WHATX/ESG_Report · Datasets at Hugging Face

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UBS actuals 2020 2030 2050 2020 2021 2030 −44% 32


Sustainability Report 2022 \| Environment 33.
Fossil fuels.
UBS remains committed to reducing the absolute financed emissions associated with loans to oil and gas companies by 71% by 2030, compared with 2020 levels.
Our target-setting for this sector is guided by the IEA Net Zero by 2050 scenario. In 2021, more than 85% of our total loan exposure was to clients that have themselves committed to net zero and stated their commitment to achieve the Paris Agreement 1.5°C goals. We continually engage with our clients to support their net-zero transition and offer them our sustainable financing solutions at their choosing, such as loans for which certain aspects (e.g., loan margin) are tied to the achieving of their overall company emission reduction targets. We also provided lending in 2021 to a client to fund the ongoing carbon capture usage and storage (CCUS) conversion of an asset, enabling the client to create carbon capture credits. › Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.
Given the risks associated with climate change and the changing market demand for fossil fuels, we regularly screen fossil fuel-related transactions against our corporate guidelines, and our lending aims to support companies in their transition journeys. Our baseline and target for fossil fuels include scope 1, 2 and 3 emissions. Scope 3 emissions are associated with the combustion of fossil fuels and contribute to the majority of emissions within this sector. For this sector, we have decided to track our progress with an absolute emission metric. As absolute emission metrics are more sensitive to data quality improvements over time, we have decided to index our baseline and target to 100 in order to avoid frequent subsequent restatements.
Our assessment of the fossil fuel sector includes exploration, production and refinery activities, as well as integrated companies operating across the value chain. Our baseline and target exclude activities such as transportation, retailing and trading. Scope 3 emissions measurement methods are yet to be developed for these activities, including in the context of commodity trade finance (CTF). We continue to pay close attention to the development of emissions measurement standards for these areas. We will assess the adoption of standards if applicable, and if they are of sufficient maturity. To ensure progress on emissions reductions in the area of CTF, we have established an internal approach based on the mix of commodities traded. Increasingly, our CTF business aims to be focused on less carbon-intensive or circular-economy commodities, for example, biofuels.
Absolute emissions fossil fuels lending.
In t CO²e (base: 100) 100 58 29.
IEA Net Zero Emissions by 2050 roadmap, World – Fossil Fuels.
Trend line to 2030 target (indicative)
UBS ambition.
UBS actuals −71% 100 0
2020 2030 2050 2020 2021 2030 100 0
33


Sustainability Report 2022 \| Environment 34.
Power generation.
We remain committed to reducing the emissions intensity associated with lending to power generation companies by 49% by 2030 (compared with 2020 levels), taking into account scope 1, 2 and 3 emissions.
Scope 1 emissions account for the majority of emissions from the power generation sector. The intensity metric (kg CO2e/MWh) monitors emissions related to the production of electricity and promotes the transition toward an increasing share of renewable energy sources.
We have decided to consider scope 1, 2, and 3 emissions. Our baseline and pathway include CO2e emissions resulting from electricity production. Activities related to the transmission and trading of electricity are not included in our baseline and target.
Our lending to this sector is focused on companies with a considerable share of renewable energy production or a diversified production mix. This high share of renewable energy production, particularly in our home market of Switzerland, has led to our emissions intensity being below the IEA benchmark. An increasing number of clients have themselves committed to net-zero objectives, some of which with accelerated interim targets to achieve net zero by 2040 or 2045. We will continue to support the transition of our clients, while at the same time also facilitating energy supply. › Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.
Emissions intensity power generation lending.
In kg CO²e / MWh 238 210 121.
IEA Net Zero Emissions by 2050 roadmap, World – Power Generation.
Trend line to 2030 target (indicative)
UBS ambition.
UBS actuals 600 0
2020 2030 2050 2020 2021 2030 600 −49% 0
34


