a committee chaired by
the Group Chief Risk Officer. The portfolio also includes positions relating to
legal matters arising from businesses that were transferred to it at the time
of its formation.
® Refer to “Note 21 Provisions and
contingent liabilities” in the “Consolidated financial statements” section of
this report for more information about litigation, regulatory and similar
matters
Our environment
Current market climate
Global economic developments in 2019
In a year characterized by strong
equity markets, ultra-low volatility and an inflection in interest rates, the pace
of the global economy slowed on a broad basis in 2019. World GDP grew by 3.1%,
which was substantially lower than the 3.7% growth achieved in 2018 and
represents the weakest growth rate since the financial crisis.
US GDP increased 2.3%, compared with 2.9% in
2018, as trade tensions between the US and China hindered business investment
and the boost from tax cuts introduced in December 2017 ebbed.
Trade tensions represented an even more
serious drag on growth in the eurozone, which relies more than the US on global
trade, manufacturing output, and business investment. Growth in the eurozone decreased
to 1.2% in 2019, compared with 1.9% in 2018. Germany’s economy expanded by only
0.6%, after a 1.5% increase in the previous year. Outside the Eurozone, Swiss
growth decreased as well, to 0.8%, compared with 2.8% in 2018.
China’s government attempted to partially
offset the effects of increasing tariffs on its exports to the US by reducing bank
reserve requirements and providing extra fiscal leeway to local governments. However,
this stimulus was limited by concerns over high leverage in the economy. GDP
growth decreased to around 6.1%, compared with 6.7% in 2018.
In other leading emerging economies, growth
slowed or stabilized at low levels. The economy of India, which until recently
had been one of the world’s fastest-growing major nations, expanded by 5%, compared
with 6.1% in 2018. Momentum was weakened by the problems of the shadow-banking
sector, which has been reducing the availability of credit to consumers. The
Mexican economy, meanwhile, was roughly flat after expanding 2% in 2018, and
Brazil’s growth rate decreased to 1.1% from 1.3%.
Major central banks were able to keep their
accommodating monetary policies in place in 2019, given that low inflation
rates persisted. Eurozone inflation stayed below the European Central Bank’s (the
ECB) target (of at or below 2%), at around 1.2% for
the year. The ECB cut its deposit rate from negative 0.4% to negative 0.5%. US
inflation was close to the target at 1.8%, permitting three quarter-point rate
cuts over the course of the year to between 1.5% and 1.75%.
Equity markets rallied, with all major indices
advancing. The MSCI All Country World Index gave a total return of 27% in US
dollars. The S&P 500 index in the US returned 31%, while the
technology-heavy Nasdaq Composite gained 37%. China’s CSI 300 was up 41% in
local currency terms. Less well-performing markets included the UK’s FTSE 100
and Hong Kong’s Hang Seng, which both returned 17% in local currency terms.
It was also a favorable year for investors
holding government bonds. The yield on 10-year US Treasury bonds fell around
80 basis points to 1.9%. The yield on the German Bund of the same tenor
fell 40 basis points to negative 0.2%.
Economic and market outlook for 2020
We expect continued sub-trend growth
in the coming year, and the global economy to continue expanding at about the
same pace as in 2019. Consumer spending has remained robust in much of the
world, especially in the US, where it is supported by a vibrant job market. The
year ended with news of a “Phase 1” trade deal between the US and China, along
with indications that tensions between the two powers may lessen. Not only did
the agreement withdraw planned tariff increases and reverse some existing
tariffs, it also moved negotiations forward in other areas of contention, such
as intellectual property protection and US access to China’s financial services
market. While this truce could be fragile and the US–China rivalry is not about
to end anytime soon, the deal appears to reduce the risks to the global economy
and business investment.
The UK left the European Union on 31 January
2020 and has entered a transition period in which the UK now faces a race to
conclude talks on a trade deal with the EU ahead of the end of its transition
period on 31 December 2020.
The next major
political focus for markets will be the US election in November, which could
generate higher volatility and affect key US sectors, such as technology,
energy, finance and health care.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our environment
Against a backdrop
of sluggish growth and continued political risk, we believe central banks will
be in no rush to raise rates. We do not expect the US Federal Reserve to
increase rates in the coming year, barring an unexpected shift in the
trajectory of the economic data. Rates are unlikely to rise again until 2021.
We expect the ECB to cut rates to negative 0.6%, with the Swiss National Bank
maintaining rates at a negative 0.75%.
The outbreak of novel Coronavirus or Covid-19
in China and its subsequent spread to other countries is likely to increase
investor uncertainty. Although our base economic forecast is that the outbreak
of Covid-19 will be contained and the effect on full-year economic growth will
be relatively limited, the virus and containment measures are likely to have at
least a short-term adverse effect on economic activity in China and other
affected countries, with a collateral impact on the global economy. A
significant rise in the number of Covid-19 infections, infections in a wide
range of countries and regions, or a prolongation of the outbreak, could increase
the adverse economic effects.
In terms of investing, stocks in most major
markets are trading above historical averages on a price-to-earnings basis. As
a result, we believe equity market returns are more likely to be driven by
earnings growth than by a further expansion of multiples. Markets should also
be supported by continuing economic growth in 2020. The risk of a recession
remains relatively low. Uncertainty over the effects of the Covid-19 outbreak
has substantially increased the macroeconomic risk to growth and this increased
risk has at least partially been reflected in recent declines in equity
markets.
Industry trends
While our industry was heavily
affected by regulatory developments over the past decade, technology has
clearly emerged as the main driver of change today and is expected to further
affect the competitive landscape as well as our products and operations going
forward. In parallel, our industry is materially driven by market and
macroeconomic conditions.
® Refer to “Current market climate” in this section for information
about global economic growth
Digitalization
Technology
is changing the way banks operate and we expect this to continue, in step with
exponential advances in computing capability, evolving customer needs and digital trends. Investment in technology is no
longer solely considered a means of making banks more efficient. Today, such investment
is the key to keeping banks flexible and competitive in a digitalized world,
and it creates the opportunity to develop new business models.
By connecting
across the financial industry ecosystem through our innovation labs, digital
factories, Future of Finance initiatives, and project collaborations, we aim to
remain at the forefront of the digital movement to drive client experience as
well as operational excellence. At the heart of our digital journey is the
focus on our clients and their evolving needs. The speed, scale, security, transparency
and precision that new technologies can offer enable us to create new services
and experiences for our clients.
We also aim to
improve operational efficiency by increasing the range of modernized and
modularized applications and infrastructure in our IT portfolio, as well as by
leveraging cloud technology and a growing number of front-to-back automated
systems and processes. Effective data management and protection are crucial to us.
The generated and curated data from our applications is protected under our
data management framework, and supports the development of responsible
artificial intelligence for better tailoring our client and employee
experience.
Consolidation
In the
financial services industry, many regions and businesses are still highly
fragmented. We expect further consolidation, with ongoing margin pressure, the search
for cost efficiencies and increasing scale advantages resulting from the fixed
costs of technology and regulation being the key drivers. Many banks also seek increasing
exposure and access to regions with attractive growth profiles, such as Asia
and emerging markets, through local acquisitions or partnerships. Lastly, the
increased focus on core capabilities or geographical footprints and the ongoing
simplification of business models to reduce operational and compliance risks
will result in further disposals of non-core businesses and assets.
New competitors
Our competitive environment is also
evolving. In addition to our traditional competitors in the asset-gathering
businesses, new entrants are targeting selected components of the value chain.
However, we have not yet seen a fundamental unbundling of the value chain and
client relationships, which might ultimately result in the disintermediation of
banks by new competitors. Over the longer term, we believe the entry into the
financial services industry of large platform companies could pose a
significant competitive threat, given their strong client franchises and access
to client data. Fintech firms are gaining momentum; however, they have not materially
disrupted our asset-gathering businesses to date. We see a trend in forging
partnerships between new entrants and incumbent banks, with the latter
acquiring technology from fintech firms, thus gaining an edge over competitors
in terms of technology, cost efficiency, and service quality.
Regulation
The post-2008 regulatory reform
agenda has largely been completed.
While some areas, such as funding in resolution, must still be fully addressed,
and the implementation of certain standards, such as the finalized Basel III
capital standard, is continuing on a national level, the focus is shifting from
regulation to supervision. In parallel, some regulators are reviewing the
efficiency of the new frameworks.
In general, regulatory-driven change
continues to consume substantial resources. In 2020, we expect further consideration
of adjustments to the Swiss too-big-to-fail framework, in particular focused on
additional liquidity requirements for systemically important banks, and the
national implementation of final Basel III rules. We expect continued work on
resolution-related reforms, including stress testing, and a sustained focus on conduct and anti-money laundering.
Furthermore, we are experiencing a surge in sustainability-related policy
proposals targeted at various aspects of financial services across the globe.
We also expect regulatory initiatives to address some of the more recent
challenges that could affect financial stability, such as shadow banking and
digital currencies.
Many of these developments are happening in
the context of increased protectionism, posing challenges to the provision of
cross-border financial services. Further restrictions with regard to market
access into the EU in particular would have a significant effect on Switzerland
as a financial center, affecting also UBS. Variations in how different
countries implement rules, and an increasing national focus, bring a risk of
additional regulatory fragmentation, which in turn may lead to higher costs for
us and new financial stability risks.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
Our environment
However, we believe
the adaptations made to our business model and our proactive management of
regulatory change put us in a strong position to absorb upcoming changes to the
regulatory environment.
® Refer to the “Regulatory
and legal developments” section
of this report for more information
Wealth creation
In 2018, global wealth overall grew
marginally, given a steep decline in equity market performance in the fourth
quarter. This trend was partially reversed in 2019, as equity markets rallied. Today,
half of global wealth is concentrated in the Americas, followed by Asia Pacific
(with approximately 30%) and the remainder in Europe, the Middle East and
Africa.1 By segment,2 approximately half of global wealth
is with high net worth individuals, ultra high net worth individuals hold
approximately 30% of global wealth, and the remaining approximately 20% is within
the affluent segment. Over the next four years, global wealth is expected to
grow by 5–10% annually.1 Regionally, wealth creation will likely be
driven by Asia Pacific and North America. The share of the Americas is expected
to remain stable over the next four years at approximately 50% of global wealth,
while the share of Europe, the Middle East and Africa is expected to further
reduce as Asia Pacific grows. In particular, China’s share of global wealth is
expected to grow to around 15% by 2023.
Wealth transfer
Demographic and socioeconomic
developments continue to generate shifts in wealth. By 2030 for example, USD 15.4
trillion of global wealth is expected to be transferred by individuals with a
net worth of USD 5 million or more, according to a 2019 report by Wealth-X.3
In addition, women now control more wealth than ever before: UBS’s 2019 report
titled “The billionaire effect – Billionaires insights 2019” found that the
number of female billionaires had grown by 46% in five years, outpacing the
growth of male billionaires. We are responding to the evolving wealth landscape
with a framework that addresses all aspects of our clients’ financial lives,
called UBS
Wealth Way. UBS Wealth Way
begins with discovery questions and a conversation with clients about what is
most important to them. We help clients organize their financial life along
three key strategies: Liquidity to help provide
cash flow for short-term expenses; Longevity for long-term needs; and Legacy for needs that go beyond their own and help improve the lives of
others, a key part of wealth transfer planning.
Shift into passive strategies
We note a continuing
trend of separation between low-cost, passive strategies and high-alpha active
and alternative strategies. Passive management is beneficial in an environment
with rising stock markets, such as the equity bull markets of the last decade.
At the same time, central banks’ monetary policies have kept interest rates at
historically low levels, which has had an effect on bond yields and other asset
classes. Investors searching for longer-term higher alpha than passive strategies
can provide have been diversifying their portfolios into real assets and
alternatives and we expect this trend to continue. We believe the breadth of
UBS Asset Management’s investment expertise allows us to meet client demands
across asset classes and strategies.
Retirement funding
Over recent years, the pension
industry has faced two key challenges: fundamental demographic shifts, such as
aging populations, and lower expected returns due to all-time low interest
rates.
Beyond structural answers to these
challenges, such as the progressive shift from defined benefit to defined
contribution pensions, we believe pension funds are reassessing their asset
allocation approach. Indeed, many pension funds are now allocating a higher
share of their portfolios to alternative investments, such as private equity,
hedge funds, real estate and infrastructure, in a search for higher-yielding
exposures.
We see this development as positive for UBS,
as these funds will likely need further support to define their investment strategy and target portfolio
allocation. In addition, our private banking and wealth management clients are
expected to need further financial and retirement planning advice, which we are
able to provide holistically through our wealth planning services.
1 Based on BCG Global
Wealth Report 2019.
2 The BCG Global Wealth
Report 2019 defines wealth segmentation as follows: wealth of greater than
USD 20 million to be classified as ultra high net worth individuals;
USD 1–20 million for high net worth individuals; USD 0.25–1 million
for affluent individuals.
3 A Generational Shift:
Family Wealth Transfer Report, issued by Wealth-X in 2019.
How we create value for our stakeholders
Stakeholder group
|
Stakeholder needs:
what do our stakeholders
expect from us?
|
Value proposition:
how we create value for
our stakeholders
|
Key topics discussed:
what was important to
our stakeholders in 2019
|
Stakeholder engagement:
how did we engage with
our stakeholders?
|
Clients
|
Advice on a broad range of products
and services from trusted experts
The option of personal interaction
with our advisors in combination with digital service anywhere, anytime
(convenient digital banking)
Top quality solutions and the highest
standards in terms of asset safety, data and information security, confidentiality
and privacy
A combination of global reach and local
service resulting in positive investment outcomes
Competitively priced products and
services
|
Delivering tailored advice and
customized solutions, using our intellectual capital and digital capabilities
Building long-term personalized
relationships with our clients
Developing new products and services
in response to clients’ evolving needs in the digital age
Providing access to the world’s
capital markets and bespoke financing
Meeting increasing demand from clients
for sustainable investments
|
Investment performance in light of
current interest rate situation
Holistic goals-based financial
planning
Sustainable finance and investing
possibilities
Data privacy and security
Offerings for small enterprises in
Personal & Corporate Banking
|
Individualized client meetings
Requests for regular client feedback,
feedback monitoring and complaints handling
Specialized client events and
conferences including information on key developments and opportunities
Client satisfaction surveys
|
Investors
|
Disciplined execution of our strategy
leading to attractive capital returns through dividends and share repurchases
Comprehensive and clear disclosures on
quantitative and qualitative data necessary to make an informed investment
decision
Recognize and proactively address
strategic opportunities and challenges
|
Executing our strategy with discipline
and agility as the external environment evolves, while aiming to deliver cost-
and capital-efficient growth
Providing transparent, timely and
reliable public disclosures
|
Structural growth and return potential
in our businesses
Cost efficiency and ability to
generate positive operating leverage
Ability to protect or even grow
revenues in a low-for-longer interest rate environment
|
Financial reports, investor and
analyst conference calls, and/or webcasts, as well as media updates on our
performance or other disclosures
General shareholder meetings
Investor and analyst meetings
|
Employees
|
A world-class employer providing an
engaging and supportive workplace culture
Skill and career development
opportunities and rewards for performance
An environment that provides a sense
of belonging and of adding value to clients and to society
|
Attracting and developing great talent
Fostering a workplace culture that
supports and engages our employees, enabling them to develop their careers
and unlock their full potential
|
The three keys to a strong corporate
culture
Our approach to hiring great people
and supporting their growth
The importance of diversity and
inclusion
|
Regular employee surveys
Group Franchise Awards program
Regular “Ask the CEO” events, along
with senior leadership, regional and functional employee sessions
|
Society
|
Facilitation of economic development
that is sustainable for the planet and humanity
Maximization of our positive effect
and minimization of any negative effects on society and the environment
Proactive management of the
environmental and societal impacts of our business
|
Promoting significant and lasting improvements
in the well-being of communities in which we operate
Taking an active role in the
transition of our economy toward environmentally and socially sustainable
solutions
|
Sustainable finance
Our climate strategy
Our client and corporate philanthropy
efforts
|
Dialogs with regulators and
governments
Partnerships with social institutions
Community investments
Interaction with NGOs
Participation in forums and round
tables, as well as industry-, sector- and topic-specific debates
|
Our strategy, business
model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Clients
Our clients are the heart of our business. We are
committed to building and sustaining long-term relationships based on mutual
respect, trust and integrity. Understanding our clients’ needs and expectations enables us to best serve their interests and to create
value for them.
Our clients and what matters most to
them
There is no archetypal UBS client.
Our clients have varying needs, but each of them expects outstanding advice and
service, a wide range of choices, and an excellent client experience.
Global Wealth Management is focused on serving the unique
and sophisticated needs of high net worth and ultra high net worth individuals,
families, and family offices around the world, as well as affluent clients in
selected markets. We provide these clients with access to outstanding advice,
service, and investment opportunities from around the globe, delivered by
experts they can trust. Using a holistic, goals-based approach to
financial planning, we deliver a personalized wealth management experience and
work side-by-side with clients to help them realize their ambitions.
Our client-facing
advisors and the global teams that support them are focused on developing
long-term client relationships, which often span generations. Global Wealth
Management clients look to us for our expertise in helping them to plan for,
protect and grow their wealth, as well as helping them make some of the most
important decisions in their lives. From significant liquidity events to
professional milestones and personal turning points, we aim to give our clients
the confidence to move forward and achieve their goals. Through extensive
research into our clients’ preferences and goals, as well as broader analysis
of investor sentiment globally, we are constantly evolving our offerings to
meet the shifting priorities of today’s wealthy clients. This includes
investing in digital capabilities and developing products that help clients
fund their lifestyles and manage their cash flow, as well as offering guidance
on how clients can create a lasting and positive impact for their communities
and the causes about which they care the most. We have been recognized as the
leading global wealth manager for clients interested in sustainable investing,1
with a commitment to developing solutions that allow clients to align their
financial goals and their personal values.
® Refer to “Our focus on ESG” in this section for examples of how
sustainable finance solutions are used across our business divisions and for
the benefit of our clients
Personal & Corporate Banking serves a total of
approximately 2.6 million individuals and 128,000 firms. We provide services to
companies ranging from start-ups to large multi-nationals, including
specialized entities, such as pension funds and insurers, real estate
companies, commodity traders, and
banks. Personal & Corporate Banking clients look for financial advice based
on their needs at each stage of their individual or corporate journey. We aim
to deliver outstanding advice to them via our client advisors and also through digital
banking. Our clients demand convenience, 24/7 availability, security and value
for money. We provide clients with access to a
broad range of services and products offered in all relevant areas: basic
banking, investing, financing (including mortgages), retirement planning, cash
management, trade and export finance, global custody, and company succession,
among others.
In Asset Management, we deliver investment products and services
directly to approximately 3,000 clients around the world – including sovereign
institutions, central banks, supranational corporations, pension funds,
insurers and charities – as well as to Global Wealth Management and its
clients, wholesale intermediaries and financial institutions. Our clients seek global insights and a
holistic approach to tailoring solutions. By building long-term, personalized
relationships with our clients and partners, we aim to achieve a deep
understanding of their needs and to earn their trust. We draw on the breadth and depth of our global investment capabilities –
across traditional and alternative, active and passive categories – and provide
seamless access to world-class platform services to deliver the solutions they
need. We integrate sustainability into our financial analysis enabling us to help
clients meet their sustainability objectives and their fiduciary duties.
The Investment Bank provides corporate,
institutional and wealth management clients with expert advice, financial
solutions, execution, and access to the world’s capital markets. Our business model is specifically built around our clients and
their needs. Corporate clients can access advisory services, debt and equity
capital market solutions, and bespoke financing through our newly reshaped
Global Banking business. Meanwhile, our Global Markets business is focused on
helping institutional clients engage with local markets around the world,
offering equities and equity-linked products, foreign exchange, rates and
credit.
® Refer to “Investment Bank” in the “Our businesses” section of this
report for more information about the structural
changes in the Investment Bank
Our
advisory and content offering is underpinned by the research we provide. The
differentiated nature of this research, combined with UBS Evidence Lab
Innovations, which offers access to
insight-ready data sets for thousands of companies, aims to give clients an
informational edge when it comes to understanding markets. As a new offering
for 2019, we have established the UBS Research Academy, where our fundamental analytics team provides training for
institutional investors on all aspects of fundamental investing, leveraging the
best of the UBS Research and UBS Evidence Lab
Innovations platforms.
1 Euromoney Private
Banking and Wealth Management Survey 2019: Global Results.
Our clients place the highest priority on the confidentiality and
security of their data. The protection of our clients’ data is of the utmost
importance to us and we have comprehensive measures in place designed to ensure
that data confidentiality and integrity are maintained. We are investing in our
IT platform to preserve and improve our IT security standards, while enabling
our clients to have secure access to their data via our digital channels. The volume, level of sophistication and impact of cyberattacks constantly
increase, and we aim to maintain a robust and agile cybersecurity and
information security program to manage cyber risk.
Enhancing the client experience through
innovation and digitalization
We strive to streamline and simplify interactions
with our clients through front-to-back digitalization and innovations.
In Global Wealth Management, we develop and
deploy digital tools that preserve and enhance the value of human relationships.
Clients expect the convenience and speed that technology offers but,
simultaneously, consider personal communication with our advisors to be more
important than ever. Modern technology that our advisors use enables them to
spend more time with clients. And our clients appreciate digital tools that
improve their experience, such as easy ways to view their portfolios, access to
research that is tailored to their needs, and multiple ways to communicate with
their advisors. In 2019, we introduced a number of new tools to help deliver on
those expectations. For example, our Asset Wizard platform provides ultra high net worth
clients in the US with consolidated and sophisticated performance and risk
analytics for their assets held at UBS and across multiple banks, portfolios,
managers, and locations. Also, in Asia, we launched the UBS Advisor
Messaging for WhatsApp, allowing for real-time
conversations between clients and advisors, to create a better client
experience. And we continue to make progress by executing our multi-year
strategy to serve clients globally from two platforms: the Wealth Management
Americas Platform in the US and the Wealth Management
Platform outside the US. Our core investment solutions consist of: UBS Manage, a discretionary mandate solution where we use our expertise to
invest clients’ assets according to a predefined investment strategy; UBS Advice, which adds portfolio monitoring and investment recommendations
based on an agreed investment strategy to self-directed accounts; and UBS Transact, a self-directed account providing clients access to UBS execution capabilities
and the UBS
House View. All our solutions draw on our broad range of investment instruments
across stocks, bonds, currencies, structured products, investment funds and
alternative investments.
Personal & Corporate Banking launched
several initiatives in 2019. Effective 1 November 2019, we have established a
new business area, Digital Platforms & Marketplaces, which reflects our commitment to engage in new digital business
models. In addition to the mortgage platform UBS Atrium, which we launched in 2017 and is directed at corporate and
institutional clients, UBS is set to introduce a mortgage platform for private
clients in the first half of 2020. We launched new tools for our client
advisors aimed at improving the in-branch advisory experience for clients, so
that we are able to suggest the right products that match the clients‘ needs. Thanks
to our new mortgage workflow, we have been able to reduce contracting time
substantially, from 10–15 days for extensions to 24 hours. We also further
simplified our digital banking platform (for both mobile and desktop) and added
new services, in addition to expanding the number of possible payment transaction
currencies to more than 120. Our clients can now pay in stores directly with
their smartphones and a wide array of wearables via Mobile Pay
and Swatch Pay. Furthermore, we
have introduced the ability to pay parking fees via Twint,
which has more than 1.5 million users in Switzerland. As of October 2019, our clients can access we.trade, a blockchain-based trade finance platform, which was the first
such platform to be launched by a Swiss bank. Recognizing changing client needs
and growing demand from start-up companies for a broader offering, we have
launched UBS
Start Business, which includes digital
accounting, mentoring for business planning, and many other services in
addition to the banking services UBS offers. The attractive offering aims to
assist young entrepreneurs in every stage of their business’s journey. Similarly, we bundle our digital offering
for small companies in UBS Digital Business,
which provides the convenience and leading digital solutions that small
companies look for. We have also introduced our vendor leasing solution, an
online tool that allows vendors to provide leasing proposals directly to their
clients (based on online credit decisions) and to generate contracts. For
corporate clients, we have made available the new UBS Payment
Tracking service (SWIFT global payments
innovation).
In Asset Management, we are investing in new
tools and technologies, as well as our alternative data capabilities, to support our teams’ investment decision-making processes and
enhance client service. In addition, our operational excellence programs are
focused on building a scalable and globally integrated operating platform to
better enable our teams to deliver the full breadth of our capabilities to
clients around the world.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
The Investment Bank strives to be the digital investment bank of the
future, with innovation-led businesses that drive efficiencies and solutions.
We set up the UBS Investment
Bank Innovation Lab to help connect business
teams in order to leverage best practice, build and test proofs of concept
safely and quickly, and inspire a culture of innovation. We see increasing
interest from clients in financial and alternative data sets that they can incorporate
into their models. In response, we set up UBS Data Solutions to meet those needs through a centralized robust data processing
and distribution platform.
We strive to
develop new products and solutions that are consistent with our
capital-efficient business model. These are typically related to new
technologies or changing market standards. Examples include FX spot & STIR
tree E-pricing, which provides client-tailored
pricing streams and hedging optimization, and Technology Enabled
Sales, which enables faster delivery and distribution of tailored content matched
to our clients’ interests. During 2019, we also launched the client portal of UBS Evidence Lab Innovations as part of the firm’s strategy to expand our value proposition in
the alternative data space, which relates to innovative ways to capture data critical
for investment decisions. We also set up UBS Neo, our
multi-channel platform, and the One Client service model, which aims to drive superior client outcomes via
collaboration, technology and data-driven client intelligence.
Engaging
with our clients
Communication with
our clients enables us to understand their needs and what matters most to them.
We use a variety of channels to
engage with clients, including regular client relationship / service meetings
where we monitor feedback and satisfaction, as well as various corporate
roadshows and dedicated events. We also engage with our clients while
supporting cultural and sports events across Switzerland.
We conduct client events on a regular basis and
on a wide array of topics. For example, in Personal
& Corporate Banking, we
have financing and retirement planning events, and a dedicated event for the CFO
community. In the Investment Bank, we host around 350 conferences and
educational seminars globally throughout the year, covering a broad range of
macro, sector, regional and regulatory topics. More than 50,000 clients attended
such events in 2019, providing insight and access to our own opinion leaders,
policy makers and leading industry experts. In Global Wealth Management, we
engage with clients in a range of ways, from personalized private briefings
with subject matter experts, to segment-specific events, to large-scale
gatherings such as UBS Wealth Insights, our
flagship Pan-Asian investment forum series, which attracts more than 3,000
clients every year. In Asset
Management, a consistent program of engagement takes place throughout the year.
Thematic events, such as the UBS Reserve Management Seminar and the Sovereign Investment Circle, bring together institutional investors to debate relevant topics
and share best practices. Our experts also produce insightful thought
leadership on markets and assets that is regularly shared with clients, as well
as frequently meeting investors to answer questions, clarify the investment strategy
or discuss issues that can affect markets.
How we
measure client satisfaction
We utilize different measures to regularly
assess our achievements and the satisfaction of our clients.
Global
Wealth Management is increasingly leveraging technology and analytics software
to collect client feedback. In 2019, we began introducing a digital feedback
tool to supplement more traditional survey methods. The tool allows Global
Wealth Management to survey clients about their satisfaction with their advisors
and UBS, as well as to identify additional financial needs. Advisors are
provided with real-time access to client feedback, enabling them to address
concerns and to follow up on new topics of interest. The tool was piloted in
selected markets in 2019 and is expected to be rolled out more broadly throughout
2020.
We conduct an annual
client survey in Personal & Corporate Banking. We
have been conducting client surveys in Switzerland since 2011, consistently
covering all private and corporate client segments annually since 2015. Clients
assess their satisfaction with regard to various topics (e.g., UBS overall,
branches, client advisors, products, services) and indicate further product or
advisory needs. Survey responses are distributed to client advisors, who subsequently
follow up with each respondent individually. In 2019, we introduced a new
machine learning model which enables us to identify the importance of internal
factors (e.g., advisors, products, prices) and external factors (e.g., media
impact, market development) with regard to overall satisfaction scores.
In Asset Management, we conduct regular
surveys, inviting institutional and wholesale clients across all our markets to
participate. They are asked about their satisfaction with client service,
products and solutions, as well as other factors relevant to their investments.
The results are analyzed to identify focus areas to improve client satisfaction.
For the Investment Bank, client satisfaction
is closely monitored by individual product coverage points. Relationship managers
then collate and review feedback holistically, conducting regular internal
review sessions to address specific areas of feedback. The Investment Bank also
closely monitors external surveys, such as the Global Institutional Investor
Survey, which provides feedback across a range of investment banking services.
We
thoroughly evaluate the feedback we receive, including complaints from clients,
and take measures to address key themes identified. In 2019, clients
specifically raised sustainable finance as a key priority, which provided confirmation
that we are aligned with our clients’ preferences in expanding our sustainable
finance offering.
Clients
(additional information)
Quality feedback management system
We have a Quality Feedback system within
Global Wealth Management (GWM) and Personal & Corporate Banking (P&C),
which provides a comprehensive and systematic platform to receive and process
feedback and suggestions from both clients and employees. Feedback is received
in a wide range of formats, including written, electronic, verbal (e.g.,
comments made to employees in our branches), through social media and via the
Swiss Banking Ombudsman.
Client feedback, including complaints and
suggestions, is of crucial importance, as it supports the development and
introduction of new products and services as well as the adaptation of our
offering in a client-oriented manner. By addressing client feedback, we strive
to strengthen client relationships, improve client satisfaction and make a
tangible improvement to client service and overall banking services. Having a
wide variety of quality feedback from our clients enables us to systematically
evaluate and review our actions. By sharing their views, clients contribute to
quality improvements at all levels.
We strive to respond directly to each individual
who provides feedback. On significant topics and key developments, we also
provide a collective response in our external reporting.
In 2019, key topics and enhancements included some targeted products and
services that centered mostly around digital banking functionalities. These
stemmed in particular from requests and improvement suggestions for existing
and new features and queries regarding access and security.
Feedback from employees (i.e., quality tips and
ideas) that is based on their knowledge and experience in improving and
updating products, processes and services helps to foster creativity and
innovation.
Suitability
Clients expect to be provided with
products and services that are suitable for them. This is particularly the case
in the divisions where we serve personal clients as opposed to institutions.
In nearly all of the countries where we do
business, this expectation has been turned into a legal or regulatory
requirement for banks acting as financial advisors. Most jurisdictions also
require the systematic assessment and documentation of the suitability of
products (including third-party products) and services, including compliance
with applicable eligibility criteria and sales restrictions. These standards
are reflected in local policies and procedures as well as in the respective
local control framework. The European Union’s Markets in Financial Instruments
Directive (MiFID) and the Swiss Financial Services Act (FinSA) are examples of
our reflection and implementation of specific standards required by regulators
as part of a local control framework. Other locations apply similar standards
as required by the relevant local regulators.
To meet both client expectations and
regulatory requirements, we have established comprehensive rules for assessing
the suitability of products and services. These rules are designed to align the
assets in a customer’s portfolio with their defined risk profile, and the
customer is advised in line with his or her needs (i.e., client suitability).
In addition, the rules require product documentation to contain appropriate and
easily understandable information on its features, target audience and the
scenarios in which the product can be used, as well as a balanced
representation of the associated opportunities and risks (i.e., product
suitability).
Suitability framework
In the GWM and P&C divisions, a
comprehensive suitability policy framework is in place. This sets out the
structured advisory process governing the way we advise and implement agreed
solutions and also document the steps taken during this process. In addition to
other purposes, it comprises requirements for monitoring and controlling
activities that aim to capture tail risks. A revised version of this policy
entered into force on
1 January 2018. The Investment Bank (IB) and Asset Management (AM) take their
guidance from UBS's suitability principles and have implemented processes to
ensure appropriate oversight of suitability requirements where applicable.
In this framework, we distinguish between
client and product suitability. Client suitability refers to the alignment
between the investor profile of the client and the products and services that
are recommended or made available to the client (or already held in his or her
portfolio), including risk information and disclosure. Product suitability
refers to a consistent set of standards applied by a product management unit to
define for which specific investors a product may be suitable.
Client suitability
GWM and P&C have established a
structured advisory process with four distinct steps – understand, propose,
agree and implement, and review. This process is supported by a number of forms
and tools that are available to client advisors. In the first step
(understand), these forms and tools support the initial identification of a
client’s investor profile, including but not limited to investment objectives
and risk ability. In the second step (propose), they serve to help client
advisors identify an appropriate investment strategy for a specific client
portfolio. Furthermore, a number of tools and platforms have been established
to help client advisors match a client’s investment strategies with appropriate
investment proposals and to support the review step. The IB and AM have
established cross-functional governance committees to ensure oversight for
client suitability where specific criteria or triggers are met.
Product suitability
Advisory
platforms and tools divide products according to their risk characteristics and
in doing so help clients and client advisors to properly assess the impact of
investment products and services on a client’s portfolio. Additional processes
are in place to make product documentation available to both client advisors
and clients. Finally, specific legal documentation is required for certain
products with specific risks (e.g., hedge funds).
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Divisional approach to suitability
Primary ownership of suitability risk
and the responsibility for addressing it is owned by the business. The
suitability policies applicable to GWM, P&C, IB and AM make this clear.
Accordingly, we have pursued a divisional approach to ensure compliance with
rapidly changing regulatory regimes, while also addressing particular
suitability obligations and remediation of identified gaps relating to the
divisions.
Monitoring and controls
Monitoring and controls for
suitability follow a three-tiered approach. The first-level controls are
conducted by the business risk management team under its Origination Control
Framework, a set of controls designed to prevent and detect operational risks
that arise within the front unit and to ensure that residual risk corresponds
to risk appetite. The second-level controls are performed by Compliance &
Operational Risk Control as Global Minimum Control Standards, which are part of
the overall Operational Risk Framework. These controls focus on both a
check-the-checker approach, and thematic, deep dive reviews. The third-level
controls are exercised by Group Internal Audit, as part of its annual audit
plan.
After-sales
communications
The UBS client experience also
includes after-sales communication. Again, this communication is, supported by
a number of tools and platforms, including ready-to-use reporting and
presentation material.
Accessibility
We ensure
that our facilities and services are accessible to everyone regardless of
disability, capability or technology. We are continuously optimizing our
websites as well as our e-banking and mobile banking platforms to fit the
requirements for an AA rating for accessibility (i.e., WCAG 2.0). All cash
machines have access key buttons and PIN keypads that are equipped for the
visually impaired. Additionally, all ATMs are enabled with voice output through
clients’ headphones, covering all functions including cash deposits. Around 100
ATMs are positioned especially for people with restricted mobility. All 40 of
our free-standing cash machines correspond to recommendations made by the
Americans with Disabilities Act Accessibility Guidelines (ADAAG).
Our focus on ESG
Our firm is in a powerful position to
contribute toward achieving the 17 United Nations (UN) Sustainable Development
Goals (the SDGs) by integrating sustainability in our mainstream offerings,
through new and innovative financial products with a positive effect on the
environment and society, and by advising our clients on their philanthropic works.
Our goal is to be the financial provider of choice for clients who wish to
mobilize capital toward the achievement of the SDGs and the orderly transition
to a low-carbon economy. We are shaping the landscape of sustainable finance by
using thought leadership, innovation and partnerships to support clients in
their sustainability efforts.
Our
clients are increasingly interested in sustainable finance, including
sustainable investing (SI), which is especially attractive if it can reduce
risk or improve returns. More than 80% of wealthy individuals are interested in
sustainable investing and 45% already hold sustainable investments.1
With regard to asset owners across the globe, 78% are integrating
environmental, social and governance (ESG) factors into their investment
process.2 Switzerland, for example, saw an 87% asset growth in
institutional sustainable investments in 2018 (compared with 2017),3
and the early indicators are that this growth continued throughout 2019.
Our key public commitments to sustainable
finance
In 2019, we became a
founding signatory of the UN Principles for Responsible Banking (the
Principles). The Principles constitute a comprehensive framework for the
integration of sustainability across banks. They define accountabilities and
require each bank to set, publish and work toward ambitious targets.
Before signing up to the Principles, UBS had
already been strongly committed both to maximizing positive effects through our
sustainable business activities and to minimizing negative impacts. While our
firm’s growing range of sustainable finance products and services supports the
former, our environmental and social risk framework helps us to better
understand and respond to potential risks to the environment and human rights.
Our Asset
Management business division is among the signatories of the PRI (the Principles
for Responsible Investment). The PRI organization supports the signatories in
incorporating ESG factors into their investment and ownership decisions. In
2019, UBS also became one of the inaugural members of the CEO Alliance on
Global Investors for Sustainable Development, which is committed to scaling up
and speeding up efforts to align business with the SDGs. The Alliance is aimed
at harnessing the insights of private sector leaders on ways to remove impediments
and
introduce solutions for scaling long-term investment for sustainable
development in line with the SDGs.
Since 2017, we have presented white papers to
the World Economic Forum (the WEF) putting forward recommendations for ways in
which private capital can achieve the SDGs, while also outlining our own
actions and pledges in that regard. For the WEF annual meeting in 2020, our
white paper focused on climate action and the ways in which investors can
mobilize private and institutional capital toward the orderly transition to a
low-carbon economy. In response, UBS has developed a Climate Aware framework.
We actively support the development of
industry standards. In 2019, we contributed to the writing of and signed the
International Finance Corporation’s Operating Principles for Impact Management.
These Impact Principles provide a standard for impact investing, in which
investors seek to generate positive impact for society alongside financial
returns. We also contributed to a report by the Sustainable Finance Working
Group of the Institute of International Finance on sustainable investment
terminology.
® Refer to the Sustainability Report 2019, available from 5 March 2020
under “Annual reporting” at www.ubs.com/investors, for our key documents,
frameworks and external commitments, and for our climate disclosure following
the recommendations of the Task Force on Climate-related Financial Disclosures
What is our governance on ESG?
Our governance framework on
sustainability supports the creation of long-term value. Our firm’s sustainability
activities, including sustainable finance, are overseen at the highest level of
our firm and are founded in our Code of Conduct and Ethics.
® Refer to the Sustainability Report 2019, available from 5 March 2020
under “Annual reporting” at www.ubs.com/investors,
for the sustainability governance chart
We regularly review whether our governance
framework continues to reflect our ambitions with regard to sustainability. In
2019, we therefore decided to further sharpen our focus on sustainable finance
and we are now establishing a Sustainable Finance Steering Committee. It will
be comprised of senior business leaders engaged in our firm’s sustainable
finance efforts, who will work together to ensure that we continue to drive
innovation and develop expertise and thought leadership regarding sustainable
finance. The Chair of the Sustainable Finance Steering Committee is a member of
the UBS in society Steering
Committee.
1 UBS Investor Watch on the Year Ahead, November 2019.
2 UBS Asset Management and Responsible Investor magazine, ESG: Do You
or Don’t You?, June 2019.
3 Swiss Sustainable
Investment Market Study 2019, June 2019.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
How do we
define sustainable finance?
Sustainable finance refers to any form of financial service that integrates ESG criteria
into business or investment decisions. We provide sustainable finance solutions
across all our business divisions and to all our client groups (as shown in the
“Key achievements in 2019” chart on the next page), with a particular focus on
sustainable investing.
Sustainable investing is an approach that seeks to incorporate ESG considerations into
investment decisions. SI strategies seek to achieve a positive environmental or
social impact and/or align investments with an investor’s values regarding ESG
topics, while aiming to improve portfolio risk and return characteristics. In
the main, we identify three approaches of sustainable investing: exclusion
(individual companies or entire industries are excluded from portfolios if
their areas of activity conflict with an investor’s values); ESG integration
(which combines ESG factors with traditional financial considerations); and
impact investing (which is designed specifically to help generate a positive
social or environmental impact alongside financial returns).
We were among the early movers in developing
terminology to describe our sustainable investing activities and to
consistently report on them. We are, however, conscious of the need to simplify
and standardize the terminology for sustainable finance, which will help to
develop and expand that market. We are therefore actively involved in the
relevant discussions and are committed to reflecting pertinent changes to
terminology in our reporting.
Core sustainable investments1
|
|
|
|
|
|
|
|
|
|
|
|
|
For the year ended
|
|
% change from
|
USD billion, except
where indicated
|
|
GRI2
|
|
31.12.19
|
31.12.18
|
31.12.17
|
|
31.12.18
|
Core SI products and
mandates
|
|
|
|
|
|
|
|
|
Integration – sustainability focus3
|
|
FS11
|
|
46.4
|
20.0
|
12.8
|
|
132.4
|
Integration – ESG integration4
|
|
FS11
|
|
372.3
|
224.5
|
63.2
|
|
65.9
|
Impact investing5
|
|
FS11
|
|
9.1
|
4.7
|
2.8
|
|
92.1
|
Exclusions6
|
|
FS11
|
|
52.2
|
50.3
|
93.0
|
|
3.7
|
Third-party7
|
|
FS11
|
|
8.5
|
13.4
|
9.8
|
|
(37.0)
|
Total core sustainable
investments
|
|
FS11
|
|
488.5
|
312.9
|
181.7
|
|
56.1
|
UBS total invested assets
|
|
|
|
3,607.0
|
3,101.0
|
3,262.0
|
|
16.3
|
Core SI proportion of total invested assets (%)
|
|
FS11
|
|
13.5
|
10.1
|
5.6
|
|
|
1 All figures are based on information available in January
2020. 2 FS stands for the performance indicators defined in the Financial
Services Sector Supplement of the Global Reporting Initiative reporting
framework. 3 Strategies where sustainability is an explicit part of the
investment guidelines, universe, selection, and/or investment process. 4
Strategies that integrate environmental, social, and governance (ESG) factors
into fundamental financial analysis to improve risk / return. 5 Strategies
where the intention is to generate measurable environmental and social impact
alongside financial return. 6 Strategies that exclude companies from
portfolios where they are not aligned to an investor’s values. Includes
customized screening services (single or multiple exclusion criteria). 7 SI
products from third-party providers applying a strict and diligent asset
selection process; the selection criteria have been reviewed for the end of
2019 reporting cycle, following a stricter approach from the provider of
sustainability ratings. Excludes third-party products that went through a
systematic GWM onboarding process, now counted under “Integration –
sustainability focus.”
|
What do we offer?
We support clients’ sustainability
efforts through thought leadership, innovation and partnerships, and we strive
to incorporate ESG factors into the products and services we provide. We
support corporate and institutional clients who want to generate positive
environmental and societal impact using our corporate advisory expertise or by
directing capital through our lending or investment capacity. We assist private
and institutional clients with their desire to invest in accordance with their own
social and environmental objectives, and we are proactive in discussing these
issues with them.
Through
our Philanthropy Services platform, we are partnering with clients to manage
their philanthropy and maximize their impact, by offering expert advice,
carefully selected programs from UBS Optimus Foundation, and innovative social
financing mechanisms, such as development impact bonds.
In 2019, we noted strong momentum in our
sustainable finance activities. A key indicator is the development of our core SI
assets, where we managed to more than double penetration, from 5.6% of total
invested assets in 2017 to 13.5% (USD 488 billion) in 2019 (2018: 10.1% or
USD 313 billion). Core sustainable investments are SI products that
involve a strict and diligent asset selection process through either exclusions
(of companies / sectors from portfolios where the companies / sectors are not
aligned to an investor’s values) or positive selections (such as best-in-class,
thematic or ESG integration and impact investing).
Norms-based screening assets, i.e., assets
that fall under the application of a UBS policy1 and do not
otherwise qualify as a core sustainable investment, amounted to USD 818
billion as of 31 December 2019 (up from USD 797 billion in 2018). Total
sustainable investments, including norms-based screening assets, accounted for
USD 1,306 billion (2018: USD 1,110 billion), or 36.2% (2018: 35.8%),
of our total invested assets.
