UBS commits $5bn to Sustainable Development Goals-related impact investing

Swiss banking giant making massive push into sustainability

Swiss banking giant UBS has committed to investing at least $5bn of private client assets to Sustainable Development Goal-related impact investing, in a strategy that includes partnering with the Rise Fund – a new $2bn social impact fund backed by a host of well-known figures including U2’s Bono and Virgin tycoon Richard Branson.

UBS revealed its plans today at the World Economic Forum (WEF) Annual Meeting in Davos today, presenting a white paper entitled Mobilizing private wealth for public good.

It’s the latest commitment to sustainability from the bank, which recently hired former RobecoSAM CEO Michael Baldinger as UBS Asset Management’s head of sustainable and impact investing and recruited former PRI Executive Director James Gifford for a role in Hong Kong.

And it comes as Dutch and Swedish institutional investors are putting their weight behind the SDGs, as RI has been reporting.

The paper authored by experts across UBS finds most initiatives overlook private wealth’s potential in addressing SDG funding gaps. It says that private wealth investment tends to be longer-term and hence aligned with the SDGs. It also has fewer regulatory and other constraints than institutional capital.

In response, UBS has committed to directing at least $5bn of private client assets into new SDG-related impact investment over the next five years to help mainstream the asset class.

This will include giving its clients access to a diversified impact portfolio via the Rise Fund led by private equity manager TPG Growth.

In addition, UBS will create a diversified impact investment platform for clients.

The move comes on the success of its $471m Oncology Impact Fund in 2016. The fund, in partnership with life sciences venture investing firm MPM, backs cancer therapeutics. UBS has also launched the world’s first development impact bond through its UBS Optimus Foundation.

As part of its commitment to the SDGs, UBS will also help launch Align17 – a WEF Young Global Leaders Initiative named after the 17th SDG (“Strengthen the means of implementation and revitalize the global partnership for sustainable development”).It is a digital platform to help investors, philanthropists, development banks and government work together to close the SDG funding gap through co-investment opportunities.

Align17 claims to be different from similar platforms in that it does not privilege blended-financing models, but includes the full spectrum of funding from philanthropy to pure for-profit impact investment to determine the right funding structure for an investment.

Alongside announcing its commitment to the SDGs, UBS makes a number of recommendations to remove barriers to SDG-related investment in its White Paper launched today.

These include: clarifying SDG investment needs by enhancing data and measurement; standardising disclosure requirements around the SDGs; and pooling private wealth impact investments to fund the SDGs.

“A critical opportunity to promote sustainable growth for all” – Ermotti.

UBS also recommends focusing regulation, government spending and philanthropic activities on the SDGs that most need public involvement to highlight where private and institutional capital is least required.

Sergio Ermotti, Group CEO at UBS and Chairman of the UBS Optimus Foundation, said: “The SDGs present a critical opportunity to promote sustainable growth for all. We encourage policymakers to follow our recommendations to engage private capital investment in SDGs. We also urge potential partners to work alongside our new and existing initiatives to build solutions to meet these vital goals.”

The Sustainable Development Goals were adopted at the United Nations Sustainable Development Summit two years ago and represent a set of 17 targets to end poverty, fight inequality and injustice, and tackle climate change by 2030.

The SDGs are an update to 2000’s UN Millennium Development Goals, and uniquely, while governments say that traditional aid will be vital to achieving the SDGs, they also stress new and innovative financing mechanisms from the public and private sector will be critical.