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Chemicals5 134 133 97 1.
Financial6 438 283 168 55.
Infrastructure7 142 148 90 (4)
Metals and mining 4481 615 492 (22)
Oil and gas 3350 318 354 10.
Technology8 144 190 141 (24)
Transport 885 80 60 6.
Utilities 2204 225 186 (9)
Other9 390 391 174 0 bby outcome10 approved11 1,965 1,988 1,696 approved with qualifications12 397 396 349 rejected or not further pursued13 93 106 119 pending14 365 49 9 assessed15 14 380 0 1 Transactions and client onboarding requests referred to the SCR function. 2 Relates to procurement / sourcing of products and services. 3 Amendment in sector calculation: sectors calculated based on first assessed entity. 4 Includes, e.g., companies producing or processing fish and seafood, forestry products, biofuels, food and beverage. 5 Includes e.g. chemical and pharmaceutical companies. 6 Includes, e.g., banks, commodity traders, investments and equity firms. 7 Includes e.g., real estate and construction and engineering companies. 8 Includes technology and telecom companies. 9 Includes, e.g., aerospace and defense, general industrials, retail and wholesale. 10 "By outcome" 2022 data is from 25 January 2023. Outcomes from 2021 and 2020 were also recalculated. 11 Client / transaction / supplier transactions approved at SCR. 12 Client / transaction / supplier subject to an SCR assessment and approved with qualifications. Qualifications may include ring-fencing of certain assets, conditions toward client / supplier or internal recommendations. 13 Client / transaction / supplier subject to an SCR assessment and rejected or not further pursued. 14 Decision pending. Except for few cases still in progress from 2021 and 2020, all 2019 pending cases have been closed and reallocated to the other outcome categories. 15 Assessed companies related to portfolio reviews.
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Sustainability Report 2022 | Appendix 2 | Governance 100.
Combating financial crime.
UBS complies with applicable laws and regulations and is committed to meeting industry standards regarding the effective prevention of money laundering and financing of terrorism. UBS takes comprehensive measures to prevent and detect non-compliance with laws and regulations and does not tolerate or facilitate criminal activity or breaches of the letter or spirit of applicable laws, regulations, rules and policies designed to prevent such activities.
UBS does not engage in business activities that pose unacceptably high levels of money laundering, fraud, sanctions or corruption risk. Additionally, UBS does not engage in activities that pose risks that cannot be effectively managed by the existing control environment. Although it is not possible to eliminate such residual risk entirely, UBS has appropriate policies, procedures, controls and processes in place to manage the relevant risks.
UBS annually assesses the money laundering, fraud, sanctions and bribery and corruption risks associated with all of its business operations against its control framework, and takes action where appropriate to further mitigate these risks.
Public-private partnerships.
We are a founding member of the Wolfsberg Group, an association of global banks that aims to develop financial services sector standards for the prevention of financial crimes such as money laundering, fraud, corruption and terrorist financing, as well as developing industry standards for know-your-client (KYC) due diligence and ongoing transaction monitoring.
The Wolfsberg Group brings together banks from around the world at its annual forum and regional out-reach meetings focused on financial crime topics, and delivers an annual academy to support the development of junior Financial Crime Prevention (FCP) officers. It also works on guidance papers in related key areas of financial crime. UBS is actively involved with this group. For example, during 2022 we co-chaired the Wolfsberg Working Group to update and re-issue its Anti-Bribery & Corruption Programme guidance.
Together with the other members of the Wolfsberg Group, we work with the Financial Action Task Force (FATF), an intergovernmental body that helps develop national and international policies on preventing money laundering and terrorist financing through consultation with the private sector.
In November 2020, UBS joined the World Economic Forum’s Partnership Against Corruption Initiative (the PACI). The PACI undertakes initiatives to address industry, country, regional, and global issues linked to anti-corruption and compliance. We contributed to the PACI’s “Gatekeepers in the Fight Against Illicit Financial Flows” paper and assessed its own framework as being compliant with these standards.
We are a member of a number of public-private partnerships operating globally that have been set up to foster closer working relationships between financial institutions and law enforcement, most notably the Joint Money Laundering Taskforce operations group in the UK, which has worked on a number of human trafficking and modern slavery cases.