Sustainability Report 2022 \| Environment 35.
Cement.
In 2022, we committed to reducing the emissions intensity associated with lending to cement companies by 15% by 2030 (compared with 2020 levels), taking into account scope 1 and 2 emissions.
Based on an analysis performed in 2022, we have introduced a net-zero target to reduce scope 1 and 2 emissions for cement by 15% by 2030.
Cement is a priority sector for the NZBA, accounting for approximately 7% of global GHG emissions.2 At the same time, cement is recognized as a sector for which emissions have proven particularly hard to reduce. This explains why benchmark emissions scenarios for this sector assume that most of the emissions reductions will need to take place in the longer term, with a significant dependency on technological innovation for the decarbonization to materialize by 2050.
The technical challenges to reduction become evident when observing the evolution of actual emissions for the cement industry compared with the scenarios of the IEA. The scenarios originally established projected a decrease of emissions from 2015 to 2020. In fact, industry actuals ended up rising, partly due to increased real estate demand in regions with less efficient producers. Considering this higher point of departure for 2020, we have established our target pathway for this sector based on the rate of reduction projected by the IEA, but applied to a starting point reflecting the actual industry average for 2020.
Regarding our lending exposure to this sector, we have a relatively small book (USD 0.5 billion in total gross exposure in 2022), with a material share of the exposures concentrated on a small number of clients. We believe our main clients in the cement industry are best in class in terms of ESG disclosures and externally verified emissions reduction targets. The energy transition agenda is front of mind for these clients, driving conversations on strategic options to develop sustainable solutions for the cement industry. Our advisory teams have provided insight into markets and the thinking of investors and asset managers around cement’s ESG matters. Given the stated dependency on investments in technological change, we see this sector as of particular importance for collaboration between the financial sector and the real economy.
2 Based on information from the International Energy Agency Net Zero by 2050 report, available on https://www.iea.org/reports/net-zero-by-2050.
Emissions intensity cement lending.
In physical intensity (t CO²e / t cementitious) 0.62 0.61 0.53 2020 2030 2050 2020 2021 2030.
IEA Net Zero Emissions by 2050 roadmap (with SBTi adjustments)
Benchmark with GCCA average as baseline and IEA NZE 2050 as reduction rate.
Trend line to 2030 target (indicative)
UBS ambition.
UBS actuals −15% 0.8 0
0.8 0.
Global cement and concrete association – weighted average 35