1 The assets in
discretionary mandates, in UBS’s actively managed retail and institutional
funds, as well as in our firm’s proprietary trading book, are subject to our
firm’s policy on the prohibition of investment in and indirect financing of
companies involved in the development, production or purchase of anti-personnel
mines and cluster munitions.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Investors
We generate long-term value for our
investors by executing our strategy with discipline, striving for cost- and
capital-efficient growth, long-term sustainable value creation, and attractive shareholder
returns.
Investor base
Our investor base is well diversified.
A substantial proportion of our institutional shareholders are based in the US,
the UK and Switzerland.
® Refer to the “Corporate governance” section of this report for more
information about disclosed shareholdings
Cost- and
capital-efficient revenue growth
We aim to drive
higher and superior returns by growing and leveraging our unique, integrated
and complementary business portfolio and geographic footprint. Our Global
Wealth Management business is well positioned to take advantage of two secular
trends: wealth transfer and wealth creation, partly driven by continued
economic growth, particularly in Asia, where China is opening its financial
markets. Each of our businesses has initiatives to achieve revenue growth and
improve operating efficiency.
® Refer to “Industry trends” in the “Our environment” section of this
report for more information about wealth creation and wealth transfer
We aim to balance growth opportunities with
cost and capital efficiency in order to drive attractive risk-adjusted returns
and sustainable performance.
Our primary measurement of performance for
the Group is return on common equity tier 1 capital (CET1), as regulatory
capital is our binding constraint and drives our ability to return capital to
shareholders.
® Refer to the “Performance targets and measurement” section of this
report for more information
Shareholder returns
We aim to increase our ordinary
dividend per share by USD 0.01 each year, and to return excess capital
through share repurchases. We consider business conditions and any
idiosyncratic developments when determining excess capital available for share
repurchases.
Alignment of interests
We aim to align the interests of our
employees with those of our equity and debt investors. This is reflected in our
compensation philosophy and practices.
® Refer to “Our compensation philosophy” in the “Compensation” section
of this report for more information
Communications
Our Investor Relations function serves as the primary point of contact between
UBS and all shareholders. Our senior management and the Investor Relations team
regularly interact with the institutional investors community, financial
analysts and other market participants, such as credit rating agencies. Clear,
transparent and relevant disclosures, together with regular and direct
interactions with existing and prospective shareholders, form the basis for our
communications. The Investor Relations team also relays the views of and
feedback from institutional investors and other market participants on UBS to
our senior management.
Investor
Relations and Corporate Responsibility work together and interact with those
investors focusing on sustainability topics relevant to UBS and society at
large.
® Refer to “Corporate governance” and “Information policy” in the
“Corporate governance” section of this report for more information
® Refer to “Society” in this section for more information about our
sustainability efforts
Shareholders and investors (additional
information)
Engagement with environmental, social
and governance (ESG) rating and research agencies
We
actively engage in dialogue with analysts at rating and research agencies. The
assessment of specialized agencies helps to evaluate our sustainability
performance and activities, and provides a useful means for benchmarking.
In 2019, we
provided detailed information on our sustainability performance to a range of
agencies, either
in response to questionnaires or via meetings or calls (with ESG analysts). Our
Sustainability Report regularly serves as a key source of information for these agencies.
Employees
Our employees drive our success. Our
employees work in 50 countries, are citizens of 136 nations and speak more than
150 languages. Their skills, experience and commitment enable us to deliver
innovative solutions for our clients, foster sustainable business success,
protect our reputation and drive the firm forward. As an employer, we attract,
develop and retain a diverse range of talent and aim to ensure there is a
workplace culture that supports and engages our employees, enabling them to build
their careers and unlock their full potential.
The keys to a strong corporate culture
Our three keys to success remain the
foundation of our strategy and culture. Together, they define what we stand for
as a firm and as individuals, and they drive our business strategy. We set out
on our cultural transformation in 2011, defining and then embedding our Pillars, Principles
and Behaviors into our core people management
processes. We conduct regular employee surveys to obtain feedback and ensure
continuous improvement, discussing the findings and further actions with our
employees. In 2019, responses indicated that employee engagement, appreciation
for our talent management practices, and pride in working at UBS were all above
the norm for financial services organizations.
® Refer to the foldout pages of this report for more information about
our Pillars, Principles and Behaviors
Engaging and enabling employees, instilling a
strong risk culture and promoting sustainability were culture-building
priorities in 2019. In this respect, our Group Franchise Awards program provided foundational support. This Group-wide initiative
rewards employees for cross-divisional collaboration and operational
effectiveness improvements.
We are convinced that leadership drives
culture, and culture drives performance. Great leaders are the key to developing
our people, client relationships and results. For many years, our House View on
Leadership has outlined what effective
leadership is at UBS, as well as what employees can expect. To help leaders
better adapt to continuous change and digitalization, we updated our House View in 2019 and integrated its precepts into all of our core HR
processes, including recruitment, performance evaluations, training, succession
planning and promotions. Characteristics such as innovation, curiosity and
agility complement our long-standing emphasis on inclusivity, sustainable
profits, accountability, cross-firm partnership and putting clients first. It
is an evolution of how we view leadership that creates an extraordinary
experience for our clients and our people.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Hiring, developing and retaining talent
We are widely recognized as an
employer of choice and a great place to build a career. Key to our success is
our long-standing commitment to investing in our employees at every career
stage. It starts with recruitment, where our philosophy is to hire for
potential, considering the individual’s experience and competencies, learning
capabilities and agility, as well as digital and data savviness. We hired a total
of 10,080 external candidates in 2019. Our junior talent programs hired more
than 1,700 graduate and other trainees, interns and apprentices. We also continued
our insourcing and hiring activities in our Business Solutions Centers in
China, India, Poland, Switzerland and the US as part of our integrated
workforce strategy.
Our in-house UBS University further updated its curriculum in 2019
to emphasize future-skills development and personal growth for all employees,
with a new digital skills curriculum that builds knowledge about topics such as
blockchain, cloud computing, robotics and artificial intelligence. We also
launched a mobile learning app to enable employees to learn whenever and
wherever they want. We revamped our leadership development offering in 2019 to
ensure that our leaders have the skills they need to develop their businesses
and their people, and to lead effectively in the digital
transformation age. In 2019, our permanent employees completed more than 1,100,000
learning activities, including mandatory training on compliance, business and
other topics. This averaged to more than two training days per employee.
Along with line manager effectiveness, having
a wide range of learning and career development opportunities, as well as tools
to facilitate professional growth, are key drivers of employee engagement. In
this respect, our new Career Navigator tool, which was launched in June
2019, has been a game-changer. This online platform enables employees to
explore career paths and search for open roles that match their interests while
allowing our recruiters to find internal talent more easily. It also identifies
skill gaps with regard to new roles and interests and directly links to
learning opportunities to help fill these gaps.
We are committed to ensuring a workplace
where employees are fairly treated, with equal opportunities for all. We do not
tolerate harassment of any kind. Our global measures include employee and line
manager training, specialist expertise in handling concerns raised, and a
global employee hotline. A Harassment Guardian provides an independent view of
the firm’s setup, procedures and behaviors to prevent harassment and sexual
misconduct.
We pay for performance, and a strong
commitment to pay equity is embedded into our compensation policies. We conduct
regular internal, as well as independent external, reviews, with the aim of
ensuring that all employees are paid fairly, and we seek to address any
unexplained gaps.
® Refer to www.ubs.com/employerawards,
www.ubs.com/careers and the “Compensation” section of this report for
more information
Personnel by region
|
|
|
|
|
|
|
|
|
As of
|
|
% change from
|
Full-time equivalents
|
|
31.12.19
|
31.12.18
|
31.12.17
|
|
31.12.18
|
Americas
|
|
21,036
|
21,309
|
20,770
|
|
(1)
|
of which: USA
|
|
20,232
|
20,495
|
19,944
|
|
(1)
|
Asia Pacific
|
|
13,956
|
12,119
|
8,959
|
|
15
|
Europe, Middle East and Africa (excluding Switzerland)
|
|
12,918
|
12,620
|
11,097
|
|
2
|
of which: UK
|
|
5,704
|
5,782
|
5,274
|
|
(1)
|
of which: rest of Europe
(excluding Switzerland)
|
|
7,048
|
6,670
|
5,662
|
|
6
|
of which: Middle East and
Africa
|
|
166
|
168
|
161
|
|
(1)
|
Switzerland
|
|
20,691
|
20,840
|
20,427
|
|
(1)
|
Total1
|
|
68,601
|
66,888
|
61,253
|
|
3
|
1 The increase in workforce in 2019 and 2018 was mainly due to
insourcing initiatives and was more than offset by a decrease in external
staff.
|
The importance of diversity and inclusion
A widely diverse workforce that
reflects the experience of our global clients is important for our long-term
success. We therefore strive to shape a diverse and inclusive culture across
the firm to drive sustainable growth and innovation, deliver the best of UBS to
our clients, and build a better place to work for all employees.
Our broad view of diversity encompasses a
range of aspects, including gender, ethnicity, LGBTQ, disability, mental health
and inclusive leadership. We remain committed to narrowing our gender
representation gap, especially at the management level, through a global gender
diversity strategy and a wide range of supporting initiatives to hire, promote
and retain more women at all levels of the organization. We continue to make
progress toward our stated aspiration of increasing the representation of women
in management roles to one-third. In 2019, 25.2% of all employees in roles at
Director level and above were women, up from 24.7% in 2018.
Our UBS Career Comeback program, which was launched in 2016,
continues to help us increase our pipeline of female senior leaders.
Professionals looking to return to corporate jobs after a career break are
hired for permanent roles and supported with specialized onboarding, coaching
and mentoring. In 2019, Career Comeback expanded beyond its four established hubs
in the US, UK, Switzerland and India to become a global, year-round program. To
date, Career Comeback has helped 142 women and 8 men relaunch their
careers.
® Refer to www.ubs.com/diversity for additional information about our
priorities and commitments, and the Sustainability Report 2019, available from
5 March 2020 under “Annual reporting” at www.ubs.com/investors for our
management practices and detailed employee data, including gender- and
region-specific data
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Employees (additional information)
Engaging with our employees
Our employees are key to meeting our
clients' needs and our long-term business success. We therefore invest in our
employees by providing them with diverse learning opportunities, fostering
internal mobility and creating a rewarding work environment. Having regular
dialogue with employees helps ensure that we understand their needs.
Our senior leaders regularly update employees
on our business strategy, priorities and policies, as well as people management
topics such as goal setting, compensation, training, internal mobility, career
development, new technologies, and risk and compliance topics. We use a variety
of communication channels and events to ensure our employees are aligned with
our corporate culture and the firm’s
three keys – the Pillars, Principles and Behaviors. We promote collaboration
and efficiency efforts such as our Group Franchise Awards program, gender
representation initiatives like UBS Career Comeback, and we have an ongoing
focus on culture-building topics like inclusive leadership. We also support the
global philanthropic projects managed by the UBS Optimus Foundation. On a
regional and divisional basis, we celebrate and support involvement in our
community engagement and employee volunteering activities. We interact with employees
through a number of news and information channels such as our intranet, UBS
Connections (our internal social network), UBS TV and a number of other interactive
help and information sites.
Direct communication with employees also
takes place through individual and team meetings, emails, all-staff sessions
and the firm’s Quality Feedback system (see page 29). In 2019, employees in all
businesses and regions attended numerous town halls and small group meetings to
discuss relevant issues directly with senior management. For example, regular
“Ask the CEO” events allowed all employees globally to learn about (and ask
questions on) topics such as the firm’s strategy and direction. These events
are attended in person by local employees and broadcast live (and via replay)
on UBS TV. Additionally, an "Ask the GEB" event was held in New York
in December 2019.
We want our employees to be engaged and share
their views and have ample opportunities to influence the firm’s future. We
therefore regularly survey all our permanent employees to capture feedback on
how we are doing as a firm, and we use that feedback to improve as an
organization. As such, in 2019, all employees were asked to participate in a
global survey, and 83% did. We particularly wanted to know whether our firm’s
principles and behaviors are being lived up to, how effective our line managers
are and whether we are providing a positive and empowering work environment.
This year, 78% of participating employees indicated high levels of engagement,
79% agreed that their line manager(s) are effective, and 81% recognized our
positive work environment. All of these results are above the financial
services industry norm.
Employees were informed of the Group-wide
survey results, as well as divisional, regional and business area results, as
applicable. Each year's data is analyzed and leveraged in future
culture-building initiatives, as it is our ongoing ambition to have a highly
motivated workforce that models integrity, collaboration and challenge in its daily
work. We strive to be the clear employer of choice in the financial services
industry and maintain overall engagement ratings in the top quartile; both
ambitions have been achieved in 2019.
Our employee networks, which are sponsored by
business leaders, are foundational to strengthening our culture. They help
employees build cross-business relationships and support an open and inclusive
workplace. In 2019, we sponsored 43 employee networks globally, including ones focused
on topics around culture, gender, ethnicity, family, mental health,
Pride / LGBTQ, disability and veterans. Of particular note, our
disability-focused networks in the US, UK, Switzerland and Asia Pacific raise
awareness of visible and invisible disabilities in the workplace, as well as
our management’s active support for hiring, developing and retaining employees
with disabilities across the firm. Our women's networks in locations around the
globe promote personal and professional development through networking,
mentoring and education.
Employee representation
As a responsible employer, we
maintain an open discourse with our formal employee representation groups. We
have two pan-European forums – the UBS Employee Forum (which is our European
Works Council) and the UBS Europe SE Works Council. These groups represent 17 countries
and consider issues that may affect our performance, operations or prospects.
Local and regional work councils, like the Employee Representation Committee in
Switzerland, discuss topics such as business transfers, pensions, workplace
conditions, health and safety, and redundancies. Collectively, these groups
represent approximately 49% of our global workforce.
® Find out more about topics of interest to employees and potential
employees at www.ubs.com/employees or www.ubs.com/careers
Managing our global workforce
Our
employees’ skills, experience and commitment are key to delivering on our
business strategy. Our human resources strategy therefore seeks to attract,
develop and retain employees who have the diverse backgrounds and capabilities
to advise our clients, develop new products, manage risk and adapt to evolving
business trends and regulations. We invest in our employees, for example,
through a comprehensive learning platform and career development programs, and
we promote initiatives to build engagement and a cohesive, collaborative
culture.
Further increasing the diversity of our
workforce and ensuring an inclusive workplace is vital to our business success.
In our experience, diverse teams better understand and relate to our equally
diverse clients’ needs. Likewise, diversity of thought, opinion and experience
helps us make better decisions and drives innovation, while an inclusive work
environment attracts high-quality people and makes the firm a better place to
work. Our human resources policies and procedures underscore our commitment to
a diverse and inclusive workplace, with equal opportunities for all employees
and a strong commitment to equal pay that is embedded in all our management
processes.
We offer competitive benefits to all employees, including
insurance, pension, retirement and personal leave, aligned with local market
practices and focused on employee wellbeing. These benefits often go beyond
legal requirements or market practice, and we regularly review them to ensure
they meet our employees’ needs. When it comes to mental wellbeing we enable
employees to build their careers while managing personal commitments. A wide
range of resources are available to help employees navigate work-life issues
and personal challenges. We support flexible working arrangements including
telecommuting, working from home, part-time roles, job sharing and partial
retirement.
Our Employee Assistance Programs offer support
and counseling for challenges such as illness, conflict, bereavement,
psychological health and elderly care. In the UK, for instance, we promoted
World Mental Health Day in October with the launch of Mental Health Champions, made
up of UBS volunteers accredited with specialist training by Mental Health First
Aid England. While these volunteers are not therapists or counselors, they are
trained to listen, reassure and respond in addition to being a point of contact
for any UBS employee who may be experiencing a mental health issue or any type
of emotional distress. We have also added a variety of new learning
opportunities focused on health and wellbeing to our UBS University offering.
At UBS, all new parents can take paid time off
after the birth or adoption of a child. Our parental leave policies meet the
legal standards in all locations and exceed them in most. For example, in the
US, our gender-neutral Child Care Leave policy enables the primary caregiver to
take up to 20 weeks of paid leave during the period immediately following the
birth, adoption or foster care placement of the employee's (or partner’s)
child. In Switzerland, new fathers can take up to 10 days of paid paternity
leave within the first year. In addition, they can either take up to 30
calendar days of unpaid leave or reduce their level of employment to 80% for up
to six months.
In the US, just as we help our clients, our goal
is to also help our employees make informed decisions so they can feel
confident about their financial situation. That is why we have partnered with
UBS Financial Wellness and from January 2020, employees will have access to
educational content, digital tools and licensed Financial Wellness Advisors who
can assist and guide them on their unique financial journey. UBS Financial
Wellness strives to deliver education on a myriad of topics including
budgeting, savings, debt management, insurance protection, big purchases, life
changes, retirement planning, investing basics, estate planning and more.
We offer redeployment and outplacement
initiatives to help employees find new roles, and we have clear policies and processes
for handling redundancies. As an example, when job losses occur in the Swiss
labor market due to restructuring, we offer affected employees access to our
COACH process. This process supports employees in finding a new position
internally or externally.
Our Code of Conduct and Ethics is the basis for
all human resource policies, guidelines and procedures. It includes a
commitment to the health and safety of employees and external staff.
® Refer to the Health and Safety statement in the Appendix 1 for more
information
® Refer to the UBS in society constitutional document in the Appendix
1 for more information
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Our 2019 workforce at a glance1
We report
in depth on our global workforce to give stakeholders a clear picture of our
management philosophy and priorities. Our reporting covers key statistics
relevant to full- and part-time employees, as well as relevant data about
external staff. Both groups rely on us to provide a safe, respectful and
collaborative workplace.
As of 31 December 2019, we had 68,601
employees (full-time equivalents / FTEs), 1,713 FTEs more than in 2018. This
included Swiss apprentices on three-year limited contracts who received
benefits equivalent to permanent employees.
A total of 16,408 external staff for core
business services were active at the end of 2019, primarily in technology and
operations roles. This included 2,215 FTEs employed through third parties on
short-term contracts to fill positions on an interim basis. Additionally, a
total of 11,647 external staff for non-core business services were active at
the end of 2019, primarily in premises-related roles.
Also of note:
–
Our workforce in 2019 was 39% female and 61%
male; 25% of senior managers who reported to GEB members were female.
–
Switzerland was our largest cross-border
importer of employees from other countries; China was our largest cross-border
exporter of employees.
–
1,125 employees changed business divisions in
2019; 499 changed regions.
–
Employees are asked to record their absences due
to illness or accident in our self-service human resources tool. In 2019, our
global workforce recorded an absentee rate of 1.7% of total scheduled days.
Our workforce by the numbers
To give the most accurate view of our
global workforce, human resources reporting considers a person (working full
time or part time) as one headcount. This accounts for the total UBS employee
number of 69,966 as of 31 December 2019 (versus 68,338 as of 31 December 2018).
These numbers exclude staff from UBS Card Center, Hotel Seepark Thun and
Wolfsberg. The following tables are all reported on this basis, unless
otherwise specified. The percentages in the tables may not total 100 due to
rounding.
1 All data was
calculated on/as of 31 December 2019, unless otherwise noted.
UBS employees: full-time and part-time
employees
Employees: full time / part
time
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Male
|
|
|
|
|
|
Full Time
|
|
41,324
|
96%
|
40,298
|
96%
|
Part Time
|
|
1,506
|
4%
|
1,473
|
4%
|
Total
|
|
42,830
|
100%
|
41,771
|
100%
|
|
|
|
|
|
|
Female
|
|
|
|
|
|
Full Time
|
|
23,364
|
86%
|
22,800
|
86%
|
Part Time
|
|
3,772
|
14%
|
3,767
|
14%
|
Total
|
|
27,136
|
100%
|
26,567
|
100%
|
Grand Total
|
|
69,966
|
|
68,338
|
|
UBS employees: permanent and “limited employment period” employees (by
gender and by region)
Employees: employment term /
region
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Americas
|
|
|
|
|
|
Permanent
|
|
21,288
|
100%
|
21,563
|
100%
|
Limited Term
|
|
0
|
0%
|
0
|
0%
|
Total
|
|
21,288
|
100%
|
21,563
|
100%
|
|
|
|
|
|
|
APAC
|
|
|
|
|
|
Permanent
|
|
13,944
|
100%
|
12,095
|
100%
|
Limited Term
|
|
11
|
0%
|
38
|
0%
|
Total
|
|
13,955
|
100%
|
12,133
|
100%
|
|
|
|
|
|
|
EMEA (excluding Switzerland)
|
|
|
|
|
|
Permanent
|
|
13,259
|
100%
|
12,960
|
100%
|
Limited Term
|
|
1
|
0%
|
0
|
0%
|
Total
|
|
13,260
|
100%
|
12,960
|
100%
|
|
|
|
|
|
|
Switzerland
|
|
|
|
|
|
Permanent
|
|
20,296
|
95%
|
20,466
|
94%
|
Limited Term
|
|
1,167
|
5%
|
1,216
|
6%
|
Total
|
|
21,463
|
100%
|
21,682
|
100%
|
Grand Total
|
|
69,966
|
|
68,338
|
|
|
|
|
|
|
|
Employees: employment term /
gender
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Male
|
|
|
|
|
|
Permanent
|
|
42,160
|
98%
|
41,050
|
98%
|
Limited Term
|
|
670
|
2%
|
721
|
2%
|
Total
|
|
42,830
|
100%
|
41,771
|
100%
|
|
|
|
|
|
|
Female
|
|
|
|
|
|
Permanent
|
|
26,627
|
98%
|
26,034
|
98%
|
Limited Term
|
|
509
|
2%
|
533
|
2%
|
Total
|
|
27,136
|
100%
|
26,567
|
100%
|
Grand Total
|
|
69,966
|
|
68,338
|
|
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
UBS employees:
external hires
External hires by age group
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Under 30
|
|
4,676
|
46%
|
5,723
|
43%
|
Between 30 and 50
|
|
4,985
|
50%
|
6,928
|
52%
|
Over 50
|
|
419
|
4%
|
598
|
5%
|
Total external hires
|
|
10,080
|
100%
|
13,249
|
100%
|
|
|
|
|
|
|
External hires by gender
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Male
|
|
6,073
|
60%
|
8,143
|
61%
|
Female
|
|
4,007
|
40%
|
5,106
|
39%
|
Total external hires
|
|
10,080
|
100%
|
13,249
|
100%
|
|
|
|
|
|
|
External hires by region
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Americas
|
|
2,328
|
23%
|
2,959
|
22%
|
APAC
|
|
3,620
|
36%
|
4,207
|
32%
|
EMEA (excluding Switzerland)
|
|
1,998
|
20%
|
3,062
|
23%
|
Switzerland
|
|
2,134
|
21%
|
3,021
|
23%
|
Total external hires
|
|
10,080
|
100%
|
13,249
|
100%
|
UBS employees:
employee turnover
Turnover by age group
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
%
|
%
|
Under 30
|
|
19%
|
18%
|
Between 30 and 50
|
|
11%
|
11%
|
Over 50
|
|
10%
|
9%
|
Overall turnover
|
|
12%
|
12%
|
Turnover by gender
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
|
%
|
Male
|
|
12%
|
12%
|
Female
|
|
13%
|
12%
|
Overall turnover
|
|
12%
|
12%
|
Turnover by region
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
%
|
%
|
Americas
|
|
12%
|
11%
|
APAC
|
|
14%
|
14%
|
EMEA (excluding Switzerland)
|
|
13%
|
13%
|
Switzerland
|
|
11%
|
11%
|
Overall turnover
|
|
12%
|
12%
|
Note: The turnover rate is calculated
by dividing the number of employees (in FTE) who left by the average number of
employees (in FTE) over the full year period.
UBS employees:
age group
Employees by age group
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
%
|
%
|
Under 30
|
|
19%
|
20%
|
Between 30 and 50
|
|
60%
|
59%
|
Over 50
|
|
21%
|
21%
|
Total
|
|
100%
|
100%
|
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
UBS employees:
employee category (rank group)
Distribution by employee
category and gender
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Officers (Director and
above)
|
|
|
|
|
|
Male
|
|
18,425
|
75%
|
18,513
|
75%
|
Female
|
|
6,223
|
25%
|
6,079
|
25%
|
Total
|
|
24,648
|
100%
|
24,592
|
100%
|
|
|
|
|
|
|
Officers (other officers)
|
|
|
|
|
|
Male
|
|
16,447
|
61%
|
15,464
|
61%
|
Female
|
|
10,583
|
39%
|
10,060
|
39%
|
Total
|
|
27,030
|
100%
|
25,524
|
100%
|
|
|
|
|
|
|
Employee rank
|
|
|
|
|
|
Male
|
|
7,958
|
44%
|
7,794
|
43%
|
Female
|
|
10,330
|
56%
|
10,428
|
57%
|
Total
|
|
18,288
|
100%
|
18,222
|
100%
|
Grand Total
|
|
69,966
|
|
68,338
|
|
Distribution by employee
category and age group
|
|
|
|
|
|
|
|
31.12.19
|
31.12.18
|
|
|
Number
|
%
|
Number
|
%
|
Officers (Director and
above)
|
|
|
|
|
|
Under 30
|
|
143
|
1%
|
126
|
1%
|
Between 30 and 50
|
|
16,402
|
67%
|
16,774
|
68%
|
Over 50
|
|
8,103
|
33%
|
7,692
|
31%
|
Total
|
|
24,648
|
100%
|
24,592
|
100%
|
|
|
|
|
|
|
Officers (other officers)
|
|
|
|
|
|
Under 30
|
|
4,075
|
15%
|
3,951
|
15%
|
Between 30 and 50
|
|
18,801
|
70%
|
17,507
|
69%
|
Over 50
|
|
4,154
|
15%
|
4,066
|
16%
|
Total
|
|
27,030
|
100%
|
25,524
|
100%
|
|
|
|
|
|
|
Employee rank
|
|
|
|
|
|
Under 30
|
|
9,287
|
51%
|
9,253
|
51%
|
Between 30 and 50
|
|
6,369
|
35%
|
6,231
|
34%
|
Over 50
|
|
2,632
|
14%
|
2,738
|
15%
|
Total
|
|
18,288
|
100%
|
18,222
|
100%
|
Grand Total
|
|
69,966
|
|
68,338
|
|
UBS employees:
average training days (gender)
Training by gender
|
|
|
|
|
|
Average training days
|
|
|
31.12.19
|
31.12.18
|
Female
|
|
2.16
|
1.83
|
Male
|
|
2.12
|
1.71
|
Total average training days
|
|
2.14
|
1.76
|
UBS employees:
average training days (rank group)
Training by rank group
|
|
|
|
|
|
Average training days
|
|
|
31.12.19
|
31.12.18
|
Officers (Director and above)
|
|
2.36
|
1.88
|
Officers (other officers)
|
|
2.02
|
1.61
|
Employee rank
|
|
2.01
|
1.80
|
Total average training days
|
|
2.14
|
1.76
|
Note: Employee
development activities include on-the-job experience and internal mobility
(changing roles within the firm), exposure to senior leaders, new teams and
experiences (e.g., through networking and mentoring) and education (both
voluntary and required). Experience and exposure generally account for
approximately 90% of an employee’s development activities. It is also important
to note that in 2018 and 2019, our in-house university revamped its offering to
better prepare for future global trends and enable employees to choose the
depth of learning to meet their voluntary learning goals based on their needs.
We also increased the efficiency of mandatory trainings in both 2018 and 2019.
UBS employees:
parental leave taken
Parental leave taken (by
gender)
|
|
|
|
|
|
2019
|
2018
|
Male
|
|
2,557
|
2,196
|
Female
|
|
3,439
|
2,951
|
Total number of employees
|
|
5,996
|
5,147
|
All employees are entitled to take parental leave as indicated
in the respective local human resources policies. This table shows number of
employees who took parental leave as recorded in the UBS HRi system; data
aggregation is subject to limitations such as the disparate definitions and permutations
of parental leave across the firm and the various leave and absence tools
used in the 50+ countries in which we operate.
|
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Society
As expressed in the 17 United Nations
Sustainable Development Goals (the SDGs), the world faces enormous societal and
environmental challenges. We recognize that it is important to understand these
challenges, as well as the opportunities arising from them, to consider their
relevance to UBS and to identify potential actions our firm may need to take.
As the world’s largest truly global wealth
manager, we have a responsibility to take a leading role in shaping a positive
future, for everyone, including the generations to come.
Code of Conduct and Ethics
In our Code of Conduct and Ethics (the
Code), the Board of Directors and the Group Executive Board set out the
principles and practices that define our ethical standards and the way we do
business. These principles apply to all aspects of our business.
All employees must confirm annually that they
have read and will adhere to the Code and other key policies, supporting a
culture where ethical and responsible behavior is part of our everyday
operations.
In the Code, we make a commitment to integrating
financial and societal performance for the mutual benefit of our clients and
our firm – and that we are constantly looking for better ways to do business in
an environmentally sound and socially responsible manner.
® Refer to the Code of Conduct and Ethics of UBS, available at www.ubs.com/code, for more information
Engaging with society
We engage with representatives of wider
society on a regular basis and on a wide range of topics. This engagement
yields important information about society’s expectations and concerns and makes
a critical contribution to our understanding and management of issues with
potential (positive and negative) relevance to our firm – and to society. By
actively fostering such interactions, we are in a position to address
expectations and concerns in an informed and effective manner.
UBS in society
UBS in society is a dedicated
organization within the firm, focused on
maximizing our positive effect and minimizing any negative effects UBS has on
society and the environment. It covers all of the activities and capabilities
related to sustainable finance (including sustainable investing), philanthropy,
environmental, climate and human rights policies governing client and supplier
relationships, our environmental footprint, human resources, and community investment. It is
through this cross-divisional organization that we leverage our expertise
across all of these areas to drive sustainable performance. UBS in society is committed to making UBS a force
for driving positive change in society and the environment.
The activities driven by UBS in society are overseen,
at the highest level of our firm, by our Board of Directors’ Corporate
Culture and Responsibility Committee (the CCRC). The Group CEO
supervises the execution of the UBS
in society strategy and
annual objectives and informs the Group Executive Board and CCRC about UBS in society updates as appropriate. Reporting to the Group CEO, the Head UBS in society
is UBS’s senior-level representative for sustainability issues and, on behalf of the Group CEO, proposes the UBS in society strategy and annual
objectives to the CCRC for approval.
®
Refer to “Board
of Directors” in the “Corporate governance” section of this report for more information about
the CCRC
Driving
change in finance
As a major financial institution, we
are conscious that the activities and decisions of our clients can have a
substantial impact on society. It is for that reason that we strive to
incorporate environmental, social and governance (ESG) impacts into the
products and services we provide to clients and partner with them to help
mobilize capital toward the achievement of the SDGs and the orderly transition
to a low-carbon economy.
We know that ESG topics are increasingly
important to our clients. That is why we have dedicated a separate section in
this report to highlight our commitment to serving the growing sustainable
finance needs and expectations of our clients, and to the key activities
associated with our commitment.
®
Refer to “Our focus on ESG” in this section for more information
Driving
change in philanthropy
We believe our clients can make a meaningful,
and measurable, difference for their chosen causes with advice from our
philanthropy experts and the more than 200 global programs that have been carefully
selected through our UBS Optimus Foundation. We increase social impact by
combining our expertise with capital and networks. Through our Philanthropy Services
platform, we offer clients unique access to social and financial innovation and
philanthropic advice, as well as tailored program design, co-funding and
co-development opportunities.
®
Refer to www.ubs.com/optimus for more information
Driving change in communities
We recognize that our firm’s long-term success depends on the health
and prosperity of the communities of which we are a part. We seek to redress
disadvantages through long-term investments in education and entrepreneurship.
We provide strategic financial commitments and targeted employee volunteering
to drive impact across a number of the SDGs.
® Refer to the “Driving
change in communities” section in the Sustainability
Report 2019, available from 5 March 2020 under “Annual reporting” at www.ubs.com/investors for more information
Driving change in business
We view the proper, firm-wide
management of our firm’s own environmental footprint and our supply chain as
important proof of how we do business in a sustainable manner for the benefit
of society.
This is equally true of our comprehensive environmental
and social risk management and framework that governs client and vendor
relationships and is applied firm-wide to all activities. We have set environmental
and social risk standards pertaining to environmental and human rights topics
in product development, investments, financing and supply chain management. We
have identified certain controversial activities that we will not engage in at
all, or only under stringent criteria. As part of this process, we engage with
clients and vendors to better understand their processes and policies, and to
explore how any environmental and social risks may be mitigated.
We have set ambitious targets relating to our
use of energy, water and paper, as well as to our travel and the amount of
waste we produce, and we aim to increase the awareness of environmental and
social matters among our employees and foster a long-term sustainable mindset in
all our activities. In 2019, the year in which we celebrated 20 years since
becoming the first bank to gain global environmental management system
certification (ISO 14001), we ran major campaigns on key environmental themes.
Our campaigns demonstrate our strong
commitment to reducing UBS’s environmental footprint and further raising our
employees’ awareness of key environmental challenges. The “Go drastic. Cut the plastic.”
global campaign, which was launched in July 2019, aims at encouraging behavioral
change to help tackle, reduce and phase out single-use plastic items across our
firm. In October, we held our first Zero Waste Day at 22 sites across the
globe, which featured numerous sustainability-themed activities. Additionally,
at five major offices across the globe, we hosted events featuring subject
matter experts talking about their life’s work and passion, including speakers
from innovative companies.
® Refer to the Sustainability Report 2019, available from 5 March 2020
under “Annual reporting” at www.ubs.com/investors,
for full descriptions of our environmental management, our responsible supply
chain management and our environmental and social risk management and framework
Reporting to our stakeholders on our
sustainability strategy and activities
Information about all our
sustainability efforts and commitments is provided in the UBS Sustainability
Report,1 available
under “Annual reporting” at www.ubs.com/investors. The content of the Sustainability Report has been
prepared in accordance with the Global Reporting Initiative (GRI) Standards
(“comprehensive” option) and with the German rules implementing the EU
directive on disclosure of non-financial and diversity information
(2014/95/EU). Our reporting on sustainability has been reviewed on a limited
assurance basis by Ernst & Young Ltd against the GRI Standards. Our
Sustainability Report 2019 also includes our full climate disclosure, which we
have been aligning with the recommendations provided by the Financial Stability
Board’s Task Force on Climate-related Financial Disclosures since their
introduction in 2017.
1 The UBS Sustainability
Report is available from 5 March 2020, and is not deemed incorporated by
reference into the SEC Form 20-F filing.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Aims and progress
We work with a long-term focus on
providing appropriate returns to all of our stakeholders in a responsible
manner. To underline our commitment, we provide transparent goals and report on
progress made against them wherever possible. In 2019, we made good progress in
delivering against the Group’s aims.
We
aim to be / Our key goals1
|
Our
progress
|
A leader in sustainable
finance across all client segments
|
2017–2020
–
Double the penetration of core SI assets from
5.6% (USD 182 billion) of total invested assets2
|
–
Achieved our goal one year early, reaching USD 488.5 billion in core SI assets representing 13.5% of total
invested assets2,3
|
2016–2021
–
Direct at least USD 5
billion of client assets into SDG-related impact investments
|
–
USD 3.9 billion of client
assets directed into SDG-related impact investments4
|
A recognized innovator and
thought leader in philanthropy
|
2017–2020
–
Achieve 40% of employees volunteering with 40%
of volunteer hours being skills based
–
Increase donations to UBS Optimus Foundation
to
CHF 100 million in 2020
|
–
38% of global workforce volunteered and 48% of
volunteer hours
were skills based5
–
UBS Optimus Foundation: USD 89.5 million (CHF 86.9 million) in donations raised; USD 109.5
million (CHF 106.3 million) in grants approved
|
2020–2025
–
Support 1 million young people and adults (“beneficiaries”) to learn and develop skills for employment, decent jobs and
entrepreneurship through our community investment activities
–
Improve the lives of 5 million children
globally by engaging at least 1,000 clients in UBS Optimus Foundation’s collective giving platforms
|
–
Progress against these goals will be reported
for the financial year 2020 onward
|
An industry leader in
sustainable business practices
|
–
Retain favorable positions in key ESG ratings
|
–
Maintained leadership position (Dow Jones
Sustainability Indices / DJSI)
–
AA rating maintained (MSCI ESG Research)
–
Industry leader rank maintained
(Sustainalytics)
–
A– rating and included in
Leadership band (CDP)
|
2017–2022
–
Implement the recommendations of the Task
Force on
Climate-related Financial Disclosures (TCFD)
|
–
First TCFD reporting introduced for the financial
year 2017, continuous improvements ever since
|
2019–2024
–
Implement the requirements of the
Principles for Responsible Banking (PRB)
|
–
Among the founding signatories of the PRB
(September 2019)
|
An employer of choice
|
–
Being recognized as one of the world’s most attractive employers in key ratings and rankings
|
–
Included in Global Universum ranking of Top 50
World’s Most Attractive Employers
–
Peer-leading position in human resources
elements of DJSI
–
Score above financial services norm in
employee engagement and work environment (based on employee survey results)
–
Recognized by Bloomberg Gender-Equality Index
|
1 Refer to
the UBS in society constitutional document (in the Sustainability Report 2019) for more information
about all aims. Goals are to be achieved by the end of the target year. 2 Core SI are SI products that involve a strict and diligent asset
selection process through either exclusions (of companies / sectors from the
portfolio where the companies are not aligned to an investor’s values) or
positive selections (such as best-in-class, thematic or ESG integration and
impact investing). Refer to the “Core sustainable investments” table in “Our
focus on ESG” in this section. 3 The
increase in core SI assets was mainly driven by the ESG integration strategy of
Asset Management. Refer to the “Core sustainable investments” table in “Our focus
on ESG” in this section. 4 Strategies
where the investment has the intention of generating measurable environmental
and social impact alongside a financial return. 5 Refer to the “Driving change in communities” section in the Sustainability
Report 2019.
Stakeholder relations (additional information)
Governments and regulators
Financial market stability is largely
dependent on the overall economic, regulatory and political environment and the
conduct of the firms within the sector. We actively participate in political
discussions to share our expertise on proposed regulatory and supervisory
changes. The regime set out by the post-2008 regulatory reform agenda is now
largely completed with focus shifting to final national implementation of key
prudential rules such as the Basel III standards.
With regard to
corporate responsibility and sustainability issues, we actively participated in
governmental discussions concerning the implementation of commitments made at
the Paris Climate Change Conference and in the United Nations Sustainable
Development Goals. In addition, we contribute to the Task Force on
Climate-related Financial Disclosures (TCFD). On a regional basis, we
contribute to various fora to engage with policymakers on the European
Commission’s Sustainable Finance Action Plan. In our home country Switzerland,
we continue to actively contribute to pertinent sustainability discussions with
various government bodies. We also contribute our experience and knowledge to
supervisors in their efforts to further thinking on new topics, such as the
appropriate regulatory environment for digital finance and the financial risks
of climate change.
® Refer to UBS’s quarterly reports and annual reports available at www.ubs.com/investors
for more information on regulatory topics
Politicians and political parties
We maintain a regular dialogue with
politicians globally and strive to establish long-term relationships with
political representatives.
We comply with legal requirements on
disclosing political donations, as applicable in the relevant jurisdictions.
Outside of Switzerland, we do not provide financial support to political
parties. In the US, eligible employees may make financial contributions through
a federal Political Action Committee (PAC), the UBS Americas Fund for Better
Government. The PAC makes contributions to federal candidates. These employee
contributions do not constitute political donations by UBS.
Support of the Swiss militia system
Swiss citizens actively and voluntarily
engage in political institutions at all three levels of the Swiss state
(federal, cantonal and local) as public officials (e.g., members of parliament,
members of commissions and executive mandates), while they continue to pursue
other professional activities. This arrangement – citizens taking on public
tasks and mandates on a part-time basis – is referred to as the militia system.
In this system, members of parliament in
Switzerland are (usually) not professional politicians and political parties do
not receive state funding. It is for this reason that we view the support of
the militia system as a crucial component of our societal responsibility in our
home market. In recognition of the vital function of Switzerland’s political
parties, we provided a total of CHF 1 million to political parties in 2019 as a
contribution to their operational costs. Financial contributions are calculated
based on the number of parliamentary seats the respective party holds at the
federal and cantonal level. Swiss parties are eligible to apply for a financial
contribution if they commit to free competition, the market economy and to the Swiss financial center. They should
also have a national focus and
either form a parliamentary group in the federal parliament or be represented
in at least one cantonal government. We view our contribution to political
parties in Switzerland as a long-term commitment, which is, however, subject to
regular reviews.
Annual political forum for employees who
hold elected public office in Switzerland
We expressly support the political
involvement of our employees. About 250 employees currently hold political
office at the federal, cantonal and local level. If necessary, employees may
spend a certain amount of their working time on their public duties. We
organize an annual political forum at which senior management and political
office holders discuss topics of relevance to UBS in Switzerland.
® Refer to www.ubs.com/gov for more information on governmental
topics pertaining to Switzerland
Peers
We actively engage in regular
discussions on corporate responsibility and sustainability issues with
specialists in peer banks, 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.
We are a founding member of the Wolfsberg Group,
an association of global banks that aims to develop financial services industry
standards regarding anti-money laundering, Know Your Client and
counter-terrorist financing policies. Meeting regularly, the Wolfsberg Group
also works closely with the Financial Action Task Force.
With regards to climate risk, UBS is cooperating
on two fronts. Firstly, we are part of the United Nations Environment Programme
Finance Initiative (UNEP FI) TCFD working group for banks to refine methodologies,
scenarios and data sources to assess climate-related financial risk in loan
portfolios and secondly, we are pilot-testing the Paris Agreement Capital
Transition Assessment (PACTA) to shape the development of methodologies and
study the alignment of corporate lending portfolios with the Paris Agreement
benchmarks.
In 2011, we were a driving force behind the
establishment of the Thun Group of Banks. The group has published two papers
that propose a framework to help identify key challenges and best practice
examples for the banking sector’s implementation of the UN Guiding Principles
on Business and Human Rights. The Thun Group maintains regular discussions,
both in calls and in annual meetings at the UBS Conference Center in Thun,
Switzerland.
Our strategy,
business model and environment (section from the UBS 2019 Annual Report)
How we create value for our stakeholders
Communities
At UBS, we recognize
that our long-term success depends on the health and prosperity of the
communities that we are a part of. Our approach is to build sustainable and
successful partnerships with non-profit organizations and social enterprises to
help our contributions have a lasting impact. Our Community Affairs programs
seek to overcome disadvantage through long-term investment in education and
entrepreneurship in the communities within which we operate.
Through local execution and partnerships,
which operate under a global framework and with coordination across regions, we
endeavor to deliver business and community impact by identifying innovative and
high-quality programs that are aligned to the business. We provide focused
financial and human support, including skills-based employee volunteering programs and client participation
where appropriate. We are an active member of the London
Benchmarking Group, an internationally recognized standard for measuring
corporate community investment.
® Refer to the “Driving change in communities“
section for further information and data of relevance
to the communities we do business in
Vendors
In 2019, we spent USD 9.01 billion on
a broad range of products and services. A large proportion
of this expenditure comprises real estate, outsourcing, IT as well as
consultancy and legal fees. Our sourcing and procurement services are provided
by an external company, Chain IQ, which applies our responsible supply chain
management (RSCM) framework and processes. The experienced procurement and
sourcing specialists at Chain IQ perform vendor due diligence and establish
remediation measures, supported by a centralized team of experts within UBS.
We aim to ensure that our social and
environmental values are being followed throughout the supply chain. A
firm-wide RSCM guideline provides systematic assistance on identifying,
assessing and monitoring vendor practices in the areas of human and labor
rights, environmental protection and anti-corruption. A central component of
this guideline is the UBS Responsible Supply Chain Standard, to which our
direct vendors are normally bound by contract. We expect our vendors to apply
these same standards to relationships with their vendors.