A risk-based approach to combating financial crime.
Onboarding and ongoing monitoring UBS performs risk-based initial due diligence on all customers, which is designed to establish their identity and ownership, nature of their business activities and source of wealth and funds. This includes formal processes for mitigating the risk of impersonation fraud in circumstances where we are not doing business on a face to face basis. Where the client represents a potentially elevated risk per the Group anti-money-laundering (AML) and KYC Policy, enhanced due diligence is performed.
UBS does not establish or maintain relationships with parties when the KYC information cannot be sufficiently established or where UBS has reason to believe the party has or intends to use UBS products or services for illicit activities. UBS does not open accounts for relationships that do not meet our standards or pose unacceptable financial crime or reputational risk for the bank.
After a client onboarding is completed, ongoing due diligence and risk screening is performed during the lifecycle of the client relationship. Clients are subjected to regular risk rating and client activities and transactions are subject to AML transaction monitoring. In addition, ongoing periodic KYC reviews are conducted at a varying frequency driven by the client risk rating.
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Sustainability Report 2022 | Appendix 2 | Governance 101.
Our Group AML & KYC Policy sets out the process and criteria relating to the identification, senior management sign off, periodic review and ongoing monitoring of clients deemed to be Politically Exposed Persons (PEPs) as well as other customers who have links with jurisdictions or industries which pose elevated levels of financial crime risk.
We apply KYC rules and use advanced technology to help identify suspicious transaction patterns and compliance risk issues. We continue to invest in our detection capabilities and core systems as part of our FCP program.
Referral of red flags to FCP must be made if any UBS staff become aware of potential suspicious activities during the client lifecycle and may result in investigation, suspicious activity report filing, and/or client exit as appropriate. We adhere to the global FATF standards with respect to record keeping.
Our entire financial crime framework is subject to regular controls testing both within the first and second lines of defense which includes a cycle of regular peer review testing executed by a designated team within the financial crime prevention group function. Additionally, our Group Internal Audit team performs a rigorous cycle of independent audit reviews covering the financial crime framework globally and cross divisionally and we are subject to ongoing supervision by regulatory authorities in all of the markets in which we operate.
Conduct and culture The UBS Code of Conduct and Ethics (the Code) sets out the principles and commitments that define our ethical standards and the way we do business. The Code commits all UBS employees to do whatever we can to combat money laundering, fraud, corruption and terrorist financing.
We have systems in place and hold ourselves accountable for detecting, stopping and reporting money laundering matters, including terrorist financing.
For example, we do not tolerate any form of corruption or bribery, including facilitating payments, nor do we offer or accept improper gifts or payments.
Additionally, the Code requires that UBS employees do not help or advise its clients, or any other party, to evade taxes or misreport taxable income and gains. It also states that we should not contract with third parties who provide services for UBS or on our behalf, where those services help others improperly evade taxes.
All employees and external staff subject to mandatory learning requirements are required to complete FCP training, which covers 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 financial crime standards, and to incorporate learnings from both internal and external events and geopolitical developments. Employees in specific areas also receive targeted training on specific financial crime risks associated with the business lines or activities they are involved with. › Refer to the Code of Conduct and Ethics of UBS, available at ubs.com/code 101
Sustainability Report 2022 | Appendix 2 | Governance 102.
Protecting data.
Data has enormous value to our firm. When treated as a corporate asset, it enables our business to run smoothly. It can also help us to grow and prosper, by giving us the information we need to capture new business or react quickly to new trends. As we continue to invest in our digital solutions, we are similarly committed to: – developing a robust command and control framework to manage and protect our offering and the petabytes of data that are inherently generated by it; – being stewards of data on behalf of our clients and employees; and – requesting our third parties adopt equivalent practices and meet our expectations.
It is our responsibility to protect data disclosed to us in an increasingly complex and evolving environment. We have comprehensive measures (relevant controls, processes and policies) in place for the protection of personal data.
We have also introduced organizational and technical security measures, underpinned by an operational risk and control framework, to safeguard personal data in accordance with applicable laws and regulations. Access to data is protected through control mechanisms following the need-to-know principle and ensuring revocation when no longer required. Where applicable and required, de-identification solutions are used for some specific use cases of sensitive client data.