Sustainability Report 2022 \| Environment 36.
Net-zero targets in relation to UBS lending emissions 2022 2021.
GGross exposure (USD billion)1.
Outstanding exposure (USD billion)2.
Gross exposure (USD billion)1.
Outstanding exposure (USD billion)2.
Financed emissions, scopes 1 and 2 (mt CO2e)3.
Financed emissions, scope 3 (mt CO2e)3.
PCAF score, scopes 1 and 24 PCAF score, scope 34.
Economic intensity (mt CO2e / USD billion)3.
Exposure covered by target.
Real estate – Residential real estate 156.9 155.2 152.9 149.7 1.1 4 0.01 – Commercial real estate 45.5 45.0 43.6 43.1 0.4 4 0.01.
Fossil fuels (coal, oil and gas)5 0.5 0.0 0.7 0.1 0.1 0.4 3 4 5.10.
Power generation 11.8 0.4 1.2 0.5 0.2 0.1 3 5 0.56.
Cement 00.5 0.0 0.5 0.0 0.0 2 2.32.
EExposure not covered by target.
Other non-financial corporate sectors 449.0 24.4 52.9 25.9 1.3 0.0 5 5.
TTotal non-financial corporates and real estate mortgages 254.4 225.0 251.8 219.4 3.1 0.5 4 5.
Lombard, financial services, commodity trade finance, private individuals, credit cards 1195.8 163.0 207.3 179.2.
TTotal loans and advances to customers 450.2 388.0 459.1 398.6 1 Gross exposure includes total loans and advances to customers and guarantees as well as irrevocable loan commitments (within the scope of expected credit loss). 2 Outstanding exposure includes total loans and advances to customers (within the scope of expected credit loss). 3 Based on outstanding exposure. Refer to section “Appendix 3 – Climaterelated methodologies – lending” for details on the calculation methodologies. 4 PCAF scores shown represent weighted average based on outstanding exposures. 5 Commodity Trade Finance excluded.
The sectors for which interim targets have been set represent USD 205.3 billion, or 46%, of the USD 450.2 billion in total gross exposure for 2022, and 81% of the USD 254.4 billion in gross exposure for which data and methodologies are available to estimate emissions. These sectors account for 2.2 metric megatons (mt) of CO2e emissions financed, or 63% of the total financed emissions of 3.6 mt (3.1 mt for scopes 1 and 2 and 0.5 mt for scope 3). This amounts to the first approximation of our total financed emissions. We expect these numbers to be restated over time as the availability and quality of data improve.
A significant share of the remaining 37% of our estimated total financed emissions relates to lending to sectors outside of the NZBA’s current scope. As further discussed in Appendix 3, “Climate-related methodologies,” the gross exposure for the remaining sectors in the NZBA’s current scope (transportation, aluminum, steel and agriculture) is USD 5.5 billion. However, only USD 0.7 billion of that total is to parts of the value chain currently addressed by net-zero target-setting approaches (e.g., PACTA for Banks and the World Business Council for Sustainable Development). Parts of the value chain that are not within the scope of these methodologies are considered to have less decision-making power or capacity to reduce carbon emissions. In addition, physical emission intensity metrics are often not relevant for these parts of the value chain. As a result, the potential for setting meaningful net-zero targets for lending to further sectors is at present limited. › Refer to the “Appendix 3 – Environment” section of this report for further details about the above statements and calculations.
As can be seen in the table above, a significant share of our gross exposure (USD 195.8 billion) is to areas such as Lombard, financial services firms and CTF. Guidelines and methodologies for all of these areas have yet to be developed. We are evaluating methodological options for assessing Lombard loans from a sustainability perspective.
36


Sustainability Report 2022 \| Environment 37.
Supporting the net-zero goals of our investing clients.
Asset Management In 2020, our Asset Management business division became a founding member of the Net Zero Asset Managers initiative (the NZAMi) and published its net-zero interim target, committing to align 20% of total assets under management (AuM) to be managed in line with net zero by 2030.3.
During 2022 we made progress across the foundational pillars required to deliver on this target. This included enhanced data sourcing and governance, developing asset-class-specific net-zero-aligned frameworks, and extending our long-standing climate engagement program. During 2023, we intend to implement revisions to fund documentation and investment management agreements to align with our net-zero-aligned frameworks. › Refer to the “Appendix 3 – Environment” section of this report for Asset Management’s methodology for defining net-zero-aligned investment portfolios.
We continue to invest in the necessary data and infrastructure to support management and monitoring of portfolios, issuer alignment and real economy decarbonization.
We recognize that approaches to achieving net zero are likely to evolve over time as data availability and quality continue to improve. Currently, our target setting is focused on carbon-intensity metrics. We draw on a wide variety of data sources to inform our assessment of climate-related risk and opportunities. Over time we expect to enhance our decarbonization approach with additional metrics, such as external verification, temperature alignment, climate solutions and scope 3 metrics.
The transition of investment portfolios will require real-economy emission reductions. We see our active ownership strategy as a powerful tool in influencing corporate behavior to achieve real-economy outcomes. We have had a dedicated climate engagement program in place since 2017 to address climate-related risks with measurable progress tracked. The program is focused on driving ambitious and credible transition strategies across portfolio holdings. Our net-zero engagement approach is underpinned by taking a sector-specific approach, extending beyond governance and targets into relevant business model objectives. We continue to set increased expectations for companies on target setting, quantified disclosures on decarbonization actions, capital deployment in line with a net-zero pathway, and progress toward stated commitments. We are also widening our engagement coverage to the highest-emitting companies across our investment universe, expanding the range of sectors and geographies.
3 The 20% alignment target amounted to USD 235 billion at the time of the commitment in 2021. By 2030, the weighted average carbon intensity of funds is to be 50% below the carbon intensity of the respective 2019 benchmark.
Building blocks of the sustainable lending operating model.
Loan origination and credit granting.
Planning and governance – Risk appetite – Policies – Group oversight – Sector strategy – Financial management (strategic plan) – Financed emissions (absolute) – Target metric and reference pathway – Credit decision – Refi nancing – Engagement – Systems and processes – Value proposition – Reporting – UBS data management – External vendors.
Monitoring, reporting and data.
Emissions incl. target setting 37


