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Sustainability Report 2022 | Appendix 3 | Environment 106.
Appendix 3 – Environment.
Our transition plan.
Our transition plan is a prioritized plan of action following the aspirations outlined in our net-zero and beyond strategy to achieve net-zero carbon emissions in our own operations and our business activities (as set out in our commitments to the Net Zero Asset Managers (NZAMi) initiative and the Net-Zero Banking Alli...
UBS contributed to the development of these guidelines. This forms part of our engagement with our peers in the financial services industry in order to determine how best to support and finance clients’ transition to a low carbon economy. Contributing to such frameworks, including also by the NZBA, in turn forms an imp...
We believe the GFANZ guidelines to be comprehensive and relevant for the financial sector, but will also continue to monitor other potential emerging standards. Our action plan touches on numerous aspects of this Sustainability Report, which are referenced in the table below. › Refer to gfanzero.com/our-work/financial-...
Foundation 1 Objectives and priorities.
Conscious of the potential adverse financial, liability and reputational risks that can arise from sustainability and climate risks and in response to client needs: – We are focused on supporting the transition toward a net-zero future, with the goal of limiting global warming to 1.5° C. – We aspire to achieve net-zero...
– See SR22 – “Our aspirational goals and progress” subsection for a description of our financing reduction targets for 2030 and Asset Management (AM)’s target to align 20% of total assets under management (AuM) to be in line with net zero. – See SR22 – “Our climate roadmap” subsection for a description of the steps we ...
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Sustainability Report 2022 | Appendix 3 | Environment 107.
Implementation strategy 2 Products and services – 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 and through our climate risk disclosure. – We are continually developing and refining sustainable so...
– See SR22 – “Our approach to sustainable finance” subsection, for examples of our sustainable finance offering, including products and services launched in 2022. – See SR22 – Appendix 1 – “Sustainable finance at UBS – additional information” subsection for a selected list of the products and services we offer to suppo...
3 Activities and decisionmaking – Our Group Risk Control unit manages our sustainability and climate risk (SCR) program to further integrate SCR into our various risk management frameworks and related processes. We are further strengthening our operating model to ensure we monitor and steer our clients’ assets and our ...
– See SR22 – “Managing sustainability and climate risks” subsection for a description of our risk processes and our climate risk program (including the board-set risk appetite, a carbon utilization measurement conceptualized in 2022 and aligned with our net-zero implementation and targets, and a company / asset-level t...
4 Policies and conditions Our comprehensive and long-standing SCR policy framework: – applies Group-wide to relevant activities, including client and supplier relationships; – is integrated into management practices and control principles and overseen by senior management; – supports transition toward a net-zero future...
– See SR22 – Appendix 2 – “Our sustainability and climate risk policy framework” subsection setting our standards including “Controversial activities – where UBS will not do business” and “Areas of concern – where UBS will only do business under stringent criteria”. – See SR22 – Appendix 2 – “Forests and biodiversity” ...
Engagement strategy 5 Clients and portfolio companies – We work alongside our clients and portfolio companies to support their efforts to transition in line with the Paris Agreement-aligned 1.5°C net-zero pathways. We proactively and constructively provide feedback and support to our corporate clients on their netzero-...
– See SR22 – “Sustainable investing for our clients” subsection for details about how we approach active ownership and a selection of our engagement programs. – See SR22 – “Supporting the net-zero goals of our investing clients – Asset Management” subsection for our dedicated climate engagement program.
– See our Asset Management Stewardship Report and our Global Stewardship Policy for information about our active approach to stewardship as a crucial part of any sustainable investing strategy across asset classes through engagement, proxy voting and advocacy, enabling us to work with firms to influence behaviors, driv...
6 Industry – We proactively engage with peers in the industry to: i) as appropriate and in line with local rules and regulations, exchange transition expertise and collectively work on finding solutions to common challenges; and ii) represent the financial sector’s views cohesively to external stakeholders, such as cli...
7 Government and public sector – We proactively engage in political initiatives relating to climaterelated issues based on our climate strategy and net-zero planning. We focus our engagement around an orderly transition that is aligned with the Paris Agreement. – We actively participate in political discussions to shar...
– See SR22 – Supplementary Information document – “Evolving and informing our strategy – our contributions to the advancement of sustainability” subsection for how we engage with stakeholders on key climate topics on a regular basis. – See SR22 – Supplementary Information document – “Supporting our strategic goals – ou...
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Sustainability Report 2022 | Appendix 3 | Environment 108.
Metrics and targets 8 Metrics and targets – We support the goals of the Paris Agreement which includes aligning our own operations and business activities with the pathway of a five-step net-zero plan to: (i) measure carbon emissions; (ii) define a roadmap and set targets; (iii) reduce climate impact; (iv) finance clim...
