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Shaping a high-performing organization – 27.8% of all Director and above staff are women – 23% of UK / 20.4% of US staff at Director level and above are held by employees from ethnic minorities – EQUAL-SALARY Foundation certifi cation for equal pay practices in Switzerland, the US, the UK, the Hong Kong SAR and Singapore.
Transitioning to a low-carbon economy – Progressed toward our decarbonization targets for 2030 for fi nancing of the real estate, fossil fuels and power generation sectors – Expanded our decarbonization targets by adding a cement sector target – 7.5% of our total customer lending exposure comes from carbon-related assets – 9.8% of our total customer lending exposure pertains to nature-related risks – 67% positive progress against climate corporate engagement objectives – 160 companies at which we voted upon climate-related resolutions – 93% total reduction of our greenhouse gas (GHG) footprint from the 2004 baseline year – 66% of invited GHG key vendors completed climate disclosures in CDP platform 3
Sustainability Report 2022 | Introduction 4.
The importance of sustainability to UBS.
UBS strives to extend its leadership in sustainability and details how we intend to achieve it.
In 2022, we made good progress on the execution of our sustainability strategy, as outlined in this report.
During the year, geopolitical events brought the fossil fuel debate into center stage. Heightened energy security concerns around the world highlighted the ongoing need for fossil fuel production while the transition to viable alternative solutions is under way. Despite the current uncertainties, we firmly believe that, in the long term, there is no conflict between energy security and energy transformation.
We also saw legislators across many jurisdictions drive standardization. The increased sophistication among constituencies helped to shift the focus on how to best measure sustainability and climate risks, and how to capture the opportunities inherent in the transition to a low-carbon world.
Despite financial markets contracting across asset classes during 2022, the long-term trajectory for sustainable investing remains one of growth, demonstrated by continuous quarterly inflows into sustainable investing (SI) products. In line with these global market developments, we continued to grow SI assets under management (AuM) as a share of total AuM, reaching 6.8% by the end of 2022, up from 5.5% at the end of 2021.
Our progress is also reflected in feedback from our key stakeholders. Our shareholders supported our climate roadmap at the 2022 AGM. At its core is our net-zero aspirations against which we made progress, be it in our lending business, our supply chain, or our own operations.
Key ESG (environmental, social, governance) ratings reconfirmed that UBS is among the leading firms when it comes to their approach to sustainability. We are, in fact, among the leaders in MSCI ESG, S&P Global’s Dow Jones Sustainability Index (DJSI) and in CDP.
Supporting our clients in the transition to a low-carbon world.
Our clients, who are at the heart of everything we do, are increasingly looking for opportunities to put their capital to work in sustainable ways. Two thirds of high-net worth investors in our 2022 Investor Sentiment Survey state that sustainability is highly important to them and to the performance of their portfolio. Furthermore, 78% of those investors surveyed expect investments in sustainability to maximize their returns. This confirms previous investor sentiment survey results where, for example in 2021, investors increasingly saw benefits from integrating sustainable investing into their portfolios.
We will continue to provide our clients with the choice of products and services they need to bring about their desired change. We will see a further mobilization of capital toward a “green recovery,” energy independence, and green tech with the shift of investment and lending towards new opportunities in the sustainability and impact space.
We remain convinced that the transition to net zero will prove to be one of the most consequential trends in coming years, with over USD 125 trillion of capital needed for the world to achieve net zero by 2050.1 Technological advances, the need for new infrastructure and new products in carbon markets or agriculture are just a few examples of the opportunities ahead. Blended finance vehicles that leverage philanthropic capital are also set to amplify opportunities and finally bring true public-private partnerships to the fore.
Many of our clients have committed to ambitious sustainability goals, often with interim targets that will help them achieve net zero by as early as 2040. Others have further to go on their journey. We are aware that the transition will neither be rapid nor in a straight line. And there is a growing recognition that the transition is about the greenhouse gas emissions and biohazards emanating from virtually every industry. That is why we do not take an exclusionary approach but are committed to working with our clients to provide them with the insights and expertise they need to evolve their businesses or operating models. We also engage with our investee companies knowing, through decades of experience, the positive influence that having a “seat at the table” can have.