Sustainability Report 2022 \| Environment 38.
Alongside these actions, we believe that we have an important role to play in working collaboratively with our clients on climate risk education, providing access to best practices in climate risk management, climate-related opportunities and approaches for net-zero-aligned portfolios. We also recognize that our industry still has a great deal of work to do in developing globally consistent methodologies and disclosures. We are actively participating in industry initiatives and other forms of collaboration, such as the Task Force on Climate-related Disclosures (the TCFD), the development of regional best practice climate-related guidance, such as the new Swiss Climate Scores, and the IFRS International Sustainability Standards Board (the ISSB) consultation on climate standards disclosure.
Global Wealth Management Our Global Wealth Management business division continues to work toward mainstreaming sustainable and impact investments for our private clients. We believe that material sustainability issues matter for financial performance and know that clients have an interest in many of these topics. Our Chief Investment Office (CIO) remains convinced that the net-zero transition will prove to be one of the most consequential investment trends in subsequent decades. We offer advice and solutions that help guide and implement this view to the extent possible and where relevant in line with our fiduciary duties.
In addition, we leverage our knowledge and industry partnerships to explore and develop carbon-focused offerings. This includes the private markets, where we continue to be the partner of choice for leading asset managers for their impact investing vehicles, including those that focus on climate and transition-related opportunities. In 2022, we launched a Low Carbon Transition module for use in our My Way offering, and we intend to offer additional modules with an explicit carbon focus.
› Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.

UBS actuals 2020 2030 2050 2020 2021 2030 −44% 32

Sustainability Report 2022 | Environment 33.

Fossil fuels.

UBS remains committed to reducing the absolute financed emissions associated with loans to oil and gas companies by 71% by 2030, compared with 2020 levels.

Our target-setting for this sector is guided by the IEA Net Zero by 2050 scenario. In 2021, more than 85% of our total loan exposure was to clients that have themselves committed to net zero and stated their commitment to achieve the Paris Agreement 1.5°C goals. We continually engage with our clients to support their net-zero transition and offer them our sustainable financing solutions at their choosing, such as loans for which certain aspects (e.g., loan margin) are tied to the achieving of their overall company emission reduction targets. We also provided lending in 2021 to a client to fund the ongoing carbon capture usage and storage (CCUS) conversion of an asset, enabling the client to create carbon capture credits. › Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.

Given the risks associated with climate change and the changing market demand for fossil fuels, we regularly screen fossil fuel-related transactions against our corporate guidelines, and our lending aims to support companies in their transition journeys. Our baseline and target for fossil fuels include scope 1, 2 and 3 emissions. Scope 3 emissions are associated with the combustion of fossil fuels and contribute to the majority of emissions within this sector. For this sector, we have decided to track our progress with an absolute emission metric. As absolute emission metrics are more sensitive to data quality improvements over time, we have decided to index our baseline and target to 100 in order to avoid frequent subsequent restatements.

Our assessment of the fossil fuel sector includes exploration, production and refinery activities, as well as integrated companies operating across the value chain. Our baseline and target exclude activities such as transportation, retailing and trading. Scope 3 emissions measurement methods are yet to be developed for these activities, including in the context of commodity trade finance (CTF). We continue to pay close attention to the development of emissions measurement standards for these areas. We will assess the adoption of standards if applicable, and if they are of sufficient maturity. To ensure progress on emissions reductions in the area of CTF, we have established an internal approach based on the mix of commodities traded. Increasingly, our CTF business aims to be focused on less carbon-intensive or circular-economy commodities, for example, biofuels.