Governance.
Our Board of Directors (the BoD) and the Group Executive Board (the GEB) recognize the cyber- and informationsecurity (CIS) program as essential in maintaining the continued success of UBS and foster an appropriate risk management culture. The BoD Risk Committee and the GEB oversee the CIS program through regular reviews and reporting and are part of the escalation chain for major and critical cyber incidents. Additionally, CIS systems and processes are subject to continual review and updates by our internal control teams.
The Group Data Management Office, part of the Group Chief Technology Office, partners across the firm to ensure robust governance over the collection, propagation and quality of our firm’s data. Additionally, the Group Data Protection Office, part of Group Compliance, Regulatory and Governance, ensures that our firm processes personal data and responds to data subject rights exercised by individuals (including clients and employees) in line with applicable data privacy laws and regulations.
Policies and procedures (including training)
As a firm, we operate at the highest possible standard. Our principles and policies guide how we use data and information, as well as how we develop and deploy technological solutions. We maintain policies and procedures to ensure everyone at our firm is aware of threats and the importance of CIS. A CIS end user and line manager policy is available internally to all UBS employees and consultants.
In recognition of the pace of digital change globally, our Code of Conduct and Ethics (the Code) includes a section on the lawful and ethical use of data. The primary focus of this section is preparing employees for greater reliance on big data, data models and artificial intelligence.
We run a comprehensive, Group-wide education and awareness program, including addressing risks related to CIS. The program features mandatory computer-based training modules (recurring and requiring exam completion), newsletters, and global and targeted awareness campaigns to all staff who have access to UBS systems. Additional educational campaigns, covering subjects such as phishing, malware infections, social engineering, tailgating, and data classification and leakage, are deployed several times per year.
Additionally, we provide training specifically tailored for certain staff. Employees are also required to review policies and affirm compliance in our web-based Affirmation Online portal on an annual basis. All UBS employees can easily access UBS’s information security portal to learn about information security threats. Selected management employees are sent regular updates regarding cybersecurity developments and trends.
We also maintain a set of requirements for our third parties that stipulate our expectations and ensure these are formally acknowledged through a dedicated contractual annex.
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Sustainability Report 2022 | Appendix 2 | Governance 103.
Handling data.
Our Data Protection Policy framework covers the standards we commit to when processing personal data. This includes that data is processed only for specific and explicit purposes and is adequate, relevant and not excessive (data minimization). Other key principles include that data subjects are informed of how their personal data is processed and that it is not processed for longer than necessary for given processing purposes. UBS has implemented processes to respond to data subjects’ exercised rights, adhering to applicable legal requirements.
We communicate our client data use and storage policies to clients and seek consent for data use as required by local regulations. In these communications we are clear what this consent means and which use cases do not require consent, for example certain legal obligations. We provide reasonable options for clients to be able to revoke this consent.
Dealing with incidents.
Our Code sets out the principles and behaviors that define our ethical practices and the way we do business. Any violation, whether it is our Code, UBS policies or external laws, rules and regulations, may result in disciplinary action, up to and including dismissal. This includes information security incidents. Also, employees are, as part of their year-end performance rating, evaluated on their integrity. This includes: doing the right thing; self-declaring incidents and issues; adhering to policies; challenging the status quo and raising their hand when things are not right, including potential security threats; and collaborating across teams, departments and divisions.
We aim to make the information security incident escalation process as simple as possible. For example, phishing emails can easily be reported by means of a dedicated button integrated within Outlook and available on all devices.
Our Group-wide incident-handling process enables any UBS person to report incidents and data breaches. Databreach-prevention processes, such as blocking of communication and proactive remediation of misplaced data in unprotected areas, are in place. Additionally, we encourage employees to report any issues and incidents as per the incident-handling process, or to their line managers, and to follow up to ensure the matter is addressed. Any compliance incidents can also be escalated through the whistleblowing process.
We also extend these processes to cover adverse information security events that take place at third parties but have relevance to UBS’s information.
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Sustainability Report 2022 | Appendix 2 | Governance 104.
Key policies and principles.
Code of Conduct and Ethics.