1 Study commissioned by the UN High-Level Climate Action Champions in 2021, see climatechampions.unfccc.int/whats-the-cost-of-net-zero-2/ 4
Sustainability Report 2022 | Introduction 5.
Future trends.
Looking ahead, we expect investors to differentiate more between “E” and “S,” and further distinguish between the many facets of “E” (i.e., carbon, plastic, water), as nature-based solutions and biodiversity topics come to the forefront. We also expect the focus on “impact” to increase as greenhouse gas emissions disclosure requirements from regulators, improved availability of data and increasing demand from clients to understand the “impact” of their investments will drive product innovation and a continued shift toward both sustainable and impactful investments.1.
Varying standards and definitions around the world continue to hamper investors’ ability to understand the many products in the market. In 2022, regulators sought to provide further guidance on existing rules (for example, the EU’s Sustainable Finance Disclosure Regulation), and we expect additional clarity regarding definitions and data, as well as the role that financial institutions should play, as we move into 2023.
This requires a multi-faceted toolkit as well as international collaboration between all actors. A key focus in this effort is data, as it is driving compliance – both voluntary and mandatory – with investor and regulatory demand for greater transparency. As a priority, our firm will continue to engage with governments and policymakers to foster alignment with a broadly accepted framework for sustainability reporting that provides the guidance and transparency required to address the challenges facing investors, and with the necessary flexibility to support innovation.
Our commitment.
ESG is here to stay, and it is going to become even more important. We will continue to endeavor to mitigate the risks and seize the opportunities presented by the transition to a low-carbon economy – for our clients, for our firm, and for our wider stakeholders. As we do so, we will continue to advance our own efforts towards the 17 Sustainable Development Goals, recognizing that we, like our clients, have much to learn as we move forward. And, as the market evolves, we will continue to share our best practices with any and all, as we move forward on this journey together.
Colm Kelleher Chairman of the Board of Directors Ralph Hamers Group Chief Executive Officer.
UBS was among the 43 companies that first signed the UN Global Compact in 2000 and is also a member of the UN Global Compact Network Switzerland, meaning we are committed to its principles on human rights, labor standards, the environment and anti-corruption. As reflected in detail in this report, we have a comprehensive set of goals and activities in place pertaining to the principles of the UN Global Compact.
1 Based on internal research by our Asset Management and Investment Bank business divisions, by the UBS Sustainability and Impact Institute as well as reporting by the OECD.
5
Sustainability Report 2022 | Introduction 6.
A firm driven by purpose.
Connecting people It is about more than just us. It is about convening a global ecosystem that connects people and businesses to ideas, partners and opportunities, so they can achieve more together.
Reimagining the power of investing. Connecting people for a better world.
Reimagining It is about proactively finding ways to fundamentally change how the world looks at finance and investing.
The power of investing We know finance has a powerful influence on the world. We believe it is something we can leverage as a positive force as stewards of capital for our clients and, together with them, for society and for our planet.
We have to constantly adapt, innovate, create and simplify to bring the best to our clients. But one thing never changes. Our purpose. Our purpose guides us, challenges us, excites us. It tells our clients, investors and communities who we are and what we stand for.
ubs.com/purpose.
For a better world It is about contributing, in both the short term and long term, to a more prosperous economy, a healthier environment and a fairer society.
What our purpose means for our stakeholders.
For clients, both existing and potential, it means that our focus is clear. They know who we are. They know what we stand for. They know what is important to us beyond traditional financing. And they know our promise: to deliver products and services that are personalized, relevant, on-time and seamless.
For employees, it means that everyone – from those who advise clients, to those who research investments, to those who manage technology platforms – knows why we do what we do, and how they can contribute to our purpose and use it to drive decision-making.
For society, it means that our role is broader than finance. We act responsibly and are committed to our communities, to sustainability and to supporting the world in tackling its biggest challenges.