Absolute emissions fossil fuels lending.

In t CO²e (base: 100) 100 58 29.

IEA Net Zero Emissions by 2050 roadmap, World – Fossil Fuels.

Trend line to 2030 target (indicative)

UBS ambition.

UBS actuals −71% 100 0

2020 2030 2050 2020 2021 2030 100 0

33

Sustainability Report 2022 | Environment 34.

Power generation.

We remain committed to reducing the emissions intensity associated with lending to power generation companies by 49% by 2030 (compared with 2020 levels), taking into account scope 1, 2 and 3 emissions.

Scope 1 emissions account for the majority of emissions from the power generation sector. The intensity metric (kg CO2e/MWh) monitors emissions related to the production of electricity and promotes the transition toward an increasing share of renewable energy sources.

We have decided to consider scope 1, 2, and 3 emissions. Our baseline and pathway include CO2e emissions resulting from electricity production. Activities related to the transmission and trading of electricity are not included in our baseline and target.

Our lending to this sector is focused on companies with a considerable share of renewable energy production or a diversified production mix. This high share of renewable energy production, particularly in our home market of Switzerland, has led to our emissions intensity being below the IEA benchmark. An increasing number of clients have themselves committed to net-zero objectives, some of which with accelerated interim targets to achieve net zero by 2040 or 2045. We will continue to support the transition of our clients, while at the same time also facilitating energy supply. › Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.

Emissions intensity power generation lending.

In kg CO²e / MWh 238 210 121.

IEA Net Zero Emissions by 2050 roadmap, World – Power Generation.

Trend line to 2030 target (indicative)

UBS ambition.

UBS actuals 600 0

2020 2030 2050 2020 2021 2030 600 −49% 0

34

Sustainability Report 2022 | Environment 35.

Cement.

In 2022, we committed to reducing the emissions intensity associated with lending to cement companies by 15% by 2030 (compared with 2020 levels), taking into account scope 1 and 2 emissions.

Based on an analysis performed in 2022, we have introduced a net-zero target to reduce scope 1 and 2 emissions for cement by 15% by 2030.

Cement is a priority sector for the NZBA, accounting for approximately 7% of global GHG emissions.2 At the same time, cement is recognized as a sector for which emissions have proven particularly hard to reduce. This explains why benchmark emissions scenarios for this sector assume that most of the emissions reductions will need to take place in the longer term, with a significant dependency on technological innovation for the decarbonization to materialize by 2050.

The technical challenges to reduction become evident when observing the evolution of actual emissions for the cement industry compared with the scenarios of the IEA. The scenarios originally established projected a decrease of emissions from 2015 to 2020. In fact, industry actuals ended up rising, partly due to increased real estate demand in regions with less efficient producers. Considering this higher point of departure for 2020, we have established our target pathway for this sector based on the rate of reduction projected by the IEA, but applied to a starting point reflecting the actual industry average for 2020.

Regarding our lending exposure to this sector, we have a relatively small book (USD 0.5 billion in total gross exposure in 2022), with a material share of the exposures concentrated on a small number of clients. We believe our main clients in the cement industry are best in class in terms of ESG disclosures and externally verified emissions reduction targets. The energy transition agenda is front of mind for these clients, driving conversations on strategic options to develop sustainable solutions for the cement industry. Our advisory teams have provided insight into markets and the thinking of investors and asset managers around cement’s ESG matters. Given the stated dependency on investments in technological change, we see this sector as of particular importance for collaboration between the financial sector and the real economy.

2 Based on information from the International Energy Agency Net Zero by 2050 report, available on https://www.iea.org/reports/net-zero-by-2050.

Emissions intensity cement lending.

In physical intensity (t CO²e / t cementitious) 0.62 0.61 0.53 2020 2030 2050 2020 2021 2030.

IEA Net Zero Emissions by 2050 roadmap (with SBTi adjustments)

Benchmark with GCCA average as baseline and IEA NZE 2050 as reduction rate.

