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UBS Global Wealth Management to include environmental scores on its funds in 2019

Key Points
  • The new assessments of equity and bond funds will include pollution, ethics and climate change.
  • Assets under management in U.S.-based socially responsible investing strategies climbed to $12 trillion at the start of 2018.
  • "We absolutely hear about [ESG] from clients up and down the demand spectrum," says Gregg Trinks, head of UBS' Americas fund investment solutions.
Sergio Ermotti, chief executive officer of UBS Group AG.
Stefan Wermuth | Bloomberg | Getty Images

UBS Global Wealth Management will include detailed assessments of its funds for environmental, social and governance issues starting next year.

The new assessments – which will take into account the funds' exposure to concerns like pollution, ethics and climate change – will apply to all of its non-U.S. long-only equity and bond mutual funds and exchange-traded funds, the bank said Monday.

UBS executives said they hope the new reports will help clients better evaluate the bank's in-house and third-party funds.The gauge should "make it immediately apparent" whether a given fund is incorporating these so-called impact investing considerations in its investment decisions, UBS said.

ESG investing — long the bastion of faith-based and civic activists — has surged in popularity in recent years.

Assets under management in U.S.-based socially responsible investing strategies climbed to $12 trillion at the start of 2018, representing 1 in 4 dollars of all investment under professional management and an increase of 38 percent from the start of 2016.

The statistics are published every two years by US SIF: the Forum for Sustainable and Responsible Investment, a Washington-based trade group whose members include numerous mutual and pension funds. They have found that climate change, tobacco and conflict risk are the top three issues for ESG-conscious asset managers.

Proponents of impact investing hope to generate market-beating gains for clients and to use their money in a way that benefits society. Some elect to allocate capital to companies or funds with a focus on developing renewable energy, while others look to invest in companies with diverse boards.

UBS said the new assessments will allow clients and advisors to identify more easily the funds that follow their ESG preferences.

"It is engrained in our organization not only to facilitate this, but also to lead in providing clear guidance and implementation tools," Greg Trinks, head of Americas fund investment solutions at UBS Global Wealth Management, said in an email. 

"Clients' ESG interests may be driven by their personal values and/or performance considerations," Trinks added. "We absolutely hear about this topic from clients up and down the demand spectrum, ranging from minimal to modest interest to a strict requirement."

Of the many enormous global wealth managers, UBS has tried to distinguish itself as a leader in sustainable investments for the high net-worth individuals it serves. Earlier this year, for example, UBS Global Wealth Management introduced two mutual funds that try to create more direct investment options for those who wish to move money into companies that prioritize sustainable factors.

One of the new funds, the UBS Engage for Impact Fund, says it seeks total return from securities that "can create meaningful, intentional, verifiable and measurable impact on the society and the environment." As of Oct. 24, the fund's principal holdings included drugmakers Abbott Laboratories and Allergan, agriculture equipment maker AGCO and Amazon.