UBS is convinced that sustainable investments will seep into wealth management. However, the bank is somewhat flexible on what exactly warrants the label.
Sustainability is the hot buzzword among wealth managers at the moment, and UBS is among those with ambitious targets: the Swiss-based wealth manager wants to double assets under management in the segment by the end of next year versus 2017.
The bank is on the precipice of doing so, according to its latest sustainability report – but not due to major demand from clients. Instead, UBS has bolstered the funds it defines as «sustainable» at its asset management division.
Going Mainstream
«2018 was the year when sustainability went mainstream at UBS», James Purcell, investment chief for sustainable and alternative assets at UBS, said at a media event.
Specifically, these investments rose by $131.2 billion last year. But just $12.6 billion of that was down to clients asking for such products. The bulk of the rise followed UBS' tweaking of criteria in asset management.
Glencore Budges
The Swiss-based bank didn't want to provide finews.asia with any examples of portfolio changes due to adopting so-called ESG criteria, or ones which adhere to certain environmental, social, and governance standards. UBS said that companies like oil major Shell and commodities giant Glencore, which is also based in Switzerland, adopted targets in response to pressure from a shareholder group which the bank is also part of.
Even if the additional criteria in asset management are mainly a bid to bolster returns, UBS is fulfilling the expectations of a key group of clients. Roughly 60 percent of wealthy and ultra-rich clients expect these type of investments to become de rigueur in the next ten years, Angela Wiebeck, the bank's head of UBS in society, said.
Mandates Growing
The Canadian banker oversees 135 bankers whose job it is to spread the gospel of sustainability, philanthropy, and equality throughout the bank. Wiebeck, who reports to communications and marketing boss Hubertus Kuelps, is a former ultra-high net worth banker.
UBS said that it sees more client demand for the investment niche in its mandates, a lucrative offering for the bank. The wealth arm launched the offering at the beginning of last year.
Purcell said assets grew to $4.5 billion from roughly $1.2 billion. Since U.S. clients of UBS have only just gained access to the investment class, he expects a further rise, albeit more slowly than thus far.
No Hard Targets
UBS has no plans to force-feed the investment class. «We want to ensure that sustainability is part of the discussion our bankers have with their clients», Wiebeck said. The bank has no hard sustainability targets for its advisers.
The wealth manager also makes it easy for clients by applying a relatively loose definition of sustainability. Investors can decide for themselves whether they want to weigh up the carbon output of products made by a particular firm, or rather focus on labor practices, for example.