The Code of Conduct and Ethics of UBS (the Code) sets out the principles and commitments that define our ethical standards and the way we do business. By adhering to it, we foster a culture where responsible behavior is ingrained in a way that protects our people, our reputation and our ability to create lasting value for our shareholders, clients and societies. We also ensure our practices are aligned with our purpose. It is what we expect from ourselves and from each other. It covers our dealings with clients, counterparties, shareholders, regulators, business partners and colleagues and it is the basis for our policies, guidelines and procedures. › Refer to the full text of the Code, available at ubs.com/code.
Sustainability and climate risk policy framework.
Our sustainability and climate risk (SCR) policy framework is embedded in our culture and applies firm-wide to relevant activities, including client and supplier relationships. It is integrated in management practices and control principles and overseen by senior management. Furthermore, it supports the transition to a net-zero future. › Refer to the “Our sustainability and climate risk policy framework” section of this report.
Stewardship / voting rights.
The stewardship policy of our Asset Management business division 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 the 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 and develop a relationship with investee companies, as well as an understanding of mutual objectives and concerns. In addition, where clients of Asset Management 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 interests and in a manner that 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 2022, we gave instructions (based on Asset Management’s corporate governance principles) to vote on 123,237 separate resolutions at 12,363 company meetings, with 1,532 of these resolutions being directly related to environmental and social issues proposed by both management and shareholders. Information about such resolutions and company meetings is provided in our proxy voting dashboard. › Refer to ubs.com/am-sustainability and vds.issgovernance.com/vds/#/MjU0/ for more information and the proxy voting dashboard.
In 2022, we actively engaged with 330 companies on environmental, social and governance issues. Of the total of 461 engagements, 306 included dialogue regarding environmental and social issues.
Combating 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. › Refer to the “Combating financial crime” section for more information.
Contributions (political, charitable and sponsorship)
UBS has appropriate policies on political donations in place, 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.
Our community interaction (i.e., charitable contributions and employee volunteering) is guided by a global policy that governs the responsibilities for community impact activities within our firm 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 and due diligence requirements applicable to all community impact activities and all financial contributions to non-profit organizations and social enterprises made by our firm.
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Sustainability Report 2022 | Appendix 2 | Governance 105.
Our sponsorship activities are guided by a Group-wide governance document that describes how our policy on brand and 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.
Human resources policies.
The Code is the basis for all of our human resource (HR) policies, guidelines and procedures, and it includes a commitment to protect the health and safety of employees and external staff. Our firm has global and countryspecific HR 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 a framework for fair, consistent and transparent treatment for our employees, while taking into account local legal requirements, market best practices and shareholder interests. This policy is supplemented by employee handbooks that provide locally relevant information and resources. Along with the individual employment contract / offer letter, employee handbooks are the primary source of information for employees about the terms and conditions of employment and the HR programs, policies and procedures applicable to them. › Refer to the “Social” section of this report.
Tax.
Following the principles articulated in the Code, the UBS Group Tax Code of Practice establishes more detailed operating guidelines with respect to tax matters. It delineates and describes five key principles that apply to tax matters across UBS Group. The UBS Group Tax Risk and Governance Policy establishes processes and procedures for the handling of all tax matters at UBS. › Refer to “Our approach to tax matters” at ubs.com/gri for further information.
Sustainability-related training and raising awareness.
We regularly provide training and work to raise awareness among employees about the Code. All employees are required to confirm annually that they have read UBS’s key documents and policies, including the Code.
We actively engage in education and awareness raising for employees, staff, clients and our local communities regarding corporate responsibility and sustainability topics and issues. Through employee onboarding, education and broader awareness-raising activities, we ensure that our employees understand their responsibilities with regard to complying with our policies and the importance of our societal commitments.
Better understanding of our sustainability goals and actions is promoted through a wide range of training and awareness-raising activities, as well as in our performance management process. For example, in 2022, a specialist training on environmental and human rights topics (including sustainable finance) was provided to more than 34,000 employees in front-office and support functions that deal directly with related aspects in everyday business processes. In addition, employee volunteering activities across all regions help raise awareness of Group Sustainability and Impact’s varied initiatives along with the firm’s sustainability goals.
General information is published on our intranet and on our Group Sustainability and Impact internet site. › Refer to “Group Sustainability and Impact management indicators” in the Supplementary Information document to this report 105