® Refer to “Responsible supply chain management“ in the “Driving
change in business” section for more information
Non-governmental organizations
We regularly interact with
non-governmental organizations (NGOs) and appreciate their input and insight,
as it helps us consider our approach to, and understanding of, societal issues
and concerns.
NGOs have long established themselves as
critical watchdogs of companies, both scrutinizing and challenging how we
address a broad range of environmental, social and human rights concerns. In
2019, discussions with NGOs were particularly focused on climate change
(notably on fossil fuels). Other topics discussed included sustainable finance
and human rights.
Media
Our media teams maintain direct and
long-term relations with media representatives across all our business regions
and provide them with timely information on a wide range of global, regional
and local topics. Senior management (at the Board of Directors and Group
Executive Board level) also regularly provide accounts to journalists,
predominantly through interviews. In addition to interviews at our corporate
events (i.e., via quarterly and annual reporting and at the Annual General
Meeting), senior management conducted many other interviews in 2019.
We also communicated with media representatives
– through interviews or background talks – on a broad range of corporate
responsibility and sustainability topics such as climate change, human rights
and environmental and social risks in general.
® Refer to www.ubs.com/media
for further information on UBS media relations
Our governance and principles
Our firm’s societal and corporate
culture activities are overseen at the highest level of our firm and are
founded in our Principles and Behaviors.
Sustainability governance
The Board of Directors (the BoD) of UBS
Group AG decides on the strategy of the Group upon recommendation by the Group
Chief Executive Officer (the Group CEO) and is responsible for the overall
direction, supervision and control of the Group and its management, as well as
for supervising compliance with applicable laws, rules and regulations. The BoD
exercises oversight over UBS Group AG and its subsidiaries and is responsible
for establishing a clear Group governance framework to provide effective
steering and supervision of the Group, taking into account the material risks to
which UBS Group AG and its subsidiaries are exposed. 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 of UBS Group AG is responsible for
setting our firm’s values and standards to ensure that the Group’s obligations to our stakeholders are met.
Both the Chairman of the BoD and the Group CEO play a key role in safeguarding
our reputation and ensuring we communicate effectively with all our
stakeholders.
All BoD committees have responsibilities and
authorities of direct relevance to our goal of creating sustainable value. The
Governance and Nominating Committee, for instance, supports the BoD in
fulfilling its duty to establish best practices in corporate governance across
the UBS Group. The Compensation Committee supports the BoD in its duties to set
guidelines on compensation and benefits. The Risk Committee oversees and
supports the BoD in fulfilling its duty to supervise and set an appropriate
risk management and control framework (in the areas of risk management and
control, treasury and capital management, as well as balance sheet management).
The Corporate Culture and Responsibility
Committee (CCRC) is the body primarily responsible for corporate culture, responsibility and sustainability. The
oversight role of the CCRC has been embedded in the Organization Regulations of
UBS Group AG.
In view of the many environmental and social
challenges globally, as encompassed by the Sustainable Development Goals (SDGs),
these topics will continue to increase in relevance for banks. These
developments therefore require regular and critical assessment of our policies
and practices, based on an accurate monitoring and analysis of societal topics
of potential relevance to UBS. This process is the
responsibility of a committee at Group Executive Board-level, the Global
Environmental and Social Risk (ESR) Committee, which sets the overall risk
appetite for the firm and resolves transactional and policy matters relating to
environmental and social risks and their associated reputation risks. It is
chaired by the Group Chief Risk Officer, who is responsible for the development
and implementation of principles and appropriate independent control frameworks
for environmental and social risks within UBS.
The GEB oversees our efforts to combat money
laundering, corruption and terrorist financing. These efforts are led by a
dedicated financial crime team of anti-money laundering compliance experts. The
GEB also oversees our approach to diversity and inclusion. Our global head of
diversity and inclusion drives a group-wide strategy complemented by divisional
and regional initiatives.
® Refer to the “Sustainability governance” graph below
® Refer to the Appendix 1 for the CCRC charter and the ESR policy
framework
Key policies and guidelines
Code of Conduct and Ethics
The Code of Conduct and Ethics of UBS (the
Code) sets out the principles and practices that UBS expects all of its employees
and directors to follow both in form and intention. The principles and
standards set out in the Code should characterize all of UBS’s business
activities and all its dealings with the firm’s stakeholders including clients,
colleagues, shareholders, regulators and business partners. It is the basis for
all UBS policies, guidelines and statements relating to each of the firm’s
employees’ personal commitment to appropriate and responsible corporate
behavior.
® Refer to www.ubs.com/code and the Appendix1 of this document for the full text of the Code
UBS in society constitutional document
It is our goal to be the financial
provider of choice for clients wishing to mobilize capital towards the SDGs and
the orderly transition to a low-carbon economy (the Paris Agreement). The UBS in society constitutional document defines the principles and responsibilities
for promoting this commitment systematically across all relevant businesses and
for implementing the ethical standards defined in the Code that govern UBS’s interaction with society and the environment.
® Refer to the Appendix 1 for the full text of the UBS in society
constitutional document
Our governance and
principles
Policies to combat
financial crime
We have developed policies intended to
prevent, detect and report money laundering, corruption and terrorist
financing. These policies seek to protect the firm and our reputation from
those who may be intending to use UBS to legitimize illicit assets.
At UBS, we apply a risk-based approach and have
a framework in place to identify and manage potential money laundering risks
associated with customers and transactions. With our systematic assessment of
money laundering risks we strive to arrive at the appropriate level of initial
and ongoing due diligence and monitoring of transactions throughout the course
of a relationship. For certain higher risk clients, face-to-face due diligence
requirements are mandatory. Our anti-money laundering (AML) policy sets out the
processes and risk criteria pertaining to politically exposed persons (PEPs).
Global PEP clients are reviewed and reapproved on an annual basis by the
responsible member of each divisional Executive Committee.
Our Code focuses on preventing the misuse of the financial system, including
in relation to bribery. The specific anti-corruption standards of conduct that
apply to all employees are also set out in the Group Policy Against Corruption.
The policy sets out our zero-tolerance stance toward corruption and prohibits
all forms of bribery by the firm and our employees, including facilitation
payments.
Anti-corruption policies and procedures that
aim to prevent bribery occurring throughout our operations apply to all
business divisions. These policies are derived from the standards set out in
the Group Policy Against Corruption and the Group Policy on Gifts and Business
Entertainment.
® Refer to the “Driving change in business” section for more
information about how we are combating financial crime
Grievances and whistleblowing protection,
policies and procedures
We strive to maintaining high legal,
regulatory and ethical standards. We have longstanding procedures in every
region to help us resolve employee grievances, and employees are strongly
encouraged to speak with their line manager or HR about any concerns.
Our global whistleblowing policy and
procedures offer multiple channels (including a whistleblowing and sexual
misconduct hotline) for staff to raise concerns about any suspected breaches of
laws, regulations, rules or other legal requirements, sexual misconduct or harassment,
or any infringement of our Code, policies or professional standards. They may
raise concerns openly or anonymously.
Our policies do not tolerate harassment of
any kind, including sexual harassment, and our whistleblowing policies,
procedures, employee education and awareness materials specifically encourage
employees to raise concerns.
As set out in the Code, employees are
required to immediately report any potential violations of the Code to their
line manager or local compliance officer. Employees may also report them
confidentially to their Legal or Compliance teams, or using our whistleblowing
procedures. UBS prohibits retaliation against employees for reporting a concern
that they reasonably believe constitute a breach or violation of this kind.
® Refer to “Risk management and control” in the “Risk, treasury and
capital management“ section of the UBS Annual Report 2019 for more information
Human Resources policies
Human Resources has global and
country-specific policies designed to ensure effective management practices, a
strong culture and a safe and respectful working environment. An overarching
global employment policy sets the minimum hiring and employment standards for
all UBS locations. It provides fair, consistent and transparent treatment for
our employees while taking into account local legal requirements, market best
practices and shareholders’ interests. This policy is supplemented by Employee
Handbooks providing local information and clarification. Along with the
individual employment contract / offer letter, Employee Handbooks are the
primary source of information for employees on the terms and conditions of
employment and human resources programs, policies and procedures applicable to
them.
UBS policies and principles pertaining to
(political, charitable, sponsorship) contributions
UBS has in place appropriate policies
on political donations, which set out the principles (including by referencing
UBS’s anti-corruption standards) and approval processes for corporate political
donations made on behalf of UBS or its entities and their respective approval
processes.
UBS’s community interaction (i.e., charitable
contributions and employee volunteering) is guided by a global policy, which governs
the responsibilities for Community Affairs activities within UBS and represents
the official guidelines for all employees to follow. It defines the governance,
principles, responsibilities, focus themes, criteria (including on anti-corruption
and anti-bribery), financial planning framework as well as due diligence
requirements applicable to all Community Affairs activities and all financial
contributions to non-profit organizations and social enterprises made by UBS.
Our sponsorship activities are guided by a
group-wide governance document which describes how the UBS policy on brand
& marketing should be implemented in sponsorship and events. The document
clarifies roles and responsibilities (including as regards anti-corruption and
anti-bribery), describes ways of working and is intended to ensure effective
and efficient cooperation among the various stakeholders.
Sustainability governance
Our governance and
principles
Our climate
strategy – taking action towards a low-carbon future
Climate action – a snapshot
Nearly five years
have passed since the adoption of the Paris Agreement on Climate Change (the
Paris Agreement). Collective progress towards achieving the goals of the
Paris Agreement will be assessed in a global stocktake in 2023, acknowledging
the
2 °C benchmark and the more recent 1.5 °C limit in global warming urged by
the Intergovernmental Panel on Climate Change (IPCC) in its 2018 special
report. Achieving the Paris Agreement goals demands unprecedented levels of
investment. In terms of the current state of climate action, there is a
recognized climate finance gap as well as a Sustainable Development Goals
(SDGs) investment gap – to meet the low-carbon transition targets. At the
same time, we see a clear investor appetite for directing capital toward a
low-carbon future. To support in scaling up collective action, UBS assists
private and institutional clients in their desire to invest in accordance
with their social and environmental objectives, thus helping to close the
gap.
|
We aspire to drive positive change in
society and the environment for future generations. Our climate strategy
underlines our commitment to the SDGs on climate action and on affordable and
clean energy as well as the Paris Agreement. These key UBS commitments are
embedded in the United Nations (UN)-backed Principles for Responsible Banking
(PRB). This global framework specifies the role of banks in supporting a
sustainable future and scaling up their contribution to the achievement of both
the SDGs and the Paris Agreement. UBS became a founding signatory of the PRB in
September 2019.
We regularly report on the implementation of
our climate strategy and follow the recommendations provided by the Financial
Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD).
The recommendations call on companies to disclose the impacts of climate change
on their businesses. This will allow investors and financial institutions to
make better investment decisions with a common set of data to assess the
climate-related risks and opportunities of specific companies. We are committed
to aligning our climate disclosure within the five-year pathway outlined by the
TCFD (until end of 2022) and to collaborating within the industry to close
gaps.
We publicly support international,
collaborative action against climate change. Our Chairman is a signatory to the
European Financial Services Round Table’s statement in support of a strong,
ambitious response to climate change. Our Group CEO is a member of the Alliance
of CEO Climate Leaders, an informal network of CEOs convened by the World
Economic Forum and committed to climate action. Our Head Sustainable Equity
Team within UBS Asset Management (AM) is a member of the TCFD.
Our climate-related achievements have been
recognized by external experts. For the fifth year running, UBS has been named
the best performer in the Diversified Financial Services and Capital Markets
Industry of the Dow Jones Sustainability Indices (DJSI), the most widely
recognized corporate sustainability rating. CDP, which runs a global disclosure
system that enables companies, cities, states and regions to measure and manage
their environmental impacts, has awarded UBS with Leadership status and a A-
rating on climate change. In 2019, ShareAction, an international organization
focused on advancing responsible investment, awarded UBS as the best performing
asset manager in climate proxy voting in its report, "Voting matters – Are
asset managers using their proxy votes for climate action?"
Climate-related
highlights
– Our climate strategy underlines our commitment to the SDGs on
climate action and on affordable and clean energy and supports an orderly
transition to a low-carbon economy, as defined by the Paris Agreement.
– Our exposure to carbon-related assets on our banking balance sheet
is low, at 0.8% or USD 1.9 billion as of
31 December 2019, decreasing further from 1.6% at the end of 2018 and 2.8% at
the end of 2017.
– Our climate-related sustainable investments increased
to USD 108 billion in 2019 from USD 87.5 billion in 2018.
– We actively engaged on climate topics with 50 oil & gas and
utilities companies, and voted on 44 climate-related shareholder resolutions.
–
We reduced our firm’s greenhouse gas (GHG)
footprint by 71% by 2019 compared with 2004 levels. We were awarded top
ratings and rankings by external experts; climate industry group leader (Dow
Jones Sustainability Indices); Climate A- rating (CDP) and best performing
asset manager in proxy voting (ShareAction, 2019).
|
Climate governance
As embedded in the Organization
Regulations of UBS Group AG, the Board of Directors’ (BoD) Corporate Culture
and Responsibility Committee (CCRC) oversees our climate strategy. Within the
parameters set by the CCRC, the UBS in society
Steering Committee ensures firm-wide execution of the climate strategy while
our firm’s climate-related risk
appetite is set by the Global Environmental & Social Risk (ESR) Committee.
In joint meetings, the CCRC and the BoD’s Risk Committee regularly and
critically review the assessments and steps taken by these management bodies
towards executing our climate strategy. The CCRC approves UBS’s annual
climate-related objectives and oversees the progressive alignment of our
climate disclosure with the TCFD recommendations. These annual plans and
objectives are managed as part of our ISO 14001-certified environmental
management system (EMS) with defined management accountabilities across the
firm. The EMS helps us to systematically reduce environmental risks,
seize market opportunities and continuously improve our environmental and
climate performance and resource efficiency.
® Refer to the ”Sustainability
governance” graph in this
section
Climate strategy
As one of the world’s largest managers of private and
institutional wealth, we play an active role in shaping a sustainable future.
As with the SDGs, we aim to be a leading financial provider in enabling
investors to mobilize private and institutional capital to climate change
mitigation and adaptation while supporting the transition to a low-carbon
economy. At UBS we see a clear investor appetite for directing capital in
climate solutions. We address this by continuously developing our offering in
sustainable finance and actively engaging with clients. Our climate strategy
supports our clients and our firm preparing for success in an increasingly
carbon-constrained world.
We support this goal through our innovative
financial product offering and advisory, as well as through embedding climate
risk in our firm-wide risk management framework and in our own operations. Our
climate strategy focuses on four pillars:
–
Protecting our own assets: We seek to protect
our assets by limiting our risk appetite for carbon-related assets and by
estimating our firm’s vulnerability to climate-related risks using
scenario-based stress testing approaches and other forward-looking portfolio
analyses. We have reduced carbon-related assets on our balance sheet to 0.8% or
USD 1.9 billion as of 31 December 2019, down from 1.6% at the end of 2018
and 2.8% at the end of 2017.
–
Protecting our clients’ assets: We support our
clients’ efforts to assess, manage and protect them from climate-related risks
by offering innovative products and services in investment, financing and
research. We actively engage on climate topics with
companies that we invest in; AM has implemented an engagement program with 50
companies from oil and gas and utilities sectors and we voted on 44 climate-related
shareholder resolutions during 2019.
–
Mobilizing private and institutional capital: We
mobilize private and institutional capital towards investments facilitating
climate change mitigation and adaptation and in supporting
the transition to a low-carbon economy as corporate advisor, and/or with our
lending capacity. In 2019, our climate-related sustainable investments rose to
USD 108 billion from USD 87.5 billion at the end of 2018, and the deal value in equity and debt capital market services, and in
financial advisory services, related to climate change mitigation and
adaptation, rose to USD 87.2 billion, from USD 56.5 billion in 2018.
–
Reducing our direct climate impact: We continue
to reduce our greenhouse gas (GHG) emissions and increase the firm’s share in
renewable energy. We have committed to using 100% renewable electricity by
mid-2020. This will reduce our firm’s GHG footprint by 75% compared with 2004
levels. At the end of 2019, we had reduced our GHG emissions by 71% compared to
baseline year 2004.
® Refer to “ “Our focus on ESG” in the “How we create value for our
stakeholders” section for more information about our sustainable investments
® Refer to “In-house environmental management“ in the “Driving change
in business” section for more information
Our governance and
principles
Climate risk management
The physical and transition risks of
climate change contribute to a structural change affecting banks and the
financial sector at large. In order to protect our own and our clients’ assets
from climate-related risks, we continue to drive the integration of
climate-related risk into our standard risk management framework. This
framework involves procedures and tools for identifying, assessing and
monitoring environmental and social risks in our standard risk, compliance and
operations processes. These include client onboarding, transaction due
diligence, product development and investment decision processes, own
operations, supply chain management and portfolio reviews. These processes are
geared toward identifying clients, transactions or suppliers potentially in
breach of our standards or otherwise subject to significant environmental and
human rights controversies, including climate change.
In 2019, we embedded climate risk into our
risk taxonomy and operational risk appetite statement, further reduced our
exposure to carbon-related assets and, more broadly, to climate-sensitive
sectors. We also refined our ability to estimate the firm’s vulnerability to
climate-related risks using forward-looking scenario-based approaches, and revised
our standards in the energy and utilities sectors.
® Refer to the ”Climate-related
standards in the energy and utilities sectors” table below
® Refer to ”Scenario
analysis” further below
1 Greenfield
means a new mine / well or an expansion of an existing mine / well which
results in a material increase in existing production capacity.
Scenario analysis
We have been using scenario-based
approaches since 2014 to assess our exposure to physical and transition risks
associated with climate change. We have performed both top-down balance sheet
stress testing (across the firm), as well as targeted, bottom-up analysis of
specific sector exposures in short, mid-, and long-term horizons. The table
below summarizes the UBS scenario assessments performed to date.
1 International Energy Agency
(IEA), World Energy Outlook 2 Beyond 2 Degrees Scenario 3 Sustainable Development Scenario 4 New Policies Scenario 5 Current Policies
Scenario
Our initial (2014) top-down approach
consisted of a scenario-based stress test to assess UBS’s balance sheet
vulnerability across the firm. Leveraging our existing firm-wide top-down
stress testing methodology, we developed a climate change scenario (which
assumes that severe weather events result in governments around the world
agreeing to implement carbon pricing mechanisms to assess the impact on
financial assets, operational income and physical assets). The scenario
anticipated that these mechanisms will prompt a shift away from coal and other
fossil fuels to cleaner alternatives and adversely impact markets and gross
domestic product. Our subsequent (2015) bottom-up analyses of oil and gas
utilities as well as electric utilities loan portfolios consisted of a
forward-looking analysis to assess impacts of a long-term low fossil fuel price
scenario resulting from policies promoting greater use of renewables, enhancing
efficiency standards and limiting emissions. We calculated the impact this
scenario would have on company probability of default and aggregated
company-level results at the portfolio level to assess changes to expected
loss. We also assessed the vulnerability of loan portfolios secured by real
estate in Switzerland and the US to physical risk by mapping the location of
collateral in over 6,000 postal code areas against Swiss Re’s CatNet tool,
which aggregates a large dataset of observed natural hazards such as wildfire,
river and pluvial flooding and tropical cyclones.
Our governance and
principles
From both top-down
and bottom-up approaches, our internal stress tests suggested no immediate
threat to UBS’s balance sheet. However, we identified methodological challenges
ranging from the suitability of climate scenarios for banking risk modelling to
data availability. To address these challenges,
16 banks, including UBS, the UN Environment Programme Finance Initiative (UNEP
FI), the Integrated Assessment Modelling Consortium (IAMC), and risk
consultancies Oliver Wyman and Acclimatise began a collaboration of several
years in 2018. The objective is to develop analytical tools that help banks
define and disclose climate-related risks and opportunities as envisioned by
the TCFD. This includes developing and further refining scenario-based
stress-testing methodologies. Now in its second phase, the UNEP FI TCFD working
group for banks has grown to 35 banks and has expanded the development of these
analytical tools to include a range of possible scenarios, further advancement
on scenario-based stress testing methodologies, and standardization between
institutions on what defines climate-sensitive activities. These advancements
aim for banks to more robustly identify and disclose exposure to
climate-related risks and opportunities.
In addition to the UNEP FI TCFD working
group, UBS is one of the pilot banks testing the Paris Agreement Capital
Transition Assessment (PACTA). In the context of the PACTA pilot, we studied
the alignment of select climate-sensitive sectors in our corporate credit
portfolio with Paris Agreement benchmarks. The methodology provides an
assessment of a bank’s
credit-financed activities in relation to the global shift to a low-carbon
economy. For example, the assessment showed that the fuel mix in UBS’ s power
utilities credit portfolio, according to the PACTA methodology, is
significantly less carbon intensive than the global corporate economy, as of 2019
(see “PACTA methodology for power generation“ further below). However, the
limitations of the outputs from this assessment are very similar to the other
pilots and we will continue to work on improving methodology, data availability
and scenario applicability.
Both pilots promote industry learning and
provide guidance for disclosing climate-related risks and opportunities in line
with TCFD recommendations. Overall, the results of the 2019 climate risk pilots
have confirmed findings from our previous pilot stress tests on climate, which
started in 2014: we have so far not identified significant climate-related
financial risk on our balance sheet. We explain this by UBS’s relatively small
lending book in climate-sensitive-sectors (see “UBS corporate lending to
climate-sensitive sectors 2019“ further below) and availability of insurance
where we have relevant exposures to such sectors (e.g., Swiss mortgage lending
book).
Protecting our clients’ assets
We help our clients assess, manage
and protect their assets from climate-related risks by offering innovative
products and services in investment, financing and research. AM has developed a
suite of products allowing clients to identify the carbon intensity of their
investments and/or to align them with the Paris Agreement: In 2017, AM together with the New Employment
Savings Trust launched a strategy called Climate Aware with an aim to do more than manage
investments based on carbon foot-printing. In 2018, AM followed its successful
UK Climate Aware rules-based fund with an Irish-based fund
that is available for international investors outside of the UK. The portfolio
is oriented towards companies that are better prepared for a low-carbon future
while reducing exposure to, rather than excluding, companies with higher carbon
risk, in order to pursue strategic engagement with these companies. The
strategy involves not only a reduction of the CO2 footprint of the
portfolio but also an innovative approach to aligning the portfolio with the 2 °C
carbon reduction scenario.
Finally, AM empowers equity portfolio
managers to examine the carbon footprint of their portfolios and compare the
relative carbon footprints of their company holdings to that of the benchmark.
Engagement
On behalf of
clients, AM engages with companies it invests in to discuss approaches to
mitigating climate-related risk. AM also actively votes on shareholder
resolutions to improve transparency and disclosure around climate-related
reporting. Specifically in the context of its Climate Aware fund, AM has implemented an engagement
program with 50 oil and gas companies as well as utilities companies
underweighted in the fund. Communication with these companies aims at improving
their disclosure and performance alignment with the TCFD recommendations.
Engagement also makes it possible to share the results of the quantitative and
qualitative assessments included in the fund methodology with investee
companies. This allows for the verification of company performance with
additional information collected before and after meetings. It also means AM
can collect feedback, explicitly communicate
objectives for change in corporate practices and further enhance the model used
to inform the under- / overweights in the strategy.
AM
is also involved in Climate Action 100+, a collaborative engagement initiative
launched in December 2017. Its aim is to engage with high-level greenhouse gas emitters,
and other companies across the global economy, that have significant
opportunities to drive the clean energy transition and help achieve the goals
of the Paris Agreement. It has the support of 320 investors, representing more
than USD 33 trillion of assets under management (at end of 2019). AM is
directly involved in 30 coalitions of investors (at the end of 2019) within
Climate Action 100+ and leads seven of the company dialogues across regions.
Whether AM is a lead or participating investor, it is an active member of these
coalitions, providing feedback on the climate change performance of companies,
the discussion agenda, engagement goals and the progress of these dialogues.
Opportunities
We mobilize private and institutional
capital for investments that facilitate climate change mitigation and
adaptation. UBS supports the orderly transition to a low-carbon economy as
corporate advisor, and/or with its lending capacity.
As we outlined in our 2020 white paper for
the World Economic Forum annual meeting, "Becoming climate aware:
Mobilizing capital to help meet climate change goals", we have formulated
a Climate Aware framework which helps
investors align their portfolios towards a climate-smart future. The framework
is built on the methodology which underlies UBS-AM’s Climate Aware strategy. The main
characteristics of the framework are:
–
Portfolio mitigation: Lowering investment
exposures to carbon risk
–
Portfolio adaptation: Increasing investment
exposure to climate-related innovation and solutions
–
Portfolio transition: Aligning portfolios to an
investor’s chosen climate glidepath
A Climate Aware framework for investors
Our governance and
principles
Portfolio mitigation
Based on our experience, maintaining a balance between
required investment returns and minimizing climate risks works most effectively
when investors integrate climate change considerations into a diversified
portfolio. Similar to ESG integration, this is an important element in
understanding the specific effects of climate change. As TCFD has highlighted,
these can be viewed as regulatory, market, technology and physical risks. How
they play out at the level of markets, industry sectors and individual issuers
depends on an interplay of:
–
regulation;
–
commercial considerations;
–
impact of technology on business models,
revenues, costs and capital requirements.
Integrating these three aspects puts the
focus on the most material issues relating to the reduction of emissions
generated by the most carbon-intensive sectors. It also leads to a deeper and
more investment-relevant understanding of the physical risks.
Portfolio adaptation
Investing for a low-carbon future
hinges on the ability to invest in, and fund, new technologies and solutions.
The key investing areas relate to GHG emissions reduction, energy transition,
and energy efficiency. They include companies that manufacture and deploy these
technologies as well as the infrastructure and services that make these
achievable at scale. There are variety of developments in business structure,
asset ownership, supply chains and delivery models that may be deployed as part
of the climate change transition. It is also important to recognize that there
are different kinds of investors that are better-placed for certain kinds of
investments. Venture capital, private equity, real estate, public equity and
public fixed income all have different appetites for technology risk.
Portfolio transition
It is important for investors to
understand the difference between where they are now and the possibilities of
the climate transition. Scenario analysis is emerging as a response to the
uncertainties of climate change. Engagement, meanwhile, provides an opportunity
for investors to encourage good corporate practice and, together with voting,
keep management accountable for the actions needed to keep pace with the
climate transition. It also allows investors to understand the investment
dynamics in individual sectors and countries and determine the overall
direction of travel. By applying the tools of scenario analysis and engagement,
investors are better able to manage the transition to a climate-smart future.
AM is also a member of the Institutional
Investors Group on Climate Change (IIGCC) Climate Action 100+ European Advisory
Group, which advocates for the world’s transition to a low-carbon economy.
Our other business divisions also translate
this strategic thinking on climate into concrete products and services. UBS
offers 100% sustainable discretionary mandates and asset allocation funds based
on an innovative dedicated Sustainable Investing Strategic Asset Allocation for
private clients in Global Wealth Management (GWM) and Personal & Corporate Banking (P&C). These include an
explicit allocation to strategies that aim at mitigating climate change, such
as green bonds and thematic investments, but also others that contribute
indirectly to climate change mitigation such as Multilateral Development Bank
bonds, ESG leaders and ESG improvers. GWM developed a new advisory solution
that includes an explicit climate change dimension, allowing clients to tilt
their portfolios towards the issues they care about. Ultimately our goal in
developing new products and services is to ensure that all material risks and
opportunities are addressed, and to allow clients to select sustainable
investments aligned to their interests while receiving financial returns in
line with traditional investment approaches.
GWM integrates sustainability assessments,
focusing on the sustainability intentionality of fund managers, into all fund
and ETF onboardings. We have set a target of directing USD 5 billion of
client assets by the end of 2021 into new impact investments contributing to the
SDGs. These investments include a significant climate component. GWM’s mutual fund and ETF offering includes
climate-focused investment strategies, comprising those focused on clean / alternative
energy.
We participated in launching, and have an ongoing
partnership with, Align17, an independent, third-party digital marketplace.
Align17 stands out in connecting a wider range of public, institutional, and
private wealth investors with SDG-related investment opportunities. These
opportunities are available to qualifying UBS clients and often serve to
finance climate-related projects.
Our AM and GWM businesses have in place a
comprehensive approach to address environmental, social and corporate
governance factors across investment disciplines. For example, sustainability
themes are embedded in GWM’s equity research processes, while AM’s Real Estate
and Private Markets has developed a Responsible Investment Strategy to enhance
investment performance of mandates for direct and indirect real estate and infrastructure
investments. The 2019 GRESB (formerly Global Real Estate Sustainability
Benchmark) awarded 15 out of 20 of AM’s submitted real estate and
infrastructure funds 5-star ratings with the remaining funds achieving a 4-star
rating.
Our Investment Bank provides capital-raising
and strategic advisory services globally to companies that make a positive
contribution to climate change mitigation and adaptation, including those in
the solar, wind, hydro, energy efficiency, waste and biofuels, and transport
sectors. In 2019, the deal value in equity or debt capital market services, and
of financial advisory services, related to climate change mitigation and
adaptation, rose to USD 87.2 billion, from USD 56.5 billion in 2018.
We strive to be the
preferred strategic financial partner relating to Switzerland’s Energy Strategy
2050. In 2019, P&C supported 12 strategic transactions in support of the
strategy. The UBS Clean Energy Infrastructure Switzerland strategy offers
institutional investors unprecedented access to a diversified portfolio of
Swiss Infrastructure facilities and renewable energy companies. Due to clients’
demand, a successor strategy was launched in September 2017. In our P&C
business we have also integrated Sustainable Investing Advisory into the
strategic dialogue with our institutional clients.
To support philanthropists entering the
climate space, UBS Optimus Foundation and the Climate Leadership Initiative
(CLI) have developed four principles for effective climate philanthropy. CLI
was created by six of the top climate donors this year with the express goal of
making it easier for new philanthropists to learn, become connected to peers
and experts and join the fight.
The four principles are Understand Climate
Solutions and Impact; Collaborate and Take Action Swiftly; Be Prepared to Stick
With It; Marshall All Your Resources.
Climate-related metrics
In 2019, we have again significantly
reduced the share of our carbon-related assets to 0.8%, down from 1.6% in 2018
(and 2.8% in 2017). More broadly, our share of exposure to climate-sensitive
sectors has reduced in 2019 to 15.5% from 19.6% in 2018 (% of total gross
banking exposure across IB and P&C).
Climate-related sustainable investments
increased to USD 108 billion, up from USD 87.5 billion in the
previous year. At the end of 2019, we had reduced our GHG emissions by 71%
compared to baseline year 2004.
Climate-related metrics 2019
|
|
|
|
|
|
|
|
|
For the year ended
|
|
% change from
|
|
|
31.12.19
|
31.12.18
|
31.12.17
|
|
31.12.18
|
Risk management
|
|
|
|
|
|
|
Identified significant climate-related financial risk on balance
sheet1
|
|
None
|
None
|
None
|
|
|
Carbon-related assets (USD bn)2
|
|
1.9
|
3.2
|
5.8
|
|
(41)
|
Proportion of total banking
products exposure, gross (%)
|
|
0.8
|
1.6
|
2.8
|
|
|
Total exposure to climate-sensitive sectors (USD bn)3
|
|
37.6
|
38.6
|
42.6
|
|
(3)
|
Proportion of total banking
products exposure, gross (%)
|
|
15.5
|
19.6
|
20.5
|
|
|
Weighted carbon intensity of the Climate Aware equities strategy
(in tons CO2e per million of USD revenue) 4
|
|
74.8
|
95.6
|
117.5
|
|
(22)
|
Compared to benchmark
(FTSE Developed World Index) (%)
|
|
(56.0)
|
(55.7)
|
(44.0)
|
|
|
Number of climate-related shareholder resolutions voted
upon
|
|
44
|
43
|
34
|
|
2
|
Proportion of supported
climate-related shareholder resolutions (%) 5
|
|
81.8
|
88.0
|
82.0
|
|
|
|
|
|
|
|
|
|
Opportunities
|
|
|
|
|
|
|
Climate-related sustainable investments (USD bn)6
|
|
108.0
|
87.5
|
74.0
|
|
23
|
Proportion of UBS clients’
total invested assets (%)
|
|
3.0
|
2.8
|
2.3
|
|
|
Total deal value in equity or debt capital market services
related to climate change mitigation and adaptation (CCMA)7 (USD
bn)
|
|
52.7
|
31.6
|
44.3
|
|
67
|
Total deal value of financial advisory services related to CCMA
(USD bn)
|
|
34.5
|
24.9
|
5.5
|
|
39
|
Number of strategic transactions in support of Switzerland’s
Energy Strategy 2050
|
|
12
|
8
|
4
|
|
50
|
|
|
|
|
|
|
|
Own operations
|
|
|
|
|
|
|
GHG footprint (kilotons CO2e)8
|
|
104
|
132
|
148
|
|
(21)
|
Percentage change from
baseline 2004 (Target: -75% by 2020) (%)
|
|
(71.2)
|
(63.4)
|
(59.0)
|
|
|
1 Methodologies for climate-related financial risk are emerging
and may change over time, as described earlier under Scenario Analysis. 2 Carbon-related
assets exposures are adjusted from previous years' versions to align with
IFRS 9: Banking products across Investment Bank and Personal & Corporate
Banking. IFRS 9 gross exposure including other financial assets at amortized
cost, but excluding cash, receivables from securities financing transactions,
cash collateral receivables on derivative instruments, financial assets at
FVOCI, irrevocable committed prolongation of existing loans and
unconditionally revocable committed credit lines and forward starting reverse
repurchase and securities borrowing agreements. As recommended by the TCFD,
carbon-related assets are defined as assets tied to the energy and utilities
sectors (Global Industry Classification Standard). Non-carbon-related assets,
such as renewables, water utilities, and nuclear power are excluded. For grid
utilities, the national grid mix is applied. 3 Gross banking
products across Investment Bank and Personal & Corporate Banking (IFRS
9). Climate-sensitive sectors defined as inventory of activities with higher
vulnerability to transition and physical climate risks, for more see in-text
description. 4 Year-on-year decrease of carbon intensity is mainly driven by
higher carbon targets of the investment strategy. Carbon intensity is based
on scope 1 and 2 CO2 emissions of investee companies, which often
rely on third-party estimates. 5 On all
proposals that we supported, we voted against the recommendation provided by
the issuer. 6 Invested assets of products such as sustainably managed
properties and infrastructure, and renewable energy. 7 Refer to
"Calculating and reporting on climate change-related financing and
advisory activities" in the Appendix of this document. 8 GHG footprint
equals gross GHG emissions minus GHG reductions from renewable energy and GHG
offsets (gross GHG emissions include: direct GHG emissions by UBS; 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). A breakdown of our GHG emissions (scope 1, 2, 3) is available
in the in-house environmental section in this document.
|
Our governance and
principles
UBS corporate
lending to climate-sensitive sectors 2019
UBS is leading an effort, with UNEP
FI and peer banks, to define an inventory of climate-sensitive activities based
on TCFD, regulators’ and rating agencies’ climate risk definitions. The current
inventory is summarized in the table below at the sector level.
UBS corporate lending to
climate-sensitive sectors 2019
|
|
|
|
banking products across
Personal & Corporate Banking and the Investment Bank
|
|
As of 31.12.19
|
USD million, except where
indicated
|
|
Gross exposure2
|
Share of total exposure
to all sectors (%)
|
Climate-sensitive sector 1
|
|
|
|
Aerospace and defence 3
|
|
2,115
|
0.9
|
Automotive
|
|
449
|
0.2
|
Chemicals
|
|
1,052
|
0.4
|
Constructions and materials 4
|
|
3,993
|
1.6
|
Food and beverage 5
|
|
2,460
|
1.0
|
Industrial Materials 6
|
|
345
|
0.1
|
Machinery and equipment 7
|
|
2,576
|
1.1
|
Mining 8
|
|
3,000
|
1.2
|
Oil and gas 9
|
|
1,415
|
0.6
|
Plastic and rubber
|
|
356
|
0.1
|
Primary materials 10
|
|
332
|
0.1
|
Real estate 11
|
|
15,031
|
6.2
|
Transportation 12
|
|
3,272
|
1.3
|
Utilities 13
|
|
1,186
|
0.5
|
|
|
|
|
Total exposure to
climate-sensitive sectors
|
|
37,582
|
15.5
|
Total exposure to all
sectors
|
|
242,565
|
100.0
|
1
Climate-sensitive sectors defined as inventory of activities with higher
vulnerability to transition and physical climate risks, for more see in-text
description. 2 Banking products across the Investment Bank and Personal and
Corporate banking divisions. IFRS 9 gross exposure including other financial
assets at amortized cost, but excluding cash, receivables from securities
financing transactions, cash collateral receivables on derivative
instruments, financial assets at FVOCI, irrevocable committed prolongation of
existing loans and unconditionally revocable committed credit lines and
forward starting reverse repurchase and securities borrowing agreements. 3 Of which air
transport: USD 1.9 billion 4 Of which construction: USD 3.2 billion, mfg. concrete / cement:
USD 0.4 billion 5 Of which food / grain traders / wholesalers: USD 1.4 billion,
mfg. food / bev: USD 1.1 billion 6 Of which mfg.
iron / steel: USD 0.2 billion, mfg. pulp / paper: USD 0.06 billion 7 Of which mfg.
metal products: USD 0.7 billion 8 Of which metal
ore traders USD 2.7 billion, coal mining: USD 0.02 billion 9 Of which
upstream extraction: USD 1.1 billion, integrated O&G: USD 0.2 billion 10 Of which
agriculture-related: USD 0.2 billion, forestry / wood: USD 0.02 billion 11 Of which
development / selling real estate: USD 14 billion, agencies: USD 0.8 billion.
In addition UBS has loans and advances to customers backed by residential
real estate totaling USD 155 billion across Global Wealth Management and
Personal & Corporate Banking 12 Of which
shipping: USD 0.5 billion, mfg. trains: USD 0.8 billion, logistics / post:
USD 0.5 billion 13 Of which prod. / dist. electricity: USD 0.8 billion (for a
closer look at the carbon exposure of UBS’s power utilities portfolio, see
PACTA graph below), refuse / recycling: USD 0.2 billion, water collection /
purification: USD 0.01 billion
|
PACTA methodology for power generation
In 2019 we further assessed select
climate-sensitive sectors using the PACTA methodology. Results on power sector
show that the technology mix of UBS’ s power sector corporate lending portfolio
is significantly less carbon intensive than the global corporate economy, as of
20191.
UBS corporate lending portfolio
technology mix of production against global corporate economy
1 Across the Investment
Bank and Personal & Corporate Banking, banking products only. As of 30.9.19,
includes clients who are classified as power utilities. The methodology is
driven by the 2° Investing Initiative's PACTA pilot.
Our governance and
principles
Sustainability-related training and raising awareness
Overview
Throughout the year, we continued
training and raising the awareness of employees, including with respect to
embracing our Code of Conduct and Ethics (the Code). All employees have to
confirm annually that they have read UBS’s key documents and policies,
including the Code.
We actively engage in internal and external
education and awareness raising on corporate responsibility and sustainability
topics and issues. Through induction, education and broader awareness-raising
activities, we ensure that our employees understand their responsibilities in
complying with our policies and the importance of our societal commitments.
UBS in society
UBS promotes
employees’ understanding of the goals and actions of UBS in society through
a wide range of training and awareness-raising activities, as well as
performance management. For example, in 2019, specialist training program on
environmental and human rights topics (including sustainable investing) has
been provided to approximately 14,000 employees in front-office and support
functions who are dealing directly with the related aspects in every day's
business processes. In addition, employee volunteering activities across all
regions help raise awareness of UBS in society and our sustainability
goals.
General information is published on our intranet
and on our UBS in society internet site.
® Refer to the Appendix 2 for the UBS in society management indicators
(including training numbers)
Combating financial crime
All employees are required to
complete financial crime training which covers anti-money laundering (AML),
sanctions, fraud and anti-corruption. The training is mandatory and must be
completed at least on an annual basis.
We regularly update web-based training modules
to address compliance issues, including anti-corruption standards. Employees in
specific areas also receive targeted training on client-related corruption,
including the bank’s own corruption risks in regard to intermediaries, gifts
and entertainment or when major new developments require additional training.
® Refer to “Combating financial crime” in the “Driving change in
business“ section for more information about our AML and anti-corruption
activities
Sustainable
performance and compensation
Total Reward Principles
Our compensation philosophy is to
align the interests of our employees with those of our investors and clients,
building on our three keys to success – our Pillars, Principles and Behaviors.
Our Total Reward Principles establish a framework that balances sustainable
performance, supporting our growth ambitions and prudent risk-taking with a
focus on conduct and sound risk management practices.
Our compensation structure is aligned with
our strategic priorities. It aligns the interests of our employees with those
of our stakeholders and encourages our employees to focus on our clients,
create sustainable value, deliver on our growth ambitions and achieve the
highest standards of performance. Moreover, we reward behaviors that help build
and protect the firm’s reputation, specifically integrity, collaboration and
challenge. We strive for client focus, excellence and sustainable performance
in everything we do. Compensation for each employee is based on individual,
team, business division and Group performance, within the context of the
markets in which we operate.
Our Total Reward Principles apply to all
employees globally. They may vary in certain locations according to local legal
requirements and regulations.
Managing a high-performing workforce
Managing our people effectively is
vital for our long-term success. As such, our global performance management
process evaluates both performance and behavior. This helps us assess how well
integrity, collaboration and challenge (the firm’s expected behaviors) are
demonstrated in daily business activities. It also makes our management,
promotion and reward processes more transparent. For 2019, 99.9% of eligible
employees received a performance review.
To help us attract and retain a skilled
global workforce, our pay is differentiated by location, rank and role. We pay
for performance and are committed to ensuring that all employees are paid
fairly, embedding pay equity principles into our compensation policies and
practices. We conduct regular internal and external reviews, and we seek to
address any unexplained gaps. Certain jurisdictions such as the UK may require
specific disclosure on this topic, which we fully adhere to.
ESG in the
compensation determination process
ESG (Environmental, Social and
Governance) is considered in the compensation determination process in
different phases through objective setting, performance award pool funding,
performance assessment and compensation decision.
At the beginning of the year, objectives
relative to Group, business divisions, Pillars, Principles and Behaviors are
set. ESG-related objectives have been embedded in our Pillars and Principles
since they were established in 2011. To maintain the focus on these important
ESG topics, our Group CEO and other GEB members have specific ESG-aligned goals
under Pillars and Principles including governance and risk management, talent
management and diversity, client satisfaction and corporate responsibility.
These include goals for reducing our carbon footprint and corporate waste, and
progressing our philanthropic efforts.
In the performance award pool funding, ESG is reflected through the assessment of risks, such as legal,
compliance, reputational and operational risks. Therefore ESG is taken into
consideration when the Compensation Committee assesses not only what results
were achieved, but also how they were achieved. These achievements versus the
ESG-related goals are reflected in the qualitative performance assessment and affect
the final compensation decision.
Objectives focusing on our key ESG
commitments are also set for managers and employees in pertinent departments or
units. Most notably, this includes managers and employees in investment,
research and product development, UBS in society, anti-money
laundering, human resources, environmental and Community Affairs functions.
Group Executive Board
Annual performance awards for the
Group CEO and the other GEB members are based on the GEB compensation determination process and, in aggregate, subject to shareholder approval at the AGM. We assess the GEB members’ performance
against a number of financial
targets and goals related to Pillars, Principles, and Behaviors. The financial measures for the Group CEO are based on overall Group performance. For the other
GEB members, such measures are
based on both Group performance and the performance of the relevant business division and/or region; those who lead Group functions are assessed on the
performance of the Group and
the function they oversee.