For investors, it means there is clarity behind our decisions. All initiatives are aligned with our purpose and executed with discipline.
ubs.com/purpose 6
Sustainability Report 2022 | Introduction 7.
About this report.
The reporting period for our Sustainability Report is 1 January to 31 December 2022 which is aligned with the financial reporting period. All data included in the report is therefore for this period, unless otherwise indicated. Data pertaining to our firm’s own environmental footprint covers the reporting period 1 July 2021 to 30 June 2022. Data showing progress against our net-zero sectorial targets pertains to 31 Dec 2021 (due to the unavailability of relevant 2022 data, as explained in the respective section of this report).
Unless otherwise noted, the information included in this report is presented at the consolidated level for UBS Group AG and UBS AG. UBS Group AG and UBS AG consolidated information does not differ in any material respect. Supplementary information regarding certain significant subsidiaries can be found in “Note 28 Interests in subsidiaries and other entities” in our Annual Report 2022.
This report comprises UBS AG’s disclosures of non-financial information required by the German law implementing EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz / CSR-RUG) (nichtfinanzieller Konzernbericht). A table at the end of this report (appendix 5) provides the references to such non-financial information. This report (in appendix 5) also contains information on UBS AG and UBS Europe SE pursuant to Art. 8 of the EU Taxonomy Regulation, and (in appendix 3) on UBS’s implementation of the environmental risk regulations in Singapore and the Hong Kong SAR.
Pursuant to the Financial Market Supervisory Authority (FINMA) Circular 2016/1 "Disclosure – banks," Annex 5, we disclose data on climate-related financial risks in this report (and in our Annual Report 2022). More broadly, we support our stakeholders in locating all climate- and nature-related information contained in this Sustainability Report through a separate UBS Climate and Nature Report 2022. The latter follows the structure recommended by the Task Force on Climate-related Financial Disclosures (the TCFD) and also leverages the beta framework of the Taskforce on Nature-related Financial Disclosures (released in November 2022).
This report has been reviewed by Ernst & Young Ltd (EY). The content has been prepared in accordance with the Global Reporting Initiative (GRI) Standards. We use the GRI as the basis for this report and apply a careful process weighing up the materiality and relevance of the information reported and the expectations of our stakeholders. We also apply our firm’s information policy and disclosure principles. The GRI content index, supplementary information, and EY’s assurance report can be downloaded from ubs.com/gri. Selected sustainability metrics in this report have been subject to reasonable or limited assurance by EY. A list of these metrics and level of assurance can be found in the assurance report. Please see our “Basis of Reporting” in appendix 5 of this report for further information on the definition, approach and scope used for these metrics.
Our Sustainability Accounting Standards Board (SASB) index, our World Economic Forum International Business Council (WEF IBC) Stakeholder Capitalism Metrics reference table and our Principles for Responsible Banking (PRB) reporting and self-assessment are also available from ubs.com/gri.
Explanation on dependencies Certain activities of UBS that pertain to the implementation of its sustainability and impact strategy are directly impacted by factors that UBS cannot influence directly or can only influence in part. These include pertinent governmental actions (e.g., when it comes to the achievement of the Paris Agreement and thus the achievement of our firm’s net-zero ambitions); the quality and availability of (standardized) data (e.g., in such areas as emissions); the development and enhancement of required methodologies and methodological tools (e.g., on climate- and nature-related risks); the ongoing evolution of relevant definitions (e.g., sustainable finance); or the furthering of transparency (e.g., pertaining to company disclosures of data). Areas where these dependencies are of particular relevance (including in particular regarding the examples noted above) are explained in the relevant sections of this Report.
6 March 2023 UBS Group AG and UBS AG.
Contacts.
Our Corporate Responsibility team, part of the UBS Chief Sustainability Office, manages UBS’s sustainability disclosure and provides information to stakeholders about the content of this report.
cr@ubs.com 7
Sustainability Report 2022 | Strategy 8.
Strategy.
Our sustainability and impact strategy.
What sustainability means to us.