– See SR22 – “Our aspirational goals and progress” subsection for a description of our aspirational goals pertaining to the planet and progress in 2022. – See SR22 – “Reducing our environmental footprint” subsection for a description of how we will manage any residual scope 1 and 2 emissions that cannot be mitigated th...
Governance 9 Roles, responsibilities and remuneration – Our climate strategy and activities are overseen at the highest level of our firm. The Board of Directors’ Corporate Culture and Responsibility Committee is the body primarily responsible for corporate culture, responsibility and sustainability including climate)....
– See SR22 – “Our sustainability governance” subsection for a description of how UBS governs its sustainability and climate strategy. – See SR22 – “Pay our people fairly and equitably” subsection and our UBS Compensation Report 2022 at ubs.com/annualreporting for information about how sustainability objectives are incl...
10 Skills and culture – To support the development and implementation of our net-zero transition plan, we implement a change management program and ensure alignment and embed the plan into the organization’s culture and practices, as well as providing support to individuals so that they have sufficient skills and knowl...
– See SR22 – “Climate risk management and control” subsection for details about training provided to employees with regard to climate risk. – See SR22 – Appendix 2 “Sustainability-related training and raising awareness” subsection for details about how we engage in education and awareness raising for staff, clients and...
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Sustainability Report 2022 | Appendix 3 | Environment 109.
Climate-related methodologies – net-zero approach for our financing activities.
As part of our net-zero commitment (available on ubs.com/gri) in April 2021, we pledged to set targets that further align our financing activities with the Paris Agreement and became a founding member of the Net-Zero Banking Alliance (the NZBA). Collaborative organizations such as the NZBA or the Partnership for Carbon...
In this section, our focus is on our net-zero approach for our financing activities and the process we are following to define the sectoral ambitions for our lending portfolio. It also details pertinent climate-related methodologies and scenarios used in this process.
Scope and boundaries.
The scope covered by our net-zero ambitions and a first assessment of the overall emissions associated with UBS’s corporate lending and real estate mortgages. Our net-zero ambitions are based on the full lending commitment made to our clients. This includes our outstanding loans, as well as undrawn irrevocable commitme...
We recognize that capital markets facilitation also plays an important role in the financing of our clients. These transactions are therefore subject to our sustainability and climate risk (SCR) policy framework but are currently not part of our net-zero analysis. There is currently no accepted industry-wide standard o...
For non-financial corporate loans, we have prioritized the climate-sensitive sectors recommended by the NZBA where we have material financial exposure and where methodologies and metrics exist to measure and steer the transition toward net zero. In addition, our net-zero approach is closely aligned to the methodology o...
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Sustainability Report 2022 | Appendix 3 | Environment 110.
Metrics.
Scope 1, 2 and 3 greenhouse gas emissions As defined in PCAF standards1, greenhouse gas (GHG) emissions accounting refers to the processes required to consistently measure the amount of GHGs generated, avoided or removed by an entity, allowing it to track and report these emissions over time. The emissions measured are...
According to PCAF’s GHG Protocol Corporate Accounting and Reporting Standard (the GHG Protocol), direct emissions are emissions from sources owned or controlled by the reporting company. Indirect emissions are emissions that are a consequence of the operations of the reporting company but that occur at sources owned or...
Direct and indirect emissions are further categorized by scope and distinguished according to the source of the emissions and where in an organization’s value chain the emissions occur. The three scopes defined by the GHG Protocol – scopes 1, 2 and 3 – are briefly described below: – Scope 1: Direct GHG emissions that o...
– Scope 2: Indirect GHG emissions from the generation of purchased or acquired electricity, steam, heating, or cooling consumed by the reporting company. Scope 2 emissions physically occur at the facility where the electricity, steam, heating, or cooling is generated.
– Scope 3: All other indirect GHG emissions (not included in scope 2) that occur in the value chain of the reporting company. Scope 3 can be broken down into upstream emissions that occur in the supply chain (for example, from production or extraction of purchased materials) and downstream emissions that occur as a con...
1 PCAF (2022). The Global GHG Accounting and Reporting Standard Part A: Financed Emissions. Second Edition.
Part of the sectors' value chains in scope.
In scope of PACTA methodology.
Oil and gas.
Coal.
Power.
Steel.
Cement.
Aviation.
Shipping.
Automotive.
Upstream.
Iron ore mining.
Suppliers.
Mining.
Generation.
Limestone quarrying.
Suppliers, contractors.
Parts supplier.
Midstream.
Manufacturing.
Ship manufacturers.
Separation and preparation.
Transformation.
Manufacturing.
Car manufacturers.
Aircraft manufacturer.
Downstream.
End products.
Ship owners and operators.
Storage.
Transmission.
Concretes.
Parts distributors, and dealerships.
Owner.
Trade.
Distribution.
Construction industry.
Workshops.
Operator.
Source: PACTA for Banks Methodology document – climate scenario analysis for corporate lending portfolios – version 1.2.1.
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