The weighting between Group, business
division, regional and
functional measures varies depending on a GEB member’s role. A significant weight is given to Group measures for all GEB members. The achievements relative to goals
related to Pillars and Principles are additional factors for assessing the
overall quality and sustainability of the financial results. We have adjusted
the metric and goal weightings and enhanced the transparency of the respective
disclosure. New for 2019, the financial measures account for 70% of the
assessment while Pillars and Principles account for 15% and Behaviors account
for the remaining 15%.
Board of
Directors
As set out in the Organization
Regulations of UBS Group AG, BoD members, as a group, must have the necessary qualifications, skills and
diversity to perform all BoD duties In particular, the BoD must together
possess financial literacy, experience in banking and risk management, as well
as international experience, including experience of international financial
matters, and knowledge of the duties of directors.
At least every three years an external
assessment of the effectiveness of the BoD is conducted. In each year when
there is no independent external assessment, a thorough self-assessment is
completed at the level of the BoD, while the committees perform
self-assessments every year.
The results of the in-depth external
assessment undertaken from end 2018 until May 2019 concluded that the BoD and
its committees were operating effectively, in line with best practice and best
in class in comparison with leading European peers. The final report did not
raise any material issues, but did make a number of recommendations for
consideration by the BoD. These led to minor adjustments in the BoD agenda and
served as a source for the definition of the BoD’s priorities for 2019/2020.
Areas of particular focus for the BoD were strategy, growth and value creation,
as well as succession planning. Furthermore, a particular focus remained on the
oversight of the regulatory, risk and legal issues as well as on digital
transformation. Environment, social and governance topics, in particular
sustainability and the continued emphasis on cultural values were other key
priorities.
® Refer to the “Corporate governance and compensation” section of the UBS Annual Report 2019 and the Organization
Regulations of UBS Group AG available at www.ubs.com/governance for
further information
Materiality under
GRI Standards
Materiality under GRI Standards
GRI-based materiality assessment
We put great emphasis on learning the
views and values of our stakeholders with regard to the business activities of
UBS and its role in society. Every year, we conduct a materiality assessment, as
defined by the guidelines of the Global Reporting Initiative (GRI), to collect
stakeholder views on key topics pertaining to our firm’s economic, social and
environmental performance and impacts. Our materiality assessment draws on
formal and informal monitoring, from our dialog with stakeholders and from
relevant external studies and reports.
Requested and supervised by the Corporate
Culture and Responsibility Committee (CCRC), UBS’s comprehensive materiality
assessment process is managed by a UBS-internal, cross-business division and
cross-regional materiality assessment team. The team consists of a group of
experts who – due to their function – deal with stakeholder expectations and
concerns on a daily basis. The team is responsible for delivering the outcome
of the materiality assessment to the CCRC on an annual basis.
We also regularly invite stakeholders to
directly share their views. In 2019, we did so through our biannual online
survey that was completed by nearly 3,300 stakeholders, with clients being by
far the largest stakeholder group. We plan to undertake a stakeholder survey
again in 2021.
UBS materiality matrix 2019
The overall results of the
materiality assessment are expressed in the UBS 2019 materiality matrix below.
The matrix ranks topics by their relevance to UBS stakeholders and their impact
on UBS’s sustainable performance. Sustainable performance, one of UBS’s three
principles, signifies our focus on the long term and our efforts to provide
consistent returns to our stakeholders.
For the 2018 materiality matrix, we
substantially reduced the number of topics, including by subsuming several
topics previously listed separately in the matrix (Combating financial crime;
Financial stability and resilience; Cyber security; Conduct; Client protection)
within the topic of Regulatory compliance and by merging topics. In 2019, we
continued with this list of topics. Among the 13 topics, Regulatory compliance
continues to be the most material, followed by, as in 2018, Client experience.
Our materiality assessment also included a
consultation of internal experts on our firm’s significant economic,
environmental and social impacts. We concluded that these impacts are directly
reflected in the topics deemed most material in the GRI-based materiality
assessment and that they are overwhelmingly concerned with economic impacts.
These topics fall within two significant impact areas of our firm: ensuring the
provision of high-quality services to clients and actively managing potential
major risks to clients as well as other stakeholders. Jointly, these two
significant impact areas of our firm are reflected in the highly ranked topics
of Regulatory compliance and Client experience.
® Refer to the Appendix 2 for a detailed overview of the impact of
material GRI topics
As shown in the matrix, stakeholders
currently regard the impact of environmental and social topics as partly influencing
their assessments and decisions. The relevance of these topics has, however,
increased compared to 2018 and, with it, the probability that the relevance of
some of these topics to UBS, notably Climate action and Sustainable investing
will further increase in coming years.
As in previous years, the overall result of
the assessment was reviewed by the CCRC. It also becomes part of the
decision-making processes of this Board of Directors committee with a
particular focus on those topics that were assessed as very relevant or have
considerably increased their relevance since the preceding year.
Material GRI topics
2019
For the purpose of the GRI Standards
materiality assessment we map the GRI topics to UBS’s materiality
matrix and we identify the most material topics on the
basis of their significance to stakeholders and their impact on sustainable performance.
All material topics are relevant to all entities
consolidated within UBS. Information describing any relevant impacts of the
topics outside UBS is provided as part of the description of the respective GRI
indicator or material topic in the following pages.
The following table provides an overview of all
topics on the UBS materiality matrix and their subtopics.
® Refer to the Appendix 2 for relevant management approaches
Materiality under
GRI Standards
Material topics
|
Sub topics
|
GRI topics
|
Governance
|
Regulatory compliance
|
–
client protection: data confidentiality;
transparency (clear terms and conditions of products); fair pricing schemes;
easy-to-understand products and services
–
combating financial crime: anti-corruption
and anti-money laundering; crime and manipulation detection processes
–
conduct: compliance with laws, rules and
regulations; integrity of the financial system; Code of Conduct and Ethics;
forward-looking engagement with risk topics and risk prevention
–
cyber security; data confidentiality and
cyber security
–
financial stability and resilience: going
concern leverage ratio (phase-in, %); common equity tier 1 capital ratio;
manage risk-weighted assets within increasingly stringent risk framework;
clear strategy
|
GRI 417: Marketing and Labeling
GRI 418: Customer Privacy
GRI 205: Anti-corruption
GRI 206: Anti-competitive
Behavior
GRI 419: Socioeconomic Compliance
|
Corporate governance
|
–
internal policies and guidelines
–
governance structure
–
strategy
|
GRI 102: General Disclosures
|
Financial and economics
|
Digital innovation
|
–
innovation lab
–
digital transformation
–
digital product and service offering
|
|
Operational efficiency and
effectiveness
|
–
cost and process efficiency
–
focus on core competencies
–
flexibility to adapt to changing regulatory
environment
–
outsourcing / nearshoring / offshoring
–
automation
–
location strategy
–
product and execution excellence
|
GRI 201: Economic Performance
|
Client experience
|
–
excellence
–
above-average performance
–
best services and practices
|
|
Employees and workplace
|
Compensation
|
–
compensation structure
–
bonus and executive payments
–
reward long-term performance
|
GRI 401: Employment
|
Diversity and inclusion
|
–
diverse work force
–
inclusive culture
–
equal employment conditions and opportunities
–
women in management
–
age diversity within teams
–
flexible working conditions
–
diverse client base
|
GRI 405: Diversity and Equal Opportunity
GRI 406: Non-Discrimination
GRI 419: Socioeconomic Compliance
|
Talent management
|
–
talent attraction
–
employee training on particular skills
–
internal mobility
–
management of talent pipeline and succession
planning
–
talent and leadership development programs
–
provision of apprenticeships and vocational
training
|
GRI 404: Training and Education
|
Material topics
|
Sub topics
|
GRI topics
|
Working culture and environment
|
–
behaviors
–
flexible working times
–
availability of remote working and/or home
office
–
occupational health and well-being: work-life
balance; health protection; health and safety of employees
|
|
Environmental and
social
|
Climate action
|
–
commitment and strategy for the topic of
climate change
–
climate-related investments, financing and
research
–
climate-related risk management
–
external disclosure on the topic
–
increasing energy efficiency and reducing our
CO2 emissions
–
reduction of resource (energy, paper, water)
consumption and increased resource efficiency
|
GRI 201 Economic Performance
GRI 302: Energy
GRI 305: Emissions
Financial Supplement (FS) Product Portfolio
|
Environmental and social risk
management
|
–
identify and manage potential negative
effects on the environment and human rights
–
standards in environmentally and socially
sensitive industries and activities
–
standards in product development,
investments, financing and for supply chain management decisions
–
responsible supply chain management
|
FS Audit
FS Product Portfolio
GRI 308: Supplier Environmental Assessment
GRI 414: Supplier Social Assessment
|
Community investment
|
–
employee engagement through employee
volunteering
–
support of non-profits, charitable
organizations and social enterprises (positive impact on communities)
–
supporting education and entrepreneurship in
local communities
–
financial inclusion
|
GRI 203: Indirect Economic Impacts
|
Sustainable investing
|
–
sustainable finance
–
combination of societal and financial returns
–
sustainable investment criteria
–
impact investing
–
ESG integration
–
client foundation
–
philanthropy advisory
|
FS Product Portfolio
FS Active Ownership
|
Driving change in finance
Driving change in finance
We strive to systematically
incorporate the economic impacts of environmental, social and governance (ESG)
issues into the products and services we provide to clients. We support
corporate and institutional clients who want to generate positive environment
and social impact using our corporate advisory expertise or by directing
capital through our lending or investment capacity. We assist private and
institutional clients in their desire to invest in accordance with their own
social and environmental objectives and we are proactive in discussing these
issues with them.
Sustainable investing
Sustainable investing (SI) is an
approach that seeks to incorporate environmental, social and/or governance
considerations into investment decisions. SI strategies seek to achieve one or
more of the following objectives: achieve a positive environmental or social
impact, align investments with an investor’s personal environmental or social
values, or improve portfolio risk and return characteristics.
As of 31 December 2019, our core SI assets
increased to
USD 488 billion (2018: USD 313 billion) representing 13.5% (2018:10.1%) of our
total invested assets. The major driver behind this increase was the growth in
the “ESG integration“ and “sustainability focus“ categories, which went up 65.9% and 132.4%
respectively. Norms-based screening assets, i.e., assets that fall under the
application of a UBS policy1 and do not otherwise qualify as a core
sustainable investment, amounted to USD 818 billion as of 31 December 2019 (up
from USD 797 billion in 2018). Total sustainable investments, including
norms-based screening assets, accounted for USD 1,306 billion (2018: USD 1,110
billion), or 36.2% (2018: 35.8%), of our total invested assets.
® Refer to “Our focus
on ESG“ in the “How we create value for our stakeholders“ section for more information about our
sustainable investing numbers
In its efforts to achieve UBS’s goal to be a leader
in SI for private clients, Global Wealth Management (GWM) provides clients with
a comprehensive set of SI solutions in its mandate and advisory offerings as
well as through impact investments opportunities. We
offer a suite of discretionary UBS Manage offerings with 100%
(excluding liquidity) sustainable and impact investments available in our main
booking centers worldwide. These offerings are based on our global Chief
Investment Office’s (CIO) UBS House View and align to its SI strategic asset
allocation. In 2019, we successfully piloted our innovative UBS Advice Premium [Sustainable
Investing] offering. Starting from January 2020,
our clients in Booking Center Switzerland can express their sustainability preferences
and receive, after
appropriate fiduciary checks, investment recommendations that are personalized
to their interests and values.
Our global CIO includes material ESG
considerations in its investment research and regularly translates key societal
and environmental concerns into investment themes as part of its Longer Term
Investments series (aimed at investing in long-term solutions to key
environmental and social challenges) and global Research-based Advice. In 2019, some notable examples of CIO perspectives were the World
Economic Forum white paper aimed at encouraging the sustainable finance
community to agree on common terminology and the launch of a new ESG data
management methodology that combines insights from multiple data providers; the
new ESG data framework also aligns with the Sustainability Accounting Standard
Board‘s (SASB) materiality framework terminology.
Simplifying and standardizing sustainable investment terminology is a crucial
part of growing sustainable finance, which is why we partner with Blackrock and
the Institute of International Finance to outline a simplified sustainable
investing taxonomy. We also arrange networking platforms, roundtables and
events for our clients to exchange ideas with one another.
We believe the private sector has a crucial
role to play in bringing innovative solutions to some of the world’s most
pressing issues. This is why UBS supports social entrepreneurs, via the UBS
Global Visionaries program, who are tackling some of the world’s biggest social
and environmental challenges. These Global Visionaries have been
recognized by our teams in GWM for their plans to improve the world in areas
such as health, education, equality and the environment. We connect these
Global Visionaries with our clients, and UBS employees volunteer their time and
expertise to help the Global Visionaries in their endeavors.
Asset Management (AM) has integrated
sustainability into its entire investment approach. We are convinced that
sustainable and impact investing can add value to portfolios within the same
risk / return profile. Investment strategies customized to address particular
sustainability objectives, such as reducing carbon risk or tilting a portfolio
toward specific environmental, social or governance factors, in combination
with traditional financial and risk / return expectations are increasingly
popular. Over the last decade, we have developed capabilities to provide
customized solutions to meet the specific goals and needs of individual
investors. We offer a wide range of SI strategies across various asset classes,
integrating sustainability and impact into our entire mainstream offerings,
including in active equities, fixed income, hedge funds, infrastructure and
private equity, real estate and passive strategies.
1
The assets in discretionary mandates, in UBS’s
actively-managed retail and institutional funds, as well as in our firm’s
proprietary trading book are subject to our firm’s policy on the prohibition of
investment on and indirect financing of companies involved in the development,
production or purchase of anti-personnel mines and cluster munitions.
The Investment Bank
provides industry-leading thematic and sector research in ESG / SI through a
widely recognized team working closely with our global line-up of outstanding
expert sector teams, and UBS Evidence Lab’s primary research specialists. Our
investment solutions include, for example, sustainable and socially responsible
Index-linked notes. We offer capital-raising and strategic advisory services
globally to companies that make a positive contribution to climate change
mitigation and adaptation, including those in the solar, wind, hydro, energy
efficiency, waste and biofuels, and transport sectors. In 2019, the total deal
value in equity or debt capital market services relating to these areas was USD
52.7 billion, and USD 34.5 billion in financial advisory services.
Personal & Corporate Banking clients have
access to appropriate and relevant sustainable investment products from AM and GWM
that follow our Group-wide approach to SI. In addition, our sustainability
analytics offering enables institutional clients to achieve full transparency
by screening their portfolio for industry exposure. We also support energy
utilities in raising capital on international capital markets to progress their
quest for renewable energy. Furthermore, we support Swiss small and
medium-sized enterprises (SMEs) in their energy-saving efforts and transition
to a low-carbon economy. SMEs benefit from initiatives such as energy check-ups
or leasing bonuses (financial contributions toward enhancing environmental
performance) for production machines. In addition, we support Swiss start-ups
in developing innovative circular economy solutions.
Having the financial expertise, networks and
access to the capital required to build or support innovative financial
products, we remain committed to introducing and funding innovative financial
solutions. Examples include the SDG Engagement High Yield Credit funds (in co-operation with Federated Investors and Hermes Investment
Management); the Climate
Aware Equity (TTF), the UBS Managed Portfolio of Sustainable Investments, and our partnership with Align 17.
As of 31 December 2019, we also held green
and social bonds in the amount of USD 867 million in our high-quality liquid
assets portfolios under the management of Group Treasury.
® Refer to the table Key sustainable investing products and
services in 2019 on the following pages for further information
® Refer to www.ubs.com/globalvisionaries for more information
about UBS Global Visionaries
Stewardship / voting rights
UBS Asset Management’s stewardship
policy is our commitment to act as responsible stewards of assets held and
managed on behalf of our clients. We recognize that clients expect us to ensure
the alignment of our approach with their own investment beliefs, policies and
guidelines. We have a strong interest in ensuring that companies in which we
invest on behalf of clients are successful, and through our stewardship
activities we seek to encourage a high standard of corporate practices, develop
a relationship with investee companies and an understanding of mutual
objectives and concerns. In addition, where clients of AM have delegated to us
the discretion to exercise the voting rights for shares they beneficially own,
we have a fiduciary duty to vote such shares in the clients’ best interest and
in a manner which achieves the best economic outcome for their investments.
We maintain a comprehensive database of our
meetings with companies and our voting activities. We review progress over time
and follow up on issues identified. In the 12-month period ended 31 December 2019,
we gave instructions (based on AM’s corporate governance principles) to vote on
104,372 separate resolutions at 10,432 company meetings. Information on such
resolutions and company meetings is provided in the Proxy Voting Dashboard.
® Refer to www.ubs.com/am-sustainability and vds.issgovernance.com/vds/#/MjU0/ for more information and for the Proxy
Voting Dashboard.
Driving change in finance
Key sustainable investing products and services in 2019 2
Product / service
|
Business division
|
Key features
|
The Rise Fund
|
Global Wealth Management (GWM)
|
USD 325 million raised of
client commitments (fund raising concluded)
Invests in seven sectors –
education, financial services, health care, infrastructure, energy, food and
agriculture, and IT – with a dual mandate: generating competitive financial
returns and measurable positive societal outcomes
|
Rethink Impact Fund
|
GWM
|
USD 75 million of client
commitments (fund raising concluded)
Direct-access social impact private
equity fund that invests in early- to growth-stage, high-impact companies,
primarily in the United States. The fund focuses on four themes: health
care, economic opportunity, environmental sustainability, and education
|
OrbiMed Asia Partners III
|
GWM
|
USD 85 million of client
commitments (fund raising concluded)
Growth investments in health care
companies in China and India, focusing on biopharmaceuticals, medical
technology and health care services
|
Generation Partners Sustainable Solutions Fund III
|
GWM
|
USD 94 million of client
commitments (fund raising concluded)
Invests in transformative
technologies providing disruptive solutions to global sustainability
challenges
|
Impact
Direct Investing Offering
|
GWM
|
Initiated to address high demand
for direct impact deals as well as UBS’s strong commitment to support the SDGs
Complements the UBS SI Offering
with direct impact investing opportunities
|
ADM Cibus Fund
|
GWM
|
USD 125 million of client
commitments (fund raising concluded)
Aims to find investment
opportunities arising out of the high-value food supply-demand imbalance
faced by many developing economies, particularly in Asia and Middle East and
North Africa
|
KKR Global Impact Fund
|
GWM
|
USD 244 million of client
commitments
Invests in businesses that
contribute measurable progress toward one or more of the SDGs
|
RXR Qualified Opportunity
Zone Fund
|
GWM
|
USD 283 million of client
commitments
Invests in real estate and/or real
estate –focused businesses within qualified opportunity zones
|
Bridge Workforce &
Affordable Housing Fund
|
GWM
|
USD 167 million of client
commitments
Invests in real estate located
throughout the United States, with a focus on workforce and affordable
multifamily housing communities
|
UBS Manage SI
(discretionary mandate and SI fund)
|
GWM, Personal & Corporate
(P&C)
|
Based on Chief Investment Office
(CIO) SI (sustainable investing) Strategic Asset Allocation (SAA) (100% SI
excl. liquidity allocation)
AuM: USD 9.1 billion (of which USD 7.1
billion track the SI SAA)
|
UBS Managed Portfolio of
SI (US only)
|
GWM
|
Based on CIO SI SAA (100% SI excl.
liquidity allocation)
AuM: USD 284 million
|
UBS Advice Premium SI
|
GWM
|
Innovative Advice mandate,
reflecting our clients’
individual preferences; launched in January 2020
|
Product
/ service
|
Business division
|
Key features
|
SI-focused UBS Advice
solutions
|
GWM
|
Expanded SI offering that includes
mutual funds, exchange-traded funds, separately managed accounts, unit
investment trusts, private equity and structured products
|
SDG Engagement High Yield
Credit funds
|
GWM
|
Launched in co-operation with
Federated Investors and Hermes Investment Management
|
ESG Portfolio Analyzer
|
GWM
|
Provides transparency and analysis
of ESG topics in client portfolios
|
Align
17
|
GWM
|
UBS-initiated third-party digital
marketplace for impact investments that connects private wealth to vetted
co-investment opportunities with diligence done by some of the world’s
leading impact fund managers
|
SI Strategy Fund
|
GWM, P&C
|
Based on CIO SI SAA and aligned to
UBS Manage SI (discretionary mandate)
AuM: USD 154 million
|
UBS Long Term Themes Equity Fund
UBS Long Term Themes
Portfolio SMA
|
GWM, Asset Management (AM)
|
USD 2.5 billion held in Long Term
Themes Fund and mandates
Invests in companies that are
solution providers for challenges such as water scarcity, emerging market
infrastructure and health care, waste management and recycling
|
Climate Aware Equity
(TTF)
Climate
Aware CH Institutional
Climate
Aware UK Life
|
AM
|
Innovative rules-based equities
strategy to address carbon risks and opportunities in portfolios
|
Global
(Engage for) Impact Equity
|
AM
|
Strategy focusing on engagement as
a key driver of impact and investment results
|
US Sustainable Equity
|
AM
|
Sustainability focused US equity fund
|
US Sustainable Growth
Equity
|
AM
|
Sustainability focused US equity
fund
|
Multilateral Development
Bank (MDB)
|
AM
|
Innovative product investing in
Development Bank bonds to support the SDGs through high-grade fixed income
exposure
|
Sustainable Corporate
Bonds
|
AM
|
Investment Grade USD / EUR / CHF
bond portfolios with superior ESG profile
|
Multi Asset
|
AM
|
Multi asset portfolio with enhanced
ESG profile in asset categories where possible
|
Short Duration High Yield
Sustainable Bond
|
AM
|
Investment guidelines with
sustainability criteria aiming to deliver a better sustainability profile
relative to their investment universe
|
Global Gender Equality
|
AM
|
Systematic strategy targeting
companies committed to sustainability and gender diversity
|
S&P 500 ESG
|
AM
|
ETF invested in all equities
included in the S&P 500 ESG index
|
Eurostoxx 50 ESG
|
AM
|
ETF invested in all equities
included in the EURO STOXX 50Ò ESG index
|
Driving change in finance
Product
/ service
|
Business division
|
Key features
|
MSCI China ESG Universal
|
AM
|
ETF invested in all equities
included in the MSCI China ESG Universal 5% Issuer Capped Index
|
JPM Emerging Markets Debt
IG ESG Bonds
|
AM
|
Designed to track the performance
of US Dollar-denominated emerging market fixed and floating-rate debt
instruments classified as investment grade (IG) and issued by Sovereigns,
Quasi-Sovereigns and Corporates.
|
JPM Global Government ESG
|
AM
|
Provides exposure to local currency
sovereign debt that meets certain sustainability standards
|
Voting (on behalf of
clients)
|
AM
|
Provided instructions (based on AM’s
corporate governance principles)
to vote on 104,372 separate resolutions at 10,432
company meetings
|
World Bank Index-Linked
Sustainable Development Bond
|
Investment Bank (IB) / GWM
|
Debt securities issued by the
International Bank for Reconstruction and Development, with a return at
maturity based on the performance of the Global Sustainability Signatories
Index
Provides investors access to a
sustainable development bond issued by the World Bank and access to a global
equity index with companies selected based on ESG ratings
|
Green and sustainable
bonds
|
IB
|
25 green and sustainable bond
transactions supported
|
Global Sustainability
Leaders index
|
IB, GWM
|
Companies selected include leaders
with regard to the UN Global Compact principles
|
Renewable energy and cleantech financing
|
IB
|
Participation in significant renewables
and cleantech deals globally, for both established utilities clients
and innovative growth-stage
companies
|
Energy check-up for SMEs
|
P&C
|
UBS SME efficiency bonus for energy
reduction plan with overall energy savings of 58,000 MWh/a, equivalent to
the annual energy consumption of approximately 3,000 single-family homes3
|
Preferred strategic partner for advisory and financing transactions related to
Switzerland’s Energy Strategy 2050
|
P&C
|
Supports energy utilities in raising capital on international
capital markets to progress their quest for renewable energy
Twelve strategic transactions
executed for Switzerland’s Energy
Strategy 2050
|
2 All information
provided is as of 31 December 2019, except where otherwise noted. 3 Information
provided is as of 31 December 2018
Driving change in philanthropy
UBS Philanthropy
Developed over more than two decades,
our unique, award-winning1 offering partners with clients and their
families to manage their philanthropy and maximize their impact. It is based on
three core pillars: comprehensive advice, insight experiences, and execution
services. We employ an investment-based approach delivering solutions to
pressing social and environmental issues.
UBS Philanthropy Services connects clients to
an international network of expertise and support. With a team of close to
60 philanthropy experts in 12 locations, we can support clients wherever their
philanthropic objectives lead. We work closely with government bodies such as
the United States Agency for International Development and the Department for
International Development in the UK. And alongside academic institutions such
as Oxford, Stanford and Harvard. This breadth and depth of know-how makes sure
that every piece of advice we offer is informed by the latest thinking and a
clear understanding of the prevailing rules and regulations in each territory.
Advice
We provide comprehensive advice to
clients and their families, whatever their philanthropic goals. Examples
include clients considering establishing their first charitable fund and
guidance on how to ensure their giving is tax-efficient, thereby maximizing the
value of their charitable funds.
Insights
We want our clients to be able to
make the best informed decisions about their philanthropy, and a key way we do
that is by connecting people and providing insight through our global network.
This can be anything from a philanthropy insights trip, to a report on the
latest charitable giving tax rules or an invitation to a networking event with
fellow philanthropists.
Execution
We offer a number of execution
services, providing our clients with flexible options on how to manage their
philanthropic giving. They include structures that make it easier and more
cost-effective to put their strategy into practice.
Donor-Advised
Fund
A UBS Donor Advised Fund (DAF) offers
clients an easy flexible and efficient alternative to setting up an independent
foundation. Quick to set up and simple in structure, a DAF can be managed in
line with a client’s usual investment approach. Their charitable donations are
invested within the parameters they select, such as capital, growth or income,
so they can grow their fund to make grants at a later date.
UBS Optimus
Foundation
The Foundation connects clients with
inspiring entrepreneurs, new technologies and proven models that are making a
measurable, long-term difference to the most serious and enduring social and
environmental problems.
UBS Optimus Foundation has a 20-year track
record, is recognized globally as a philanthropic thought leader and as a
pioneer in the social finance space. The latter aims for “impact first“, and often entails greater financial risk than investing in
mainstream assets. In fact, impact bonds or loans for impact are a way to drive
financial returns that are directly linked to actual social impact.
In all its activities, the Foundation always
takes an evidence-based approach and focuses on programs that have the
potential to be transformative, scalable and sustainable. This gives our
clients the reassurance that they are funding innovative projects that have a
stronger chance of achieving all-important systemic change. In some cases, UBS
also makes matching contributions to the Foundation, ensuring that our clients'
donations go even further.
Achievements in 2019
UBS Optimus Foundation raised USD 89.5
million in donations and approved USD 109.5 million grants. Across our
portfolios and programs, we helped improve the well-being of 3.3 million
children worldwide (500,000 more than last year).
Approximately 400 ultra-high
net worth individuals or philanthropists attended our
events on the topic of philanthropy to foster collaboration, share knowledge
and best practice.
1 Best Global Bank for Philanthropy Advice, Euromoney Private Banking
Survey 2017–2019.
Driving change in
business
Driving change in business
This section includes key initiatives
and activities that we are committed to in order to incorporate
sustainability in our way to do business and that meet
the expectations of our stakeholders. These include our management of
environmental and social risks, our firm’s environmental footprint, our
responsible supply chain management and our approach to combating financial
crime.
We recognize that we have a role to play in
leading debates on important societal topics and, in collaboration with other
firms and industry bodies, in setting high standards for these topics in and
beyond our industry. Our key activities in 2019 in this regard are set out in
the table below and on the next page.
Advancing sustainability in the
financial sector – UBS’s key activities in 2019
Initiative
|
Focus topic
|
Role / activity of UBS
|
Key outcome of initiative
in 2019
|
Principles for Responsible
Banking (PRB)
|
Sustainable finance
|
Founding signatory of the PRB
|
Active input to the consultation
process and participation at PRB launch event
|
Financial Stability Board
Task Force on Climate-related Financial Disclosures (TCFD)
|
Climate change
|
Member of TCFD and aligning of UBS
disclosure with TCFD recommendations
|
Continued development and
implementation of TCFD
|
UN Environment Programme
Finance Initiative (UNEP FI)
|
Climate change
|
Collaborates in developing
approaches to help banks disclose their exposures to climate-related risks
and opportunities, as envisioned by the TCFD
|
Launched second phase working group
to expand risk and opportunity assessment methodologies, climate scenarios,
and related data and tools, building on previous efforts disclosed in two
publicly available reports
|
EnergyCom
|
Climate change
|
Premium
partner
|
Key annual Swiss SME event on
climate and energy topics
|
Climate Action 100+
|
Stewardship / climate change
|
Directly
involved in 30 coalitions of investors and engagement lead on seven coalition
dialogues
|
Engagement resulted in strengthened
climate change commitments from some of the world’s largest energy producers
|
Institutional Investors
Group on Climate Change
|
Climate change
|
Participant
and stream lead
|
Chairing working group dedicated to
exploring the alignment of portfolios to the goals of the Paris Agreement
|
Circular Economy Incubator (Impact Hub)
|
Responsible
production
|
Premium partner. In addition, we
support Swiss start-ups in developing innovative business models which follow
the idea of a circular economy (resell and reuse, repair and refurbish).
|
Incubator for Swiss sustainable
start-ups
|
Initiative
|
Focus topic
|
Role / activity of UBS
|
Key outcome of initiative
in 2019
|
Paris Agreement Capital
Transition Assessment (PACTA)
|
Climate change
|
One of
17 banks pilot-testing and shaping the development of the methodology
|
First assessment on the alignment of
corporate lending portfolios with the Paris Agreement benchmarks completed
|
|
Natural capital
|
Participant
in various work streams
|
Continued participation in advisory
committee for the second stage of the project tool ENCORE (Exploring Natural
Capital Opportunities, Risks and Exposure)
|
Natural Capital Finance Alliance
|
Natural capital
|
Participant in various work
streams
|
Continued participation in
advisory committee for the second stage of the project tool ENCORE (Exploring Natural
Capital Opportunities, Risks and Exposure) which maps how
industry sectors depend on nature
|
|
Swiss Sustainable Finance
(SSF)
|
Sustainable finance
|
Member
of SSF board
|
Events and projects to promote
sustainable finance in Switzerland
|
Association for Environmental Management and Sustainability in
Financial Institutions (VfU)
|
Sustainable finance
|
Member of VfU board
|
Events and projects to advance
sustainable finance in Germany, Austria and Switzerland
|
Thun Group of Banks
|
Human rights
|
Convener of Group
|
Thun Group input to OECD Responsible Business Conduct (RBC)
guidance
|
Organisation
for Economic Co-operation and Development (OECD)
|
Due diligence
|
Member of advisory group of OECD
Responsible Business Conduct (RBC) project
|
Launch of OECD guidance on Due
Diligence for Responsible Corporate Lending and Securities Underwriting
|
Belt and Road Green
Investment Principles (GIP)
|
Climate change and sustainable
finance
|
Signatory
to the GIP
|
Participation at the first GIP
Plenary meeting
|
Institute of International
Finance (IIF) Sustainable Finance Working Group (SFWG)
|
Sustainability standards and
regulation
|
Member
of IIF SFWG and lead on policy and regulatory engagement
|
Best practices on TCFD, proposal to
simplify SI taxonomy, greening infrastructure, and continued input to other
initiatives including EC TEG
|
Global Impact Investing
Network
|
Sustainable finance
|
Member
of Investor Council
|
Regular dialogue and event
presentations
|
IFC Operating Principles
for Impact Management
|
Sustainable finance
|
Founding
signatory, Advisory Board member
|
Launch and publication of Principles,
led by World Bank's IFC
|
Impact Management Project
(IMP)
|
Sustainable finance
|
Project
partner
|
Integration of IMP conventions into
diligence and investment approach
|
PRI (Principles for
Responsible Investment)
|
Sustainable finance
|
Various, including members of SDG
Advisory Committee
|
Proposals on how to measure SDGs for
corporations
|
Global Research Alliance
for Sustainable Finance and Investment (GRAFSI)
|
Sustainable finance
|
Sponsor
|
Advance theoretical understanding of
SI / ESG integration
|
UBS ESG and Sustainability
Symposium
|
Sustainable finance and investing
|
Organizer
|
One-day conference around the key
issues the financial markets are navigating, including academic panel (in collaboration
with GRAFSI)
|
UBS Conferences, e.g.,
European Conference, Greater China Conference
|
Various
|
Organizer
|
Variety of panels on sustainable
finance, climate risk, energy transition, etc.
|
Driving change in
business
Environment and human rights
Our environmental management system
covers the entire scope of UBS products, services and in-house operations that
may give rise to an environmental impact. It is externally audited annually and
recertified every three years.
We view the proper management of our firm’s
own environmental footprint and our supply chain as important proof points for
how we do business in a sustainable manner. This is equally true for our
comprehensive management of environmental and social risks (ESR). Our in-house
environmental management, responsible supply chain management (RSCM), and ESR
standards and management are aligned with the UBS in
society strategy and enforced
across the firm.
We constantly strive to reduce our greenhouse
gas (GHG) emissions, waste production, energy and paper consumption as well as
water usage.
By engaging with vendors to promote
responsible practices, we look to reduce negative environmental and social effects
of the goods and services UBS purchases. Our RSCM principles embed UBS’s ethics
and values in our interactions with our vendors, contractors and service
partners. Since 2008, firm-wide guidelines have provided systematic assistance
on identifying, assessing and monitoring vendor practices in the areas of human
and labor rights, environmental protection and corruption. A central component
of this guideline is the UBS Responsible Supply Chain Standard to which our
vendors are bound by contract.
We apply an ESR framework to identify and
manage potential adverse impacts to the environment and/or human rights, as
well as the associated environmental and/or social risks that our clients’ and
our own assets are exposed to. We support the orderly transition to a
low-carbon economy. Our climate strategy underlines our commitment to the
United Nations Sustainable Development Goals on climate action and on
affordable and clean energy – and to the Paris Agreement on Climate Change
(Paris Agreement). We regularly report on the implementation of our climate
strategy and follow the recommendations of the Task Force on Climate-related
Financial Disclosures.
In assessing UBS’s potential human rights
impacts we focus on three key stakeholder groups: employees, clients and vendors.
With regard to employees, UBS, through its human resource (HR) policies and
practices, meets the obligations that a responsible company is expected to
comply with. We review our HR policies and practices on a regular basis to
ensure that human and labor rights continue to be respected. With regard to
clients, we conduct ongoing reviews of our business relationships to assess
whether they might lead to potential negative impacts on rights holders. All
client relationships that are considered important from an ESR point of view
are subject to enhanced ESR due diligence.
With regard to our vendors, we identify
high-risk vendors when establishing new contracts or renewals based on the
vendors’ provision of goods and services that have either a substantial
environmental and social impact, or are sourced in markets with potentially
high social risks. We also regularly screen active vendors as part of our ESR
control processes.
Both our firm’s approach to the environment
and human rights and our commitment to our employees (as reflected in our HR
processes and policies) are overseen by the Board of Directors, notably by the
Corporate Culture and Responsibility Committee (CCRC). Within the parameters
set by the CCRC, environmental and human rights issues at Group Executive
Board-level are overseen by the Global ESR Committee. The CCRC regularly
reviews the assessments and steps taken by the Global ESR Committee toward
executing UBS’s environmental and human rights commitments and climate
strategy.
® Refer to “Our climate strategy” in the “Our governance and
principles“ section and to the “ESR policy framework“ in the Appendix 1 for
more information
® Refer to “In-house environmental management” in this section for more
information
Management of environmental and social risks
We apply an environmental &
social risk (ESR) framework to identify and manage potential adverse impacts on
the environment and/or to human rights, as well as the associated environmental
and social risks to which our clients’ and our own assets are exposed to. Our
comprehensive ESR standards, which are in line with the principles expressed in
the UBS in society constitutional document, govern client and vendor relationships and
are enforced firm-wide.
We have set ESR standards for product
development, investments, financing and supply chain management decisions. As part
of our due diligence process, we engage with clients and vendors to better
understand their processes and policies and to explore how any environmental
and social risks may be mitigated. We apply a precautionary approach by
avoiding transactions, products, services, activities or vendors if they are
associated with material, environmental or social risks that cannot be properly
assessed or mitigated.
Our ESR standards include a description of
controversial activities and other areas of concern where we will not engage,
or where we will only engage with stringent criteria in place, as outlined
below. These standards are reviewed on a regular basis.
Our standard risk, compliance and operations
processes involve procedures and tools for identifying, assessing, reporting
and monitoring environmental and social risks. These include client onboarding,
ongoing Know Your Client reviews, transaction due diligence, product
development, investment decisions, supply chain management and portfolio
reviews.
These processes are geared toward identifying
clients, transactions or vendors potentially in breach of our standards, or
otherwise subject to significant environmental and human rights controversies.
We use advanced data analytics to assess companies associated with such risks,
integrated into our web-based compliance tool, before we enter into a client or
vendor relationship or transaction. This significantly enhances our ability to
identify potential risks. In 2019, 1,889 referrals were assessed by our ESR
unit, of which 82 were rejected or not further pursued, while 299 were approved
with qualifications and 32 were still pending.
® Refer to the “ESR policy framework“ in the Appendix 1 for more
information
We will not do business if associated with severe environmental
or social damage to or through the use of:
|
We will
only do business under stringent criteria in the following areas:
|
– UNESCO world heritage sites
– wetlands, endangered species,
– high conservation value forests, illegal
logging and use of fire,
– child labor, forced labor, indigenous
peoples’ rights
|
– soft commodities: palm oil, soy, timber,
fish and seafood
– power generation: coal-fired power plants,
large dams, nuclear power
–
extractives: arctic
oil and oil sands, coal mining, Liquefied Natural Gas (LNG), ultra-deepwater
drilling, hydraulic fracturing, oil sands, arctic drilling, coal mining,
precious metals, diamonds
|
Driving change in
business
Case studies on the management of
environmental and human rights matters
Environmental
and social risk in trade finance and commodity trade finance
Why is
trade finance relevant?
Trade finance supports about 20% of world trade,
playing a central role in facilitating the global trade of raw commodities and
other goods. Commercial banks support importers, exporters and traders (for commodities)
to secure or finance international transactions. Trade may be exposed to
heightened environmental and social risks, especially when linked with
extraction of raw commodities and/or specific projects. Depending on the type
of the trade, such risks may arise for the
producer, the exporter and/or the importer of traded goods – as well as for the
bank providing the financing.
What do
we do?
UBS enables buyers, sellers and traders to
successfully trade goods and commodities, by guaranteeing deal performance
through a variety of financial instruments. For example, in Commodity Trade
Finance, UBS offers structured, short- to mid-term loans that finance deals
trading metals, energy, and soft-commodities between producers and end users.
Recognizing the role that UBS plays in facilitating and growing global trade,
UBS implements its environmental and social risk framework in the context of
individual transactions.
How do we implement the ESR
framework in trade finance, commodity trade finance?
ESR controls are part of the standard transaction due diligence processes.
Based on our daily feed into the standard compliance tool, every transaction is
checked against ESR. We use a risk-based approach. This means for commodity
trade finance, we focus on the originator of the commodity. For trade finance,
we focus on the counterparty and on projects that will use the goods involved, for
example machinery produced by our client in Switzerland. This means we apply
checks beyond our clients on all relevant counterparties in a transaction. We
may ask additional questions to clarify the origin or the final use of the
goods and we may approve or decline. With a fast moving underlying business
(same day in and out), additional in-depth due diligence is limited on
transactional level. It is however possible to perform enhanced due diligence
during
periodic Know Your Client
reviews or with separate deep-dive reviews in between transactions, which we
conduct on a periodic and ongoing basis.
Climate risks in financing
electric utilities
What are the climate risks
associated with electric utilities?
According to the International Energy Agency, approximately 35% of global power
generation today is coal-fired. As the world transitions to a low-carbon
economy, reliance on coal-fired power generation will reduce significantly,
eventually to 0%. Risks embedded in this transition are found with clients who
have a significant reliance on coal-fired power plants in their own asset
portfolios.
What is our commitment?
We are supporting the utility sector in providing
solutions that are in line with a sustainable development pathway. Recognizing
the climate implications created by the extraction and burning of coal, we are
committed to not providing project-level financing for new coal-fired power
plants globally and only supporting financing transactions of existing
coal-fired operators (>30% coal reliance) who have a transition strategy in
place that aligns with a pathway under the Paris Agreement, or if the
transaction is related to renewable energy.
How do we
execute our commitment when financing electric utilities?
ESR controls are part of our standard transaction due diligence processes.
Utilities are screened for exposure to coal-fired power plants. Where a client
or related entity has coal-fired power plants in their portfolio, we first
determine the current and future asset base of the client, by megawatt capacity
of the various fuel types in the client’s power generation portfolio (e.g.,
nuclear, natural gas and coal). This is determined through desk research,
third-party specialty databases and engaging with the client in question. We
then benchmark the coal reduction trajectory against the Paris
Agreement-aligned benchmarks for host countries, as determined by our
third-party environmental, social and corporate governance data partner. The
rates are then compared to determine if the client’s forward-looking strategy
meets our Paris Agreement-aligned commitment.
Case
study: Non-compliance with the standards of the Roundtable on Sustainable Palm
Oil (RSPO)
Why is palm oil such a hot topic?
It is estimated that more than 50% of tropical
deforestation is due to the production of palm oil, soy, timber and beef. Deforestation
and forest degradation can cause biodiversity to decline. Deforestation is, in
fact, second only to the energy sector as a source of global greenhouse gas
emissions and accounts for up to 20% of global emissions. Furthermore, as
millions of people rely directly on forests, deforestation continues to cause
severe societal problems, sometimes leading to violent conflict.
What do we do?
Before doing business with any company involved in
palm oil production or trading, our experts for environmental and social risk
inquire how a company manages environmental and social challenges in its palm
oil operations, as required by UBS’s standards for palm oil production.
Depending on the client and the type of transaction that UBS is confronted
with, for example lending, trade finance, underwriting or investment banking
advisory mandates, due diligence may involve desk research and interaction with
the companies, external experts, as well as global and local non-governmental
organizations. Depending on the results, this can lead to a variety of actions,
from requesting the client to certify its production or trading processes
against the standards of the RSPO to declining to do business with the client.
How does our ESR approach impact a
particular case?
UBS negotiated the commencement of a relationship
with a corporate client whose activities also included the palm oil business.
At that point, the corporate entity was not a member of the RSPO, which is a
requirement under the respective UBS standard. UBS therefore agreed to a
conditional onboarding of the corporate entity under the condition that it
adhered to the RSPO within a predefined time period. After the agreed period
had passed without the client taking the necessary steps, UBS exited the
relationship.
Driving change in
business
In-house environmental management
Introduction
We are committed to reducing our
environmental footprint and make an effort to go beyond our duty to protect the
environment. We continuously seek to increase recycling and the use of
environmentally friendly products as well as the efficiency of our energy and
water use, decreasing waste, paper usage, business travel and employee
commuting.
We manage our environmental management system
in accordance with ISO 14001. In 1999, we were the first bank to obtain this
ISO certification for our worldwide environmental management system, which
covers the entire scope of UBS products, services and in-house operations that
may cause an environmental impact. It is externally audited on an annual basis,
with our latest recertification having taken place in 2017. We have also
further developed our Environmental and Energy Management System in our
European locations to be compliant with ISO 50001. We received our first ISO
50001 certification (energy management system standard) in 2017, the
recertification is due in 2020.
Our environmental indicators (energy, water,
paper, waste, recycling and travel) and related greenhouse gas (GHG) emissions
data are externally verified on the basis of the ISO 14064 standard. These
comprehensive audits confirm not only that appropriate policies and processes
are in place to manage environmental issues but also that they are applied on a
day-to-day basis.
