At the end of this century, our planet will likely be warmer than at any other time in human history. The impact this will have on our ecosystem, our lives and the economy will be dramatic. The UBS Climate Aware Equity strategy aims to address climate change as a systemic problem and invests in companies that will be successful in a low-carbon economy.
Why the UBS Equity Climate Aware strategy
Why the UBS Equity Climate Aware strategy
Our low cost solution aims at providing investors with an innovative, rules-based strategy, designed to capitalize on the long-term transition to a low greenhouse gas emissions economy and invest more in companies at the heart of this transition, as well as those adapting their operating models.
Tilting to achieve climate objectives
Tilting to achieve climate objectives
The strategy applies positive and negative 'tilts' related to climate change that guide portfolio construction
Engagement and voting
Engagement and voting
Engaging directly with company's management to educate about best practices and encourage reporting of sustainability metrics
Risk mitigation
Risk mitigation
Incorporating sustainability in the investment process may lower the cost of capital and limit downside risks
Our model is constructed and based on four core elements or building blocks. By combining this multi-dimensional group of metrics, we guide portfolio construction toward a set of exposures aimed at reflecting the low greenhouse gas emission economy and the beyond 2°C scenario. Our approach is innovative and forward-looking, implementing a probability-based framework to capture the inherent uncertainty surrounding carbon data. The four core elements or building blocks are:
Glide path probability
Glide path probability
We build a quantitative model that compares a company's carbon footprint trend with the required emission reduction implied by the beyond 2°C scenario. This approach allows us to estimate the likelihood that a company will achieve those glide path targets.
Qualitative overlay
Qualitative overlay
We improve the estimates of our quantitative model with a qualitative framework. We take into account whether carbon emission is reported under the Carbon Disclosure Program (CDP) and the company's disclosure related to implementation of policies, objectives and/or initiatives on carbon efficiency.
Current carbon intensity and renewable energy
Current carbon intensity and renewable energy
We consider information about a company's direct and indirect carbon footprint (measured as intensity levels). In order to partially capture the substitution of energy sources under the beyond 2°C scenario, we incorporate information related to both the production of renewable energy and the delivery of technology to the sector.
Fossil fuel reserves and energy production
Fossil fuel reserves and energy production
We allow underweighting companies generating electricity from coal power stations and the reduction of exposure to companies that hold proven reserves of coal, oil or gas.
Whether you have a question or a request, we will be happy to get in touch with you. Contact our UBS Asset Management team for more details.
Yuan Yuan Xu
Client Relationship Manager, UK Institutional Client Coverage
James Rogers
Client Relationship Manager, UK Institutional Client Coverage
Antonia Shepherd-Barron
Client Relationship Manager, UK Institutional
Matteo Mazzetto
Head UK Institutional Client Coverage and EMEA O'Connor ICC
