Caters to increased client interest to pursue a sustainable investment approach
Rising global challenges such as climate change, water scarcity, the depletion of other important natural resources, and other human-induced factors are putting pressure on the world’s economy and cannot be neglected. Recent cases have shown that companies are exposed to significant risks arising from lack of governance and ethical standards, such as governance lapses, and accounting scandals. Hence, social and environmental factors are no longer just a “nice to have” moral considerations, but a vital “must have”. As this topic is becoming increasingly important also to clients globally, UBS has launched a dedicated Values-Based Investment team in Hong Kong to cater to our clients’ needs in the region.
The UBS Values-Based Investment team offers knowledge, advisory and investment solutions for clients looking to pursue a sustainable investment approach in their investment portfolio. Investors around the world increasingly recognize that investments can drive social and environmental change and they want to drive positive change in society. Meanwhile, investors are also realizing the economic opportunities of investing sustainably and that there is an effective way to achieve this without having to compromise financial returns.
Hard to understand
Many investors find it increasingly difficult to implement sustainable investing strategies into their portfolio. This is partly due to the sustainable investing industry itself, which in many ways has failed to provide clarity on what it offers.
Another hurdle is the investment itself. Investors are not provided clear answers to questions around which investments promote the most positive change? What is the best way to implement these investments? And how can a lasting impact be ensured? While 80 percent of investors may be interested in sustainable investing, there is also a common belief that – contrary to evidence – sustainable investments yield less than conventional investments. However there is evidence to indicate that companies with better Environmental, Social and Governance ("ESG") standards can and do generate better risk-adjusted returns.
Leading the way
The UBS global team of sustainable investments experts has been supporting clients to become sustainable investors for over 15 years. Mario Marconi, Head of the Family Services Group, UBS Wealth Management, said, "We have developed a state of the art portfolio screening and investment approach to support not only our institutional but increasingly our private clients in their efforts to identify their sustainability preference and align their personal values with their individual investment approach. With a Hong Kong-based sustainable investment team we are able to support clients with expert knowhow on the local environment and regulations."
ESG considerations are increasingly taken into account for investment decisions. UBS has developed tools to make it easier for clients to identify sustainable investments. The team will classify an investment in terms of its sustainability by analysing the portfolio and assigning a simple and easy to understand rating (S1, highest sustainability rating to S5, lowest sustainability rating) to each portfolio position to provide a clear picture.
Amy Lo, Country Head of UBS Hong Kong and Head of Greater China, UBS Wealth Management, said, "Because sustainable investing has been integrated into UBS's overall investment framework, any investment alternative proposed as a more sustainable option will have a similar risk return profile to the original position. Therefore the risk return of sustainable investments can be compared to conventional portfolios."
A valuable proposition
"At UBS, we believe that wealth can deliver more than financial returns, the way you invest can also have a positive impact." Amy Lo added.
"Investing according to sustainability criteria could not only outperform the market but this approach can also contribute to solving our planet’s greatest sustainability challenges. If we can help our clients overcome the hurdles, there is no limit to how much could be achieved", concluded Mario Marconi.