® Refer to the “Assurance and certification”
section for our ISO certificates
ISO Standard
The International
Organization for Standardization (ISO) is an independent, non-governmental
organization with boards of experts who develop worldwide proprietary,
industrial and commercial standards for global challenges in various
market-relevant topics. ISO Standards help organizations of any size to drive their
internal processes forward and develop their business. ISO 14001 specifies the requirements for an environmental
management system of organizations, ISO 14064 helps companies to quantify and
report their GHG and manage its verification, whereas ISO 50001 focuses on
their energy management system and their continual improvement of energy
performance.
Objectives and targets
We have established environmental
objectives at relevant levels and functions. To continuously improve our
environmental performance, we have set quantitative targets related to our
significant environmental aspects since 2006. The current quantitative
objectives were set in 2016 and have 2020 as the target year.
Environmental targets and performance in
our operations1
|
|
GRI2
|
2019
|
Target 2020
|
Baseline
|
% change from baseline
|
Progress /
Achievement7
|
2018
|
2017
|
|
|
|
|
|
|
|
|
|
Total net greenhouse gas emissions (GHG footprint) in t CO2e3
|
305
|
103,670
|
-75%
|
360,5014
|
-71.2
|
l
|
131,960
|
147,757
|
Energy consumption in GWh
|
302
|
556
|
-5%
|
6615
|
-15.9
|
l
|
584
|
627
|
Share of renewable electricity
|
302
|
72.0%
|
100%
|
27.7%4
|
158.7
|
l
|
59.2%
|
56.0%
|
GHG offsetting (business air travel) in t CO2e3
|
305
|
42,949
|
100%
|
04
|
100
|
l
|
50,166
|
54,412
|
Paper consumption in kg per FTE6
|
301
|
78
|
-5%
|
1145
|
-31.5
|
l
|
91
|
95
|
Share of recycled and FSC paper
|
301
|
83.4%
|
90%
|
89.5%5
|
-6.8
|
l
|
79.8%
|
90.8%
|
Waste in kg per FTE6
|
306
|
156
|
-5%
|
2065
|
-24.2
|
l
|
175
|
203
|
Waste recycling ratio
|
306
|
51.2%
|
60%
|
54.1%5
|
-5.5
|
l
|
50.8%
|
55.0%
|
Water consumption in m m3
|
303
|
0.79
|
-5%
|
0.965
|
-17.7
|
l
|
0.79
|
0.87
|
Legend: CO2e = CO2 equivalents; FTE =
full-time employee; GWh = giga watt hour; kWh = kilo watt hour; km =
kilometer; kg = kilogram; m m3 = million cubic meter; t = tonne
1 Reporting
period 2019 (1 July 2018-30 June 2019). 2 Reference to
GRI Sustainability Reporting Standards (see also www.globalreporting.org). 3 GHG footprint
equals gross GHG emissions minus GHG reductions from renewable energy and GHG
offsets (gross GHG emissions include: direct GHG emissions by UBS; 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). 4 Baseline year 2004. 5 Baseline year
2016. 6 FTEs are
calculated on an average basis including contractors. 7 Green: on
track; Amber: improvements required.
|
GHG emissions
In
line with our climate strategy, we aim to reduce our GHG footprint 75% by 2020
compared to 2004.
Our strategy to reduce GHG emissions is based
on increasing energy efficiency, replacing fossil fuel-based heating systems
with renewable heating systems and increasing our share of renewable energy. In
various branches in Switzerland, we have replaced oil heating systems with
geothermal heat pumps and district heating with heat from waste incineration
plants.
In 2019, we cut UBS’s GHG footprint by
another 21%, or 26% per full-time employee, year on year. This is a total
reduction of 71% since 2004.
Driving change in
business
Sustainable real estate
The
building infrastructure directly impacts our environmental footprint. Taking a
building life cycle perspective, we apply our environmental consideration
before we enter a new building and until we exit the building. To reduce our
impact on the environment, we have adopted well-recognized green building
standards, such as LEED (Leadership in Energy and Environmental Design) or local green building standards, to manage our real estate's
environmental aspect, including green lease. Across our global building portfolio, eight projects achieved LEED certification
in 2019.
In
India Pune EON, our office has been certified to LEED Platinum. It was designed
to optimize energy consumption which helps us reduce our environmental
footprint. In this newly built office, we achieved 57% energy saving in
lighting over the LEED baseline.
Collaboration is at the core of our culture,
and a key to our success. We are committed to creating smart and engaging
workspaces that bring employees closer together and focused on increased
productivity and more frequent interaction.
Transitioning to an agile desk sharing work
space in our newest build outs in our campus in Lincoln Harbor enables us to
reduce our real estate footprint. We are in the process of attaining a LEED
certification for these new spaces.
Energy
consumption
For the last decade, we have managed
to consistently reduce our energy consumption. In 2019, we used 556 GWh, which
is equal to a reduction in energy consumption of 5% compared to 2018. This
success was mainly driven by environmental as well as energy management
measures. We pursue a holistic approach, incorporating all levels of our
organization. For example, through strategic measures at company level, like
the targeted adaption of energy composition, adaptive measures in portfolio
management (such as consolidating workspaces in energy-efficient buildings and alternative workplace
concepts) or stricter procurement guidelines, we set the framework for
continued improvement. This strategic orientation is then implemented
throughout the firm, leading to tangible changes in the whole organization.
Thereby, we implement smaller measures like switching to LEDs, refurbishing windows
or optimizing building services (such as heating, cooling, ventilation and lighting).
To ensure successful implementation, as well as for monitoring purposes, we
have externally audited and certified the accuracy of our energy reporting (ISO
14064), document successful building projects with LEED certificates and
constantly review and update quantitative targets.
Global IT demand has drastically increased over the years. However, we
have achieved significant improvements in IT operational efficiencies.
Strategic programs include transformation to next-generation networks,
modernization and virtualization of the global server estate. Consolidation of
desktop computers to centrally based systems within data centers has also
significantly reduced desktop power and hardware requirements. Although
business demand in 2019 has increased by 10% for computers and by 36% for
storage, the technology refresh strategy and virtualization programs have meant
that data center power demand has remained stable.
Driving change in
business
Renewable energy
In order to strengthen our commitment
to limiting the effects of climate change and enabling the orderly transition
to a low-carbon economy, we joined the RE100 initiative in September 2015. By mid-2020,
we will source 100% of our electricity from renewable sources, which will help
reduce our GHG footprint by 75% compared to 2004.
Where possible, we try to produce our own
renewable electricity for the buildings we occupy.
In 2019, 72% of UBS’s worldwide electricity
consumption was drawn from renewable sources. In Switzerland we started over 12
years ago and have been sourcing electricity from 100% renewable sources in
various countries around the globe, such as Germany, the UK and Austria. In 2019, we signed a
long-term solar energy deal in Singapore, which will locally supply renewable energy
to support our operations in Singapore over the next 10 years.
As part of the effort to meet UBS’s global RE
100 commitment, we signed an agreement to purchase approximately 135,000
renewable energy credits (RECs) to match our 2019 electricity consumption in
twelve countries across the Americas region, including Brazil, Canada, Chile,
Colombia, Mexico and the US.
RE
100
RE100 is a global initiative launched by The
Climate Group in partnership with CDP, urging the world's most influential
companies to commit to source 100% of their electricity from renewable sources.
RE100 brings together more than 200 multinationals committed to 100% renewable electricity.
Business travel and offsetting CO2 emissions
Business travel is a necessary part
of the way we work, and is regarded as an enabler for business. Nevertheless,
we continue to challenge ourselves on the need, frequency and type of travel.
Working with partners that invest in sustainable aviation fuel (SAF), improved
waste management (in the air and on the ground) and more fuel-efficient
aircraft fleets, we maintain a keen interest in lowering the carbon intensity
of our business travel.
Over the years, we have taken many steps to
encourage the use of collaborative work tools, like Skype or video conference,
in order to reduce the need to travel. Overall demand management as well as
general behavioral change have led to a 19% reduction in air spend, non-client-related
air travel was reduced by 30%. In addition, high-speed rail travel has
increased by 5%, compared to 2018.
Since 2007, we have been offsetting all of
our CO2 emissions from business air travel. We currently support two
major wind power Gold Standard projects in Europe and Asia, reducing the same
amount of CO2 emissions and contributing to local sustainable
development.
We encourage the shift to electric mobility
and are expanding our e-charging stations in Switzerland and Germany. This
gives our employees and clients the opportunity to charge their electric or
hybrid cars with renewable energy while on site.
Gold Standard
Gold
Standard was established in 2003 by WWF and other international non-governmental
organizations to ensure projects that reduced carbon emissions featured the
highest levels of environmental integrity, are trustful, verifiable and make
measurable contributions to sustainable development.
Driving change in
business
Paper
Our total paper consumption is at an
all-time low and is composed of 36% copier or printer paper, 36% client output,
16% publications and the remainder are for various paper products. Globally,
around 83% of our paper consumption originates from recycled sources or those
certified by the Forest Stewardship Council (FSC). UBS has been using paper
from sustainable sources since 2006.
Digitalization brings environmental, economic
and client experience benefits. The more digitally based online services we
offer to our clients, the more we improve our efforts to go paperless. In
September 2019, our active UBS Digital Banking clients in Booking Center
Switzerland were informed that bank documents, credit card and prepaid card
invoices would be sent to them digitally. By going digital, documents are now
available faster and the environmental impact is reduced significantly. We are
also moving away from paper internally. Our digitalization efforts here involve
creating digital copies of paper-based information, through scanning and
machine-reading technologies turning paper into data. Simplifying, automating
and digitizing processes leads to more efficiency and effectiveness. Many of
our meeting rooms have video capability which saves the need to print multiple
presentations.
Our Digital Mailroom program is a further concrete
example of our sustainable engagement. The objective of this program is to
support the implementation of our digital office strategy, by digitizing all
physical inbound mail and therefore allowing integrated and digital processing
within the bank.
Over the past year, our Secure Print team has
been working on installing 8,400 new secure printers in UBS offices in 32 UBS
countries around the world. This helps preventing accidental extra printing.
Waste and recycling
“Single-use” was named word of the year
by Collins Dictionary in 2018. Global awareness on the adverse impact of single-use
plastic and plastics waste streams – which harm wildlife, pollute beaches and threaten
our food security – has continued to increase since.
We have implemented a variety of strategies
across our firm to reduce waste and increase the amount of reused and recycled
products. At the beginning of 2019, we started to remove single-use (plastic)
items globally. We eliminated disposable coffee and water cups in office
kitchens with a limited number of compostable coffee cups being made available
if necessary. Employees have been encouraged to bring their own reusable coffee
mugs and water bottles to support this effort, and our firm has either provided
reusable mugs or sold branded mugs, water bottles and reusable cutlery to
support these initiatives. Plastic bottles in vending machines and other points
of sale are being replaced with glass and aluminum product alternatives. We
removed the option to choose disposables for internal catering orders.
UBS technology is constantly changing and
evolving, from end user desktop computers to servers, storage, networks and the
data center physical infrastructure itself. Our asset recovery program includes
hardware and peripheral components from both our data centers and office
buildings. On occasion, these changes require the decommissioning and disposal of
hardware, which is always performed in alignment with the ISO 14001 standard by
our accredited, licensed global providers.
With all these activities, we are looking to
drastically reduce our amount of waste, specifically the plastic and non-recyclable
material found in all our locations worldwide. In 2019, 51% of waste produced
in UBS locations was recycled.
Water
Water, both waste and clean, is a
central focus of our environmental program. We are determined to reduce the
overall usage of fresh water at. Many measures have been taken, ranging from
water-saving fittings to rainwater collection. To ensure continuous reduction
in water consumption, rules have been implemented for procurement, building
utility replacements and new developments, thus allowing for long-term
refinement. Adequate disposal of wastewater is also a priority. Negative
environmental impacts, especially ecotoxicology, loading of waterbodies with
nitrogen and phosphorus as well as public health are taken into consideration.
Overall, we reduced our water usage by 52% since 2009.
Reporting
standards and methodologies
We have prepared our GHG reporting in
accordance with key concepts and requirements stated by the International
Organization for Standardization in ISO 14064-1 (specification with guidance at
the organization level for quantification and reporting of GHG emissions and
removals) and the World Business Council for Sustainable Development / World
Resources Institute in the Greenhouse Gas Protocol Corporate Accounting and
Reporting Standard.
Our firm’s environmental and GHG reporting
has been prepared based on a reporting year of 1 July to 30 June. This differs
from UBS’s financial reporting period (1 January to
31 December).
Driving change in
business
All GHG emission
figures are in tons of carbon dioxide equivalents (CO2e) and include
three of the six GHGs covered by the Kyoto Protocol – carbon dioxide (CO2),
methane (CH4) and nitrous oxide (N2O). We have omitted
hydrofluorocarbon (HFC) emissions from our reporting, as they are not a
material source of GHGs for the business. There are no GHG sources contributing
to perfluorocarbons (PFCs) and sulphurhexafluoride (SF6) emissions.
Direct GHG emissions and indirect GHG
emissions from electricity have been reported by UBS Group AG, its branches,
representative offices and entities where UBS has operational control and
through which UBS conducts its banking and finance business or provides
services in support of such business. Based on the GHG protocol Scope 2 Guidance
and Scope 3 Standard, energy consumption for heating purposes of leased space,
where UBS does not have any operational control of the heating system, is
classified as other indirect GHG emissions.
We have determined the GHG emissions
associated with UBS activities on the basis of measured or estimated energy and
fuel use, multiplied by relevant GHG emission factors.
Where possible, fuel or energy use is based
on direct measurement, purchase invoices or actual mileage data covering more
than 80% of our reported energy usage. In other cases it has been necessary to
make estimations.
We used published national conversion factors
and global warming potentials (GWPs) to calculate emissions from operations. In
the absence of any such national data, we used the UK Government GHG Conversion
Factors for Company Reporting for the calculation of GHG emissions.
The GHG base year was set as 2004 (July 2003
to June 2004), as this was the first year we reported detailed GHG emissions
verified according to ISO 14064. The 2004 GHG footprint baseline is 360,502
tons and consists of 41,858 tons scope 1, 219,727 tons net scope 2, and 98,918
tons scope 3 emissions. The appropriateness of the base year is reviewed on an
annual basis. In 2006, we set global quantitative objectives for energy, paper,
waste and water for 2009. They were revised and extended three times so far and
covered the periods 2009 until 2012 and 2012 until 2016. The current
quantitative objectives have 2016 as a baseline and 2020 as a target year.
Environmental indicators1
|
|
|
|
|
|
|
|
|
|
|
|
20192
|
|
20182
|
20172
|
|
GRI3
|
|
Absolute normalized4
|
Data quality5
|
Trend6
|
|
Absolute normalized4
|
Absolute normalized4
|
Total direct and intermediate
energy consumption7
|
302
|
|
556 GWh
|
***
|
à
|
|
584 GWh
|
627 GWh
|
Total direct energy
consumption8
|
302
|
|
55 GWh
|
***
|
æ
|
|
60 GWh
|
68 GWh
|
natural gas
|
|
|
87.2%
|
***
|
à
|
|
88.0%
|
84.8%
|
heating oil
|
|
|
7.4%
|
***
|
æ
|
|
7.9%
|
10.4%
|
fuels (petrol, diesel, gas)
|
|
|
4.6%
|
***
|
á
|
|
3.7%
|
4.4%
|
renewable energy (solar power, etc.)
|
|
|
0.8%
|
***
|
á
|
|
0.4%
|
0.4%
|
Total intermediate energy
purchased9
|
302
|
|
501 GWh
|
***
|
à
|
|
524 GWh
|
559 GWh
|
electricity
|
|
|
436 GWh
|
***
|
à
|
|
457 GWh
|
491 GWh
|
electricity from gas-fired power stations
|
|
|
10.1%
|
***
|
â
|
|
13.9%
|
15.2%
|
electricity from oil-fired power stations
|
|
|
1.8%
|
***
|
â
|
|
2.3%
|
2.5%
|
electricity from coal-fired power stations
|
|
|
11.9%
|
***
|
â
|
|
16.5%
|
16.7%
|
electricity from nuclear power stations
|
|
|
4.6%
|
***
|
â
|
|
8.2%
|
9.6%
|
electricity from hydroelectric power stations
|
|
|
35.8%
|
***
|
à
|
|
35.6%
|
34.6%
|
electricity from other renewable resources
|
|
|
35.8%
|
***
|
á
|
|
23.5%
|
21.4%
|
heat (e.g., district heating)
|
|
|
65 GWh
|
**
|
à
|
|
67 GWh
|
68 GWh
|
Share of electricity from
renewable sources
|
302
|
|
72%
|
***
|
á
|
|
59%
|
56%
|
Total business travel
|
|
|
459 m Pkm
|
***
|
â
|
|
532 m Pkm
|
579 m Pkm
|
rail travel10
|
|
|
2.4%
|
***
|
á
|
|
2.2%
|
1.9%
|
road travel10
|
|
|
1.1%
|
***
|
à
|
|
1.0%
|
1.6%
|
air travel
|
|
|
96.5%
|
***
|
à
|
|
96.8%
|
96.4%
|
Number of flights (segments)
|
|
|
218,679
|
***
|
â
|
|
246,107
|
250,743
|
Total paper consumption
|
301
|
|
5,370 t
|
***
|
æ
|
|
5,852 t
|
5,866 t
|
post-consumer recycled
|
|
|
21.9%
|
***
|
á
|
|
14.1%
|
14.9%
|
new fibers FSC11
|
|
|
61.5%
|
***
|
æ
|
|
65.7%
|
75.9%
|
new fibers ECF + TCF11
|
|
|
16.5%
|
***
|
â
|
|
20.2%
|
9.2%
|
new fibers chlorine-bleached
|
|
|
0.02%
|
**
|
â
|
|
0.04%
|
0.07%
|
Total waste
|
306
|
|
10,749 t
|
***
|
à
|
|
11,252 t
|
12,543 t
|
valuable materials separated and recycled
|
|
|
51.1%
|
***
|
à
|
|
50.8%
|
55.0%
|
incinerated
|
|
|
16.1%
|
***
|
à
|
|
16.0%
|
16.9%
|
landfilled
|
|
|
32.7%
|
**
|
à
|
|
33.2%
|
28.1%
|
Total water consumption
|
303
|
|
0.79 m m3
|
**
|
à
|
|
0.79 m m3
|
0.87 m m3
|
Greenhouse Gas (GHG)
Emissions in CO2e
|
305
|
|
|
|
|
|
|
|
Direct GHG emissions (Scope 1)12
|
|
|
10,574 t
|
***
|
æ
|
|
11,522 t
|
13,305 t
|
Gross indirect GHG emissions (Gross Scope 2)12
|
|
|
142,636 t
|
***
|
æ
|
|
150,957 t
|
161,349 t
|
Gross other indirect GHG emissions (Gross Scope 3)12
|
|
|
62,585 t
|
***
|
â
|
|
71,389 t
|
76,763 t
|
Total Gross GHG Emissions
|
|
|
215,794 t
|
***
|
æ
|
|
233,868 t
|
251,417 t
|
GHG reductions from renewable energy13
|
|
|
(69,175) t
|
***
|
á
|
|
(51,742) t
|
(49,247) t
|
CO2e offsets (business air travel)14
|
|
|
(42,949) t
|
***
|
â
|
|
(50,166) t
|
(54,412) t
|
Total Net GHG Emissions (GHG
Footprint)15
|
|
|
103,670 t
|
***
|
â
|
|
131,960 t
|
147,757 t
|
Legend: GWh = giga watt hour; Pkm = person kilometer; t = ton; m3
= cubic meter; m = million; CO2e = CO2 equivalents
1 All figures are
based on the level of knowledge as of January 2020. 2 Reporting
period: 2019 (1 July 2018 – 30 June 2019), 2018 (1 July 2017 – 30 June 2018),
2017 (1 July 2016 – 30 June 2017) 3 Reference to
GRI Sustainability Reporting Standards (see also www.globalreporting.org).
4 Non-significant
discrepancies from 100% are possible due to roundings. 5 Specifies the
estimated reliability of the aggregated data and corresponds approximately to
the following uncertainty (confidence level 95%): up to 5% – ***, up to 15% –
**, up to 30% – *. Uncertainty is the likely difference between a reported
value and a real value. 6 Trend: at a ***/**/* data quality, the respective trend is
stable (à) if the variance equals
5/10/15%, low decreasing / increasing (æ,ä) if it equals
10 /20/30% and decreasing / increasing if the variance is bigger than
10/20/30% (â,á). 7 Refers to energy consumed within the operational boundaries of
UBS. 8 Refers to
primary energy purchased that is consumed within the operational boundaries
of UBS (oil, gas, fuels). 9 Refers to energy purchased that is produced by converting
primary energy and consumed within the operational boundaries of UBS
(electricity and district heating). 10 Rail and road
travel: Switzerland only. 11 Paper produced from new fibers. FSC stands for Forest
Stewardship Council, ECF for Elementary Chlorine Free and TCF for Totally
Chlorine Free. 12 Refers to ISO 14064 and the “GHG (greenhouse gas) protocol
initiative” (www.ghgprotocol.org), the international standards for GHG
reporting: scope 1 accounts for direct GHG emissions by UBS; gross scope 2
accounts for indirect GHG emissions associated with the generation of
imported / purchased electricity (grid average emission factor), heat or steam;
gross scope 3 accounts for other indirect GHG emissions associated with
business travel, paper consumption and waste disposal. 13 GHG savings by
consuming electricity from renewable sources 14 Offsets from
third-party GHG reduction projects measured in CO2 equivalents (CO2e).
These offsets neutralize GHG emission from our business air travel. 15 GHG footprint
equals gross GHG emissions minus GHG reductions from renewable energy and CO2e
offsets.
|
Driving change in
business
Environmental indicators per full time employee
|
|
Unit
|
2019
|
Trend
|
2018
|
2017
|
Direct and intermediate energy
|
kWh / FTE
|
8,081
|
â
|
9,080
|
10,151
|
Business travel
|
Pkm / FTE
|
6,670
|
â
|
8,272
|
9,377
|
Paper consumption
|
kg / FTE
|
78
|
â
|
91
|
95
|
Waste
|
kg / FTE
|
156
|
â
|
175
|
203
|
Water consumption
|
m3 / FTE
|
11.5
|
æ
|
12.3
|
14
|
CO2 footprint
|
t / FTE
|
1.51
|
â
|
2.05
|
2.39
|
Legend: FTE = full-time employee; kWh = kilo watt hour; Pkm =
person kilometer; kg = kilogram; m3 = cubic meter; t = ton
Note: FTEs are calculated on an average basis including FTEs
that were employed through third parties on short term contracts.
|
Responsible supply chain management
We embed environmental and social
standards into our sourcing and procurement activities. Our firm-wide responsible
supply chain management (RSCM) framework is based on identifying, assessing and
monitoring vendor practices in the areas of human and labor rights, the
environment, health and safety and anti-corruption, in line with our commitment
to the UN Global Compact and the UBS in society
constitutional document.
In 2019, remediation measures were requested
for 18 vendors that provide UBS with goods and services with high risk. Improving
their adherence to UBS’s RSCM standards has a potentially high positive impact.
Committing our vendors to our standards
We aim to reduce negative environmental
and social effects of the goods and services UBS purchases and we engage with vendors to promote responsible practices. A central
component of our RSCM framework is the UBS Responsible Supply Chain Standard to
which our direct vendors are bound by contract. The standard defines our
expectations towards vendors and their subcontractors regarding legal
compliance, environmental protection, avoidance of child and forced labor,
non-discrimination, remuneration, hours of work, freedom of association, humane
treatment, health and safety and anti-corruption issues and a whistleblowing
mechanism to support and protect employees.
® Refer to the “Our documents” page on www.ubs.com/insociety to download the Responsible Supply Chain Standard in various languages
Identifying,
assessing and monitoring high-impact vendors
The RSCM framework includes an impact
assessment of newly sourced goods and services, which takes into account
potential negative environmental and social impacts along the lifecycle of a
product or a service, and all purchased goods and services are categorized
accordingly.
We identify high-impact vendors when
establishing new contracts or renewals based on the vendors’ provision of goods
and services that have either a substantial environmental and social impact or
are sourced in markets with potentially high social risks. Such high-impact vendors
are requested to fulfill further requirements towards product and service
provision and are assessed against the UBS Responsible Supply Chain Standard.
If this assessment reveals any non-compliance with our standard, UBS defines
and agrees, together with the vendor, on specific improvement measures, which
we monitor. Lack of improvement may lead to the termination of the vendor
relationship. We also regularly screen active vendors as part of our environmental and social risk control processes.
Vendors of potentially high-impact goods or
services are requested to conduct a self-assessment on their responsible
management practices and to provide corresponding evidence. Actual and
potential negative impacts that are considered in the impact assessment of
purchased goods and services include:
® Adverse
environmental impacts due to inefficient use of resources (e.g., water, energy,
biomass) and emissions during the lifecycle of the product
® Hazardous
substances, emissions, pollutants and limited recyclability of products,
adversely affecting people and the environment
® Unfair
employment practices, such as low wages, excessive overtime, absence of
occupational health and safety measures
® Risks
for consumer health and safety
® Procurement
and use of materials with a strongly negative environmental and/or social
impact
® Insufficient
management of subcontractors regarding sustainability aspects
In 2019, 103 vendors were classified as vendors
that provide UBS with goods or services with potentially high impacts, both
newly sourced as well as ongoing engagements, which are regularly re-assessed.
17% of these vendors were considered as in need of improving their management
practices. Specific remediation actions were agreed with all of them and the
implementation progress has been closely monitored.
In 2019, no UBS vendor relationship was
terminated as a result of RSCM assessments. This can partly be related to the
fact that we assess the vendor’s potential risks before entering into a
contract with them.
Driving change in
business
Combating
financial crime
We are committed to combating money
laundering, corruption and terrorist financing and have
implemented policies, procedures and internal controls that are designed to
comply with such laws and regulations. We have
developed a financial crime prevention framework that is intended to prevent,
detect and report money laundering, corruption and terrorist financing.
We annually assess the money laundering,
bribery and corruption, and sanctions risks associated with all of our business
operations against our control framework, and take actions to further mitigate
these risks.
We are a founding member of the Wolfsberg Group,
an association of global banks that aims to develop financial services industry
standards for policies on preventing financial crime such as corruption, money
laundering and terrorist financing, and on Know Your Client principles. The
Wolfsberg Group brings together banks globally at its annual forum and regional
reach-out meetings focused on financial crime topics and works on guidance
papers in related key areas of AML.
Together with the other members of the
Wolfsberg Group, we work closely with the Financial Action Task Force (FATF),
an intergovernmental body that helps develop national and international
policies on preventing money laundering and terrorist financing through
consultation with the private sector. We have adopted the global FATF standards
with respect to record keeping.
In 2019, we have successfully achieved ISO
certification in accordance with ISO standard Anti Bribery Management System
37001:2016. The audit certifies that UBS’s global anti-bribery & corruption framework meets global
requirements to prevent and detect bribery as defined by ISO, and it evidences
UBS’s commitment. The ISO certification is renewed annually and is the result
of UBS proactively engaging an accredited ISO auditor. The ISO standard
requires a series of measures which are aimed at preventing, detecting and
addressing bribery. Such measures include, but are not limited to: policies and
procedures, culture and tone from the top, appropriate resourcing, training,
risk assessments, third party due diligence, and implementing appropriate
controls.
® Refer to the “Assurance and
certification” section for the ISO 37001:2016 certificate
Monitoring
We apply Know Your Client 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 financial crime prevention
program.
Our framework requires any suspicious activities
to be promptly escalated to independent control units and external authorities,
as required by law. Our monitoring framework covers risk-based transaction
monitoring, real-time screening and retroactive searches. The UBS AML
monitoring framework is established in accordance with the Monitoring Screening
and Searching Wolfsberg Statement and is reviewed on an annual basis.
® Refer to the “Our governance and principles” section for information
about combating financial crime governance and policies
Ratings and recognitions
In 2019, we continued to gain
industry recognition for our commitment to improving performance under ESG
criteria and for our efforts in offering clients world-class expertise and
sustainable products. For the fifth year running, we were named the best
performer in the Diversified Financial Services and Capital Markets Industry of
the Dow Jones Sustainability Index (DJSI), the most widely recognized corporate
sustainability rating. MSCI ESG Research maintained our rating at AA, while
Sustainalytics ranked our firm as an industry leader.
Ratings and recognitions1
Ratings and recognitions
|
Scope
|
UBS result
|
Dow Jones Sustainability
Indices (DJSI)
|
Environmental, social and governance
(ESG) performance
|
Industry leader
Index member of DJSI World and DJSI
Europe
|
CDP
|
Climate change
|
Climate A- rating (on Leadership
band)2
|
Sustainalytics
|
ESG performance
|
Leader score within our industry
95th percentile ranking
|
MSCI
|
ESG performance
|
AA rating
Top three among primary peer group3
|
ISS-ESG
|
ESG performance
|
Corporate responsibility prime status
|
FTSE4Good Index
|
ESG performance
|
Index member
|
Euromoney Private Banking and
Wealth Management Survey 2019
|
Philanthropic advice
|
Winner
|
Euromoney Private Banking and
Wealth Management Survey 2019
|
SRI / Social impact investing
|
Winner
|
PWM / The Banker Global
Private Banking Awards 2019
|
Sustainable investing
|
Winner
|
Environmental Finance
Sustainable Investment Awards 2019
|
Best ESG Hybrid Fund
|
Winner
|
Environmental Finance
Sustainable Investments Awards 2019
|
Best ESG Initiative of the Year
|
Winner
|
GRESB Real Estate, Debt
and Infrastructure assessments
|
Sustainability performance of real
asset portfolios worldwide
|
Submission of 20 of REPM’s (Real Estate & Private Markets) flagship funds (across real
estate equity, real estate debt and infrastructure globally), representing
95% of REPM’s direct pooled real estate and infrastructure vehicles globally. 15 real estate and infrastructure funds achieved 5-star status,
the highest recognition available
|
ShareAction
|
Stewardship
|
AM ranked as the leading asset
manager globally for voting on climate-related resolutions
|
Driving change in
business
Ratings and recognitions (continued)
Ratings and recognitions
|
Scope
|
UBS result
|
Corporate Engagement
Awards
|
Community investment
|
Gold for Best Educational Programme
Best alignment of brand values
through sponsorship activity
|
Better Society Awards (UK)
|
Community investment
|
Highly Commended for Commitment to
Local Community
|
Global Good Awards (UK)
|
Community investment
|
Gold for Community Partnerships in
Education and Entrepreneurships
Silver Award in the Best Education
Project category for UBS’s 10 year partnership with The Bridge Academy
|
2019 Top 10 Enterprises
for Public Welfare (China)
|
Community investment
|
Winner of the Charity Award
|
Japan Corporate
Philanthropy Award (Japan)
|
Community investment
|
Grand Prix of the Award
|
Employer of Tomorrow Award
(Polish Agency for Enterprise Development)
|
Employment-related and community
investment
|
Winner
|
World’s Most Attractive Employers
(Universum)
|
Employment-related
|
Top 50
|
Bloomberg Gender-Equality Index
|
Employment-related
|
Index member
|
Working Mother magazine's
"100 Best Companies" (US)
|
Employment-related
|
Top 100
|
Best Places to Work for
LGBT Equality (Human Rights Campaign), US
|
Employment-related
|
15th consecutive year
|
The Times Top 100 Graduate
Employers (UK)
|
Employment-related
|
Top 100
|
Best HR Center of
Expertise in Greater China Award (HRoot 2019)
|
Employment-related
|
Winner
|
1 All information provided is as of 31 December 2019, except where
indicated. 2 As of 20
January 2020 3 As defined in the UBS Compensation Report 2019
Driving change in
communities
Driving change in communities
Overview
At UBS, we are committed to making a
lasting impact by addressing and overcoming disadvantage within our local
communities. Our Community Affairs programs enable us to achieve this
commitment. Through successful and sustainable partnerships with non-profit
organizations and social enterprises, we make long-term investments into
education and entrepreneurship. We provide strategic financial commitments and
focused employee volunteering to drive change.
We believe every individual plays a role in
ensuring a healthy and thriving future for our communities. This is why we
offer UBS employees two days of paid leave to volunteer each year. Our focus on
skills-based volunteering aims to address issues within society that hinder
sustainable growth and development.
® Refer to www.ubs.com/insociety for more information
Our contributions
in 2019
Our Community Affairs framework is
global in scope and delivers both community and business impact in each of the
regions in which we operate. The globally mandated strategy is flexible in
nature, and regional execution of the strategy ensures we are aligning our
programs to address local community issues and support business priorities. The
impact of our Community Affairs program is driven by both financial donations
and hours volunteered by our employees.
We use a global framework, based on the
industry-leading London Benchmarking Group (LBG) model, for measuring and
reporting on our Community Affairs programs and investments. Use of such a
standardized model across our global strategy ensures that we are able to
effectively focus our approach.
–
Cash – direct cash contributions from the firm, including support
through its affiliated foundations in Switzerland and the UBS Anniversary
Education Initiative and contributions to the UBS Optimus Foundation.1
–
Employee time – the cost to UBS of the time that employees spend on community
programs during working hours. This is calculated by multiplying the number of
volunteer hours during working hours by the average hourly salary.
–
In-kind – contributions of products, equipment, services and other non-cash
items from the company to the community. For UBS, this is primarily the cost of
making our premises available to our partner charities for events.
–
Management overheads – the cost associated with the firm’s Community Affairs function.
–
Community investment – long-term strategic involvement in community partnerships in the
areas of education and entrepreneurship. 88% of UBS’s Community Affairs grants
were made in these areas.
–
Commercial initiative – activities in the community, to directly support the success of
the company, promoting corporate brand identities and other policies, in
partnership with charities and community-based organizations.
–
Charitable gifts – intermittent support to a wide range of good causes in response
to the needs and appeals of charitable and community organizations. This
includes our programs to match employee donations.
1
All cash contributions shown here are recognized on a
cash rather than accrual basis. The cash contribution does not include
contributions totaling USD 513,845 which are required by law (India and South
Africa). This is consistent with LBG methodology. Separately (see page 48 of
this report), we recognize UBS Optimus Foundation contributions on an accrual
basis reflecting committed grants made in the reporting period.
Driving change in
communities
Employee
volunteering
In 2018, we made a commitment to our
local communities by setting a target to achieve 40% of employees volunteering
by the end of 2020, of which 40% of volunteer hours will be skills-based.
By encouraging our employee volunteering
efforts towards skills-based volunteering, we ensure that we work to tackle
local social issues in the most powerful and effective way. Our skills-based
volunteering programs include building the capacity of social enterprises
through mentoring and supporting the career aspirations of local students.
Leveraging the specialized skills and talents of our employees is key to the
success of our program and to our business.
Progress
against 2020 target
We are making progress towards our
2020 target, and at the end of 2019, 38% of our global workforce volunteered,
with 48% of the hours being skills-based.
|
|
|
|
|
|
Target 2020
|
2019
|
2018
|
2017
|
Number of employees volunteering
|
|
27,297
|
25,256
|
20,140
|
% employees engaged
|
40%
|
38%
|
36%
|
31%
|
Number of volunteer hours
|
|
202,784
|
197,807
|
168,226
|
% hours that are
skills-based
|
40%
|
48%
|
45%
|
38%
|
Measuring
Impact
Our
strategic focus is on education and entrepreneurship. We offer programs which
support young people globally, to help increase their educational attainment
and acquire workplace skills. We also work with entrepreneurs to help them
build and scale businesses that tackle unemployment and revitalize underserved
communities. Many of our offices focus on social entrepreneurship, supporting
businesses that have social impact at the heart of their business model.
UBS uses the global LBG framework to capture
data from our Community Affairs partners on the impact that UBS’s contributions
have made.
Individual
beneficiaries in 2019
Our Community Affairs program
benefited 280,858 young people and entrepreneurs across all of the regions in
which we operate.
We also measure the extent to which our
support has benefitted them (i.e., by using the LBG depth of impact scale in
the figure below). Measuring based on this model has shown that UBS’s support
has substantively improved or transformed the lives of 107,388 individuals in
2019. This represents 38% of the number of beneficiaries for whom depth of
impact was reported.
Driving change in
communities
Impacting
organizations in 2019
36
intermediary organizations supported
by UBS that are building the capacity of charities, social enterprises and
social sector organizations
1,742
third-party organizations reached by
UBS’s support for intermediary organizations
2025 goal
We know that long-term change can
only be achieved by setting long term and impactful targets. In 2020, for the
first time, we are setting a long-term target on the change that we want to
make.
Our 2025 goal is to support 1 million young
people and adults to learn, and develop skills for employment, decent jobs and
entrepreneurship by 2025. We recognize this is best achieved through strategic
grant funding and by engaging our employees in skills-based volunteering. Our
work will focus on supporting three UN Sustainable Development Goals (SDGs)
specifically: SDG 4 Quality Education, SDG 8 Decent work and economic growth
and SDG 10 Reduced inequalities.
We will continue to use our depth of impact
scale (see above) to report both, the number of beneficiaries we have reached,
and the extent to which our support has changed lives. We also have a 2020
target to maintain 38% of beneficiaries whose lives are "improved" or
"transformed" by UBS's support.
Our sustainability track record
1954
|
Beginnings of Community Affairs at
Wealth Management US
|
1962
|
Establishment of Union Bank of
Switzerland’s 100th anniversary foundation (since 1999: UBS Culture Foundation)
|
1971
|
Launch of A Helping Hand from UBS
Employees (UBS Mitarbeiter helfen) in Switzerland
|
1972
|
Establishment of Swiss Bank
Corporation’s 100-year anniversary foundation (since 1999: UBS Foundation for
Social Issues and Education)
|
1978
|
Beginnings of Community Affairs in
EMEA
|
1982
|
Establishment of first energy-functional
unit
|
1988
|
Co-founding member of Business in
the Community in the UK
|
1989
|
First bank in Switzerland with the
position of environmental officer
|
1992
|
First formal energy guidelines
|
1993
|
Among the first signatories of the
United Nations Environment Programme bank declaration (UNEP FI)
|
1994
|
Introduction of first environmental
policy
|
1995
|
Publication of first environmental
report and introduction of environmental credit assessment procedure for
Swiss corporate clients
|
1996
|
Introduction of employee
volunteering at Wealth Management US and of matched-giving scheme for London
employees
|
1997
|
Launch of Socially Responsible
Investment (SRI) Funds
Establishment of the Investment Bank
Community Affairs in Stamford (monetary and in-kind donations, and employee
volunteering).
|
1998
|
Merger of Union Bank of Switzerland
and Swiss Bank Corporation to create UBS
|
1999
|
Founding member of Wolfsberg Group
First bank to obtain ISO 14001
certification for worldwide environmental management system in banking
business and launch of Environmental Risk Policy in the Investment Bank
Establishment of UBS Optimus
Foundation
|
2000
|
UBS among first companies to sign UN
Global Compact
Wolfsberg Group Anti-Money
Laundering (AML) Principles for Private Banking (revised 2002)
UBS commences reporting on corporate
responsibility in Annual Report
|
2001
|
Establishment of Corporate
Responsibility Committee, a Board of Directors committee, and publication of
first Corporate Responsibility section in Annual Report
Establishment of a Global Diversity
Steering Committee within the Investment Bank
Founding member of European Social
Investment Forum (Eurosif)
Wolfsberg Group Commitment against
Terrorism
Employee volunteering time-off
policy introduced for London employees
|
2002
|
Wolfsberg Group Statement on Fight
against Financing of Terrorism and AML Principles for Correspondent Banking
Launch of Group-wide Diversity
initiative
Founding signatory of CDP
(originally known as Carbon Disclosure Project)
Commencement of joint Wealth
Management and Investment Bank Community Affairs in Chicago
Expansion of in-house environmental
program to Corporate Services outside Switzerland
|
2003
|
First financial services firm to
formally register interest as an academy sponsor in the UK (leads to the
opening of the The Bridge Academy, Hackney, in 2007)
Institution of NGO communications
and analysis function
|
2004
|
Establishment of SRI Equity Research
in the Investment Bank
|
Our sustainability track record
2005
|
Establishment of coordination
function for Community Affairs in Switzerland
Setting up of
UBS Tsunami Relief Fund
UBS commences
social reporting in Annual Report (section on employees)
|
2006
|
Introduction of climate strategy
Adoption of UBS Statement on Human
Rights
Wolfsberg Group releases Investment
Banking FAQs, Guidance for Mutual Funds and Pooled Vehicles, Correspondent
Banking FAQs and Guidance on the Risk-Based Approach
|
2007
|
Establishment of SRI Research in
Global WMBB
Wolfsberg Group Statement against
Corruption and Wolfsberg Group Statement on Transparency in International
Payments
First company-wide volunteering at
Wealth Management US
|
2008
|
Introduction of group-wide
Responsible Supply Chain Guideline
Wolfsberg Group Revised PEP FAQs
|
2009
|
UBS applies Global Reporting
Initiative (GRI) framework to its 2008 non-financial disclosure
UBS’s Sustainability Disclosure 2008
meets the requirements of level A+ of the GRI (continued in subsequent years)
UBS Asset Management becomes a
signatory to the Principles for Responsible Investment (PRI)
|
2010
|
Launch of UBS’s new Code of Business
Conduct and Ethics
Publication of UBS Position on Controversial
Activities
|
2011
|
Convener of Thun Group of Banks on
banking and human rights
Establishment of UBS Environmental
& Social Risk Committee
Awarded with UK Big Society Award
(established by the UK Prime Minister)
|
2012
|
UBS celebrates its 150th anniversary
Setting up of the UBS International
Center of Economics in Society at the University of Zurich
Global roll-out of the Investment
Bank’s environmental, social and governance (ESG) Analyzer
|
2013
|
Thun Group launches discussion paper
on banking and human rights
Renewal of climate strategy
|
2014
|
Introduction of UBS Environmental
and Human Rights Policy
Launch of UBS and Society, UBS’s
sustainability organization
Publication of UBS’s comprehensive
Environmental and Social Risk Framework document
UBS’s Sustainability Disclosure 2013
meets the requirements of GRI G4 comprehensive
|
2015
|
Dow Jones Sustainability Indices
(DJSI) industry group leadership
Appointment of Head UBS and Society
|
2016
|
DJSI industry group leadership
maintained
Introduction of UBS and Society
Policy (replacing and expanding upon UBS Environmental and Human Rights
Policy)
|
2017
|
DJSI industry group leadership
maintained for third year running
UBS and Society constitutional
document (replaces UBS and Society policy)
UBS unveils a blueprint for
channeling private wealth towards the UN SDGs at the World Economic Forum
Annual Meeting in Davos
UBS joins UN working group on TFCD
implementation to help banks disclose their exposures to climate-related
risks and opportunities
|
2018
|
Listed as number 1 market player for
sustainable investments in Switzerland according to the Swiss sustainable
investment market study 2018
DJSI industry group leadership
maintained for fourth year running
MSCI ESG increased rating of UBS
from A to AA
UBS and Society renamed into UBS
in society
|
2019
|
DJSI industry group leadership and
MSCI ESG rating of AA maintained
Appointment of Head Sustainable
Finance
|
® Refer to www.ubs.com/history
for information on the history of UBS
Assurance and certification
Independent assurance report by EY
Assurance and certification
Assurance and certification
ISO 14001 and 50001 certificates
UBS is globally certified according to
ISO 14001, the international environmental management system standard.
In 1999, UBS was the first bank to obtain ISO 14001 certification for its
worldwide environmental management system. The management system covers the
entire scope of UBS’s products, services and in-house operations that may give
rise to an environmental impact. Additionally, we have further developed our environmental
and energy management system in our European locations in order to be compliant
with ISO 50001. We received the first ISO 50001 certification (energy
management system standard) in 2017. The integrated
management system is externally audited annually and
re-certified every three years.
