UBS, based in Switzerland, is the world’s largest private bank and the largest private lender worldwide with invested assets totalling almost €2 trillion. The bank is a participant of the UN Global Compact and the UN Principles for Responsible Investment, as well as being a founding member of the Thun Group that aims to incorporate the UN Guiding Principles on Business and Human Rights into the banking sector. The Thun Group and its work represent an important step towards socially responsible banking, however, it has been criticised for insufficiently addressing the variety of human rights violations occurring through the operations of financial institutions as well as falling short of defining specific criteria that can be incorporated into the decision-making processes. Recently UBS was exposed to “…allegations of misconduct at its precious metals trading business, as well as supposed collusion and manipulation in the foreign exchange market…”.
The bank has financial ties to 23 of the 25 controversial companies investigated in the Dirty Profits 3 report, yet it states, “[we] have placed societal considerations at the heart of all our advisory, research, investment, financing and ownership processes”. According to the bank, 24% of all asset investments at UBS incorporate sustainable and socially responsible investment criteria, ensured by an “industry-leading environmental and social risk screening process” and the formulation of its Environmental & Human Rights Policy. UBS has defined both ‘controversial activities’ where the bank will refrain from business related to ‘severe environmental and social damage’ and ‘areas of concern’ where “UBS will only do business under stringent criteria”.
For instance, with regards to Arctic drilling, UBS states that “transactions involving oil and gas exploration and development in the Arctic (onshore and offshore) are also assessed against the company’s safety management capacity and track record as well as adequacy of the company’s spill response plans”. Yet, UBS has provided more than €250 million in loans to Royal Dutch Shell, since January 2012, disregarding Shell’s record of incidents in its Alaskan Arctic drilling efforts. Furthermore, the bank has direct financial affiliations with all the major fossil fuel providers in this report, through the provision of loans and the underwriting of share and bond issuances, and the managing of shares and bonds. UBS’ climate change commitment merely states that the bank aims to support innovative technologies and increase the energy efficiency of its clients’ operations, it does not commit to refrain from financing fossil fuel companies active in coal-fired power generation. For instance, RWE, who has received €125 million in loans and €200 million in bond underwritings through UBS, has turned towards extending its coal-fired energy provision. Thus, RWE continues to invest in its out-of date coal power plants as well as continuing to source coal from controversial mining corporations in Colombia. Hence, in its climate change strategy UBS asserts the following: “We recognise the transition will take time and that fossil fuels will be the dominant energy source for some time to come”.
The above policy information and analysis is taken form the Dirty Profits 3 report published in December 2014.
More information about UBS and its financial ties to selected controversial companies can be found in the Dirty Profits 3 report. Further detailed data tables can be downloaded here.
UBS was connected to several controversial companies in the Dirty Profits 2 report, published November 2013. Details can be found with the published report and the detailed data tables from the research period 2011-2013 are available to download here.