Front & Female+ UBS
The co-head of UBS Global Wealth Management Asia Pacific, and head and chief executive of UBS Hong Kong reflects on the rise of sustainable investing, the challenges that need to be addressed and how finance has the power to influence much-needed global change
There has been a sea change in investment trends in the last 24 months. “Previously clients would ask, why should I invest sustainably? Now they ask, how can you help me invest sustainably?” says Amy Lo.
Sustainable investing is something that Lo has advocated for many years, well before it became the buzz phrase it is today. And the fact that investors are finally coming round to the proposition is clearly a welcome change.
“Finance has a catalyst role to play to help solve some of the biggest challenges in the world. That’s our corporate responsibility,” says Lo. “And as the largest global wealth manager, UBS is in a position to lead and shape and to mobilise wealth for public good.”
In September 2020, UBS made the landmark decision to make sustainable investments its preferred solution over traditional investments for private clients wishing to invest globally. “At that time, it was a very bold announcement and commitment,” says Lo; UBS was the first global wealth manager to do so.
Since then, Covid-19, climate change, macro-economic factors and greater investor awareness have all contributed towards staggering growth in sustainable investment and the integration of Environmental, Social and Governance (ESG) factors across investment.
UBS’s Q1 2022 global investor sentiment survey revealed that the majority of investors cited sustainable investments as one of the most attractive sectors to invest in the current geopolitical situation, while according to the bank’s global family office report 2022, over half of the family offices made sustainable investments in 2021. As of December 31, 2021, UBS sustainability focus and impact investing assets had grown by 78% YoY to USD 251 billion.
Sustainable investing, however, is not a home run. Greenwashing—where companies try to appear more sustainable than they really are—is a major challenge. But it’s one that Lo believes can be addressed by increasing ESG resources and expertise to screen and vet investments. With over two decades of involvement in sustainable investing, Lo said the bank has a key role to play in helping to create common standards that will provide clarity on what is expected. Greater regulatory guidance and clarity on standards, definitions, disclosure and data, which are currently lacking and have proved a barrier to sustainable investing, will also help.
For clients looking to invest sustainably, UBS has identified a shift in Asia-Pacific from exclusion portfolios, where investors simply avoid investing in companies that do not meet ESG criteria, to ESG integration, where these factors are at the core of the investment process.
The areas and themes drawing the most interest include energy—specifically clean and renewable; food security due to the food disruption caused by the pandemic and the Russia-Ukraine conflict; and, as more data is created, cybersecurity.
With the ever-increasing impact of climate change, investment in the environment is perennially popular. In November 2021, UBS and its Optimus Foundation partnered with consultancy Earth Security to create The M40 Initiative. This aims to support mangrove conservation, which is vital for climate change mitigation, by providing innovative finance opportunities around projects that protect and restore coastal ecosystems.