These comprehensive audits verify that
appropriate policies and processes are in place to manage environmental and
energy-related topics and that they are executed in day-to-day practice.
In 2019, UBS successfully passed the ISO 14001 and
ISO 50001 surveillance audit on its environmental and energy management system.
Assurance and certification
Assurance and certification
ISO 37001 certificate
Charter of the
Corporate Culture and Responsibility Committee
Excerpt from The Organization Regulations of UBS Group AG (Annex C – Charter for the Committees of the Board of Directors of UBS
Group AG)
Corporate Culture and
Responsibility Committee
|
7.1
|
The CCRC supports the Board in its duties to
safeguard and advance the Group’s reputation for responsible and sustainable
conduct. Its 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. The CCRC’s function
also encompasses the monitoring of the current state and implementation of
the programs and initiatives within the Group pertaining to corporate culture
and corporate responsibility.
|
In general
|
7.2
|
The CCRC’s responsibilities
and authorities are to:
(i)
General:
(a)
monitor and advise the Board on current and emerging
societal trends and developments of potential relevance for the Group;
(b)
review and assess the current state and
implementation of the corporate culture and corporate responsibility programs
and initiatives within the Group; and
(c)
monitor the consistent application of the
behaviors of integrity, challenge and collaboration within UBS;
(ii)
Policies and regulations:
(a)
monitor and advise the Board
on evolving external corporate culture and corporate responsibility regulations, standards and practices;
(b)
conduct the annual review process for the Code of Conduct
and Ethics of UBS and make proposals for amendments to the Board; and
(c)
review and oversee
that policies and guidelines of UBS pertaining to corporate culture and corporate
responsibility are relevant and up to
date;
(ii)
Strategy:
(a)
monitor the effectiveness of actions taken
by UBS relating to the corporate culture and responsibility regulations and policies as well as objectives of UBS;
(b)
support the GEB, if required, in the adjustment
of processes pertaining to corporate
culture and responsibility;
(c)
approve UBS in society’s overall
strategy and annual
objectives and
(d)
support a strong
and responsible corporate culture firmly founded in a spirit
of long-term thinking;
(iv)
Programs and initiatives:
oversee UBS’s corporate culture and corporate responsibility programs and
initiatives, including:
(a)
UBS in society;
(b)
sustainable and impact investing;
(c)
client philanthropy;
(d)
environmental
and social (including human rights) risk management;
(e)
climate strategy;
(f)
in-house environmental management;
(g)
responsible supply chain management;
(h)
community affairs;
(i)
diversity and
inclusion;
(j)
talent management;
(k)
working environment; and
(l)
combating financial crime;
(v)
Communications:
(a)
advise the Board on the reporting of the Group’s
corporate culture
and responsibility strategy and activities, review
the relevant sections of the
Group’s annual report, and provide oversight of the annual UBS sustainability
disclosure assurance audit process; and
(b)
monitor and
review communications with stakeholders on corporate culture
and corporate responsibility (including with relevant organizations and with sustainability rating
and ranking bodies) and their effectiveness with regard to the reputation of the Group.
|
Responsibilities and authorities
|
Appendix 1 –
Governance and policies
Our Code of
Conduct and Ethics
In
this Code, the Board of Directors and the Group Executive Board set out the principles
and practices that define our ethical standards and the way we do business.
By following it, we will foster an ethical
culture where responsible behavior is second nature. We will protect our most
important asset – our reputation. And, ultimately, we will create lasting value
for our shareholders. The Code sets the standards that help us to make that
happen.
It is based on three Principles: client
focus, which is about building relationships that create long-term value,
focusing on investment returns and anticipating and managing conflicts of
interest; excellence in everything from our products and services to how we
collaborate across the firm to deliver the best of what UBS has to offer; and
sustainable performance, which is about working continuously to strengthen our
reputation as a rock- solid firm and provide consistent returns for
shareholders.
It is essential that we all follow these
Principles. In short, if we do business in the right way, we will be a better
business, and an even more successful one.
The Code applies to everything and
everyone
The Code covers our dealings with
stakeholders, clients, counterparties, shareholders, regulators and business
partners – and each other. And it is the basis for all our policies, guidelines
and procedures.
Ignorance of the
Code is no excuse
As part of our training, everyone
hears about the standards in the Code and learns how to apply them. But we also
strongly encourage you to read the Code and get to know it. Not knowing the
Code is no excuse for violating it.
Our Boards are fully behind the Code –
and needs the whole bank to be behind it, too
The Code has the full backing of the
Board of Directors and Group Executive Board. And every one of us needs to make
sure our day-to-day actions and decisions follow the standards set out here.
Above all, we must put the interests of UBS, our clients and our shareholders
above our own.
Of course, the Code cannot describe every
possible situation. If you find yourself dealing with something unexpected, apply these ethical standards in your
judgment and get guidance or help.
Thank you for your support.
Axel A. Weber
Chairman of the Board of Directors
Sergio P. Ermotti
Group Chief Executive Officer
Laws, rules and regulations
Obeying the law
We obey the laws, rules and
regulations where we live, work and do business – as well as our own governance
documents.
And we cooperate with our regulators, being
open and transparent in our dealings with them.
Cross-border business
When we are working across borders,
we obey all pertinent laws, rules and regulations – both at home and abroad.
If we are selling to, buying from, visiting
or dealing with clients from outside our home country, it is our job to
understand what rules, laws or policies apply – and follow them.
Fair dealing and fair competition
We succeed by outperforming our
competitors fairly and honestly, not by resorting to unfair or underhand
tactics.
We don’t stretch, distort or try to hide the
facts or the truth. Nor do we use information we are not meant to have to gain
an unfair advantage over competitors.
We act fairly, honestly and in good faith
with everyone we deal with: our clients, business partners, competitors,
suppliers, the public and each other.
And we act in the interest of fair and effective
competition and respect all the laws, rules and regulations that are designed
to create a level playing field for all – including antitrust and competition
laws.
Fighting crime
We have a duty to contribute to the
integrity of the financial system, as well as our own business.
So we do whatever we can to combat money
laundering, corruption and terrorist financing – including imposing global
sanctions in line with our policy.
Money laundering
We have rigorous systems in place to
detect, report and stop any suspected money laundering.
Corruption
We have zero tolerance for corruption
or any kind of bribery, including so-called “facilitation payments.” We don’t
offer or accept improper gifts or payments in the course of our business.
Criminal activity
We carry out due diligence and keep a
constant lookout for any suspicious activities, reporting them to senior
management as soon as we discover them. And we follow strict Know-Your- Customer
regulations.
Tax matters
We follow all the laws, rules,
regulations and treaties around tax that apply to us, all over the world – not
just to the letter, but in their true spirit. We pay and report all taxes due.
We report information relating to our own tax position and that of our clients
and employees as required.
We will not help our clients or any other
party avoid paying the tax that they owe or reporting their income and gains,
nor will we support any transactions where we know or shall presume that the
tax outcome is dependent on unrealistic assumptions or the hiding of facts.
We will also not contract with third parties
that provide services for or on our behalf, where those acts help others to
evade taxes owed.
Behaving responsibly and ethically
Values and ethics
We don’t just follow the laws, rules
and regulations in everything we do. We do what is right. We don’t just ask
ourselves whether what we’re doing is legal, but whether it fits with our three
UBS Behaviors: Integrity, Collaboration and Challenge.
Client relationships
We look after our clients for the
long term, winning their loyalty by earning their trust.
We try to anticipate what our clients are
going to need before they ask. We go out of our way to give them an exceptional
service. We make sure our products and services are adequate for our clients
and are sold in a way that is not detrimental to their interests.
And we treat them fairly, and with the same
courtesy and respect, however large or small they may be.
Conflicts of interest
We put our clients’ best interests
before our own – and UBS’s interests before our personal interests. And we
never let UBS’s or our personal interests influence our advice to a client, or
our dealings with them.
We have systems to identify and manage
potential conflicts of interest. And as soon as we do identify any such
conflicts, we raise them immediately with our line manager or with Legal or
Compliance & Operational Risk Control.
Appendix 1 – Governance
and policies
Sharing, using
and storing information
Reporting and information sharing
When we share or report anything,
especially financial information – to either the public or our regulators – we
take great care to make sure it is accurate, up to date and as easy to
understand as it can be (and in line with any legal or regulatory requirements
and best practice).
We maintain an internal control framework
that is designed to support the preparation and fair representation of
consolidated financial statements in accordance with International Financial
Reporting Standards (IFRS) and that are free from material misstatement.
Based on their audit work, our independent
external auditors express an opinion on our internal controls over financial
reporting as well as on the financial statements themselves. Our internal audit
function often provides support to our external auditors in discharging their
responsibilities, and also assesses the adherence to our strategy and the
effectiveness of our governance, risk management and control processes.
Inside information
We never use inside information
(material information that is not public) to do anything other than what it was
given to us for in the first place.
Having made every effort to ascertain whether
information is inside information, we only ever share such information on a
need-to-know basis. That applies to people inside and outside UBS, in line with
our internal procedures, as well as any relevant laws, rules and regulations.
Client confidentiality
Our clients trust us to keep the
information they’ve shared with us safe and secure and only use it in the ways
we’ve agreed with them.
We follow the highest standards of
information security to keep our client information confidential and to protect
legitimate client privacy rights. We have strict data security standards and
procedures designed to prevent data being tampered with, seen or used by the
wrong people, stolen, lost or destroyed.
We never share our clients’ details with
anyone, unless we have their express permission to do so – or where we have a
legal duty to share it with the relevant authorities. And even within UBS, we
will only share client details with those colleagues who genuinely need to see
it to serve our clients’ best interests.
Creating the
right culture
Diversity and equal opportunity
We believe that people from different
backgrounds, with different thoughts and opinions, make us a stronger business.
They bring us valuable new ideas, approaches and experiences.
Regardless of their status, everyone has the
same chance to get ahead at UBS – whatever their ethnicity, gender, national
origin, age, ability, sexual orientation or religion. And we work to create a
culture where everyone feels they are welcome, respected and that they are a
valuable part of our team – whatever part of UBS they work in.
We do not tolerate any kind of
discrimination, bullying or harassment. And we encourage each other to speak up
and report it through clear channels, without fear of reprisals.
Performance and professionalism
Our professionalism, integrity and
pursuit of excellence are how we create value for our clients and shareholders.
So our compensation system is designed to reward long-term value creation by
balancing performance and prudent risk-taking with a focus on conduct and sound
risk management practices.
We know that our business is only as strong
as our people. So we work hard to create a working environment where talent can
thrive and reach its full potential.
Protecting our assets
We keep UBS’s assets safe and secure – from sensitive, confidential information about our business, plans
and people to our intellectual property, systems and equipment, as well as
documents, information and other materials belonging to others that are
entrusted or made available to us. That means making sure that these assets are
handled properly and used in line with relevant laws and regulations and doing
what we can to prevent them from being lost, stolen, damaged or misused. We
retain data to fulfill regulatory retention and legal hold obligations.
We will not use such assets for non-UBS
business or for our own personal advantage.
Health and safety
We never do anything that might put
people in danger or harm them in any way – whether they’re colleagues, clients,
partners, competitors, visitors or anyone else.
We keep our workplaces safe by following
health and safety rules. Doing this makes sure we have safe and healthy working
conditions in which our dignity is respected.
Society and
the environment
Integrating financial and societal
performance
We integrate financial and societal performance
for the mutual benefit of our clients and our firm.
So we’re constantly looking for better ways
to do business in an environmentally sound and socially responsible manner.
That includes monitoring, managing and
reducing any negative impact we might have on the environment and on human
rights. It means managing social and environmental risks that our own and our
clients’ assets are exposed to. And it means looking for sustainable investment
opportunities, for ourselves and our clients.
Investing in our communities
We constantly look for ways to
contribute to the well-being of our local communities – by supporting
charitable activities financially and non-financially, including through our
volunteering efforts.
Violating the Code
Disciplinary procedures
Anyone who breaks the rules (whether
it is our Code, UBS policies or outside laws, rules and regulations) will face
consequences – from reprimands and warnings to dismissals.
This includes not only the person who broke
the rules, but also their line manager and anyone who knew about it but did not
report it.
And where a violation amounts to criminal
behavior, we will not hesitate to bring it to the attention of the relevant
authorities.
Upholding the
Code
From our Board of Directors down, we
live up to this Code at all times, with no exceptions.
UBS will not accept any justification or
excuse for breaking it, whatever the reason – whether for profit, convenience
or competitive advantage or because a client or someone else asked for it.
Changes to the Code
The Code defines the way we do
business. It is reviewed regularly to make sure it reflects our principles and standards
and is consistent with the law. Whenever there’s a change, an announcement goes
to every employee.
Affirmation process
Each of us declares that we have read
and affirmed our awareness of the Code, as part of our annual affirmation process.
Speak Up
We immediately report any potential
violations [of the Code] to our line manager or local investigations officer.
We can also report them confidentially or anonymously using the whistleblowing procedures
published on the intranet site goto/speakup.
UBS regards any form of retaliation against
whistleblowers to be unacceptable.
And UBS expects its line managers to escalate
and report any violations of laws, rules, regulations, policies, professional
standards and the principles of the Code.
Questions about the Code
Any questions about any part of this
Code, or what it means in practice, should go to the Group General Counsel or
the Head of Group Compliance, Regulatory & Governance.
Appendix 1 –
Governance and policies
UBS in
society constitutional document
Our Commitment
UBS's goal is to be the financial
provider of choice for clients wishing to mobilize capital towards the
achievement of the United Nations Sustainable Development Goals (SDGs) and the
orderly transition to a low-carbon economy (the Paris Agreement). We work
towards this goal by integrating sustainability into our mainstream offerings,
through new and innovative financial products with a positive effect on the
environment and society, and by advising clients on their philanthropy. And it
is through the management of environmental and social risks, the management of
our environmental footprint and our sustainability disclosure that we continue
to set standards in the industry.
Our cross divisional organization, UBS in society, focuses our firm on this
direction. UBS in society is
committed to making UBS a force for driving positive change in society and the
environment for future generations. It will do so by focusing our firm on
creating long-term positive impact for clients, employees, investors and
society. Our ambition is to be:
–
A leader in sustainable finance across all
client segments
–
A recognized innovator and thought leader in
philanthropy1
–
An industry leader for sustainable business
practices
–
An employer of choice
UBS in society covers all the activities and capabilities related to sustainable
finance (including sustainable investing), philanthropy, environmental, climate
and human rights policies governing client and supplier relationships, our
environmental footprint, human resources as well as community investment. It is
through this cross divisional organization that UBS leverages its expertise
across all of these areas to drive sustainable performance.
We intend to make sustainable performance the
standard across our firm and part of every client conversation. This means that
we will focus on the long term and work to provide appropriate returns to all
of our stakeholders in a responsible manner. In addition, we are transparent
about our targets and progress wherever possible to demonstrate our commitment.
Scope
The document defines the principles,
governance and controls for implementing this commitment. It outlines how UBS
is becoming a force for driving positive change – in finance, in philanthropy,
in communities and in our business. Our banking activities, in-house
operations, supply chain management and community interactions are subject to,
and must be conducted in compliance with, this commitment.
Principles
The following principles outline how UBS in society promotes the implementation of
its commitment to make UBS a force for driving positive change in society and
the environment for future generations, across four areas: in finance, in
philanthropy, in communities and in our business.
In finance
We're reshaping the landscape of
sustainable finance by using thought leadership, innovation and partnerships to
support clients in their sustainability efforts. For:
–
Private investors: We're helping clients invest
in companies that use their resources wisely and deliver reliable, long-term
results. It’s important to us that our clients can invest in what they care
about, make the difference they desire and still get the returns they are
looking for.
–
Institutional investors: We're transforming the
business of asset management and taking a long-term perspective by establishing
sustainable and impact investing as core components across our offering and
solutions.
–
Corporate organizations: We're offering in-depth
research, innovative products and expert advice to organizations who would like
to consider environmental, societal and governance criteria in their financing
and investing decisions.
–
Swiss businesses: We're creating programs to
help Swiss companies prepare for the new, low-carbon economy.
In philanthropy
We’re partnering with clients and
others for good, by offering expert advice, carefully selected programs from
UBS Optimus Foundation, and innovative social financing mechanisms, so that our
clients can make meaningful and measureable impact:
–
UBS Optimus Foundation: We're making a
measureable improvement in the lives of world's most vulnerable children. From
getting more girls into school, to using solar power to improve maternal health
we're bringing our clients, partners and extensive network together to support
SDG-focused initiatives with the potential to be transformative, scalable and
sustainable. We do this through evidence-based grant making and innovative
social finance, finding the most effective ways to use capital to drive social
change.
–
Philanthropy advisors: We’re dedicated to making
the philanthropic vision of our clients come to life. From helping them
understand where they can begin, to how they can give in the most effective
way, our advice is supported by in-depth research. We offer access to a global
philanthropist network and insight experiences through our Philanthropy Forums
and visits to the foundation's programs.
1 Includes client and corporate donations
In communities
We recognize that UBS's long-term
success depends on the health and prosperity of the communities of which we are
part.
Our Community Affairs programs represent the
firm's investment in communities. Our programs seek to overcome disadvantage through
long-term investment in education and entrepreneurship. We provide UBS
resources (both financial and employee volunteering) to drive change and create
a positive impact. Our approach is to build sustainable and successful
partnerships with non-profit organizations and social enterprises to ensure
that our contributions have a lasting impact.
Our Community Affairs framework is global in
scope and delivers both community and business impact in each of the regions in
which we operate. Regional execution of the global strategy ensures we are
effectively aligning our programs to address local community issues and support
business priorities.
In our business
We’re leading by example in that we
challenge ourselves and our peers to raise the bar and be open about the impact
our actions have on society and the environment. Our focus is on:
–
Environmental and social risk: We apply an
environmental and social risk (ESR) framework to identify and manage potential
adverse impacts to the environment, the climate and to human rights as well as
the associated environmental and social risks our clients' and our own assets
are exposed to. UBS's comprehensive ESR standards are aligned with UBS in society, govern client and supplier
relationships, and are enforced firm-wide and applied to all activities.
–
Environmental footprint: We set quantitative
targets to reduce group-wide greenhouse gas emissions and the environmental
impact of our operations. Environmental programs include investments in
sustainable real estate and efficient information technology, energy and water
efficiency, paper and waste reduction and recycling, the use of environmentally
friendly products (such as renewable energy or recycled paper), business travel
and employee commuting. UBS aims to reduce negative environmental and social
impacts of goods and services it purchases and engages with suppliers to
promote responsible practices.
–
Human resources: Our employees are crucial to
our business success. We seek to attract, develop and retain talented people at
all levels with diverse background and skills to effectively advise our
clients, deliver innovative solutions, manage risk, navigate evolving
regulatory requirements, and drive change. We also focus on increasing
awareness of UBS in society amongst our employees by integrating sustainability topics in our
employee lifecycle activities.
–
Corporate responsibility: We report openly and
transparently about our firm's environmental, social, governance (ESG)
performance, including UBS in society,
and seek to maintain open dialogue and active communications with our
stakeholders.
Responsibilities
and Structure
The Corporate Culture and
Responsibility Committee (CCRC)2 supports the UBS Board of Directors
in its duties to safeguard and advance the Group’s reputation for responsible
and sustainable conduct. It approves and monitors UBS in society's overall
strategy and annual objectives, reviews that the UBS in society constitutional
document is relevant and up to date, and oversees the program's annual
management review.
The Group CEO3 supervises the
execution of the UBS in
society strategy and annual objectives. The Group
CEO also informs the Group Executive Board (GEB) and Corporate Culture and
Responsibility Committee (CCRC) about UBS in society updates as appropriate.
The Head UBS in society is UBS's
senior level representative for environmental and sustainability issues. He or
she is nominated by the Group CEO, chairs the UBS in society Steering
Committee, is a member of the Global Environmental Social Risk Committee, and
is a permanent guest to the CCRC. He or she develops the UBS in society
strategy, leads in its execution, and submits annual objectives to the Group
CEO. On behalf of the Group CEO, he or she proposes the UBS in society strategy
and annual objectives to the CCRC for approval. He or she is supported by the UBS in society
Executive Committee (EC)4 in this effort.
The UBS in society Steering
Committee (SC)5 ensures firm-wide execution of the UBS in society
strategy across business divisions, functions and regions. The Committee is
chaired by the Head UBS in
society and is composed of divisional, regional,
and Group COO EC members as well as UBS in society EC members. SC
members are nominated by their respective GEB member and/or the Head UBS in society,
and are responsible to define and implement the sustainability strategy of
their BA / Function (and to allocate resources accordingly) in line with the UBS in society
strategy. SC members ensure their objectives and plans are signed off by their
GEB member / ECs.
The Global Environmental & Social Risk
Committee6 defines an ESR framework and independent controls that
align UBS's environmental and social risk appetite with that of UBS in society. It
is chaired by the Group Chief Risk Officer, who is responsible for the
development and implementation of principles and appropriate independent
control frameworks for environmental and social risks within UBS.
2 Responsibilities and authority of the CCRC are defined in Annex C
of the Organization Regulations of UBS Group AG
3
As set out in the Business Regulations Corporate
Center
4
As set out in the UBS in society Executive
Committee Terms of Reference
5
As set out in the UBS in society Steering Committee
Terms of Reference
6
As set out in the Global Environmental and Social
Risk Committee Terms of Reference
Appendix 1 –
Governance and policies
The Business
Divisions are responsible for developing, providing resources to, and executing
the UBS in society annual objectives in their respective division as they relate to
client relationships, product development, investment management, distribution
and risk management, predominantly in the areas of sustainable finance and
client philanthropy.
The Regions are responsible for providing
resources to, and executing Community Affairs objectives in their region
through their respective regional Community Affairs teams. The Community
Affairs objectives are aligned with the global framework of UBS in society.
The Corporate Center functions are
responsible for developing, providing resources to, and executing UBS in society
annual objectives as they relate to risk control, sustainability regulation,
employee training and development, in-house environmental and supply chain
management, and communications.
Reporting and
Controls
Our commitment is implemented through
a firm-wide management system steered by defined measurable objectives. Their
achievement is reviewed on a semi-annual basis by the Head of UBS in society, and on an annual basis by the
Corporate Culture and Responsibility Committee.
Progress made in implementing UBS in society's
strategy, commitment, and objectives is reported as part of UBS's annual
reporting. This reporting is reviewed and assured externally according to the
requirements of the Global Reporting Initiative's (GRI) sustainability
reporting guideline. We also regularly report on the implementation of our
climate strategy and follow the recommendations provided by the Financial
Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD)
and externally verify our greenhouse gas reporting according to ISO 14064.
UBS is certified according to ISO 14001 and
ISO 50001 international environmental and energy management standards. These
certificates attest that UBS's environmental management system is an
appropriate tool for evaluating compliance with the relevant environmental
regulations, achieving self-defined environmental objectives, and maintaining
continual improvement of environmental performance.
The implementation of our commitment and
principles, as laid out in this document, is a process of continual improvement.
Standard Information
The Sustainable Development Goals (SDGs)
In September 2015, with the support
of 193 nations, the United Nations launched the 2030 Agenda for Sustainable
Development to end poverty, combat climate change, and fight injustice. Seventeen
Sustainable Development Goals (SDGs) went into effect in January 2016 to
address global socioeconomic imbalances threatening the lives of people living
in developing economies and the future of generations to come.
The Paris
Agreement
The Paris Agreement is an agreement
within the United Nations Framework Convention on Climate Change (UNFCCC)
signed in 2016. As of March 2019, 195 countries had signed committing to keep
the long-term global average temperature increase to well below 2 °C above
pre-industrial levels; and to pursue efforts to limit the increase to 1.5 °C
above pre-industrial levels, recognizing that this would substantially reduce
the risks and impacts of climate change. It also aims to increase the ability
of parties to adapt to the adverse impacts of climate change, and make finance
flows consistent with a pathway towards low greenhouse gas emissions and
climate-resilient development.
Climate strategy
UBS considers an orderly transition
to a low-carbon economy as vital. Orderly means that emissions are reduced in a
measured way to meet climate goals, starting now. We support this transition
through our comprehensive climate strategy. We are determined to protect our
clients, and our own assets from climate-related risks in the context of
uncertain policy and technology developments, mobilize private and
institutional capital to finance the transition and reduce our own direct
climate impact.
Environmental and social risk (ESR)
Environmental and social risks are
broadly defined as the risk that UBS supports clients, or sources from
suppliers, who cause or contribute to severe environmental damage or human
rights infringements. Environmental and social risks can also arise if UBS's
operational activities and its employees (or contractors working on behalf of
UBS) fail to operate within relevant environmental and human rights
regulations. Environmental and social risks (including human rights and
climate-related risks) may result in adverse financial and reputational impacts
for UBS.
Sustainable investments (SI)
Sustainable investing is an approach
that seeks to incorporate environmental, social and governance (ESG)
considerations into investment decisions. SI strategies seek to 1) achieve a
positive environmental or social impact, and/or 2) align investments with an
investor’s values regarding ESG topics, while aiming to improve the portfolio
risk and return characteristics.
Sustainable finance
Sustainable finance refers to any
form of financial service that integrates environmental, social and governance
(ESG) criteria into the business or investment decisions for the lasting
benefit of both clients and society at large.
7
NGFS – A call for action, Climate change as a
source of financial risk, First comprehensive report, 2019
Environmental
and social risk policy framework
Comprehensive,
highest industry standards, deeply rooted in our culture
Our
comprehensive environmental and social risk framework is deeply rooted in our
culture, and
–
governs client and supplier relationships and
applies firm-wide to all activities
–
meets the highest industry standards as
recognized by environmental, social, governance ratings
–
is integrated in management practices and
control principles and overseen at the most senior level of our firm.
|
This
framework is aligned
with our UBS in society organization that covers all the
activities and capabilities related to sustainable finance (including
sustainable investing), philanthropy, environmental, climate and human rights
policies governing client and supplier relationships, our environmental
footprint, human resources as well as community investment.
Introduction
We live in a world that is more interconnected, more interde- pendent and more interactive than ever before.
Rapid techno- logical advances in particular continue to have a profound effect
on the economic, political, cultural, environmental and social
landscape. These advances have
changed the way we think
and act. They have altered the way we do business. They have transformed the products
and services we
consume, and reshaped the perceptions of the world around
us. While this has brought with it significant benefits and
opportunities, it has also created
far greater awareness of
the challenges we all face.
As a global company, and the
largest truly global wealth manager to high net worth and ultra high net worth
clients, UBS is in a unique
position to help address these
challenges, both together with our clients and through our own efforts.
Our principles and standards clearly define
how we want to do things at UBS. They apply to all aspects of our business and the ways in which
we engage with our stakeholders. Our
Code of Conduct and Ethics documents our corporate responsibility. Our work in key societal areas such
as protecting the environment and
respecting human rights are part
of this. Living up to our societal
responsibilities contributes to the wider
goal of sustainable development. As a global firm we take responsibility to lead the debate on important societal topics, contribute
to the setting of standards and collaborate in and beyond our industry.
Managing
environmental and social risks is a key component of our corporate
responsibility. We apply an environmental and social risk policy framework to all our activities. This helps us identify and manage potential adverse impacts to the environ-
ment and to human rights, as well as the associated risks affecting our clients and us. We have set standards in product
development, investments, financing and for supply chain management
decisions. We have identified certain
controversial activities we will not engage in, or will only engage in under stringent
criteria. As part of this process, we engage with clients and suppliers to better
understand their processes
and policies and to explore how any
environmental and social risks may be
mitigated.
The foundation of UBS’s environmental and social risk policy framework is established in the
Code of Conduct and Ethics of UBS and the UBS in society constitutional
document.
Appendix 1 –
Governance and policies
Our focus
Our industry is playing an active role in addressing global
issues such as human rights and the protection of our environment. Climate
change impacts ecosystems, societies, and economies worldwide, and we support
clients achieving their goals in support of the transition to a low-carbon
economy. Growing environmental and human rights concerns have resulted in a
fast-changing regulatory and competitive landscape which is affecting our firm,
our suppliers and our clients. In
response to these emerging risks and opportunities, we are shaping
appropriate solutions and commitments.
Over twenty-five years ago, UBS was one of
the first financial institutions to sign the United Nations (UN) Environment
Pro- gramme’s “Statement by Financial Institutions on the Environ- ment and Sustainable
Development.” We were also among the first companies to endorse the UN Global
Compact, we were an original signatory of the CDP, and our Asset Management
(AM) business is an Investment Manager signatory to the Principles for
Responsible Investment.
In 2019, we became a
founding signatory of the UN Principles for Responsible
Banking. The Principles constitute a comprehensive
framework for the integration of sustainability across banks. They define
accountabilities and require each bank to set, publish and work toward
ambitious targets.
In 2000, our firm was a
founding member of the Wolfsberg Group of banks, which was originally set up to
promote good practice in combatting money laundering. In 2011, the firm was a
driving force behind the establishment of the Thun Group of Banks, which has in
the meantime published two discussion papers that seek to establish a framework
to facilitate the identification of the key challenges and best practice
examples for the banking sector’s implementation of the UN Guiding Principles
on Business and Human Rights (UNGPs). We are a member of the Roundtable on
Sustainable Palm Oil (RSPO).
In 2014, we endorsed the Banking Environment Initiative’s and Consumer Goods
Forum’s “Soft Commodities” Compact, which reconfirms our commitment to developing and implementing responsible business standards.
Progress made in implementing UBS in society is
reported as part of UBS’s annual reporting. This reporting is reviewed and assured
externally according to the
requirements of the Global
Reporting Initiative’s (GRI) Sustainability Reporting Guideline. UBS is
certified according to ISO 14001, the international environmental management standard.
®
Refer to the “Driving
change in business” section of this document for an overview of external
commitments and memberships
Climate change
Climate change is one of the most significant challenges of our time. The world’s key environmental and social challenges – such as
population growth, energy security, loss of
biodiversity and access to drinking water
and food – are all closely intertwined with climate
change. This makes the transition to a
low-carbon economy vital. We
support this transition through our
comprehensive climate strategy,
focusing on four pillars:
–
Protecting our own assets: We have reduced
carbon-related assets on our balance sheet to 0.8% or USD 1.9 billion as of 31 December
2019, down from 1.6% at the end of 2018 and 2.8% at the end of 2017. In 2019 we
also revised our standards in the energy and utilities sector and further
embedded climate-related risk into our standard risk management framework.
–
Protecting our clients’ assets: We support our
clients’ efforts to assess, manage and protect them from climate-related risks
by offering innovative products and services in investment, financing and
research. We also actively engage on climate topics with companies that we
invest in.
–
Mobilizing private and institutional capital: We
mobilize private and institutional capital towards investments facilitating
climate change mitigation and adaptation and in supporting the transition to a
low-carbon economy as corporate advisor, and/or with our lending capacity.
–
Reducing our direct climate impact: We have
committed to using 100% renewable electricity by mid-2020. This will reduce our
firm’s GHG footprint by 75% compared with 2004 levels.
We publicly support
international, collaborative action against climate change. Our Chairman is a
signatory to the European Financial Services Round
Table’s statement in support of a strong, ambitious response to climate change.
Our Group CEO is a member of the Alliance of CEO Climate Leaders, an informal network of CEOs convened by the
World Economic Forum and committed to climate action. Our Head Sustainable
Equity Team within AM is a member of the Task Force on
Climate-related Financial Disclosures (TCFD).
® Refer to the “Our governance and
principles” section of this document for the full climate strategy
Forests and biodiversity
Deforestation and forest
degradation can cause biodiversity to decline.
As approximately
80% of the world’s documented species
are found in tropical rainforests, deforestation will impact
global biodiversity. Deforestation is,
in fact, second only to
the energy sector as a source of
global greenhouse gas emissions and accounts for
up to 20% of emissions, more than
the entire global transport sector.
It is
further estimated that more than 50%
of tropical defor- estation is due to
the production of soy, palm
oil, timber and beef.
In human
terms, millions of people
rely directly on forests (small-scale
agriculture, hunting and gathering,
and harvesting forest products
such as rubber). Yet,
deforestation continues to cause
severe societal problems, sometimes leading
to violent conflict.
Recognizing these risks, we:
–
became member of the RSPO
in 2012.
–
endorsed the Banking Environment Initiative’s
and Consumer Goods Forum’s “Soft Commodities” Compact.
In doing so, we aim to support the transformation of soft commodity supply
chains by expecting producers to be committed to achieving full certification
according to applicable sustainability certification schemes, such as the RSPO. We acknowledge that land acquired without
adequate consultation, compensation, and consideration of customary land rights
(commonly referred to as land grabbing), can significantly impact local
communities: often smallholders who primarily rely on subsistence farming to
sustain their livelihood.
–
have identified and will not engage in certain
activities that contribute to deforestation and its related impacts (sections
Controversial Activities – Where UBS will not do business and Areas of Concern
– Where UBS will only do business under stringent criteria).
Human rights
UBS is committed to respecting and promoting
human rights in all our
business activities. We believe this is
a responsible approach underlining our desire to reduce as far as possible potentially negative impacts on society. Our commitment in this important area is long standing.
In July 2000, UBS was one of
43 companies
that pledged to adhere to the Global Compact.
The principles of the Global Compact, today the largest corporate
responsibility initiative globally, stem from the Universal Declaration of
Human Rights, the International Labor Organization’s Declaration on Fundamental
Principles and Rights at Work, the Rio Declaration on Environment and
Development and the UN Convention Against Corruption. The United Nations took a
significant step in 2011 by endorsing the UNGPs. At this point, UBS together
with other banks formed the Thun Group of Banks to jointly consider these
developments and conclusions and to share experiences and ideas regarding the
implementation of the UNGPs. To this end, the Thun Group of Banks has published
two discussion papers that seek to establish a framework to facilitate the
identification of the key challenges and best practice examples for the banking
sector’s implementation of the UNGPs. Both discussion papers were also intended
to inform other pertinent initiatives, in the specific case of the second the
OECD’s proactive agenda on Responsible Business Conduct, which released in 2019
its guidance on due diligence for Responsible Business Conduct in General
Corporate Lending and Securities Underwriting. UBS is a member of the Advisory
Group to the OECD’s project.
Recognizing these risks, we:
–
established a UBS Position on human rights in
2006. In 2013, we revised the firm’s Environmental and Social Risk Framework to
formalize accountability for human rights issues.
–
stipulated that we will not engage in commercial
activities that make use of child labor and forced labor, or that infringe the
rights of indigenous peoples (see section Controversial Activities – Where UBS
will not do business).
–
will continue our work internally, and
externally with the Thun Group of Banks and the OECD,
to understand how best to implement the UNGPs across our operations.
Our standards
UBS has
set standards in product
development, investments, financing and supply chain management
decisions, which include
the stipulation of controversial activities and other areas of concern
UBS will not engage in, or will only engage in under stringent criteria.
Appendix 1 –
Governance and policies
Controversial
Activities – Where UBS will not do business
UBS will
not knowingly provide financial or advisory services to
clients whose primary business activity, or where the proposed transaction, is
associated with severe environmental or social damage to or through use of:
–
World heritage sites as classified by UNESCO;
– Wetlands on the Ramsar
list;
–
Endangered species of wild flora and fauna listed in Appen-
dix 1 of the Convention on
International Trade in Endan- gered Species;
– High conservation value forests as defined by the six cate- gories of the Forestry Stewardship Council (FSC);
–
Illegal fire: uncontrolled and/or illegal use of fire for land clearance;
–
Illegal logging including purchase of illegal harvested timber (logs or roundwood);
–
Child labor according to ILO-conventions 138 (minimum
age) and 182 (worst forms);
–
Forced labor according to ILO-convention 29; and
–
Indigenous peoples’ rights in accordance with IFC
Perfor- mance Standard 7.
The same standards apply when UBS purchases goods or services from suppliers.
In addition, UBS does not directly or indirectly finance the development, production or purchase
of controversial
weapons
of such
companies determined to fall
within the “Swiss Federal Act on War
Materials.”
On the topic of cluster munitions and anti-personnel mines: UBS does not provide credit facilities to, nor
conduct capital market transactions for, companies
that are involved in the
development, production or
purchase of cluster munitions and anti-personnel
mines. UBS does not include
securities of affected companies in its
actively managed retail and institu- tional
funds and in discretionary mandates.
UBS draws upon external expertise to
decide whether a company is subject to the restrictions
imposed by Swiss law.
Areas of Concern – Where UBS will only do
business under stringent criteria
Specific guidelines and assessment criteria
apply to transactions with corporate
clients engaged in the areas of
concern listed below.
The guidelines and assessment criteria apply to loans, trade finance, direct investments in real estate
and infrastructure, securities and loan underwriting transactions, and investment
banking advisory assignments.
Transactions in the areas listed below trigger an enhanced due diligence and approval process. In addition to the
assessment of regulatory compliance,
adherence to UBS’s controversial activities standards, past and present environmental and human rights performance, as well
as concerns of stakeholder groups, these transactions require an assessment of the following criteria:
Soft commodities
–
Palm oil: Companies must be a member of the RSPO and not
subject to any unresolved public criticism from the RSPO. Companies must
further have some level of mill or plantation certification and be publicly
committed to achieving full certification (evidence must be available). Company
must also be committed to “No Deforestation, No Peat and No Exploitation” (NDPE).
–
Soy: Companies producing soy in markets at high risk of tropical
deforestation must be a member of the Roundtable on
Responsible Soy (RTRS) and not
subject to any unresolved public criticism from the RTRS.
Companies must further be publicly committed to achieving full certification
(evidence must be available).
–
Timber: Companies producing timber in markets at high risk of tropical
deforestation must seek to achieve full certification of their production
according to the Forest Stewardship Council (FSC) or a national scheme endorsed against the 2010 Programme for the Endorsement of Forest Certification (PEFC) meta standard for timber products. Company must also have fire
prevention, monitoring and suppression measures in place.
–
Fish and seafood: Companies producing, processing or trading
fish and seafood must provide credible evidence of no illegal, unreported and unregulated
fishing in their own production and supply chain.
Power Generation
–
Coal-fired power plants
(CFPP): We do not provide project-level finance for new
coal-fired power plants globally and only support financing transactions of
existing coal-fired operators (>30% coal reliance) who have a transition
strategy in place that aligns with a pathway under the Paris Agreement, or the
transaction is related to renewable energy.
– Large dams:
Transactions directly related to large dams include an assessment against the
recommendations made by the World Commission on Dams
(WCD) and the International Hydropower Association Sustainability Assessment
Protocol.
–
Nuclear power: Transactions directly related to the con- struction of new, or the
upgrading of existing nuclear power plants include an assessment on whether the
country of domicile of the client / operation has ratified the Treaty on the Non-Proliferation of Nuclear Weapons.
Extractives
–
Arctic oil and oil sands: We do not provide financing where the stated use of proceeds is for
new offshore oil projects in the Arctic or greenfield1 oil sands
projects, and only provide financing to companies, which have significant
reserves or production in arctic oil and/or oil sands (>30% of reserves or
production), where the stated use of proceeds is related to renewable energy or
conventional oil & gas assets.
–
Coal mining: We do not provide financing where the stated use of proceeds is for
greenfield1 thermal coal mines and do not provide financing to coal
mining companies engaged in mountain top removal operations. We continue to
severely restrict lending and capital raising to the coal mining sector.
–
Liquefied Natural Gas
(LNG): Transactions directly related to LNG
infrastructure assets are subject to enhanced ESR due diligence considering
relevant factors such as management of methane leaks, and the company's past
and present environmental and social performance.
–
Ultra-deepwater drilling: Transactions directly related to ultra-deepwater drilling assets
are subject to enhanced ESR due diligence considering relevant factors such as
environmental impact analysis, spill prevention and response plans, and the
company's past and present environmental and social performance
–
Hydraulic fracturing: Transactions with companies that practice hydraulic fracturing in
environmentally and socially sensitive areas are assessed against their
commitment to and certification of voluntary standards, such as the American Petroleum Institute’s documents and standards for
hydraulic fracturing.
–
Precious metals: Transactions directly related to precious metals assets that have a
controversial environmental and social risk track record are assessed against
the client’s commitment to and certification of voluntary standards, such as
the International Council on Mining & Metals’
(ICMM) International Cyanide Management Code (ICMC).
– Diamonds: Transactions
with companies that mine and trade rough diamonds are assessed on the client’s
commitment to and certification of voluntary standards, such as the ICMC, and rough diamonds must be certified under the
Kimberley Process.
Our processes and governance
UBS applies an environmental and social risk framework
to all transactions, products, services and activities such as lending, capital raising,
advisory services or investments that
involve a party associated with environmentally or socially sensitive activities. The framework seeks to identify and manage potential adverse impacts to the environment and to human rights, as well as the financial
and reputation risks of being associated with them.
Integration in risk,
compliance and operations processes
Procedures and tools for the identification, assessment and monitoring
of environmental
and social risks are applied and integrated
into standard risk, compliance and operations processes.
– Client onboarding:
Potential clients are assessed for environmental and social risks associated
with their business activities as part of UBS’s Know Your Client compliance
processes.
– Transaction due diligence: Environmental and social risks are identified and assessed as part
of standard transaction due diligence and decision-making processes in all
business divisions and relevant product lines.
– Product development and investment decision
processes: New financial products and services are
reviewed before their launch in order to assess their compatibility and
consistency with UBS’s environmental and human rights standards. Environmental
and social risks are also considered in investment decision processes and when
exercising ownership rights like proxy voting and engagement with the
management of investee entities.
– Own operations: Our
operational activities and employees, or contractors working on UBS premises,
are assessed for compliance with relevant environmental, health and safety, and
labor rights regulations.
– Supply chain management: Environmental and social risks are assessed when selecting and
dealing with suppliers. UBS also evaluates goods and services that pose
potential environmental, labor and human rights risks during lifecycle
(production, usage, and disposal) as part of its purchasing processes.
– Portfolio review: At
portfolio level, we regularly review sensitive sectors and activities prone to
bearing environmental and social risks. We assess client exposure and revenue
in such sectors and attempt to benchmark the portfolio quality against regional
and/or sector averages. Such portfolio reviews give us an accurate aggregated
exposure profile and an enhanced insight into our transaction and client
onboarding processes. Based on the outcome of these reviews, we can explore
ways to improve the future portfolio profile along a range of risk parameters.
Clients, transactions or suppliers
potentially in breach of UBS’s position, or otherwise subject to significant
environmental and human rights controversies, are identified as part of UBS’s
standard risk and compliance processes. 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 2019, 1,889 referrals were assessed by
our environmental and social risk unit, of which 82 were rejected or not
pursued, 299 were approved with qualifications and 32 were pending.
1
Greenfield means a new mine /
well or an expansion of an existing mine / well which results in a material
increase in existing production capacity.
