Money is a form of expression. Every time a person invests, they are directly influencing the economy, financing innovation and generating impacts on nature and the community. Recently, more and more investors are finding a way to express themselves through sustainable investments.
“More and more people want to express themselves with their money, in the way they invest, and that’s one of the main reasons why ESG has become mainstream”, explains Sylvia Coutinho, head of WM Latin America and president of the UBS Group No brazil. This movement, according to her, is led by women and millennials, but it has already influenced different generations globally. Furthermore, it intensified in the face of the crisis triggered by the pandemic.
“Without a doubt, covid-19 has produced a disruption in supply chains and the way people consume, thus exposing the fragility of systems based only on inventories,” says Sylvia.
The executive recalls that the crisis has increased poverty and social inequalities and has led people to review their routines and consider how much humanity is vulnerable and dependent on other people, as well as on the health of the planet.
Another source of pressure comes from the Paris Agreement and the commitment to the transition to decarbonisation. “Investors are looking at these trends and opportunities, and how they decide where to invest will certainly accelerate this transition. In fact, ESG strategies have fared better than traditional ones, including in Brazil,” she says.
Used to helping its clients understand how to manage the potential of their assets, UBS has great differentiators in its favor: six decades of experience in sustainability actions and an investment strategy that considers the theme in all client portfolios.
An effort that translates into 141 billion dollars in investments focused on impact and sustainability, a growth of 154% compared to 2019, in the use of 100% of electricity from renewable sources and in 3.7 million children helped by UBS Optimus Foundation last year, according to data from UBS.
But, after all, how to build a portfolio with a positive impact? The first step, according to the institution’s expertise, is to understand the concept behind sustainable investments. The practice, which according to UBS is adopted by only 39% of global investors (more than half of them aged between 18 and 34 years old and with assets above 50 million dollars in assets), consists of taking into account personal and institutional values and the impact on society at the time of decision making.
And for those who think it’s complicated to build a portfolio with principles without compromising performance, UBS offers three tips for those who want to start this journey. First, exclude companies with values that differ from yours; then include those that match your values and, finally, select investments that target a relevant impact.
Another common question is: how much to invest to do good? According to UBS, those who invest according to their values devote, on average, more than a third of their portfolio to sustainable investments. Everything indicates that the scenario will change for the better given the many options available today and investors’ belief that sustainable investments will be predominant in the near future.
But what do investors need to know to seize the best opportunities in the sustainability market, while building a portfolio that has a real impact on ESG agendas? For Sylvia, the new scenario repositioned a number of sectors and generated “big winners and big losers”.
Therefore, when evaluating possibilities and risks, it is strategic to count on the support of specialists such as UBS, which has led sustainability actions since the 1950s (learn more in the timeline below).
Andrew Lee, head of Sustainable & Impact Investing at UBS GWM Chief Investment Office, explains that, in this way, UBS expects sustainable development strategies to generate performances comparable to traditional investments. “There is academic evidence that indicates that companies that demonstrate leadership in relevant ESG issues and materials have better financial performance than those that do not,” he points out.
The company therefore employs a 360-degree approach as it delivers innovative products and solutions and shares them with its global network of partners. Thus, it generates value for different sectors of society, which see themselves positively impacted by investments in actions on both the environmental and social and governance fronts.
The priority focus, says Lee, tends to remain in the first letter of the acronym ESG: that is, funds linked to environmental factors – and which already dominated this market even before the crisis –, in the specialist’s view, leave it even more strengthened. “While many investors opt for environmentally supported portfolios, others may choose to make a gradual transition. In both cases, we recommend diversifying the choices.”
In the financial sector, wealth managers play a crucial role in the development of sustainable investments, providing experience, personalized advice and tailored solutions.
In September 2020, UBS was the first major global financial institution to make sustainable investments the preferred solution for its high net worth clients. As one of the world’s largest wealth managers, UBS is well positioned to meet client demands and thus fulfill its purpose: to reimagine the power of investments, connecting people towards a better world.
“We support our customers in finding what matters most to them,” describes Andrew. Like? “We help clients who want to invest to bring about positive, measurable change by making funds available in a range of areas, including health and oncology, climate, social inequality, and diversity and inclusion,” says Lee.