UBS has joined a working group of banks which aims to measure the direct impact of their financing on society and the environment.
UBS has joined the Banking for Impact working group together with ABN Amro from the Netherlands, Denmark’s Danske Bank and Singapore’s DBS, the group said on its website.
Banking for Impact’s aim is to collaborate with the Harvard Business School on measuring their direct social and environmental effects.
Setting Metrics
The intention is that by 2022 there should be a protocol by which the banks can assess their loan book and every corporate client by their impact. The basis for this will be the Weighted Accounts Initiative launched by Harvard in 2019.
«Already, our world is realising the need for a different type of economy and many sectors are advancing in creating this. If the financial sector doesn’t act now, it faces the risk of being left behind.
«The industry needs standardised guidance as to how it will measure environmental and social impacts and be willing to use this information to make decisions that benefit share-holders, clients, employees and communities equally,» the working group said.
«Leading Transition»
UBS CEO Ralph Hamers said: «The world economy needs a market-based system where social and environmental impacts are just as transparent as financial profit metrics. Measuring previously unreported elements will help the private sector tackle critical societal challenges such as climate change and inequality. The banking sector, with the ability to appropriately price social and environmental risks, is well positioned to lead this transition.»
Swiss Reporting Obligation
From July, Swiss financial regulator Finma will oblige the major banks, UBS and Credit Suisse, to to report on potential climate-change risks related to their businesses.
Specifically, financial service providers must describe major climate-related financial risks and their impact on business strategy, model, and financial planning and disclose how they identify, assess, and manage them, Finma said. It also wants to know how the matter is governed internally.
