UBS is cementing its position as one of the go-to banks for sustainable investment solutions.
The $US2.7 trillion Switzerland-based money manager has made sustainability one of the cornerstones of its wealth-management business. On Monday, it announced that UBS Wealth Management and UBS Wealth Management Americas have raised $US325 million for The Rise Fund, an impact investment fund led by private equity firm TPG Capital.
“The sum raised represents the largest investment in the private equity impact investment vehicle,” according to a press release on the news.
The Rise Fund was founded by Bill McGlashan, the founder of STX Entertainment, singer-songwriter Bono, and Jeff Skoll, a billionaire Canadian engineer. The fund has an investment cap of $US2 billion.
Sustainable investment solutions, which aim to both deliver outsize returns and remedy societal and environmental ills, are becoming more and more popular. The bank’s $US325 million commitment is part of a greater goal to raise $US5 billion for impact investments designed to advance the UN’s Sustainable Development Goals.
The $US325 million in contributions come from across UBS’ wealth-management network, according to Jason Chandler, head of investment platforms and solutions at UBS Wealth Management Americas. The money will be invested in companies and projects that benefit society and the environment, he said.
“The investments considered span multiple industries across the globe,” Chandler told Business Insider.”An independent firm assesses the positive impact which is reported to UBS clients in addition to the financial return on their investment.”
The move is a reflection of a major development in the wealth-management industry. Sustainability is a key issue for millennials, as reported by Business Insider’s Raul Hernandez. Investors under the age of 35 are roughly twice as likely as other age cohorts to withdraw from investments that have sustainability problems, according to UBS. And with millennials poised to inherit roughly $US30 trillion from Baby Boomers, according to a UBS white paper, catering to the preferences of the younger generation will be key for wealth managers and financial advisers.
Mark Haefele, chief investment officer of UBS, told Business Insider that it’s not just millennials, however, that care about sustainability.
“We have recognised through our research that people of all ages want their financial adviser to meet their sustainability needs and this desire is growing,” Haefele said.
The Switzerland-based bank told Business Insider its sustainable investments grew by about 40 billion Swiss francs in 2016. Those investments now make up about 35%, or more than $US970 billion Swiss francs, of the bank’s “total invested assets.”
UBS made its $US5 billion commitment in January, at the World Economic Forum in Davos, Switzerland. The announcement was made in tandem with the release of a white paper titled “Mobilizing Private Wealth for Public Good.” There, UBS outlined how to “channel private wealth towards the United Nations Sustainable Development Goals,” which cover issues such as health, hunger, and the environment.
UBS’ pledge followed a $US471 million contribution to its UBS Oncology Impact Fund in 2016.
Haefele thinks the future of financial services will be rooted completely in sustainability.