Partial data on the involvement of the UBS Group in the intensification of the climate crisis
UBS is a member of the Net Zero Asset Manager initiative and regularly discusses its engagement strategy with its clients (see, for example, the Building Bridges Summit 2022). However, so-called engagement practices that are often inconsistent without a proactive and consequential policy are nothing but green washing.
Has UBS’s asset management division asked the companies in which it has invested to stop new fossil-fuel projects immediately? No. Has UBS’s asset management division asked them to publish absolute short-term greenhouse-gas-reduction targets? No. Specifically, although her representative voted against Glencore’s board in 2022 (having acknowledged corrupt practices on three continents last year), did she vote for the resolution calling for credible decarbonization targets presented at Shell’s general meeting that same year? No.
To be a credible member of the “Net Zero” initiative in which UBS participates, it is necessary, among other things, to (1) adopt a policy of exclusion from the entire coal value chain, and (2) stop supporting the expansion of fossil fuels altogether.
In the period from April 2021 to August 2022 alone, UBS and Credit Suisse provided at least US$8 billion in loans and underwritings to companies developing new projects, both in the coal sector (US$1 billion) and new oil and gas supply and gas projects (US$7 billion). As of September 2022, the five largest Swiss asset managers (UBS AM, CS AM, Pictet AM, Zurich, Swiss Life) held at least US$22.2 billion in companies developing new coal projects ($2 billion) and new oil and gas supply projects ($20.3 billion). UBS AM is the largest investor of the five in coal and oil and gas expansion (USD 11.4 billion) (Reclaim Finance, BreakFree Suisse et al., Swiss Finance Complicit in Fossil Fuel Expansion, 2023)
The Coal Sector
The UBS Group continues to support coal developers. As of September 2022, UBS held $2.5 billion in companies still developing new coal mines, power plants or infrastructure .
In April 2022, UBS also issued a US$150 million bond to KEPCO (UBS share). KEPCO is involved in planning 8.3 GW of additional coal-fired power capacity in five different projects in South Korea, Indonesia and Vietnam (Reclaim Finance, BreakFree Suisse et al., Swiss Finance Complicit in Fossil Fuel Expansion, 2023).
Industry best practices (currently by Amundi, AXA IM or Ostrum AM) are based on the exclusion of all coal developers. Despite our calls for significant improvements, UBS AM currently clings to an exclusionary policy with a threshold for mining companies that derive more than 20% of their revenues from coaland if they do not have a transition strategy “aligned with the objectives of the Paris Agreement”. Diverse companies such as Adani Group and Glencore, which derive no more than 20% of their revenues from coal, but develop new mines and publish insincere transition strategies, continue to receive support. Glencore owns the world’s largest opencast coal mine. UBS’s exclusion policy do not concern all coal-based power generation and infrastructure companies. Finally, it does not cover passively managed funds (almost half of the funds managed by UBS AM) which have so far not been subject to any climate-related restrictions.
We agree with many others that UBS must have a strategy of zero coal by 2030 in Europe and the OECD countries, and by 2040 worldwide, in order to have a chance of meeting the criteria of the “race to zero” advocated by the United Nations and by the two keynote speakers at the summit, Razan Al Mubarak and Mahmoud Mohieldin.
Oil and Gas
In the report we co-published this year with the NGO Reclaim Finance, we showed that UBS Asset Management is the largest investor among the leading investors in the oil and gas sector in Switzerland:
UBS Bank is a business partner of Petrobras. The Brazilian oil and gas expansion company, condemned for massive corruption in Brazil, plans to add 7 billion barrels of oil equivalent to its production portfolio in the near term.
More recently, a major pan-European survey on green investment showed that UBS and Credit Suisse have channelled $263 billion to the fossil-fuel industry through bonds that they have created and issued on the market. The practice of indirect but decisive support is becoming increasingly important in the overall financial support to fossil fuel companies. Petrobras received USD 36 billion between 2016 and 2021 thanks to banks such as Credit Suisse and UBS.
Other examples extracted by DataCatering experts from the financial database Refinitiv: On March 27, 2023, the bank subscribed to a bond issue for Korea National Oil Corporation (KNOC). KNOC was one of six banks to make a similar contribution and receive $1.1 million each for their work. KNOC is expanding its oil and gas production in Vietnam, the United Arab Emirates, the United States and Canada, and 28% of that expansion is in unconventional oil and gas, according to Urgewald. According to the German NGO, KNOC is involved in the oil sands of Alberta and oil production in the Amazon.
Amazon Deforestation
As a recent survey conducted by the Center for Climate Crime Analysis on behalf of the Society for Threatened Peoples shows, UBS is a trading partner of Brazilian agro-industrial companies such as BrasilAgro and Marfrig, which are directly responsible for a significant share of Amazon deforestation. Teaming up with Banco do Brasil, UBS has created an investment bank UBS BB.
As SPM explains, «In 2021, [Banco do Brasil] organized the issuance of Agribusiness Receivables Certificates (CRAs) and helped Brazil’s agricultural sector attract international investors through this financial instrument.»