Appendix 1 –
Governance and policies
Environmental
and social risk assessments
Environmental and social risk
assessments
|
|
|
|
|
|
|
|
|
For the year ended
|
|
% change from
|
|
|
31.12.19
|
31.12.18
|
31.12.17
|
|
31.12.18
|
Cases referred for
assessment1
|
|
1,889
|
2,114
|
2,170
|
|
(11)
|
by region
|
|
|
|
|
|
|
Americas
|
|
248
|
288
|
305
|
|
(14)
|
Asia Pacific
|
|
479
|
718
|
604
|
|
(33)
|
Europe, Middle East and Africa (excluding Switzerland)
|
|
282
|
293
|
253
|
|
(4)
|
Switzerland
|
|
880
|
815
|
1,008
|
|
8
|
by business division
|
|
|
|
|
|
|
Global Wealth Management2
|
|
199
|
426
|
507
|
|
(53)
|
Personal & Corporate Banking
|
|
801
|
684
|
795
|
|
17
|
Asset Management
|
|
4
|
7
|
7
|
|
(43)
|
Investment Bank
|
|
849
|
980
|
852
|
|
(13)
|
Corporate Center3
|
|
36
|
17
|
9
|
|
112
|
by sector
|
|
|
|
|
|
|
Agribusiness4
|
|
197
|
277
|
291
|
|
(29)
|
Chemicals
|
|
61
|
91
|
87
|
|
(33)
|
Financial5
|
|
722
|
589
|
617
|
|
23
|
Infrastructure
|
|
82
|
109
|
53
|
|
(25)
|
Metals and mining
|
|
200
|
249
|
233
|
|
(20)
|
Oil and gas
|
|
150
|
187
|
207
|
|
(20)
|
Technology6
|
|
105
|
164
|
140
|
|
(36)
|
Transport
|
|
40
|
51
|
53
|
|
(22)
|
Utilities
|
|
108
|
176
|
191
|
|
(39)
|
Other7
|
|
224
|
221
|
298
|
|
1
|
by outcome8
|
|
|
|
|
|
|
approved9
|
|
1,476
|
1,648
|
1,679
|
|
(10)
|
approved with qualifications10
|
|
299
|
358
|
397
|
|
(16)
|
rejected or not further pursued11
|
|
82
|
108
|
94
|
|
(24)
|
pending12
|
|
32
|
0
|
0
|
|
|
1 Transactions
and client onboarding requests referred to the environmental and social risk
(ESR) function. 2 Wealth Management and Wealth Management Americas reported as
Global Wealth Management from 2018. Therefore, 2017 numbers were restated. 3 Relates to procurement / sourcing of products and services. 4 Includes, e.g.,
companies producing or processing fish and seafood, forestry products,
biofuels, food and beverage. 5 Includes, e.g., banks, commodity traders, investments and
equity firms. 6 Includes
technology and telecom companies. 7 Includes, e.g.,
aerospace and defense, general industrials, retail and wholesale (from
2017). 8 "By
outcome" 2019 data is from 22.1.2020 9 Client /
transaction / supplier subject to an ESR assessment and considered in
compliance with UBS’s ESR framework. 10 Client / transaction / supplier subject to an ESR assessment and
approved with qualifications. Qualifications may include ring-fencing of
certain assets, conditions towards client / supplier or internal
recommendations.
11 Client /
transaction / supplier subject to an ESR assessment and rejected or not
further pursued. 12 Decision pending. Pending cases 2018 have been closed and
reallocated to the other outcome categories.
|
Escalation and approval processes
Where business or control functions
responsible for identifying and
assessing environmental and social risks as part of due diligence processes determine
the existence of potential
material risks, they refer the client, supplier or transaction to a specialized environmental and social risk unit for enhanced
due diligence. If identified risks are believed to pose potentially significant environmental or social risks, they
are rejected by the risk unit or are escalated according
to the firm’s reputation risk
escalation process.
Governance and
oversight
In view of the many environmental and
social challenges globally, these topics will continue to increase in relevance
for banks. These developments therefore require regular and critical assessment
of our policies and practices, based on an accurate monitoring and analysis of
societal topics of potential relevance to UBS.
This
process is the responsibility of a committee at Group Executive Board-level, the Global Environmental and Social Risk Committee, which sets the overall risk appetite for the firm and resolves and policy matters relating
to environmental and
social risks and their associated reputation risks.
It is
chaired by the Group Chief Risk Officer, who is responsible for
the development and implementation of
principles and appropriate independent control frameworks for environmental and social risks within UBS.
All corporate responsibility and sustainability developments at UBS are monitored
and reviewed by the UBS Corporate
Culture and Responsibility Committee, a Board of Directors' committee
of UBS Group AG. The Committee
supports the Board in its duties to safeguard and advance UBS’s reputation for responsible corporate conduct.
In this capacity it reviews
and monitors the implementation of UBS’s ESR framework.
Appendix 1 –
Governance and policies
Health and
safety statement
UBS is committed to ensuring that all staff have a working environment
that protects their health, safety and wellbeing.
Our
Code of Conduct and Ethics includes a commitment to follow health and safety
rules and implement best practices to ensure as safe a workplace as possible.
We have health and safety guidelines that
stress the importance of having a physical infrastructure and working environment
that support our staff in performing up to their potential. As work patterns
and employee expectations have changed, UBS has taken a proactive approach to
ensure that our work spaces continue to meet the needs of our businesses, our
staff, our clients and our business partners, while also meeting our legal
obligations.
UBS complies with all health and safety
standards and restrictions imposed by applicable laws in all the countries in
which we operate. We also apply internal policies and guidelines – both
globally and regionally – which may go beyond the legal health and safety
requirements.
An environment without incidents or accidents
is in everyone’s interests. In addition to applying our own health and safety
measures, we ask third parties conducting business with us or operating on our
premises to consider health and safety matters too, and all vendors and
contractors are required to comply with our health and safety guidelines when
dealing with us.
All of our staff are expected to conduct
themselves in a way that helps to ensure their own health and safety and that
of their colleagues.
Health and Safety Principles
–
We aim to maintain a working environment that
supports the general health and well-being of all staff.
–
We build and maintain innovative work places
that allow employees to work efficiently and collaboratively.
–
Our agile working arrangements (and our leave
and benefit arrangements) are designed to support employees’ work and personal
lives.
–
We actively promote an open and respectful work
environment.
–
We strive to ensure that our working environment
is as safe as possible, including addressing issues such as protection of
non-smokers, radiation exposure risk assessments, etc.
–
We have measures in place to mitigate potential
emergencies in the workplace and while travelling on business.
–
Travel and security experts, crisis management
committees, first aid providers, health specialists, social counselors and
other specialists are available to employees.
–
UBS has a range of services and programs (for
example, our Employee Assistance Programs, Social Counseling and online support
materials) to help employees navigate through various personal issues,
including health, family care, addiction and dependency problems.
–
Workplace issues can also impact employee
wellbeing. We have appropriate routes for employees to raise any concerns,
including documented grievance, complaint and whistleblowing processes.
Measures Taken to Ensure Health and
Safety
–
UBS provides information to employees on topical
issues and initiatives.
–
Our line managers help to maintain a safe and
healthy work environment and UBS gives them the information and support that is
relevant to their role.
–
We regularly review our health and safety
activities to ensure issues are effectively managed and improvements are made
where necessary. Our reviews also include employee consultation (where
appropriate).
Health and Safety Governance
Responsibility for the governance and
review of health and safety sits with the Group Chief Operating Officer and the
Group Head Human Resources.
Day-to-day responsibility for health and
safety matters is shared between Group Corporate Services and HR Reward.
The Corporate Culture and Responsibility
Committee has oversight of health and safety matters.
UBS in society management indicators
UBS in society management
indicators
|
|
|
|
|
|
|
|
|
For the year ended
|
|
% change from
|
|
|
31.12.19
|
31.12.18
|
31.12.17
|
|
31.12.18
|
Personnel in specialized
units / functions (full time equivalents)1
|
|
145
|
135
|
108
|
|
7
|
Awareness raising2,4
|
|
|
|
|
|
|
Training participation (headcounts)
|
|
85,589
|
43,722
|
68,955
|
|
114
|
Specialized training3,4
|
|
|
|
|
|
|
Training participation (headcounts)
|
|
13,979
|
11,821
|
9,460
|
|
18
|
External audits5
|
|
|
|
|
|
|
Audit participation (headcounts)
|
|
109
|
135
|
203
|
|
(19)
|
Auditing time (calendar days on site)
|
|
15
|
25
|
35
|
|
(40)
|
Internal audits6
|
|
|
|
|
|
|
Audit participation (headcounts)
|
|
287
|
437
|
537
|
|
(34)
|
Auditing time (person days)
|
|
772
|
572
|
875
|
|
35
|
1 Employees that
are part of the UBS in society organization and/or have specialized knowledge
relevant for the UBS in society management system. 2 Increase due
to high participation rate regarding environmental and social risk awareness
training and mandatory Code of Conduct and Culture training in Q4 3 Specialized training is provided to employees in front-office
and support functions who are dealing directly with UBS in society aspects in
everyday business processes. 4 Possible double counts, i.e., one employee may complete more
than one training in a year 5 ISO 14001, ISO 50001, ISO 14064 and Global Reporting
Initiative (GRI). 6 Audits / reviews conducted by specialized internal units. The
implementation of environmental and social risk policies is also audited by
Group Internal Audit.
|
Appendix 2 –
Additional information for GRI
Information
for management approaches for material topics
Information relevant to all
material topics
Governance
See “Board of Directors and
sustainability” in the “Our governance and principles” section in this
document. Resources for material topics are allocated in accordance with
corporate budgeting processes
Grievance mechanisms
We have a global whistleblowing
policy and procedures (plus an internal website with guidance and links to an
online form, hotlines and other resources), as referenced in our Code of
Conduct and Ethics, and we ask all employees to promptly speak up about any
conduct that might breach policies, laws or regulations. We also provide
mandatory training for all employees to ensure everyone understands our
commitment, procedures and responsibilities.
Additionally, we also have various feedback
channels for external stakeholders. Our Corporate Responsibility team can be
contacted for all sustainability inquiries and issues via the UBS in society website. Client feedback (including that which is collected through
our Quality Feedback management system or through the Report Misconduct of UBS
Staff online form) enables the firm to act and continuously improve products
and client service standards in order to provide the best client experience.
Evaluation of management approaches
We assess the effectiveness of the
approaches as listed in the management approach section (GRI 103-2) of each
material GRI topic in the GRI content index through a number of measures, most
visibly through:
–
Performance against targets
–
Internal and external audits (e.g., ISO 14001
certification)
–
External ratings (e.g., environmental, social and
governance (ESG) ratings), employer awards / honors
–
Stakeholder feedback (e.g., employee and client
surveys)
–
Reputation measurement (through UBS-internal
approaches)
–
Measurement systems (e.g., UBS-internal reporting,
management reviews, impact measurements)
–
Assessment and testing of controls
Results from such evaluations may lead to
potential adjustments to our approaches. In the reporting period, significant
adjustments were made to the Group strategy and our climate strategy (see
references in 103-3 for GRI topic "Economic Performance" in the GRI
Content Index).
Information
relevant to specific material topics
Indirect economic impacts
This topic is partly covered by UBS’s
Community Affairs activities. However, there is a much larger component that
includes the financing of companies by the Investment Bank worldwide as well as
the specific (economic) role UBS holds as the largest bank in Switzerland. In
Switzerland, UBS’s indirect economic impact is determined for instance through
its business relations to more than 120,000 companies (including over 90% of
the largest 250). More than 80% of the 250 banks in Switzerland, as well as a
majority of medium and large pension funds, are UBS clients and benefit from a
wide range of services. 2.5 million private clients and almost half of all
Swiss companies are served by UBS. Further indirect economic impact is realized
through its employees throughout the country (more than 20,000).
Digital innovation
Digitalization continues to transform
the banking industry. Our investments in technology play a critical role in
maintaining our position as the largest global wealth manager. They are
designed to enhance and differentiate the client experience and product
excellence our firm offers, while accelerating effectiveness and efficiency.
Digital innovation is a focus across the firm, both within the business
divisions (e.g., product development) and Corporate Center (notably within the
Chief Operating Officer area).
In 2019, we spent around USD 3.5 billion on
technology. We gear our investments toward technologies to enable business
growth through innovation and superior client experience, and to continue to
increase efficiency across the organization.
Advanced technologies are used in our business
divisions and Corporate Center to enhance the client experience by increasing
front-to-back digitalization, improving product excellence and distribution,
driving efficiency gains and maintaining platform security.
Employee topics
This section covers the management
approach for the following topics: employment, training and education,
diversity and equal opportunity, non-discrimination, and working culture and
environment. This information is provided in addition to the “Employees”
section, where we describe these topics and how we manage them. The purpose of
our management approach is to engage and enable our employees to meet clients’
needs while positively impacting our employees.
Group policies are
global and apply to all employees. Additionally, there are local policies to
address specific local requirements, where applicable. Refer to the “Key
policies and guidelines” section for further information.
Our objectives are provided in the
“Employees“ and the “UBS sustainability objectives and achievements 2019 and
sustainability objectives 2020“ sections of this document.
The firm’s Board of Directors (BoD), Group Executive
Board, Group COO and Head Group Human Resources specifically have
responsibility for defining and executing an human resources strategy aligned
to UBS’s objectives and positioning the firm as an employer of choice. This
includes providing advisory, human resources services to employees as well as
strategic advice to managers and executives to support them in attracting, engaging,
developing and retaining talent.
The BoD’s CCRC regularly and critically
reviews developments in key human resources areas, notably employee health and
wellbeing as well as corporate culture. The CCRC’s responsibility to oversee
our firm’s corporate culture and corporate responsibility programs and
initiatives has been included in the Organization Regulations of UBS Group AG.
With regard to evaluating our management
approach, and in addition to the measures outlined above, we undertake focused
initiatives and take action in areas where we could do better. Each initiative
has associated analysis, communication and accountability elements to ensure
that we can continue to build on strengths but especially so we can improve on
areas of relative weakness or concern.
Appendix 2 –
Additional information for GRI
Impact of
material GRI topics
This table lists those GRI topics
that we have identified as material and additional topics identified as
material in the UBS GRI-based materiality assessment (see above). The table
shows the level of involvement we believe our firm has with the economic,
social or environmental impacts (positive or negative) that may occur in relation
to the respective material topic. For every topic, the table shows our
assessment of whether UBS’s involvement with the impacts of such topic upon the
economy, society or environment is direct, indirect or limited.
Calculating
and reporting on climate change-related financing and advisory activities
The following text explains how the
numbers for climate change-related financing and advisory activities featured
in the “Our climate strategy“ section of this Sustainability Report have been calculated.
In 2019, the Investment Bank provided equity
or debt capital market services for a total deal value of USD 52.7 billion, or
acted as financial advisor for a total deal value of USD 34.5 billion, to
clients that contribute to climate change mitigation and adaptation.
The methodology behind these numbers consists
first in identifying clients who, through the products and services they offer,
work to mitigate the effects of global climate change and help to adapt to
changing climate impacts. We use internal expertise, deal specific information such
as green bond issuance or a high MSCI ranking of clients to identify these
clients and deals. Clients’ activities span all industry sectors, including
renewable energy generation and clean tech but also energy efficiency, waste
management, transport, infrastructure renewal and development or water
management. They range from small-cap and pure-play startups to large international
and diversified companies.
We aggregate total USD deal value of all
global capital market deals in which UBS acted as lead manager or bookrunner
for these companies and aggregate total USD value of deals where UBS acted as
financial advisor. The data represents all our transactions with these clients
and not only transactions that can be classified as directly climate-related.
.
Appendix 2 –
Additional information for GRI
Direct
economic value generated and distributed by
UBS Group AG consolidated in 2019
|
|
|
USD million
|
|
31.12.19
|
Operating income
|
|
28,889
|
Operating expenses
|
|
23,312
|
of which: Personnel expenses
|
|
16,084
|
of which: Community
investments
|
|
45
|
2018 dividends paid on UBS shares
|
|
2,544
|
Tax expenses, excluding deferred taxes
|
|
791
|
Economic value retained
|
|
2,242
|
Financial literacy
The topic is mainly relevant in
Switzerland, the only country where we offer comprehensive financial products
and services to retail and small / medium enterprise (SME) clients. Many of our
products and services that contribute to the enhancement of financial literacy
are therefore limited to our Swiss clients. Examples include:
– Financial check-up for young
people and students
– Saving tips for young people and
students
– Budget calculator for young
people and students
– Mortgage calculator
– Download center for SMEs offering a collection of our broad
range of publications, documents and resources, such as succession planning
checklists
Services not limited to Swiss clients
include:
– UBS Key Invest provides know-how
about structured products
– UBS Dictionary of Banking
– Chief Investment Office Wealth
Management Research
– UBS Financial Education Program
(for US clients only)
Additionally, UBS runs various
community programs globally that enhance financial literacy. Many of our
skills-based volunteering activities across the key themes of education and
entrepreneurship also contribute to the enhancement of financial literacy.
Examples include:
–
UBS Social Investment Toolkit
–
UBS Elevating Entrepreneurs
Appendix 3 – Sustainability objectives and achievements
UBS sustainability objectives and achievements 2019 and sustainability
objectives 2020
Objectives and achievements 2019
UBS in society
For our reporting against the UBS in society mid-term targets, please refer to page 48 of this Sustainability Report.
Material
GRI topics
|
Objectives
2019
|
Achievements
2019
|
Status
|
FS Product Portfolio;
FS Active Ownership
|
Sustainable investments / finance:
·
Make progress towards our mid-term goal to
direct USD 5 billion of client assets into new Sustainable Development Goal
(SDG)-related impact investments to help mainstream the asset class and its
contribution to the SDGs (by 2021)
·
Global Wealth Management (GWM) to launch at
least two private markets impact investing products
·
Asset Management (AM) and GWM to further
support the sustainable and impact investing cause (e.g., internal / external
communication, events, research and whitepapers)
·
Investment Bank (IB) to maintain leadership
position in Environmental / Social / Governance (ESG) Integration /
Sustainable Investing (SI) research through the collaborative delivery of differentiated
content and client events
·
Further strengthen the collaboration to
establish AM as SI leader in the industry
·
AM to launch SI products and solutions both
in the active and passive space
·
AM to strengthen the company engagement
approach focusing on climate action and impact categories in order to
improve the sustainability performance of our investments
|
·
USD 2 billion of client assets directed into
SDG-related impact investments in 2019, reaching USD 3.9 billion (i.e., 78%
of our 2021 goal)
·
Launch by GWM of two Sustainable Investing
Private Equity Impact Funds in 2019: Bridge Workforce and Affordable Housing
and RXR Opportunity Zone Fund.
·
Publication of UBS whitepaper at the World
Economic Forum 2019 annual meeting; offering policymakers, investors and the
financial sector recommendations for meeting the SDGs. Publication by AM of
research papers, including one on climate, climate engagement, stewardship,
climate change and central banks, and global institutional survey on ESG.
·
168 research activities (reports / calls /
events / videos), supporting our aim to deliver differentiated ESG and
Sustainable Investing (SI) content to institutional investors. Launch by IB of
ESG icon to highlight, where relevant, substantive ESG content in “mainstream“
research. Publication of 32 such reports. Inaugural UBS ESG and
Sustainability Symposium, with over 300 clients, corporate attendees, UBS
staff, industry leaders and global experts, including over 40 speakers. Symposium
done with Global Research Alliance for Sustainable Finance and Investment
(GRASFI) which receives sponsorship from UBS. Key client conferences and
events integrated ESG content, including UBS Greater China Conference, UBS's
flagship client conference held annually in Shanghai – and UBS OneASEAN
Conference in Bangkok.
·
See Achievements reported above on supporting
the sustainable and impact investing, as well as Achievements reported below
regarding engagement. AM sponsor of PRI (Principles for Responsible Investment),
Responsible Investor Europe, Americas, and Japan events .
·
Launch by AM of 13 funds. AM reached USD 38.6
billion of Assets under Management (AuM) for SI focused and Impact products
(i.e.. progress of USD 21 billion for the year)
·
AM a lead manager for 7 collaborative
engagements within Climate Action 100+ and supported 82% of climate related
resolutions proposed by shareholders. AM ranked as number 1 asset manager
for voting on climate resolutions according to ShareAction. AM engaged with
50 companies in the oil & gas and utilities sectors on climate risk
specifically to share our findings, receive feedback, receive additional
data to enhance our models over-time and also to encourage companies to
mitigate climate change risks.
|
On Track / Achieved
|
Material GRI topics
|
Objectives
2019
|
Achievements
2019
|
Status
|
GRI 203: Indirect Economic Impacts
|
Pioneer two to three new ways to
finance international aid in partnership with bilateral or multilateral
agencies, foundations and/or the private sector.
Raise at least CHF 30 million through
these new partnerships or philanthropic products.
|
UBS Optimus Foundation (Optimus) on
track with development of innovative ways to finance international aid,
including designing a social impact bond (SIB) with the Hong Kong
Government, and a client-funded East Africa Education facility (an outcomes
based investment fund). Optimus raised more than CHF 35 million from
strategic partnerships and social finance .
|
On track
|
FS Product Portfolio;
FS Active Ownership
|
Launch of a consolidated global UHNW
community to meet the different needs / passions of UHNW clients and their
successors.
Note: Target changed as of H1 2019
due to a change of IT platform and a review of the existing UHNW communities
concept. Original target: Continue to build the Global Philanthropists
Community (GPC) to grow beyond 500 members and create value by facilitating
50 connections amongst community members.
|
Launch of new platform as UBS Global
Connections for existing members. Platform will be open for new members in
Q1 2020.
|
On track
|
GRI 203: Indirect Economic Impacts
|
Make progress towards our mid-term
goal to achieve a volunteering rate of 40% of employees by the end of 2020,
with 40% of volunteers’ time directed at skills-based programs.
|
38% of employee volunteering. 48% of
all volunteer hours skills-based
|
On track
|
FS Product Portfolio;
GRI 203: Indirect Economic Impacts
|
Achieve 2,000 client touch points
with Global Visionaries program.
|
Over 7,000 client touch points
through the Global Visionaries program.
|
Achieved
|
GRI 201: Economic Performance;
GRI 302: Energy;
GRI 305: Emissions;
FS Product Portfolio
|
Climate strategy:
·
Further aligning UBS’s risk appetite with
reduction path under Paris Agreement and refine climate risk methodologies
Execute on 2020
greenhouse gas / energy reduction target and RE100 implementation plan:
·
Reduce Greenhouse gas (GHG) emissions by 75%
below 2004 level
·
Reduce energy by 5% below 2016 level
·
Increase share of renewable electricity to
100% by June 30, 2020
–
–
Execute on 2020
operational environmental targets for water, paper and waste:
·
Reduce water consumption by 5% below 2016
level
·
Reduce paper consumption per FTE by 5% below
2016 level
·
Increase share of sustainable (FSC / recycled)
to 90%
·
Reduce waste per FTE by 5% below 2016 level
·
Increase waste recycling ratio to 60%
|
·
Further integrated climate-related risk into
UBS's risk management framework: climate risk is now embedded into the
firm's risk taxonomy and operational risk appetite statement. In addition,
UBS further limited its risk appetite for carbon-related assets: the firm
reduced exposure to carbon-related assets (0.8%) and strengthened UBS
standards in the energy and utilities sectors. We further developed
forward-looking scenario-based climate risk methodologies: Participation in
the Paris Agreement Capital Transition Assessment (PACTA) pilot for
corporate lending portfolios; as well as in phase II of UN Environment
Programme Finance Initiative (UNEP FI) pertaining to Task Force on
Climate-related Disclosures (TCFD).
On track to achieve 2020 targets for
GHG / energy reduction and RE100 implementation plan:1
·
GHG reduction: –71% compared to 2004
·
Energy reduction: –15% compared to 2016
·
Share of renewable energy: 72% up from 59% in
2018
On track to achieve 2020 operational
environmental targets for water, paper and waste:1
·
Water reduction: –17% compared to 2016
·
Paper consumption per FTE: – 31% compared to
2016
·
Share of sustainable paper: 83% up from 80%
in 2018
·
Waste per FTE: –24% compared to 2016
·
Waste recycling ratio: 51.2% up from 50.8% in
2018
|
Achieved
On Track
On Track
|
Appendix 3 – Sustainability objectives and achievements
Material GRI topics
|
Objectives
2019
|
Achievements
2019
|
Status
|
FS Audit
|
Strengthen UBS’s long-term value
creation (LTVC) case for investors by supporting the integration of LTVC
report into Annual Report.
|
LTVC case advanced by changes made to
Book 1 of the Annual Report. LTVC fold-out integrated at the very beginning
of Annual Report and Book 1 re-structured and content adapted to reflect
integrated approach.
|
Achieved
|
All
|
Increase ESG engagement with UBS investors
by participating in at least two ESG investor events / roadshows.
|
ESG is increasingly integrated into
mainstream investor engagements (with one dedicated ESG investor roadshow
conducted).
|
Partly Achieved
|
FS Audit
|
Execute firm-wide ISO 14001 surveillance
audit and ensure continued certification by addressing audit findings.
|
ISO 14001 2019 surveillance audit passed
with no major non-conformities. All minor non-conformities from last audit
closed.
|
Achieved
|
FS Product Portfolio;
FS Active Ownership
|
Simplify Environmental & Social
Risk (ESR) checks and processes in onboarding and periodic Know Your Client
(KYC) reviews and train approx. 50% of relevant target groups.
|
Simplified ESR operational controls
in onboarding and periodic Know your Client (KYC) reviews to increase their
efficiency and effectiveness; 100% of target group (front staff in GWM and
Personal & Corporate Banking [P&C], and risk officers) trained on
revised controls as part of mandatory Anti-money Laundering (AML) training.
Additional specialist trainings rolled out in various locations (e.g.
Singapore, Switzerland).
|
Achieved
|
GRI 308: Supplier Environmental
Assessment;
GRI 414: Supplier Social Assessment
|
Further improve approach to assess
vendors and enhance UBS Responsible Supply Chain Standard (RSCM).
|
RSCM guideline and Factbase, an
internal database, updated.
|
Achieved
|
1 Reporting
period 2019 (1 July 2018 – 30 June 2019)
Other areas
Material
GRI topics
|
Objectives
2019
|
Achievements
2019
|
Status
|
GRI 201: Economic Performance;
Operational efficiency and effectiveness
|
·
Reported return on CET1 capital of ~15% for
2019, with an ambition to improve to ~17% by 2021
·
Adjusted cost / income ratio of ~ 77% for
2019, with an ambition to improve to ~ 72% by 2021
|
·
Return on common equity tier 1 capital of
12.4% in 2019
·
Adjusted cost / income ratio of 80.8% in 2019
|
New targets / guidance for 2020-2022
|
GRI 205: Anti-Corruption
|
Review UBS’s financial crime
framework to ensure that emerging risks are reflected.
|
Review of UBS's Financial Crime
framework conducted, to ensure that emerging risks are reflected.
|
Achieved
|
GRI 401: Employment;
Working culture and environment
|
Build engagement and strengthen our
corporate culture
· Reinforce culture programs across the organization
· Promote a feedback culture and measure, foster and recognize the
UBS behaviors of integrity, collaboration and challenge
· Remain an employer of choice for employees at all career stages
· Attract the right external talent and maintain a highly motivated
workforce
· Continue to foster internal mobility and provide long-term career
prospects
|
We are widely recognized as an
employer of choice and received various top-employer honors in 2019. Of
particular note are our achievements in Global Universum ranking of Top 50
World's Most Attractive Employers, our peer-leading position in human
resources elements of Dow Jones Sustainability Index, employee survey scores
above financial services norm in employee engagement (78%) and work
environment (81%) and our recognition by Bloomberg Gender Equality Index.
Internal mobility remained a key
priority in 2019, as it builds cross-firm connections, increases engagement
and enables employees to leverage existing skills as well as developing new
ones. Along with line manager effectiveness, having a wide range of learning
and career development opportunities, as well as tools to facilitate
professional growth, are key drivers of employee engagement. In this
respect, our new Career Navigator tool, which debuted in June 2019, has been
instrumental. This online platform enables employees to explore career paths
and search for open roles that match their interests while allowing our
recruiters to find internal talent more easily. The tool also identifies
skill gaps with regards to new roles and interests and directly links to
learning opportunities to help fill these gaps. In 2019, 1,125 employees
changed business divisions; 499 changed regions.
|
On track
|
GRI 404 Training and Education
|
Effectively develop, manage and
retain our talent
· Curate and modernize the UBS University learning offering to
continue to enhance learner experience
· Prepare current and future leaders for enhanced responsibilities
in an ever-evolving banking and working environment
|
In 2019, our in-house UBS University
further updated its curriculum to emphasize future-skills development and
personal growth for all employees. These updates included a new digital
skills curriculum that builds knowledge about topics such as blockchain, cloud
computing, robotics and artificial intelligence. A new mobile learning app
launched in mid-2019 enabled employees to learn whenever and wherever they
want.
We also completely revamped our
leadership development offering in 2019 to ensure that our leaders have the
skills they need to grow their businesses and their people, and to lead
effectively in an age of digital transformation.
In 2019, our permanent employees
completed more than 1,100,000 learning activities, including mandatory
training on compliance, business and other topics. This averaged to 16.2
sessions, or more than 2 training days, per employee.
|
On track
|
Appendix 3 – Sustainability objectives and achievements
Material GRI topics
|
Objectives
2019
|
Achievements
2019
|
Status
|
GRI 405: Diversity and Equal
Opportunity;
GRI 406: Non-Discrimination
|
Strengthen our diverse and inclusive
workplace
· Aspiration to increase the ratio of women in management roles to
one-third
· Expansion of understanding and skill base around Inclusive
Leadership
|
Our diverse workforce and inclusive
culture are critical to our long-term success. Already diverse in many ways,
we are committed to further increasing our diversity and to ensuring equal
opportunities for all employees. We are especially focused on hiring,
retaining and promoting more women across the firm with a focus on senior
ranks. We continue to make progress toward our stated aspiration to increase
the representation of women in management roles to one-third. In 2019, 25.2%
of all employees in roles at Director level and above were women, up from
24.7% in 2018
Our award-winning UBS Career Comeback program, already established in the
UK, US, Switzerland and India, was extended to include all other UBS
locations in 2019. In addition to our strategic initiatives, every year we
sponsor numerous activities to promote greater diversity and inclusiveness,
including events and communications around International Women's Day and
Pride Month. In 2019, we sponsored 43 employee
networks globally, including networks focused on culture, gender, ethnicity,
family, mental health, disability, Pride / LGBTQ and veterans topics.
|
On track
|
Client experience
|
·
Implement new tool to handle client
complaints as well as requests in connection with FADP (Swiss Federal Act on
Data Protection) / EU GDPR (General Data Protection Regulation)
·
Finalize alignment of complaint process with
FIDLEG (Swiss Financial Services Act)
·
Define rules / processes for handling data
requests under FIDLEG
|
·
The workflow-tool for processing FADP client
requests was deployed in October 2019
·
Alignment was completed with policy update
and communication to Client Advisors
·
Process is being finalized: ongoing
discussions with stakeholder to define responsibilities
|
On track
Achieved
On track
|
GRI 417: Marketing and Labeling
|
Suitability:
·
Implement the new Swiss FIDLEG law applicable
to financial service delivery in Switzerland
·
Implement the 2018 ESMA Guidelines on certain
aspects of MIFID II suitability requirements for MIFID-affected clients
|
·
Implementation of Swiss FIDLEG under way
(FIDLEG entered into force on 1 Jan 2020)
·
All MIFID requirements have been implemented
and compliance gaps closed.
|
On track
Achieved
|
GRI 206: Anti-competitive Behavior;
GRI 418: Customer Privacy;
GRI 419: Socioeconomic Compliance
|
Maintain an effectively designed and
operating conduct risk framework with standards consistently applied across
all businesses, functions and regions
|
Conduct risk framework is operating
effectively across all businesses, functions and regions. Closure of various
conduct risk framework-related issues and remediation throughout 2019.
|
Achieved
|
Digital innovation
|
Technology spending to be maintained
at current levels (~3.5 bn CHF) with a focus on advanced technology to
enable business growth and innovation and create further efficiencies.
|
·
Maintained ~USD 3.5 billion tech spend
·
Innovative client solutions delivered across
business division and corporate centers
·
Continuation of cloud journey incl. public
cloud and O365 adoption with 10K users onboarded
·
AI governance underway; 100 +PoC (Proof of
Concepts) and experiments and 30+ applications in production of
implementation across the company
·
Digital factories and labs opened in
Singapore, Zurich and the US
|
Achieved
|
Objectives 2020
UBS in society
UBS in
society is committed to making UBS a force for
driving positive change in society and the environment for future generations.
It will do so by focusing our firm on creating long-term positive impact for
clients, employees, investors and society. We intend to make sustainable
performance the standard across our firm and part of every client conversation.
To implement our strategy, we have defined firm-wide goals that we plan to
achieve by the end of 2025.
Please refer to page 48 of this Sustainability
Report for an overview of these mid-term goals. The
following 2020 UBS in
society objectives are aligned to these mid-term
goals.
Material
GRI topics
|
Objectives
2020
|
FS Product Portfolio;
FS Active Ownership
|
Sustainable investments / finance:
· Make progress towards our mid-term goal to direct USD 5 billion
of client assets into new SDG-related impact investments to help mainstream
the asset class and its contribution to the SDGs (by the end of 2021)
· GWM to continue to add funds and exchange-traded funds (ETFs)
with SI focus or stronger SI integration to the fund shelf
· P&C to increase sustainable solutions and facilitate further
increase by benefit-oriented client advice, and by leveraging digital technologies
· P&C to be the preferred strategic partner for advisory and
financing transactions related to Switzerland’s
energy strategy 2050
· IB to encourage corporate disclosure and drive client dialogue
around relevant Environment, Social and Governance (ESG) matters; as well as
increase the number of green and sustainable bond (or similar) mandates
· AM to continue marketing sustainable investing to institutional
clients.
|
GRI 201: Economic Performance;
GRI 302: Energy;
GRI 305: Emissions;
FS Product Portfolio;
FS Active Ownership
|
Climate strategy:
AM to continue expanding climate
solutions and engagement programs, as well as collaboration with Climate
Action 100+.
Climate risk objectives (following
the 5-year TCFD implementation path by 2022):
· Further align UBS's risk appetite with the Paris Agreement and
conduct portfolio reviews on climate-sensitive sectors
· Further develop climate risk methodologies in-house and through
participation in industry-wide working groups (UNEP FI TCFD Phase II; PACTA
pilot by Two Degrees Investing Initiative and Institute of International
Finance (IIF))
· Address emerging regulatory expectations regarding the
identification and management of climate risks.
Execute on 2020 greenhouse gas /
energy reduction target and RE100 implementation plan:
· Reduce greenhouse gas (GHG) emissions by 75% below 2004 level
· Reduce energy consumption by 5% below 2016 level
· Increase share of renewable electricity to 100% by mid-2020.
Execute on 2020 operational
environmental targets for water, paper and waste:
· Reduce water consumption by 5% below 2016 level
· Reduce paper consumption per full-time employee (FTE) by 5% below
2016 level
· Increase share of sustainable (FSC / recycled) to 90%
· Reduce waste per FTE by 5% below 2016 level
· Increase waste recycling ratio to 60%.
|
Appendix 3 – Sustainability objectives and achievements
Material GRI topics
|
Objectives
2020
|
FS Product Portfolio;
GRI 203: Indirect Economic Impacts
|
Pioneer new ways to finance
international aid in partnership with bilateral or multilateral agencies,
foundations and/or the private sector
|
FS Product Portfolio;
FS Active Ownership
|
· All business divisions to further support the development of
sustainable finance (e.g., internal / external communication, events,
research and whitepapers)
· IB to maintain leadership position in ESG Integration /
Sustainable Investing research through the collaborative delivery of
differentiated content and client events.
|
GRI 203: Indirect Economic Impacts
|
· Achieve a volunteering rate of 40% of employees by the end of
2020, with 40% of volunteers’ time directed at skills-based programs
· Community Affairs to maintain the 2019 percentage of
beneficiaries reporting significant improvement in skills or transformation
in quality of life resulting from UBS's investment.
|
GRI 308: Supplier Environmental Assessment;
GRI 414: Supplier Social Assessment
|
Responsible Supply Chain Management –
review product catalogue and increase the number of sustainable products.
|
FS Audit;
GRI 201: Economic Performance;
FS Product Portfolio;
FS Active Ownership
|
· Strengthen Environmental Social and Governance (ESG) disclosures
in the UBS Annual Report 2019 by including a "focus on ESG"
section
· Execute firm-wide ISO 14001 surveillance audit and ensure
continued certification by addressing audit findings
· Start the preparation work for the implementation of the UNEP FI
Principles for Responsible Banking (PRB).
|
Other areas
Material
GRI topics
|
Objectives
2020
|
GRI 201: Economic Performance;
Operational efficiency and effectiveness
|
Targets, capital and resource
guidelines 2020-2022 (on a reported basis):
· Group returns: 12–15% return on CET1 capital (RoCET1)
· Cost efficiency: Positive operating leverage and 75–78% cost /
income ratio
· Growth 10–15% profit before tax growth in Global Wealth
Management
· Capital allocation: Up to 1/3 of Group
RWA and LRD in the Investment Bank
· Capital guidance: ~13% CET1 capital ratio; ~3.7% CET1 leverage
ratio
|
GRI 205: Anti-Corruption
|
Review UBS’s financial crime
framework to ensure that emerging risks are reflected.
|
GRI 401: Employment;
Working culture and environment
|
Build engagement and strengthen our
corporate culture
· Reinforce culture programs across the organization
· Promote a feedback culture and measure, foster and recognize the UBS
behaviors of integrity, collaboration and challenge
· Remain an employer of choice for employees at all career stages
· Attract the right external talent and maintain a highly motivated
workforce
· Continue to foster internal mobility and provide long-term career
prospects
|
GRI 404 Training and Education
|
Effectively develop, manage and
retain our talent
· Emphasize future-skills development and personal growth for all
employees
· Ensure that our leaders have the skills they need to grow their
businesses and their people in an age of digital transformation
|
GRI 405: Diversity and Equal
Opportunity;
GRI 406: Non-Discrimination
|
Strengthen our diverse and inclusive
workplace
· Aspiration to increase the ratio of women in management roles to
one-third
· Expansion of understanding and skill base around Inclusive
Leadership
· Implement supporting initiatives to hire, promote and retain more
women at all levels of the organization
|
Client experience
|
· Rollout of a new client feedback tool to handle client complaints
in Booking Center CH
· Rollout of a web-based training for dealing with client
complaints
|
GRI 417: Marketing and Labeling
|
Suitability:
· Implement the new Swiss FIDLEG law applicable to financial
service delivery in Switzerland
· Assess and implement changes made to the EU regulations pursuant
to sustainable investments and other ESG ₋ Environmental, Social and
Governance criteria
|
GRI 206: Anti-competitive Behavior;
GRI 418: Customer Privacy;
GRI 419: Socioeconomic Compliance
|
Promote and maintain an effectively designed
and operating conduct risk framework as the conduct risk discipline
continues to mature and regulators converge on requirements and
expectations.
|
Digital innovation
|
Technology spending to be maintained
at current levels (~3.5 bn USD) with a continued focus on modularization and
modernization of our estate, leveraging innovation and ecosystem to enable
business growth and create further efficiencies.
|
Appendix 4 – Global Reporting Initiative content index
Global Reporting Initiative Content Index 2019
This content index refers to the
Global Reporting Initiative (GRI) Standards issued by the Global Sustainability
Standards Board and the Financial Services Sector Supplements, which form
together a voluntary reporting framework that provides guidance on how
organizations can disclose their sustainability performance.
UBS’s reporting has been reviewed by
Ernst & Young Ltd (EY) against the GRI Standards. The content has been
prepared in accordance with the comprehensive option as evidenced in the EY
assurance report. The limited assurance by EY covered all items of the GRI
Content Index.
This report has been prepared in
accordance with the GRI Standards: Comprehensive option.
Guidance
Disclosure Number and
title of disclosure
Reference Referenced
text which covers the GRI Standard
Page Page
reference in the UBS Annual Report 2019 (UBS AR 2019) or UBS Sustainability
Report 2019 (UBS SR 2019)
Note
Topics in the index that do not
feature a management approach are not material, but are reported on a voluntary
basis (selected indicators only).
All references to the Annual Report
2019 are referring to the combined UBS Group AG and UBS AG Annual Report 2019
available on www.ubs.com/investors.
