When I joined UBP in 2022, my first mission was to draw up the sustainability organisation and governance plan. While the Asset Management division already had processes in place for serving our institutional clients, the wealth management and CSR side needed developing.
After mapping out the organigramme of teams and committees, I set about recruiting the specialists we needed. Sustainability being a bank-wide concern, the 13 team members are embedded in different divisions, including Asset Management, Wealth Management Operations, and Communications.
In my opinion, sustainability is about finding ways to carry on operating, developing and innovating in ways that create a healthy environment in which nature can thrive and the next generations prosper. At UBP, this means adopting a pragmatic, patient, and professional approach to anticipating risks and opportunities, and convincing all stakeholders of the importance of striving for that.
On that basis, once in place, our teams first set about laying the groundwork for creating a sound range of sustainable investment products. The expertise we have built among our Asset Management teams and their ability to translate this into products is evidenced by the high percentage of Article 8 and 9 funds among our public funds (they account for 78% of AuMs). The expansion of our impact equity franchise in London is a further demonstration of our teams’ ambition and know-how. On the basis of these strong foundations, this development continues as regulations evolve and our teams grow.
Creating an attractive and valuable offering requires the collecting and structuring of vast amounts of data. Data relating to the sustainability credentials of the companies in which we invest, but also to the sustainability ‘sensibilities’ of our clients, collected through a dedicated questionnaire. All this information is then to be distilled into usable KPIs so that it can be used to measure and compare impacts.
There are also more and more stringent sustainability requirements. Reporting obligations have been increasing over the past year and more are due to come into force, both in Switzerland and in the EU.
UBP’s Asset Management division has been accustomed to disclosing sustainability- related data for several years, as this has been a requirement for institutional clients. More broadly, we have been publishing data voluntarily, for example for the United Nations Principles for Responsible Investment, as well as our Sustainability Report for the last three years, and the UK Stewardship Code.
This Sustainability Report is our first one published as a requirement, since it became mandatory last year in Switzerland under the Code of Obligations. The TCFD disclosures – which we have been including in the Sustainability Report since we started – will become mandatory next year. Looking ahead, soon we will have to comply with the European Union’s CSRD (Corporate Sustainability Reporting Directive – 2022/2464/ EU) for our Luxembourg entities. It has very strict stipulations which we must prepare for well in advance in order to be ready to report by the time it becomes an obligation.
Beyond regulations, however, the real purpose of all this data is for implementing the next stage of our sustainability strategy: using it to develop a broader and more granular responsible investment offering for our Wealth Management clients.
Access to reliable data and reference points is taking the art of responsible investment from a relatively crude approach of excluding companies to one applying advanced selection techniques.
Indeed, traditionally the practice was merely to weed out any financial instruments issued by companies with signs of controversy (such as dealing in controversial weapons or having ties with politically exposed people or places). Now we are well on the way to applying complex analysis methods to weigh companies’ negative impact, positive contribution and ESG risk.
The factors that go into the mix include the effects of changes in nature, society, and the economy (e.g. climate change, ageing populations, technological advances, and the energy transition) on companies’ operations. Those firms’ own contributions to environmental or social improvements, and their potential negative impacts, are also taken into account. By integrating these two angles, we are able to gauge whether a company will thrive, or not, in the changing economic landscape.
As awareness and interest grows among clients, I think that although the demand is quite low today, it will grow, and I expect the pace of that growth to be fast with the younger generations who have been hearing about the issues from a young age. The banking world will have to keep up and be ready to provide them with what they are asking for. In that regard, we are working on tools and approaches to provide our clients with the information they need in order to make conscious investment decisions and select companies that are contributing to the transition to a more sustainable future.
To this end UBP has started deploying in-house training programmes for portfolio managers, advisors, relationship managers and more to give them all the knowledge and tools they will need for engaging with clients on the topic and providing the services and products that clients will be asking for.
As the momentum gathers, with the data harmonised across teams and platforms and with relationship managers getting up to speed with the rationale, I feel we have set the foundations on which to build a truly diversified and attractive range of solutions that align with sustainability principles.
Robert de Guigné