Banking giant on track to double penetration of sustainable investments by 2020
Investment banking giant UBS has become the latest firm to tighten rules around coal financing, today announcing a total project-level financing ban on new coal-fired power plants around the world.
It means the bank will only support financing transactions of existing coal-fired operations which have a transition strategy in place compliant with a 2C emissions pathway.
It follows news of BNP Paribas' enhanced coal investment policy last week, and the firm's new sustainability strategy released today, which requires every company it invests in to demonstrate how it is working towards the Paris Agreement's 2C goal by 2025.
UBS said it is on track to double the volume of "core sustainable investment assets" by the end of 2020 compared to 2017, with sustainable investment up 72 per cent in 2018 to $313bn, compared to a year earlier. These now represent just over 10 per cent of UBS' total invested assets, the bank said.
Climate-related investments now stand at $87.5bn, up from $74bn in 2017.
Meanwhile, lending to carbon-related assets has been scaled back from from $6.6bn in 2017 to $2.7bn in 2018 as the bank focuses on "supporting clients in preparing for success in an increasingly carbon-constrained world".
"We see a strong business rationale for catering to the growing importance of and demand for sustainability," said UBS chairman Axel Weber. "We have set ourselves the goal to create long-term positive value for clients, employees, investors and society. Our goal carries with it a clear responsibility for taking a leading role driving change towards a positive future."
By 2021 UBS has said it will direct $5bn of client assets into new impact investments focused on the UN Sustainable Development Goals (SDG), and reduce the firm's greenhouse gas footprint by 75 per cent by 2020 compared with 2004 levels.
But its ambitions could face considerable headwinds. Yesterday chief executive Sergio Ermotti told a conference in London that the bank has suffered one of the worst starts to the year in recent history, with revenues down about a third compared to the same time last year.
Ermotti blamed "persistent uncertainty and political risks" as the reasons for the poor performance.