Supporting the transition to a low-carbon economy
The impacts of climate change, such as floods, storms, droughts and forest fires are not only alarming for the environment itself, but also for the global economy, which relies on a healthy planet and the resources it provides. Physical damage to infrastructure and outputs, disruption of value chains and volatility in commodity prices pose significant economic risks, alongside the regulatory, litigation and transition risks which the shift to a carbon-neutral economy generates.
Identifying and managing climate-related investment risks and opportunities is therefore key for driving performance. At the same time, reaching the targets of the Paris Agreement requires large-scale changes in all sectors of the economy, and as a financial intermediary, we can play an important role in contributing to the transformation of the economy. Indeed, channelling capital towards responsible investment solutions represents our biggest lever for driving change.
To reduce carbon emissions linked to assets held in UBP’s investment portfolios, we currently monitor the weighted average carbon intensity (WACI) of all our long-only, internally managed funds domiciled in Luxembourg, France and Switzerland, and of all mandates invested in corporate bonds and equities in addition to sovereign bonds. UBP has a range of products, primarily in our sustainable and impact range, that aim to support the transition to a low-carbon economy.
UBP is also committed to participating in the fight against climate change and to contributing to the Paris Agreement’s objective to keep global warming well below 2°C above pre-industrial levels. With this in mind, UBP is integrating the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). We decided to support, publishing an annual TCFD report since 2021, while UBP Asset Management (Europe) S.A. joined the Institutional Investor Group on Climate Change (IIGCC) and Net Zero Asset Managers initiative in 2021. UBP also became a signatory to the CDP (formerly Carbon Disclosure Project) in 2022.
From carbon-neutral to nature-positive
Beyond the climate crisis, we recognise the importance of addressing the wider environmental challenges the world faces. With USD 44 trillion – or over half of global GDP – dependent on nature or natural services, biodiversity loss is not only an environmental crisis but undeniably an economic crisis as well. From agriculture, food and pharmaceuticals to construction, fashion and tourism, businesses rely either on the extraction of resources or the provision of natural services, such as clean water, healthy soils and pollination. All these goods and services are provided at no charge.
However, from the degradation of natural habitats to the extinction of plant and animal species, the loss of biodiversity is advancing at an alarming rate, driven by climate change, pollution, land use change and over-exploitation of natural resources. This creates direct physical risks, such as unreliable or smaller harvests, as well as reputational, litigation and transition risks.
Just as the climate crisis created growth opportunities for solution providers and transition risks for those who were not adapting, the protection and restoration of biodiversity is gaining traction, thus providing new market opportunities for innovative companies. Building on our expertise in impact investing, we recently launched a biodiversity strategy, offering investors an early-stage growth opportunity with a positive impact.
To build knowledge and support for nature-positive business models, we are collaborating with other stakeholders through several initiatives, including the Investment Leaders Group of the Cambridge Institute for Sustainability Leadership (CISL) and the UNPRI Investor Working Group on Sustainable Palm Oil. UBP is also a member of the Task Force on Nature-related Financial Disclosures (TNFD) Forum.
Reducing UBP’s environmental footprint
Realising that the transition to a low-carbon economy requires every member of society to do their part, UBP strives to continually lower the environmental impact stemming from its operations. We are committed to reducing our own carbon footprint by a quarter by 2025 compared with 2019 levels, targeting Scope 1, 2 and 3 emissions:
- Scope 1: direct emissions from company facilities and fugitive emissions from sites owned or controlled by UBP
- Scope 2: indirect emissions from purchased energy (e.g. electricity and heating)
- Scope 3: indirect emissions from other activities, such as purchased goods and services, business travel, employee commuting and waste generated through our operations (emissions from our operations only; category 15 of the GHG protocol excluded)
“As a responsible firm with an awareness of the impact our activities can have on the environment, we pay close attention to managing our environmental impact.”
Stephan Zilker, COO Zurich & Head of General Services, and Chair of the CSR Committee
Besides switching to renewable energy, reducing our energy consumption represents the biggest lever for lowering our operational carbon footprint. We have therefore identified energy-efficient office buildings, renewable energy sources and LED lighting as cornerstones of our emission-reduction strategy.
As part of this effort, we have embarked on an ambitious, 10-year renovation programme for our buildings in Geneva to improve the energy efficiency of our premises. We are also increasing the use of renewable energy at our offices.
However, managing our Scope 3 emissions is equally important to us and we are implementing a number of measures to target travel- and commuting-related emissions as well as emissions generated by our waste and by the goods and services we purchase from third-party suppliers. To this end, UBP recently reviewed its travel policy, limiting travel – especially air travel – and giving preference to eco-labelled hotels when overnight stays are necessary. We are also increasing the digitalisation of several administration, finance and procurement operations to cut back on our use of paper.
Whilst we strive to continuously reduce our carbon footprint, we have been offsetting our remaining emissions at Group level since 2020 in partnership with myclimate, one of the world’s leading organisations in voluntary CO2-emission compensation.