A shared responsibility

SRI is an investment philosophy that is proving as good for clients as it is for the world we live in.

You may have heard about Corporate and Social Responsibility (CSR), but what does it mean in practice? Well, it's about understanding and addressing the social and environmental issues an organisation faces - and turning them into opportunities.

Here's an example: a retailer may achieve increased sales, and gain a boost to their reputation, by offering environmentally friendly, fair trade or locally sourced goods alongside their regular product range. By facilitating this kind of "responsible" purchase, they are not only helping to conserve and sustain, rather than exploit resources, but they're also offering customers the chance to do the same.

As a financial services firm, UBS is focused on providing a broad range of financial products and services to help clients make a return on their investments. In asset management and securities analysis we're seeing an increasing demand for opportunities involving socially responsible investing - commonly referred to as SRI.

By any measure, SRI is a growth area. The Social Investment Forum's most recent bi-annual study showed that SRI accounts for one of every nine dollars professionally managed in the US. So, in short - SRI is doing well while doing good.

UBS and SRI

UBS has long been involved in the field of SRI. In 1996, UBS Global Asset Management established an SRI unit in Zurich, which has since expanded to Chicago and Singapore.

We now offer our asset management clients (firms like pension funds and life assurance companies) a number of equity funds that incorporate SRI criteria, like the Global Innovators Fund - investing in areas such as sustainable energy - which has grown from CHF 109m in 2005 to CHF 2bn today.

In 2004, a team dedicated to SRI was created in the Investment Bank in London. The following year, they took second place for 'Best SRI-related Service' in the 2005 Socially Responsible Investment Survey (Thompson Extel and UK Social Investment Forum).

Our SRI team collaborates with analysts from sector teams (these are groupings such as: financial institutions, real estate, healthcare, utilities etc.) to write about emerging SRI themes. These research reports then help clients make investment decisions.

Looking to the future

Going forward, the boundaries between SRI and conventional investing look set to blur as the integration of environmental, social or ethical issues becomes a common element in general securities analysis or asset management.

"The next two decades will see a major international structural shift towards a low carbon economy driven by changing consumer preferences, increased efficiency and regulation on carbon emissions." Wanda Kim, Head of UBS Investment Bank's Environmental Advisory Group explains "This change is driving companies' investment decisions today and no sector is immune from this transition. As a financial institution, UBS is in a position to advise clients on the most effective corporate strategies and, independently, to advise investors on which companies are best positioned to take advantage of these macro trends."

As a result of this, over 60 UBS analysts have been involved in collaborative work on climate change since 2007. The utilities team has been writing about the impact of carbon trading on the share prices of utilities firms since 2004 and this team also now writes on and forecasts the CO2 price. Elsewhere, sector teams cover photovoltaics as well as biofuel, wind, and other alternatives, as well as energy efficiency. In addition, climate change's financial impacts now regularly appear in the work of UBS's broader sector research, contributing to UBS's reputation as forward thinking and client focused.

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