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 102 General Disclosures (2016)
|
102–1 Name of organization
|
Corporate information
|
UBS AR 2019 / 7
|
102–2 Activities, brands,
products, and services
|
Our strategy
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Corporate Center
|
UBS SR 2019 / 7–8
UBS SR 2019 / 11–13
UBS SR 2019 / 14–15
UBS SR 2019 / 16–17
UBS SR 2019 / 18–19
UBS SR 2019 / 20
|
102–3 Location of headquarters
|
Corporate information
|
UBS AR 2019 / 7
|
102–4 Location of operations
|
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
Further information reg.
locations, incl. list of all UBS Branches worldwide can be found under https://www.ubs.com/global/en/
about_ubs/about_us/locations.html
|
UBS SR 2019 / 11–13
UBS SR 2019 / 14–15
UBS SR 2019 / 16–17
UBS SR 2019 / 18–19
|
102–5 Ownership and legal form
|
Corporate information
Group structure and shareholders
Share capital structure
|
UBS AR 2019 / 7
UBS AR 2019 / 204–205
UBS AR 2019 / 206–210
|
102–6 Markets served
|
Our strategy
Global Wealth Management
Personal & Corporate Banking
Asset Management
Investment Bank
|
UBS SR 2019 / 7–8
UBS SR 2019 / 11–13
UBS SR 2019 / 14–15
UBS SR 2019 / 16–17
UBS SR 2019 / 18–19
|
102–7 Scale of the organization
|
Our key figures
Note 2a Segment reporting
Note 2b Segment reporting by
geographic location
|
UBS AR 2019 / 8
UBS AR 2019 / 353–356
UBS AR 2019 / 357
|
102–8 Information on employees and
other workers
|
Employees (additional information)
Employees
|
UBS SR 2019 / 38–45
UBS SR 2019 / 35–37
|
102–9 Supply chain
|
Vendors
Responsible supply chain
management
|
UBS SR 2019 / 50
UBS SR 2019 / 93
|
102–10 Significant changes to the
organization and its supply chain
|
Our evolution
Note 1b Changes in accounting
policies, comparability and other adjustments
Note 32 Changes in organization
and acquisitions and disposals of subsidiaries and businesses
|
UBS AR 2019 / 14–15
UBS AR 2019 / 349–351
UBS AR 2019 / 470–471
|
102–11 Precautionary Principle or
approach
|
Risk management and control
Key policies and guidelines
|
UBS AR 2019 /
105–155
UBS SR 2019 / 51–52
|
102–12 External initiatives
|
External commitments and
memberships
Advancing sustainability in the
financial sector
|
UBS SR 2019 / 97
UBS SR 2019 / 76–77
|
102–13 Membership of associations
|
See 102–12
|
UBS SR 2019 / 97
UBS SR 2019 / 76–77
|
102–14 Statement from senior
decision-maker
|
Chairman’s statement
|
UBS SR 2019 / 3–4
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 102 General Disclosures (2016)
|
102–15 Key impacts, risks, and
opportunities
|
Sustainability at UBS
Our strategy, business model and
environment
Risk management and control
Risk evaluation
Objectives and achievements 2019
Objectives 2020
Sustainability governance
|
UBS SR 2019 / 5–6
UBS SR 2019 / 7–50
UBS AR 2019 / 105–155
UBS SR 2019 / 165
UBS SR 2019 / 135–139
UBS SR 2019 / 140–142
UBS SR 2019 / 51–53
|
102–16 Values, principles,
standards, and norms of behavior
|
Our Code of Conduct and Ethics
Key policies and guidelines
The keys to a strong corporate
culture
Pillars, Principles and Behaviors
(foldout pages)
|
UBS SR 2019 / 113–116
UBS SR 2019 / 51–52
UBS SR 2019 / 35
UBS AR 2019 / 0
|
102–17
Mechanisms for advice and concerns about ethics
|
Our
Code of Conduct and Ethics
Key
policies and guidelines
Quality
feedback management system
Grievance
mechanisms
|
UBS SR 2019 / 113–116
UBS SR 2019 / 51–52
UBS
SR 2019 / 29
UBS
SR 2019 / 129
|
102–18 Governance structure
|
Board of Directors
Group Executive Board
Charter of the Corporate Culture
and Responsibility Committee
Sustainability governance
|
UBS AR 2019 / 213–228
UBS AR 2019 / 229–236
UBS SR 2019 / 112
UBS SR 2019 / 51–53
|
102–19 Delegating authority
|
Charter of the Corporate Culture
and Responsibility Committee
Sustainability governance
|
UBS SR 2019 / 112
UBS SR 2019 / 51–53
|
102–20 Executive-level
responsibility for economic, environmental, and social topics
|
Sustainability governance
Charter of the Corporate Culture
and Responsibility Committee
|
UBS SR 2019 / 51–53
UBS SR 2019 / 112
|
102–21 Consulting stakeholders on
economic, environmental, and social topics
|
Chairman’s statement
How we create value for our
stakeholders
Shareholders’ participation rights
Corporate calendar UBS Group AG
|
UBS SR 2019 / 3–4
UBS SR 2019 / 25–50
UBS AR 2019 / 211–212
UBS AR 2019 / 7
|
102–22 Composition of highest
governance body
|
Board of Directors
Group Executive Board
Sustainability governance
|
UBS AR 2019 / 213–228
UBS AR 2019 / 229–236
UBS SR 2019 / 51–53
|
102–23 Chair of the highest
governance body
|
Not relevant to UBS (two-tiered
board structure)
Board of Directors
|
UBS AR 2019 / 213–228
|
102–24 Nominating and selecting
the highest governance body
|
Sustainable performance and
compensation
Board of Directors
Elections and terms of office
Organizational principles and
structure
Governance and Nominating
Committee
Skills, expertise and training
of the Board of Directors
Succession planning
|
UBS SR 2019 /
64–65
UBS AR 2019 / 213–228
|
102–25 Conflicts of interest
|
Key policies and guidelines (Code
of Conduct and Ethics)
Important business connections of
independent members of the Board of Directors
|
UBS SR 2019 / 51–52
UBS AR 2019/ 226
|
102–26 Role of highest governance
body in setting purpose, values, and strategy
|
Sustainability governance
Charter of the Corporate Culture
and Responsibility Committee
Chairman’s statement
|
UBS SR 2019 / 51–53
UBS SR 2019 / 112
UBS SR 2019 / 3–4
|
102–27 Collective knowledge of
highest governance body
|
Skills, expertise and training of
the Board of Directors
|
UBS AR 2019 / 227
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 102 General Disclosures (2016)
|
102–28 Evaluating the highest
governance body’s performance
|
Performance assessment
Sustainable performance and
compensation
|
UBS AR 2019 /
222
UBS SR 2019 / 64–65
|
102–29 Identifying and managing
economic, environmental, and social impacts
|
Sustainability governance
Charter of the Corporate Culture
and Responsibility Committee
Chairman’s statement
How we create value for our stakeholders
Materiality under GRI Standards
|
UBS SR 2019 / 51–53
UBS SR 2019 / 112
UBS SR 2019 / 3–4
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
|
102–30 Effectiveness of risk
management processes
|
Charter of the Corporate Culture
and Responsibility Committee
|
UBS SR 2019 / 112
|
102–31 Review of economic,
environmental, and social topics
|
Board of Directors – Corporate
Culture and Responsibility Committee
|
UBS AR 2019 /
224
|
102–32 Highest governance body’s
role in sustainability reporting
|
Charter of the Corporate Culture
and Responsibility Committee
|
UBS SR 2019 / 112
|
102–33 Communicating critical
concerns
|
Sustainability governance
Charter of the Corporate Culture
and Responsibility Committee
Chairman’s statement
Grievances and whistleblowing
protection, policies and procedures
|
UBS SR 2019 / 51–53
UBS SR 2019 / 112
UBS SR 2019 / 3–4
UBS SR 2019 / 52
|
102–34 Nature and total number of
critical concerns
|
Materiality under GRI Standards
How we create value for our
stakeholders
Note: Due to the diverse nature
and sources of critical concerns it is not possible to report their total
number.
|
UBS SR 2019 / 66–69
UBS SR 2019 / 25–50
|
102–35
Remuneration policies
|
Compensation Report 2019
Sustainable performance and
compensation
|
UBS AR 2019 /
242–288
UBS SR 2019 / 64–65
|
102–36 Process for determining
remuneration
|
Compensation Report 2019
|
UBS AR 2019 / 242–288
|
102–37 Stakeholders’ involvement
in remuneration
|
How we create value for our
stakeholders
Shareholders’ participation rights
Corporate calendar UBS Group AG
Compensation report – Overview of
the performance assessment measures
Shareholder engagement and say on
pay
Note: Voting results of AGMs are
published on www.ubs.com/agm
|
UBS SR 2019 / 25–50
UBS AR 2019 / 211–212
UBS AR 2019 / 7
UBS AR 2019 / 268
UBS AR 2019 / 246–249
|
102–38 Annual total compensation
ratio
|
Reason for omission: Not disclosed
due to confidentiality
Compensation for the CEO, the
highest paid GEB member, total compensation for GEB members, compensation
for the BoD members, including the Chairman, and compensation for employees
other than GEB members are disclosed in the Compensation Report 2019.
|
UBS AR 2019 / 242–288
|
102–39 Percentage increase in
annual total compensation ratio
|
Reason for omission: Not disclosed
due to confidentiality
Compensation increase for the CEO,
the highest paid GEB member, total compensation for GEB members,
compensation for the BoD members, including the Chairman, and general
employee compensation for employees other than GEB members are disclosed in
the Compensation Report 2019.
|
UBS AR 2019 / 242–288
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 102 General Disclosures (2016)
|
102–40 List of stakeholder groups
|
How we create value for our
stakeholders
Materiality under GRI Standards
|
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
|
102–41 Collective bargaining
agreements
|
Employee representation
|
UBS SR 2019 /
38
|
102–42 Identifying and selecting
stakeholders
|
See 102–40
|
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
|
102–43 Approach to stakeholder
engagement
|
See 102–40
|
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
|
102–44 Key topics and concerns
raised
|
See 102–40
|
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
|
102–45 Entities included in the
consolidated financial statements
|
Our external reporting approach
Our evolution
Note 1 Summary of significant
accounting policies
Note 31 Interests in subsidiaries
and other entities
Note: Except where clearly
identified, all of UBS’s sustainability information referenced in this GRI
index is presented on a consolidated basis under IFRS requirements for
financial reporting for the UBS Group AG.
|
UBS AR 2019 (at the very beginning
of the report)
UBS AR 2019 / 14–15
UBS AR 2019 / 317–352
UBS AR 2019 / 464–469
|
102–46 Defining report content and
topic boundaries
|
Information policy
How we create value for our
stakeholders
Materiality under GRI Standards
Impact of material GRI topics
|
UBS AR 2019 / 240–241
UBS SR 2019 / 25–50
UBS SR 2019 / 66–69
UBS SR 2019 / 131
|
102–47 List of material topics
|
Material GRI topics 2019
|
UBS SR 2019 /
67–69
|
102–48 Restatements of information
|
None
|
|
102–49 Changes in reporting
|
No significant changes
|
|
102–50 Reporting period
|
1.1.2019–31.12.2019
|
|
102–51 Date of most recent report
|
15.3.2019
|
|
102–52 Reporting cycle
|
Financial reporting: quarterly
Sustainability reporting: annually
|
|
102–53 Contact point for questions
regarding the report
|
Questions related to Annual
Report: Contacts
Questions related to Sustainability
Report: Contacts
|
UBS AR 2019 /
7
UBS SR 2019 /
2
|
102–54 Claims of reporting in
accordance with the GRI standards
|
GRI content index
Independent assurance report by EY
|
UBS SR 2019 /
143
UBS SR 2019 /
105–106
|
102–55 GRI content index
|
|
|
102–56 External assurance
|
Auditors
Management’s report on internal
control over financial reporting
Independent assurance report by EY
About this Sustainability Report
|
UBS AR 2019 / 238–239
UBS AR 2019 / 292–305
UBS SR 2019 / 105–106
UBS SR 2019 /
2
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Economic Performance (Material
topics: Operational efficiency and effectiveness; Climate action)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Our strategy
Performance targets and
measurement
Our key figures
Group Internal Audit
Organizational principles and
structure
Our climate strategy
Charter of the Corporate Culture
and Responsibility Committee
Sustainability governance
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 7–8
UBS SR 2019 / 9
UBS AR 2019 / 8
UBS AR 2019 / 239
UBS AR 2019 / 221
UBS SR 2019 / 54–63
UBS SR 2019 / 112
UBS SR 2019 / 51–53
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management approach
|
Evaluation of management
approaches
Our strategy
Performance targets and
measurement
Our climate strategy
|
UBS SR 2019 / 129
UBS SR 2019 / 7–8
UBS SR 2019 / 9
UBS SR 2019 / 54–63
|
GRI 201 Economic Performance (2016)
|
201–1 Direct economic value generated
and distributed
|
Direct economic value generated
and distributed by UBS Group AG consolidated in 2019
Income statement
Statement of cash flows
Note 6 Personnel expenses
Note 7 General and administrative
expenses
Note 8 Income taxes
Driving change in communities
Vendors (total purchase amount)
|
UBS SR 2019 / 133
UBS AR 2019 / 306
UBS AR 2019 / 315–316
UBS AR 2019 / 360
UBS AR 2019 / 360
UBS AR 2019 / 361–364
UBS SR 2019 / 98–102
UBS SR 2019 / 50
|
201–2 Financial implications and
other risks and opportunities for the organization’s activities due to
climate change
|
Our climate strategy
Refer to Submission to the CDP climate change questionnaire for further information
|
UBS SR 2019 / 54–63
|
201–3 Defined benefit plan
obligations and other retirement plans
|
Note 29 Pension and other
post-employment benefit plans
|
UBS AR 2019 / 442–455
|
201–4 Financial assistance
received from government
|
UBS did not receive any
significant monetary support from governments in 2019
|
|
Indirect Economic Impacts (Community
investment)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Society
Indirect economic impacts
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 51–53
UBS SR 2019 / 46–48
UBS SR 2019 / 129
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 203 Indirect Economic Impacts (2016)
|
203–1 Infrastructure investments
and services supported
|
Driving change in communities
|
UBS SR 2019 / 98–102
|
203–2 Significant indirect
economic impacts
|
Indirect economic impacts
Recovery and resolution
Personal & Corporate Banking
Society
Sustainability at UBS
For further information see also
Switzerland and UBS – Strong
partners
|
UBS SR 2019 / 129
UBS AR 2019 / 51–53
UBS SR 2019 / 14–15
UBS SR 2019 / 46–48
UBS SR 2019 / 5–6
https://www.ubs.com/ch/en/
microsites/switzerland-facts-figures-and-stories/switzerland-and-ubs.html
|
Anti–corruption (Regulatory
compliance)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Policies to combat financial crime
Combating financial crime
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 51–53
UBS SR 2019 / 52
UBS SR 2019 / 94
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 205 Anti–corruption (2016)
|
205–1 Operations assessed for
risks related to corruption
|
Combating financial crime
|
UBS SR 2019 / 94
|
205–2 Communication and training
about anti–corruption policies and procedures
|
Sustainability-related training
and raising awareness
Responsible supply chain
management – Committing our vendors to our standards
|
UBS SR 2019 / 64
UBS SR 2019 / 93
|
205–3 Confirmed incidents of
corruption and actions taken
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
Anti–competitive Behavior (Regulatory
compliance)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Risk appetite framework
Operational risk
Our Code of Conduct and Ethics
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS AR 2019 / 111–114
UBS AR 2019 / 153–155
UBS SR 2019 / 113–116
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 206 Anti-competitive Behavior (2016)
|
206–1 Legal actions for
anti-competitive behavior,
anti-trust, and monopoly practices
|
See GRI 419–1
|
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Materials
|
GRI 301 Materials (2016)
|
301–1 Materials used by weight or
volume.
|
Paper is the only relevant
material for this indicator
In-house environmental management
– Paper
|
UBS SR 2019 / 88
|
301–2 Recycled input materials
used
|
Paper is the only relevant
material for this indicator
In-house environmental management
– Paper
|
UBS SR 2019 / 88
|
Energy (Climate action)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Sustainability-related training
and raising awareness
UBS in society management
indicators
Our climate strategy
Environmental targets and
performance in our operations
UBS in society constitutional
document
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
Refer to Submission to the CDP climate change questionnaire for further information
|
UBS SR 2019 / 51–53
UBS SR 2019 / 64
UBS SR 2019 / 128
UBS SR 2019 / 54–63
UBS SR 2019 / 82
UBS SR 2019 / 117–119
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificates
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 302 Energy (2016)
|
302–1 Energy consumption within
the organization
|
GHG emissions
Energy consumption
Environmental indicators
Reporting standards and
methodologies
|
UBS SR 2019 / 83
UBS SR 2019 / 85
UBS SR 2019 / 91
UBS SR 2019 / 89–90
|
302–2 Energy consumption outside
of the organization
|
Not relevant
|
|
302–3 Energy intensity
|
Environmental indicators per full time
employee
Reporting standards and
methodologies
|
UBS SR 2019 / 92
UBS SR 2019 / 89–90
|
302–4 Reduction of energy
consumption
|
GHG emissions
Energy consumption
Environmental targets and
performance in our operations
Reporting standards and
methodologies
|
UBS SR 2019 / 83
UBS SR 2019 / 85
UBS SR 2019 / 82
UBS SR 2019 / 89–90
|
302–5 Reductions in energy
requirements of products and services
|
Not relevant for financial
institutions, see FS8
|
|
Emissions (Climate action)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Sustainability-related training
and raising awareness
UBS in society management
indicators
Our climate strategy
Environmental targets and
performance in our operations
UBS in society constitutional
document
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
Refer to Submission to the CDP climate change questionnaire for further information
|
UBS SR 2019 / 51–53
UBS SR 2019 / 64
UBS SR 2019 / 128
UBS SR 2019 / 54–63
UBS SR 2019 / 82
UBS SR 2019 / 117–119
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificates
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
GRI 305 Emissions (2016)
|
305–1 Direct (Scope 1) GHG
emissions
|
Environmental indicators
GHG emissions
Reporting standards and
methodologies
|
UBS SR 2019 / 91
UBS SR 2019 / 83
UBS SR 2019 / 89–90
|
305–2 Energy indirect (Scope 2)
GHG emissions
|
Environmental indicators
GHG emissions
Reporting standards and
methodologies
|
UBS SR 2019 / 91
UBS SR 2019 / 83
UBS SR 2019 / 89–90
|
305–3 Other indirect (Scope 3) GHG
emissions
|
Environmental indicators
GHG emissions
Reporting standards and
methodologies
|
UBS SR 2019 / 91
UBS SR 2019 / 83
UBS SR 2019 / 89–90
|
305–4 GHG emissions intensity
|
Environmental indicators per full time
employee
Reporting standards and
methodologies
|
UBS SR 2019 / 92
UBS SR 2019 / 89–90
|
305–5 Reduction of GHG emissions
|
see 302–4
|
|
305–6 Emissions of ozone-depleting
substances (ODS)
|
Not relevant
|
|
305–7 Nitrogen oxides (NOX),
sulfur oxides (SOX), and other significant air emissions
|
Not relevant
|
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Effluents and Waste
|
GRI 306 Effluents and Waste (2016)
|
306–2 Waste by type and disposal
method
|
Environmental indicators
Waste and recycling
|
UBS SR 2019 / 91
UBS SR 2019 / 89
|
Supplier Environmental Assessment
(Environmental and social risk management)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Objectives 2020
Objectives and achievements 2019
UBS in society constitutional
document
Responsible supply chain
management
Information relevant to all
material topics
|
UBS SR 2019 / 51–53
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 117–119
UBS SR 2019 / 93
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificates
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
GRI 308 Supplier Environmental
Assessment (2016)
|
308–1 New suppliers that were
screened using environmental criteria
|
Responsible supply chain
management
|
UBS SR 2019 / 93
|
308–2 Negative environmental
impacts in the supply chain and actions taken
|
Responsible supply chain
management
|
UBS SR 2019 / 93
|
Employment (Compensation)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Compensation Committee
Employees
Compensation
Key policies and guidelines
Sustainable performance and
compensation
Objectives 2020
Objectives and achievements 2019
Information relevant to specific material
topics – Employee topics
Information relevant to all
material topics
|
UBS AR 2019 / 224
UBS SR 2019 / 35–39
UBS AR 2019 / 242–288
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129–130
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 401 Employment (2016)
|
401–1 New employee hires and
employee turnover
|
Hiring, developing and retaining
talent
Our workforce by the numbers
|
UBS SR 2019 / 36
UBS SR 2019 / 40–45
|
401–2 Benefits provided to
full-time employees that are not provided to temporary or part-time
employees
|
Managing our global workforce
|
UBS SR 2019 / 39
|
401–3 Parental leave
|
Managing our global workforce
UBS employees: parental leave
taken
Reason for omission: Information
unavailable for GRI 401–3 c), d) and e). Data aggregation is subject to
limitations such as the disparate definitions and permutations of parental
leave across the firm and the various leave and absence tools used in the
more than 50 countries in which we operate.
|
UBS SR 2019 / 39
UBS SR 2019 / 45
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Training and Education (Talent
management)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Employees
Key policies and guidelines
Sustainable performance and
compensation
Objectives 2020
Objectives and achievements 2019
Information relevant to specific material
topics – Employee topics
Information relevant to all
material topics
|
UBS SR 2019 / 35–39
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129–130
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 404 Training and Education (2016)
|
404–1 Average hours of training
per year per employee
|
UBS reports in training days
instead of training hours. One training day equals eight training hours.
Hiring, developing and retaining
talent
Our workforce by the numbers
|
UBS SR 2019 / 36
UBS SR 2019 / 40–45
|
404–2 Programs for upgrading
employee skills and transition assistance programs
|
Hiring, developing and retaining
talent
The importance of diversity and
inclusion
Managing our global workforce
|
UBS SR 2019 / 36
UBS SR 2019 / 37
UBS SR 2019 / 39
|
404–3 Percentage of employees
receiving regular performance and career development reviews
|
Sustainable performance and
compensation
Hiring, developing and retaining
talent
As the performance review
percentage covers 99,9% of all our eligible employees, there is no added
value for further breakdown by gender or employment category.
|
UBS SR 2019 / 64–65
UBS SR 2019 / 36
|
Diversity and Equal Opportunity (Diversity
and inclusion)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Employees
Key policies and guidelines
Sustainable performance and
compensation
Objectives 2020
Objectives and achievements 2019
Information relevant to specific material
topics – Employee topics
Information relevant to all
material topics
|
UBS SR 2019 / 35–39
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129–130
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI 405 Diversity and Equal
Opportunity (2016)
|
405–1 Diversity of governance bodies
and employees
|
The importance of diversity and
inclusion
Our workforce by the numbers
Members of the Board of Directors
Skills, expertise and training of
the Board of Directors
Members of the Group Executive
Board
|
UBS SR 2019 / 37
UBS SR 2019 / 40–45
UBS AR 2019 / 223–220
UBS AR 2019 / 227
UBS AR 2019 / 229–236
|
405–2 Ratio of basic salary and
remuneration of women to men
|
Hiring, developing and retaining
talent
Our commitment to pay fairness
Sustainable performance and
compensation
Total Reward Principles
|
UBS SR 2019 / 36
UBS AR 2019 / 250
UBS SR 2019 / 64–65
UBS AR 2019 / 250
|
Non-discrimination (Diversity and
inclusion)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Employees
Key policies and guidelines
Sustainable performance and
compensation
Objectives 2020
Objectives and achievements 2019
Information relevant to specific material
topics – Employee topics
Information relevant to all
material topics
|
UBS SR 2019 / 35–39
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129–130
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 406 Non-discrimination (2016)
|
406–1 Incidents of discrimination
and corrective actions taken
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
Supplier Social Assessment (Environmental
and social risk management)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Objectives 2020
Objectives and achievements 2019
UBS in society constitutional
document
Responsible supply chain
management
Information relevant to all
material topics
|
UBS SR 2019 / 51–53
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 117–119
UBS SR 2019 / 93
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificates
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
GRI 414 Supplier Social Assessment
(2016)
|
414–1 New suppliers that were
screened using social criteria
|
Responsible supply chain
management
|
UBS SR 2019 / 93
|
414–2 Negative social impacts in
the supply chain and actions taken
|
Responsible supply chain
management
|
UBS SR 2019 / 93
|
Local Communities
|
GRI G4 Financial Services Sector
Disclosures
|
FS 14 Initiatives to improve
access to financial services for disadvantaged people
|
Accessibility
|
UBS SR 2019 / 30
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Public Policy
|
GRI 415 Public Policy (2016)
|
415–1 Political contributions
|
Politicians and political parties
|
UBS SR 2019 / 49
|
Marketing and Labelling (Regulatory
compliance)
|
GRI 103 Management Approach (2016)
GRI G4 Financial Services Sector
Disclosures
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Regulation and supervision
Our Code of Conduct and Ethics
Suitability
Key policies and guidelines
Quality feedback management system
Financial literacy
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS AR 2019 / 49–50
UBS SR 2019 / 113–116
UBS SR 2019 / 29–30
UBS SR 2019 / 51–52
UBS SR 2019 / 29
UBS SR 2019 / 134
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 417 Marketing and Labelling
(2016)
|
417–1 Requirements for product and
service information and labelling
|
Not relevant for financial
services company
See former FS15 which has been
included in 103 for Marketing and Labelling (i.e., Suitability)
|
|
417–2 Incidents of non-compliance
concerning product and service information and labelling
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
417–3 Incidents of non-compliance
concerning marketing communications
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
Customer Privacy (Regulatory
compliance)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Regulation and supervision
Our Code of Conduct and Ethics
Information relevant to all
material topics
Objectives 2020
Objectives and achievements 2019
|
UBS AR 2019 / 49–50
UBS SR 2019 / 113–116
UBS SR 2019 / 129
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 418 Customer Privacy (2016)
|
418–1 Substantiated complaints
concerning breaches of customer privacy and losses of customer data
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Socioeconomic Compliance (Regulatory
compliance; Diversity and inclusion)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Our Code of Conduct and Ethics
Operational risk
Information relevant to all material
topics
Objectives 2020
Objectives and achievements 2019
|
UBS SR 2019 / 113–116
UBS AR 2019 / 153–155
UBS SR 2019 / 129
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
GRI 419 Socioeconomic Compliance (2016)
|
419–1 Non-compliance with laws and
regulations in the social and economic area
|
Reason for omission:
Confidentiality constraints: UBS
treats this data as confidential company information. Significant cases
would be discussed in Note 21 b) "Litigation, regulatory and similar
matters" of the UBS Annual Report.
|
UBS AR 2019 / 387–394
|
Product Portfolio (Climate action;
Environmental and social risk management; Sustainable investing)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Sustainability governance
Our focus on ESG
Society
Key policies and guidelines
Our Code of Conduct and Ethics
UBS in society constitutional
document
Our climate strategy
Objectives 2020
Objectives and achievements 2019
Environmental and social risk
policy framework
Driving change in finance
Driving change in philanthropy
Sustainability-related training
and raising awareness
UBS in society management
indicators
Information relevant to all
material topics
|
UBS SR 2019 / 51–53
UBS SR 2019 / 31–33
UBS SR 2019 / 46–48
UBS SR 2019 / 51–52
UBS SR 2019 / 113–116
UBS SR 2019 / 117–119
UBS SR 2019 / 54–63
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 120–126
UBS SR 2019 / 70–74
UBS SR 2019 / 75
UBS SR 2019 / 64
UBS SR 2019 / 128
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificates
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
GRI G4 Financial Services Sector
Disclosures
|
FS6 Percentage of the portfolio
for business lines by specific region, size (e.g., micro/SME/large) and by
sector
|
Global Wealth Management
Global Wealth Management
Personal & Corporate Banking
Personal & Corporate Banking
Asset Management
Asset Management
Investment Bank
Investment Bank
Market risk
Country risk
Credit risk
Basel III Pillar 3 UBS Group AG
2019 report
|
UBS SR 2019 / 11–13
UBS AR 2019 / 85–87
UBS SR 2019 / 14–15
UBS AR 2019 / 88–92
UBS SR 2019 / 16–17
UBS AR 2019 / 93–96
UBS SR 2019 / 18–19
UBS AR 2019 / 97–100
UBS AR 2019 / 138–147
UBS AR 2019 / 148–152
UBS AR 2019 / 119–137
https://www.ubs.com/global/en/investor-relations/financial-information/pillar-3-disclosures.html
|
FS7 Monetary value of products and
services designed to deliver a specific social benefit for each business
line broken down by purpose
|
Driving change in philanthropy
|
UBS SR 2019 / 75
|
FS8 Monetary value of products and
services designed to deliver a specific environmental benefit for each
business line broken down by purpose
|
Our climate strategy
Calculating and reporting on
climate change-related financing and advisory activities
|
UBS SR 2019 / 54–63
UBS SR 2019 / 132
|
Audit (Environmental and social risk
management)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
UBS in society constitutional
document
UBS in society management
indicators
Objectives 2020
Objectives and achievements 2019
|
UBS SR 2019 / 117–119
UBS SR 2019 / 128
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificate
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Active Ownership (Sustainable
investing)
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Society
Sustainability governance
UBS in society constitutional
document
Our focus on ESG
Driving change in finance
Environmental and social risk
policy framework
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 46–48
UBS SR 2019 / 51–53
UBS SR 2019 / 117–119
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
UBS SR 2019 / 120–126
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
ISO 14001 and 50001 certificate
|
UBS SR 2019 / 129
UBS SR 2019 / 107–110
|
GRI G4 Financial Services Sector
Disclosures
|
FS10 Percentage and number of
companies held in the institution’s portfolio with which the reporting
organization has interacted on environmental or social issues
|
Reason for omission: Our
interactions with companies take a comprehensive ESG approach. Selective quantitative
data provision on environmental and social issues only is therefore not
practical.
Stewardship / voting rights
Climate strategy
|
UBS SR 2019 / 71
UBS SR 2019 / 50–51
|
FS11 Percentage of assets subject
to positive and negative environmental or social screening
|
Our focus on ESG
Driving change in finance
|
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
|
Topics
not covered by the topic-specific standards
|
GRI Standard
|
Disclosure
|
Reference
|
Page
|
Digital Innovation
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Enhancing the client experience
through innovation and digitalization
Digital innovation
Information relevant to all
material topics
Objectives 2020
Objectives and achievements 2019
|
UBS SR 2019 / 27–28
UBS SR 2019 / 129
UBS SR 2019 / 129
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
KPI: USD billion spent on
technology
|
Digital innovation
|
UBS SR 2019 / 129
|
Operational Efficiency and Effectiveness
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Corporate Center
Our strategy
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 20
UBS SR 2019 / 7–8
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
KPI: Cost / income ration
|
Our Key Figures
|
UBS AR 2019 / 8
|
Client Experience
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
103–2 The management approach and
its components
|
Our Code of Conduct and Ethics
Quality feedback management system
Clients
Current market climate and
industry trends
Our strategy
Objectives 2020
Objectives and achievements 2019
Information relevant to all
material topics
|
UBS SR 2019 / 113–116
UBS SR 2019 / 29
UBS SR 2019 / 26–33
UBS SR 2019 / 21–24
UBS SR 2019 / 7–8
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129
|
103–3 Evaluation of the management
approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
KPI: Net new money growth (%) for
Global Wealth Management
|
Global Wealth Management
Net new money growth
|
UBS AR 2019 / 85
|
Appendix 4 – Global Reporting Initiative content index
GRI
Standard
|
Disclosure
|
Reference
|
Page
|
Working Culture and Environment
|
|
GRI 103 Management Approach (2016)
|
103–1 Explanation of the material
topic and its boundary
|
Materiality under GRI Standards
Impact of material GRI topics
Our approach to long-term value
creation
|
UBS SR 2019 / 66–69
UBS SR 2019 / 131
UBS SR 2019 (at the very beginning
of the report)
|
|
103–2 The management approach and
its components
|
Compensation Committee
Employees
Society
Key policies and guidelines
Sustainable performance and
compensation
Objectives 2020
Objectives and achievements 2019
Information relevant to specific
material topics – Employee topics
Health and safety statement
Our Code of Conduct and Ethics
Information relevant to all
material topics
|
UBS AR 2019 / 224
UBS SR 2019 / 35–39
UBS SR 2019 / 46–48
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 140–142
UBS SR 2019 / 135–139
UBS SR 2019 / 129–130
UBS SR 2019 / 127
UBS SR 2019 / 113–116
UBS SR 2019 / 129
|
|
103–3 Evaluation of the management approach
|
Evaluation of management
approaches
|
UBS SR 2019 / 129
|
|
KPI: Employer of choice
|
Society – Aims and progress
|
UBS SR 2019 / 48
|
|
Sustainability Accounting Standards Board Index 2019
Reporting under the Sustainability
Accounting Standards Board (SASB) standards for the first time, we have focused
on the three sector standards most relevant to our firm: Asset Management &
Custody Activities, Investment Banking & Brokerage and Commercial Banks.
Except where clearly identified, all of UBS’s information included in this
index is presented for UBS Group AG and all its subsidiaries. While we do not
disclose all information and metrics included in the SASB standards in our 2019
reporting, we are endeavoring to develop our disclosure over time and to close
relevant gaps.
Note
All references to the Annual Report
2019 are referring to the combined UBS Group AG and UBS AG Annual Report 2019
available on www.ubs.com/investors.
Appendix 5 – Sustainability Accounting Standards Board
index
SASB
Code
|
Accounting Metric
|
Reference
|
Page
|
Disclosures Included in Multiple
Sectors’ Standards
|
FN-AC-330a.1
FN-IB-330a.1
|
Percentage of gender and racial /
ethnic group representation for
(1) executive management,
(2) non-executive management,
(3) professionals, and
(4) all other employees
|
Employees
Our Code of Conduct and Ethics
Skills, expertise and training of
the Board of Directors
Gender-related aspects in
compensation
|
UBS SR 2019 / 35–45
UBS SR 2019 / 113–116
UBS AR 2019 / 227
UBS AR 2019 / 244
|
FN-IB-510a.1
FN-CB-510a.1
FN-AC-510a.1
|
Total amount of monetary losses as
a result of legal proceedings associated with fraud, insider trading,
anti-trust, anti-competitive behavior, market manipulation, malpractice, or
other related financial industry laws or regulations
|
Note 21 Provisions and contingent
liabilities
|
UBS AR 2019 / 387–394
|
FN-AC-510a.2
FN-IB-510a.2
FN-CB-510a.2
|
Description of whistleblower
policies and procedures
|
Grievances and whistleblowing
protection, policies and procedures
Upholding the Code
Grievance mechanism
Risk principles and risk culture
|
UBS SR 2019 / 52
UBS SR 2019 / 116
UBS SR 2019 / 129
UBS AR 2019 / 112
|
FN-IB-550a.1
FN-CB-550a.1
|
Global Systemically Important Bank
(G-SIB) score, by category
|
G-SIB information is included in
our Pillar III Disclosure (see https://www.ubs.com/global/en/investor-relations/financial-information/pillar-3-disclosures.html)
Regulation and supervision
|
Pillar III Disclosure
UBS AR 2019 / 49–53
|
FN-IB-550a.2
FN-CB-550a.2
|
Description of approach to
incorporation of results of mandatory and voluntary stress tests into
capital adequacy planning, long-term corporate strategy, and other business
activities
|
Our climate strategy
Stress testing
Further key aspects of credit risk
models
Regulation and supervision
|
UBS SR 2019 / 54–63
UBS AR 2019 / 116–117
UBS AR 2019 / 133–135
UBS AR 2019 / 49–53
|
Asset Management & Custody
Activities
|
FN-AC-270a.2
|
Total amount of monetary losses as
a result of legal proceedings associated with marketing and communication of
financial product-related information to new and returning customers
|
Note 21 Provisions and contingent
liabilities
|
UBS AR 2019 / 387–394
|
FN-AC-270a.3
|
Description of approach to
informing
customers about products and
services
|
Suitability
Operational risk
|
UBS SR 2019 / 29–30
UBS AR 2019 / 153–155
|
FN-AC-410a.1
|
Amount of assets under management,
by asset class, that employ (1) integration of environmental, social and
governance (ESG) issues, (2) sustainability-themed
investing, and (3) screening
|
Our focus on ESG
Driving change in finance
|
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
|
FN-AC-410a.2
|
Description of approach to
incorporation of environmental, social and governance (ESG) factors in
investment and/or wealth management processes and strategies
|
Global Wealth Management
Society
Our climate strategy
Our focus on ESG
Driving change in finance
UBS in society constitutional
document
|
UBS SR 2019 / 11–13
UBS SR 2019 / 46–48
UBS SR 2019 / 54–63
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
UBS SR 2019 / 117–119
|
SASB
Code
|
Accounting Metric
|
Reference
|
Page
|
FN-AC-410a.3
|
Description of proxy voting and
investee
engagement policies and procedures
|
Protecting our clients' assets
Stewardship / voting rights
Key sustainability investing
products and services
|
UBS SR 2019 / 58–59
UBS SR 2019 / 71
UBS SR 2019 / 74
|
FN-AC-550a.2
|
Description of approach to
incorporation of liquidity risk management programs into portfolio strategy
and redemption risk management
|
UBS AM defines Liquidity risk as
the risk that a fund cannot meet client redemption requests at current
prices while fulfilling ongoing obligations to remaining investors in line
with the fund's stated investment objective, strategy and policies.
UBS AM operates a Liquidity Risk
Framework in line with our fiduciary duty towards investors, which:
·
Considers liquidity risk management at
product design / fund setup;
·
Requires ongoing liquidity monitoring; and
·
Includes escalation protocols and governance
for management of liquidity risk events
|
|
FN-AC-550a.3
|
Total exposure to securities
financing transactions
|
Traded products
Leverage ratio denominator
|
UBS AR 2019 / 125–126
UBS AR 2019 / 188–189
|
FN-AC-550a.4
|
Net exposure to written credit
derivatives
|
Note 11 Derivative instruments
|
UBS AR 2019 / 371–376
|
FN-AC-000.A
|
(1) Total registered and
(2) total unregistered assets
under management (AUM)
|
Note 36 Invested assets and net
new money
Global Wealth Management
Asset Management
|
UBS AR 2019 / 475
UBS AR 2019 / 85–87
UBS AR 2019 / 93–96
|
FN-AC-000.B
|
Total assets under custody and
supervision
|
Note 36 Invested assets and net
new money
Global Wealth Management
Asset Management
|
UBS AR 2019 / 475
UBS AR 2019 / 85–87
UBS AR 2019 / 93–96
|
Investment Banking &
Brokerage
|
FN-IB-410a.1
|
Revenue from (1) underwriting, (2)
advisory, and (3) securitization transactions incorporating integration of
environmental, social, and governance (ESG) factors, by industry
|
Our focus on ESG
Driving change in finance
Environmental and social risk
policy framework
(Note: "UBS applies an
environmental and social risk framework to ALL transactions, products,
services and activities such as lending, capital raising, advisory services
or investments that involve a party associated with environmentally or socially
sensitive activities.")
|
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
UBS SR 2019 / 120–126
|
FN-IB-410a.2
|
(1) Number and (2) total value of
investments and loans incorporating integration of environmental, social,
and governance (ESG) factors, by industry
|
Our focus on ESG
Driving change in finance
Environmental and social risk
policy framework
(Note: "UBS applies an
environmental and social risk framework to ALL transactions, products,
services and activities such as lending, capital raising, advisory services
or investments that involve a party associated with environmentally or
socially sensitive activities.")
|
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
UBS SR 2019 / 120–126
|
FN-IB-410a.3
|
Description of approach to
incorporation of environmental, social, and governance (ESG) factors in
investment banking and brokerage activities
|
Society
Our climate strategy
Our focus on ESG
Driving change in finance
UBS in society constitutional
document
Environmental and social risk
policy framework
|
UBS SR 2019 / 46–48
UBS SR 2019 / 54–63
UBS SR 2019 / 31–33
UBS SR 2019 / 70–74
UBS SR 2019 / 117–119
UBS SR 2019 / 120–126
|
FN-IB-510b.3
|
Total amount of monetary losses as
a result of legal proceedings associated with professional integrity,
including duty of care
|
Note 21 Provisions and contingent
liabilities
|
UBS AR 2019 / 387–394
|
Appendix 5 – Sustainability Accounting Standards Board
index
SASB
Code
|
Accounting Metric
|
Reference
|
Page
|
FN-IB-510b.4
|
Description of approach to
ensuring professional integrity, including duty of care
|
Employees
Key policies and guidelines
Sustainable performance and
compensation
Sustainability-related training
and raising awareness
Our Code of Conduct and Ethics
Charter of the Corporate Culture
and Responsibility Committee
Risk categories
Risk principles and risk culture
Operational risk
Compensation framework for
employees other than GEB members
|
UBS SR 2019 / 35–37
UBS SR 2019 / 51–52
UBS SR 2019 / 64–65
UBS SR 2019 / 64
UBS SR 2019 / 113–116
UBS SR 2019 / 112
UBS AR 2019 / 107
UBS AR 2019 / 112
UBS AR 2019 / 153–155
UBS AR 2019 / 257
|
FN-IB-550b.1
|
Percentage of total remuneration
that is variable for Material Risk Takers (MRTs)
|
Sustainable performance and
compensation
Compensation
|
UBS SR 2019 / 64–65
UBS AR 2019 / 242–288
|
FN-IB-550b.2
|
Percentage of variable
remuneration of Material Risk Takers (MRTs) to which malus or clawback
provisions were applied
|
Regulated staff
2019 performance award pool and
expenses
|
UBS AR 2019 / 277–278
UBS AR 2019 / 279–280
|
FN-IB-550b.3
|
Discussion of policies around
supervision, control and validation of traders’ pricing of Level 3 assets
and liabilities
|
Note 24 Fair value measurement
Regulated staff
|
UBS AR 2019 / 410–429
UBS AR 2019 / 277–278
|
FN-IB-000.A
|
(1) Number and (2) value of (a)
underwriting, (b) advisory, and (c)
securitization transactions
|
Investment Bank
|
UBS AR 2019 / 97–100
|
Commercial banks
|
FN-CB-230a.2
|
Description of approach to
identifying and addressing data security risks
|
Our clients and what matters most
to them
Operational risks affect our
business
Top and emerging risks
Operational risk
|
UBS SR 2019 / 26–27
UBS AR 2019 / 67–68
UBS AR 2019 / 108
UBS AR 2019 / 153–155
|
FN-CB-240a.1
|
(1) Number and (2) amount of loans
outstanding qualified to programs designed to promote small business and
community development
|
Personal & Corporate Banking
Personal & Corporate Banking
Driving change in communities
|
UBS AR 2019 / 88–92
UBS AR 2019 / 122
UBS SR 2019 / 98–102
|
FN-CB-240a.4
|
Number of participants in
financial literacy initiatives for unbanked, underbanked, or underserved
customers
|
Financial literacy
|
UBS SR 2019 / 134
|
FN-CB-410a.1
|
Commercial and industrial credit
exposure, by industry
|
Credit risk
Loans and advances to banks and
customers by industry
Climate strategy
Also see Pillar III Disclosure at https://www.ubs.com/global/en/investor-relations/financial-information/pillar-3-disclosures.html
|
UBS AR 2019 / 119–137
UBS AR 2019 / 733–734
UBS SR 2019 / 54–63
Pillar III Report
|
FN-CB-410a.2
|
Description of approach to
incorporation of environmental, social, and governance (ESG) factors in
credit analysis
|
Our climate strategy
Environmental and social risk
policy framework
|
UBS SR 2019 / 54–63
UBS SR 2019 / 120–126
|
FN-CB-000.A
|
(1) Number and (2) value of
checking and savings accounts by segment: (a) personal and (b) small
business
|
Personal & Corporate Banking
Personal & Corporate Banking
|
UBS AR 2019 / 24–25
UBS AR 2019 / 88–92
|
FN-CB-000.B
|
(1) Number and (2) value of loans
by segment: (a) personal, (b) small business, and (c) corporate
|
Personal & Corporate Banking
Personal & Corporate Banking
|
UBS AR 2019 / 88–92
UBS AR 2019 / 122
|
Risk
evaluation
In pursuance of the requirements
of the German law implementing the EU directive 2014/95 (on non-financial
disclosures, CSR-Richtlinie-Umsetzungsgesetz / 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 law.
Combating money laundering and
terrorist financing has been a major focus of government policies relating to
financial institutions in recent years. The US Bank Secrecy Act and other laws
and regulations require the maintenance of effective policies, procedures and controls
to detect, prevent and report money laundering and terrorist financing, and to
verify the identity of our clients. Failure to maintain and implement adequate
programs to prevent money laundering and terrorist financing could result in
significant legal and reputation risk. In addition, we are subject to laws and
regulations, in jurisdictions in which we operate, prohibiting corrupt or
illegal payments to government officials and others, including the US Foreign
Corrupt Practices Act and the UK Bribery Act. We maintain policies, procedures
and internal controls intended to comply with those regulations.
The financial services industry is
characterized by intense competition, continuous innovation, restrictive,
detailed, and sometimes fragmented regulation and ongoing consolidation, and we
may be unable to retain and attract qualified employees. 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
recent years, 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 Group Executive Board (GEB)
members, as well as certain other employees. Constraints on the amount or
structure of employee compensation, higher levels of deferral, performance
conditions and other circumstances triggering the forfeiture of unvested awards
may adversely affect our ability to retain and attract key employees. The loss
of key staff and the inability to attract qualified replacements could
seriously compromise our ability to execute our strategy and to successfully
improve our operating and control environment, and could affect our business
performance.
® Refer to the “Risk factors” and "Regulation and
supervision" sections of UBS's Annual Report 2019 for more information
Appendix 6 – EU Non-financial disclosures index
Non-financial
disclosures in accordance with German law implementing the EU directive 2014/95
This GRI Document also includes our
firm's disclosures of non-financial information required by German law
implementing the EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz /
CSR-RUG). These disclosures can be found in the sections and the pages
indicated below. Due to the differing materiality requirements of the GRI
Standards and of CSR-RUG the material topics listed in the CSR-RUG index are
therefore limited to the matters ("Belange") addressed by CSR-RUG.
|
Section in Sustainability Report 2019
|
Page(s)
|
About this report (including framework)
|
About this Sustainability Report
|
2
|
Description of the business model
|
Our strategy, business model and
environment
|
7–50
|
Material risks
|
Risk evaluation
|
165
|
Non-financial aspects
|
Section in Sustainability Report 2019
|
Page(s)
|
Broad thematic issues affecting all
nonfinancial aspects
|
Our focus on ESG
Our governance and principles
Sustainable performance and
compensation
Sustainable investments
Sustainability-related training and
raising awareness
UBS sustainability objectives and
achievements 2019 and sustainability objectives 2020
|
31–33
51–53
64–65
70–71
64
135–142
|
Environmental and human rights matters
(Material topics: Climate action;
Environmental and social risk management; Sustainable investing)
|
Society
Stakeholder relations (additional
information): Vendors
Environment and human rights
Our climate strategy – taking action
towards a low-carbon future
Management of environmental and social
risks
Responsible supply chain management
In-house environmental management
|
46–48
50
78
54–63
79
93
82–92
|
Social and employee matters
(Working culture and environment; Talent
management; Compensation; Diversity and inclusion; Community investing)
|
Society
Employees
Sustainable performance and
compensation
Driving change in communities
|
46–48
35–45
64–65
98–102
|
Anti-corruption and bribery matters
(Combating financial crime as sub-topic
of Regulatory compliance)
|
Combating financial crime
|
94
|
UBS
Group AG
P.O.
Box
CH-8098
Zurich
www.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/
David Kelly _____________
Name:
David Kelly
Title:
Managing Director
By: _/s/ Ella Campi ______________
Name:
Ella Campi
Title:
Executive Director
UBS
AG
By: _/s/
David Kelly _____________
Name:
David Kelly
Title:
Managing Director
By: _/s/ Ella Campi ______________
Name:
Ella Campi
Title: Executive Director
Date: March 5, 2020
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