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Sustainability Report 2022 | Appendix 3 | Environment 111. |
The GHG Protocol further categorizes scope 3 emissions into 15 upstream and downstream categories. For banks such as UBS, emissions financed via lending activities fall under scope 3 downstream emissions, more precisely under Scope 3 category 15. |
Financed emissions reported under scope 3 category 15 include apportioned scope 1 and 2 emissions of the counterparties or assets being financed. Scope 3 is included for certain sectors where methodologies and data are widely available. We have included scope 3 emissions in our assessment of the fossil fuel, power gene... |
Absolute financed emissions Financed emissions represent the carbon emissions of our corporate clients attributed to UBS. Following PCAF guidance, the attribution factor is the fraction of UBS’s loan exposure to the client’s enterprise value including cash (EVIC) or the sum of equity and debt for private companies. |
In the case of real estate, the attribution is based on the loan-to-value (LTV) of the property. In accordance with PCAF guidance, residential real estate LTV is calculated using the original property value, while for commercial real estate the most recently available property valuation is used. |
Physical emissions intensity. |
Physical emissions intensity is a metric that normalizes a company’s emissions by its output (e.g., the megawatthours or metric tons of cement produced). Through this metric we can monitor whether our clients are becoming increasingly efficient. The physical emissions intensity effectively demonstrates the progress mad... |
For real estate, the physical emissions intensity is calculated by dividing the sum of financed emissions by the sum of financed surfaces. |
Corporate fi nanced emissions = ∑ (Corporate emissions × ) |
Financing to corporate. |
EVIC or Equity + Debt. |
Real estate fi nanced emissions = ∑(Real estate emissions × LTV) |
Corporate physical emis. intensity =∑ ( × ) |
Financing to corporate. |
Total sector fi nancing. |
Corporate emissions. |
Corp. output (e.g., MWh, tons produced) |
Real estate physical emissions intensity = ∑(Real estate emissions × LTV) ∑(Real estate surface × LTV) 111 |
Sustainability Report 2022 | Appendix 3 | Environment 112. |
Quantifying clients’ emissions. |
To estimate the emissions from our clients we rely on data available in their own disclosures, data from specialized third-party providers and internal data. Current limitations on the availability of emissions data at company or asset level required us to include approximations in the calculations; for example, by app... |
We expect the availability and quality of emissions data to improve in the next few years. Improved data may be used to strengthen the robustness of the reporting, which may result in restatements of our net-zero ambitions and total financed emissions over time. In the preliminary assessment of our total financed emiss... |
The inherent one-year time lag between the as-of date of our lending exposure and the as-of date of emissions can be explained by two factors: corporates disclose their emissions in annual reporting only a few months after the end of a financial year; and specialized third-party data providers take up to nine months to... |
Climate scenarios. |
We selected the scenario – IEA NZE by 2050 – in accordance with the NZBA guideline, as one of the most recent and widely accepted models that achieves a temperature increase of 1.5°C by 2050. Over time we will seek to augment our sector pathways, as we gain greater clarity on the validity of key technological and regul... |
PCAF data quality scoring from 1 to 5. |
Source: PCAF 2020 "The global GHG accounting and reporting standard for the fi nancial industry." |
Emissions estimated based on the company’s primary production and emissions factors per unit of production. |
Emissions estimated based on average energy consumption per energy label and surface area. |
Emissions estimated based on the company’s revenues and emissions factors per unit of revenue. |
Emissions estimated based on average energy consumption per location, building type, and surface area. |
Emissions estimated based on average emissions per US dollar invested in a sector. |
Emissions estimated based on average energy consumption per location, building type, and number of buildings. |
Certain. |
Uncertain. |
Verifi ed emissions disclosed by the company. |
Corporate Financing Real Estate Financing. |
Emissions estimated based on primary energy consumption data and energy supplier-specifi c emissions factors. |
Unverifi ed emissions disclosed by the company or estimated based on the company’s energy consumption and related emissions. |
Emissions estimated based on primary energy consumption data and average emissions factors per energy source. |
Score 1. |
Score 2. |
Score 3. |
Score 4. |
Score 5 112 |