Trend line to 2030 target (indicative)

UBS ambition.

UBS actuals −15% 0.8 0

0.8 0.

Global cement and concrete association – weighted average 35

Sustainability Report 2022 | Environment 36.

Net-zero targets in relation to UBS lending emissions 2022 2021.

GGross exposure (USD billion)1.

Outstanding exposure (USD billion)2.

Gross exposure (USD billion)1.

Outstanding exposure (USD billion)2.

Financed emissions, scopes 1 and 2 (mt CO2e)3.

Financed emissions, scope 3 (mt CO2e)3.

PCAF score, scopes 1 and 24 PCAF score, scope 34.

Economic intensity (mt CO2e / USD billion)3.

Exposure covered by target.

Real estate – Residential real estate 156.9 155.2 152.9 149.7 1.1 4 0.01 – Commercial real estate 45.5 45.0 43.6 43.1 0.4 4 0.01.

Fossil fuels (coal, oil and gas)5 0.5 0.0 0.7 0.1 0.1 0.4 3 4 5.10.

Power generation 11.8 0.4 1.2 0.5 0.2 0.1 3 5 0.56.

Cement 00.5 0.0 0.5 0.0 0.0 2 2.32.

EExposure not covered by target.

Other non-financial corporate sectors 449.0 24.4 52.9 25.9 1.3 0.0 5 5.

TTotal non-financial corporates and real estate mortgages 254.4 225.0 251.8 219.4 3.1 0.5 4 5.

Lombard, financial services, commodity trade finance, private individuals, credit cards 1195.8 163.0 207.3 179.2.

TTotal loans and advances to customers 450.2 388.0 459.1 398.6 1 Gross exposure includes total loans and advances to customers and guarantees as well as irrevocable loan commitments (within the scope of expected credit loss). 2 Outstanding exposure includes total loans and advances to customers (within the scope of expected credit loss). 3 Based on outstanding exposure. Refer to section “Appendix 3 – Climaterelated methodologies – lending” for details on the calculation methodologies. 4 PCAF scores shown represent weighted average based on outstanding exposures. 5 Commodity Trade Finance excluded.

The sectors for which interim targets have been set represent USD 205.3 billion, or 46%, of the USD 450.2 billion in total gross exposure for 2022, and 81% of the USD 254.4 billion in gross exposure for which data and methodologies are available to estimate emissions. These sectors account for 2.2 metric megatons (mt) of CO2e emissions financed, or 63% of the total financed emissions of 3.6 mt (3.1 mt for scopes 1 and 2 and 0.5 mt for scope 3). This amounts to the first approximation of our total financed emissions. We expect these numbers to be restated over time as the availability and quality of data improve.

A significant share of the remaining 37% of our estimated total financed emissions relates to lending to sectors outside of the NZBA’s current scope. As further discussed in Appendix 3, “Climate-related methodologies,” the gross exposure for the remaining sectors in the NZBA’s current scope (transportation, aluminum, steel and agriculture) is USD 5.5 billion. However, only USD 0.7 billion of that total is to parts of the value chain currently addressed by net-zero target-setting approaches (e.g., PACTA for Banks and the World Business Council for Sustainable Development). Parts of the value chain that are not within the scope of these methodologies are considered to have less decision-making power or capacity to reduce carbon emissions. In addition, physical emission intensity metrics are often not relevant for these parts of the value chain. As a result, the potential for setting meaningful net-zero targets for lending to further sectors is at present limited. › Refer to the “Appendix 3 – Environment” section of this report for further details about the above statements and calculations.

As can be seen in the table above, a significant share of our gross exposure (USD 195.8 billion) is to areas such as Lombard, financial services firms and CTF. Guidelines and methodologies for all of these areas have yet to be developed. We are evaluating methodological options for assessing Lombard loans from a sustainability perspective.

36

Sustainability Report 2022 | Environment 37.

Supporting the net-zero goals of our investing clients.

