LONDON (Reuters) – UBS Group (UBSG.S) said on Thursday that it would advise private clients investing globally to choose sustainable investments over more traditional options, the first major financial institution to do so.
Money has flowed into a range of sustainable investments in recent years as policymakers look to retool the financial system in the fight against climate change and “build back better” from the economic ravages of the COVID-19 pandemic.
UBS, which manages $2.6 trillion in assets for some of the world’s wealthiest people, said it believed a 100% sustainable portfolio could deliver the same or potentially higher returns and also offer strong diversification benefits to clients.
“The shift in preferences toward sustainable products and services is only just beginning,” said Iqbal Khan, co-president of UBS Global Wealth Management.
“We believe sustainable investments will prove to be one of the most exciting and durable opportunities for private clients in the years and decades ahead.”
UBS said clients currently have around $500 billion invested in its “core” sustainable assets, such as Green Bonds and low-carbon index funds.
While traditional investments such as plain vanilla bonds or a mainstream stock index would still be more suitable in some circumstances, UBS said the coronavirus pandemic had fuelled its belief that a fundamental shift in markets was underway.
“COVID-19 has put the exclamation point on one of the most important shifts in financial services in a generation,” said Tom Naratil, co-president of UBS Global Wealth Management and president of UBS Americas.
“The pandemic has brought the vulnerability and interconnected nature of our societies and industries to the forefront of investors’ minds and shown that sustainability considerations cannot be ignored.”