UBS Group AG current report, Q1 FY2023

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UBS Group AG: 2022 Sustainability Report Summary (Form 6-K)

Business Context and Reporting Period

This Form 6-K, filed on March 6, 2023, incorporates UBS Group AG's Sustainability Report 2022. The reporting period covers January 1, 2022, to December 31, 2022, aligning with the financial year. The report details UBS's progress on its sustainability and impact strategy, focusing on three pillars: Planet, People, and Partnerships. It addresses the firm's transition to a low-carbon economy, diversity and inclusion efforts, and social impact initiatives. The report is prepared in accordance with GRI Standards and reviewed by Ernst & Young Ltd.

Key Financial and Sustainability Metrics

Note: This filing is a non-financial sustainability report. Traditional financial metrics such as revenue, net profit, and operating cash flow are not disclosed in this document. The following metrics relate to sustainable finance, environmental impact, and social performance.

  • Sustainable Investing (SI) Assets Under Management (AuM): USD 268 billion as of December 31, 2022, representing 6.8% of total invested AuM (up from 5.5% in 2021).
  • Green, Social, and Sustainability-Linked (GSSS) Bond Deals: UBS facilitated USD 48 billion in financing through 77 deals in 2022.
  • Operational Emissions (Scope 1 & 2): Reduced by 13% compared to 2021. Net GHG footprint for the reporting period (July 2021–June 2022) was 25,324 metric tons CO2e.
  • Renewable Energy: Achieved 99% renewable electricity coverage for operations.
  • Financed Emissions: Reduced absolute financed emissions associated with loans to fossil fuel companies by 42% (vs. 2020 baseline).
  • Workforce Diversity: Female representation at Director level and above increased to 27.8% (2021: 26.7%).
  • Philanthropy: UBS Optimus Foundation network raised USD 274 million in donations in 2022.

Material Changes Versus Prior Period

  • Sustainable Investing Growth: Despite a contraction in global financial markets, SI AuM grew by 6.5% year-over-year, while impact investing assets decreased to USD 21 billion due to market performance and methodology changes.
  • Decarbonization Progress: UBS made measurable progress on net-zero lending targets. Residential real estate lending portfolio emissions intensity decreased by 8%, and commercial real estate by 7% (vs. 2020 baseline).
  • Operational Efficiency: Energy consumption decreased by 8% year-over-year, and paper consumption per full-time equivalent (FTE) dropped by 8%.
  • Climate Risk Exposure: Exposure to carbon-related assets decreased to 7.5% of total customer lending exposure (down from 8.0% in 2021).
  • Supply Chain Engagement: 66% of invited key vendors completed climate disclosures via the CDP platform, up from previous engagement levels.

Guidance, Outlook, and Management Commentary

Management Outlook: UBS leadership anticipates that the transition to net zero will be one of the most consequential trends in coming years, requiring over USD 125 trillion in capital globally. The firm expects investors to increasingly differentiate between "E" (Environmental) and "S" (Social) factors and to focus on "impact" investing.

Strategic Goals and Targets:

  • Net Zero Operations: Target to achieve net-zero Scope 1 and 2 emissions by 2025.
  • Financing Targets (2030): Reduce emissions intensity of residential real estate lending by 42%, commercial real estate by 44%, and absolute financed emissions for fossil fuels by 71% (all vs. 2020 levels).
  • Asset Management: Align 20% of AuM with net-zero frameworks by 2030.
  • Diversity: Target 30% female representation at Director level and above by 2025.

Risks and Contingencies: The report highlights dependencies on external factors, including government actions on climate policy, the availability of standardized data, and the evolution of regulatory frameworks (e.g., EU Taxonomy, SFDR). UBS notes that its net-zero goals for Scope 3 emissions are contingent on broader sectoral progress and governmental action.

Key Facts for Investor Verification

  • Verification of SI AuM: Confirm the 6.8% share of total AuM in sustainable investments and the methodology used to classify "sustainability focus" vs. "impact investing."
  • Net-Zero Methodology: Review the specific baselines (2020) and pathways used for financed emissions targets, noting the one-year lag in emissions data availability.
  • Operational Emissions Data: Verify the 13% reduction in Scope 1 and 2 emissions and the 99% renewable electricity claim, noting the environmental reporting period (July–June) differs from the financial year.
  • Climate Risk Exposure: Assess the 7.5% exposure to carbon-related assets and the firm's transition risk heatmap methodologies.
  • Assurance Scope: Note that selected metrics have been subject to reasonable or limited assurance by EY; verify which specific metrics fall under this assurance.