Asset Management In 2020, our Asset Management business division became a founding member of the Net Zero Asset Managers initiative (the NZAMi) and published its net-zero interim target, committing to align 20% of total assets under management (AuM) to be managed in line with net zero by 2030.3.

During 2022 we made progress across the foundational pillars required to deliver on this target. This included enhanced data sourcing and governance, developing asset-class-specific net-zero-aligned frameworks, and extending our long-standing climate engagement program. During 2023, we intend to implement revisions to fund documentation and investment management agreements to align with our net-zero-aligned frameworks. › Refer to the “Appendix 3 – Environment” section of this report for Asset Management’s methodology for defining net-zero-aligned investment portfolios.

We continue to invest in the necessary data and infrastructure to support management and monitoring of portfolios, issuer alignment and real economy decarbonization.

We recognize that approaches to achieving net zero are likely to evolve over time as data availability and quality continue to improve. Currently, our target setting is focused on carbon-intensity metrics. We draw on a wide variety of data sources to inform our assessment of climate-related risk and opportunities. Over time we expect to enhance our decarbonization approach with additional metrics, such as external verification, temperature alignment, climate solutions and scope 3 metrics.

The transition of investment portfolios will require real-economy emission reductions. We see our active ownership strategy as a powerful tool in influencing corporate behavior to achieve real-economy outcomes. We have had a dedicated climate engagement program in place since 2017 to address climate-related risks with measurable progress tracked. The program is focused on driving ambitious and credible transition strategies across portfolio holdings. Our net-zero engagement approach is underpinned by taking a sector-specific approach, extending beyond governance and targets into relevant business model objectives. We continue to set increased expectations for companies on target setting, quantified disclosures on decarbonization actions, capital deployment in line with a net-zero pathway, and progress toward stated commitments. We are also widening our engagement coverage to the highest-emitting companies across our investment universe, expanding the range of sectors and geographies.

3 The 20% alignment target amounted to USD 235 billion at the time of the commitment in 2021. By 2030, the weighted average carbon intensity of funds is to be 50% below the carbon intensity of the respective 2019 benchmark.

Building blocks of the sustainable lending operating model.

Loan origination and credit granting.

Planning and governance – Risk appetite – Policies – Group oversight – Sector strategy – Financial management (strategic plan) – Financed emissions (absolute) – Target metric and reference pathway – Credit decision – Refi nancing – Engagement – Systems and processes – Value proposition – Reporting – UBS data management – External vendors.

Monitoring, reporting and data.

Emissions incl. target setting 37

Sustainability Report 2022 | Environment 38.

Alongside these actions, we believe that we have an important role to play in working collaboratively with our clients on climate risk education, providing access to best practices in climate risk management, climate-related opportunities and approaches for net-zero-aligned portfolios. We also recognize that our industry still has a great deal of work to do in developing globally consistent methodologies and disclosures. We are actively participating in industry initiatives and other forms of collaboration, such as the Task Force on Climate-related Disclosures (the TCFD), the development of regional best practice climate-related guidance, such as the new Swiss Climate Scores, and the IFRS International Sustainability Standards Board (the ISSB) consultation on climate standards disclosure.

Global Wealth Management Our Global Wealth Management business division continues to work toward mainstreaming sustainable and impact investments for our private clients. We believe that material sustainability issues matter for financial performance and know that clients have an interest in many of these topics. Our Chief Investment Office (CIO) remains convinced that the net-zero transition will prove to be one of the most consequential investment trends in subsequent decades. We offer advice and solutions that help guide and implement this view to the extent possible and where relevant in line with our fiduciary duties.

In addition, we leverage our knowledge and industry partnerships to explore and develop carbon-focused offerings. This includes the private markets, where we continue to be the partner of choice for leading asset managers for their impact investing vehicles, including those that focus on climate and transition-related opportunities. In 2022, we launched a Low Carbon Transition module for use in our My Way offering, and we intend to offer additional modules with an explicit carbon focus.

› Refer to the “Strategy” section of this report for more information about our sustainable finance products and services.