Finance has a powerful influence on the world. At UBS we reimagine the power of people and capital, to create a better world for everyone: a fairer society, a more prosperous economy and a healthier environment. That is why we partner with our clients to help them mobilize their capital toward a more sustainable world and why we have put sustainability at the heart of our purpose.
Our ambition.
We want to be the financial provider of choice for clients that wish to mobilize capital toward the achievement of the United Nations’ 17 Sustainable Development Goals (the SDGs) and the orderly transition to a low-carbon economy.1 We are focusing on three key areas to drive that transition: Planet, People and Partnerships, and here is why.
Planet first.
Reaching net zero is an ambitious goal, but we are committed to doing our part. The shift toward a lower-carbon future is a priority for UBS and it is a key focus of our sustainability strategy.
We have set aspirational goals to achieve net-zero greenhouse gas (GHG) emissions from our own business and we are directing capital toward the low-carbon transition by offering the choice our clients need to effect the change that they want to see. At the same time, we are focused on managing the risks related to climate, natural capital and biodiversity to protect our clients’ assets and those of our firm from the impact of climate change. We are also seizing the opportunities from the low-carbon transition.
Our climate strategy is a reflection of our focus areas and covers two main areas: managing climate-related financial risks, and taking action on a net-zero future, via four strategic pillars: › Refer to our Climate and Nature Report 2022, available at ubs.com/gri, which brings together all climate- and nature-related information in this report 1 The low-carbon economy is defined as economic activities that deliver goods and services that generate significantly lower emissions of greenhouse gases; predominantly carbon dioxide.
Governance.
Strategy.
Managing climate-related fi nancial risks Acting for a low-carbon future.
Risks and opportunities.
Metrics and targets.
Climate strategy.
Protecting our clients’ assets – Managing climaterelated risks and opportunities through our innovative products and services in investment, financing and research.
Protecting our own assets – Limiting our risk appetite for carbon-related assets – Estimating our vulnerability to climate risks.
Reducing our climate impact – Sourcing 100% of our electricity from renewable sources – Responsible supply chain management.
Mobilizing capital – From private and institutional clients – Toward the orderly transition to a low-carbon economy 8
Sustainability Report 2022 | Strategy 9.
People matter.
At UBS, we believe in a diverse, equitable and inclusive society, not just because it is the right thing to do, but because it creates a virtuous cycle of viable, long-term economic and social development that will help to reduce inequalities. For example, advancing women’s equality could add between USD 12 trillion and 28 trillion to global GDP by 2025.2.
We are a large, diverse and inclusive organization with a global presence. Through our interactions with each other, the communities in which we operate and our wider stakeholders, we are using our influence to help people advance. › Refer to the “Social” section of this report for more information about our firm’s employees › Refer to the “Social” section of this report for more information about our philanthropic activities.
Partnerships bring it together.
The challenges our world faces cannot be solved by one organization alone. That is why we partner with other thought leaders and standard setters to unite around common goals that can drive change at a global scale. › Refer to the report’s Supplementary Information document for more about our partnerships and our approach to them.
Delivering our sustainability commitments and strategy.
We aim to continuously enhance our sustainability performance, both environmental and social. The way we do business is governed by the UBS Code of Conduct and Ethics, which sets out the principles and commitments that define our ethical standards. It outlines our commitment to creating a fairer, more prosperous society by addressing inequalities and championing a healthier environment. It also contains our commitment to fulfill our compliance obligations. We are committed to obeying the laws, rules and regulations of the areas where we live, work and do business. › Refer to ubs.com/code for the full UBS Code of Conduct and Ethics 2 McKinsey Global Institute, The power of parity: how advancing women’s equality can add USD 12 trillion to global growth, in UBS CIO GWM, Longer Term Investments: Diversity and Equality, 2021.
Our aspirational goals and progress.
Our priorities Our aspirational goals Our progress in 2022.
Planet, people, partnerships USD 400 billion invested assets in sustainable investments by 2025. Increased invested assets in sustainable investments to USD 268 billon (compared with USD 251 billion in 2021).