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UBS hardens energy lending as sustainable investments rise

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Switzerland's UBS said the value of its 'sustainable' investments rose by more than 50 per cent to nearly US$500 billion in 2019, while lending to the energy and utilities sectors fell by 40 per cent as it tightened its rules.

[LONDON] Switzerland's UBS said the value of its sustainable investments rose by more than 50 per cent to nearly US$500 billion in 2019, while lending to the energy and utilities sectors fell by 40 per cent as it tightened its rules.

UBS, which has assets of more than US$3.76 trillion and invests for some of the world's richest individuals, has increasingly looked to carve out a market-leading position in sustainable investing.

That comes as policymakers and regulators push financial institutions to do more to help accelerate a global push to a low-carbon economy and meet the United Nations Sustainable Development Goals, tackling poverty and other global challenges.

"As the world's largest truly global wealth manager, we have a responsibility to take a leading role in shaping a positive future for everyone, including future generations," UBS Chairman Axel Weber said in a statement.

"We aim to be the financial provider of choice for clients who want to engage toward the achievement of the United Nations Sustainable Development Goals (UN SDGs) while helping achieve an orderly transition to a low-carbon economy."

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What counts as 'sustainable' varies across institutions, but can range from simply reflecting environmental, social and governance-related risks in the investment process, to 'impact investing', backing projects aiming to provide a measurable positive impact on society.

UBS defines all of these as 'core' sustainable investments and said they had collectively risen to US$488 billion by the end of the year, or 13.5 per cent of total invested assets, up from US$312.9 billion a year earlier.

The value of equity and debt capital market deals and financial advisory services linked to climate change mitigation and adaptation hit US$87.2 billion in 2019, up from US$56.5 billion in 2018.

Bank lending to the energy and utilities sectors fell more than 40 per cent to US$1.9 billion in 2019, equivalent to just 0.8 per cent of its total gross banking products exposure, down from 1.6 per cent at the end of 2018.

Since the end of the year, UBS said it had further toughened its guidelines for lending to the sector, including not financing new greenfield thermal coal mines, offshore oil projects in the Arctic or greenfield oil sands projects.

REUTERS

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