Climate change is not just damaging the planet, it could also have a detrimental effect on our members’ investments. This is because as we move towards a low carbon economy, companies that do not adapt are likely to fall in value.
In 2017, we helped to develop and launch the UBS Life Climate Aware World Equity Fund in partnership with our global developed equities fund manager. We invested £130m in the fund at launch and will be investing further as the fund forms a key part of our default strategy.
We do not exclude any companies but we try to positively influence them by engaging with them and using our voting rights
The fund aims to have a positive effect on our members’ money by investing more in green and renewable energy companies, and less in organisations that cause damage to the environment. We do not exclude any companies but we try to positively influence them by engaging with them and using our voting rights.
Investing for the long term
Some of our youngest members will be saving with us for the next 40 to 50 years and they are likely to be the most affected by climate change. As such, we have put a higher proportion of our equity allocation in the foundation phase into our climate aware fund, as this is where our youngest members’ money is.
How it works
The fund uses international scientific climate models and globally agreed fossil fuel emission-reduction targets to calculate the investment approach. This means it increases investment in companies adapting to combat climate change in line with, or better than, the Paris agreement.
It also reduces investment in certain companies; the fund would invest less in companies that are not adapting to climate change or reducing emissions.
Voting for change
We also use our voting rights to encourage companies to act in a climate aware way. We engage with companies that the International Energy Agency has deemed to be high contributors to climate change that are currently not taking action to change their business practices.
We will then encourage them to adapt their business models so they meet international global warming targets.
The fund’s climate aware voting policy covers things such as: shareholder resolutions, director elections, political and lobbying, expenditure, report and accounts, and audit committee reports.
Looking to the future
The fund is designed to be flexible and forward-thinking to take into account developments in international commitments and consumer and business sentiment.
We are part of an advisory group that monitors climate-related trends and developments, political shifts and their wider potential impacts on capital markets. We will use this information to work out how companies should be weighted in the fund.
We will also look at the fund to work out what effect our climate aware approach has had so we can optimise it to make members more money. At the same time, their money will become part of the solution of climate change and help contribute to a better future for all.