Sustainability Report 2022 | Appendix 3 | Environment 113. |
Net-zero-related materiality assessment. |
NZBA sectors and targets 2022 2021 NNet zero. |
NZBA sectors wwith target. |
GGross exposure (USD billion)1. |
Covered with target (USD billion) |
Gross exposure (USD billion)1. |
Covered with target (USD billion) NACE codes in scope of net-zero target. |
Carbon emissions scopes Unit 2020 baseline 2021 actuals 2020– 2030 target. |
Real estate – Residential real estate 158.9 156.9 155.9 152.9 Private clients with mortgages 1,2 kg CO2e / m2 30 27 (42%) – Commercial real estate 47.1 45.5 44.7 43.6 Real estate financing 1,2 kg CO2e / m2 32 30 (44%) |
Fossil fuels (coal, oil and gas)2 1.3 0.5 1.0 0.7 B.05, B.06, C.19 1,2,3 t CO2e, baseline indexed as 100 100 58 (71%) |
Power generation 22.2 1.8 1.5 1.2 D.35.11, D.35.13 1,2,3 kg CO2e / MWh 238 210 (49%) |
Cement 00.5 0.5 0.5 0.5 C.23.51 1,2 t CO2e / t cementitious 0.62 0.61 (15%) 22022 2021. |
NZBA sectors wwithout target. |
GGross exposure (USD billion)1. |
PACTA scope (USD billion) |
Gross exposure (USD billion)1 PACTA scope (USD billion) |
NACE codes in scope of PACTA methodology Transportation – Automotive 0.4 0.1 0.4 0.1 C.29 – Air 1.8 0.1 2.5 0.5 H.51 – Shipping 00.4 0.3 0.4 0.3 H.50. |
Aluminum 00.0 0.0 0.0 0.0 C.24.42. |
Steel 00.1 0.1 0.1 0.1 C.24.1. |
Agriculture3 3.0 0.2 4.1 0.2 A 01 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 Commodity Trade Finance excluded. 3 Refer to World Business Council for Sustainable Development publication “An Introduct... |
CO² emissons in world energy outlook scenarios over time, 2000–2050. |
Source: IEA. |
40. |
Announced pledges scenario 1.8 °C updated with COP26 pledges as of 3 November 2021. |
Historical 2000 0 |
2010 2022 2030 2050 2040. |
Stated policies scenario 2.6 °C. |
Announced pledges scenario 2.1 °C. |
In Gt CO² |
Net-zero scenario 1.5 °C 113 |
Sustainability Report 2022 | Appendix 3 | Environment 114. |
Based on a UBS-internal analysis (using data supplied by the European Banking Authority), our lending exposure to the most carbon-intensive sectors is already low compared with our peers. This has the advantage of making us well-aligned with the transition to a low-carbon economy. However, it also means that for us, th... |
We have set net-zero targets for five sectors that have a material share of our lending activities and carbon emissions. Targets would not be material at present for aluminum, iron and steel because of the limited exposure. For transportation and agriculture, the clear bulk of our exposure is in business activities tha... |
Further enhancements. |
Like many of our peers, we are at the start of our net-zero journey and have created our methodology based on current industry best practice. As the world’s pathway to net zero is still at a developing stage, we expect continued advances and evolutions to our approach. We see four key factors for change: market practic... |
Specifically, adjustments will be needed, when scope 3 is rolled out to additional sectors beyond the fossil fuel, power generation and automotive industries after 2023, or as new target-setting guidance emerges. |
Our selected scenario (IEA NZE by 2050) is currently used by the industry, but other scenarios may emerge that are more specific to our lending portfolio and geographic exposure (e.g., Switzerland). Additionally, IEA NZE is also subject to new updates and new releases over time as the science and projections develop. |
Regarding data, we used a combination of data sources to build our emission baseline and targets. However, client information, either directly, or from public sources or third-party vendors, remains limited. As more information becomes available, we will be able to refine our footprint. |
We have developed our methodology based on leading practices and reported where possible, despite the limitations we face due to the nascency of the challenge. As more methodologies become available for additional sectors or asset classes where UBS has relevant exposures, we will test and adopt them accordingly. The re... |
Carbon sequestration We are dedicated to helping our clients in any way possible to guide them toward net zero. Our engagement plan prioritizes emissions reductions. While we recognize that not all scenarios or frameworks allow for offsetting, we anticipate that carbon removal offsets will be needed to supplement our n... |
We strive to support our clients’ transitions through limited use of carbon sequestration, in accordance with the NZBA. Offsets shall be additional, certified, and restricted to carbon removals to balance residual emissions where there are limited technological or financially viable options to eliminate emissions. We p... |
114 |
Sustainability Report 2022 | Appendix 3 | Environment 115. |
Climate-related methodologies – defining net-zero-aligned investment portfolios. |
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