UBS Asset Management has today announced the launch of a new suite of strategies based on its innovative Climate Aware framework, whcih will enable the firm to support more clients in aligning their investment and environmental goals.

The asset manager developed its Climate Aware framework as part of its Climate Aware passive equity strategy launched in 2017. The launch of the broader suite of investment strategies today includes active and passive equity and fixed income, which are the building blocks of most portfolios, it said.

This represents the first time UBS AM has launched a cross-asset class suite of products, the firm added.

The framework is based on portfolio mitigation by lowering investment exposure to carbon risks; portfolio adaptation through increasing investment exposure to climate-related innovation and solutions; and portfolio transition aligning to a chosen climate glidepath.

Suni Harford, president of UBS AM, said: “The degree to which investors are embracing ESG as a fundamental investment driver, particularly around the issue of climate risk, is stark. As demand continues to grow and sustainable assets amass more capital, we will see the investment landscapes transform even further.”

He added that this is a trend which “we believe is here to stay and investors in today’s markets must understand the effect that climate is having on their portfolio”.

Barry Gill, head of investments, said the firm’s Climate Aware approach “sits at the heart of our sustainable investment proposition and is underpinned by our active stewardship program”. He added that this new appraoch “sends a clear message”  to the companies UBS AM invests in, giving the firm the opportunity to engage with such companies to help them achieve a lower-carbon target.

University of Oxford and Lombard Odier launch strategic partnership on Sustainable Investment

The University of Oxford and Lombard Odier have set up a new multi-year partnership to foster research and teaching on sustainable finance and investment.

The collaboration between the two entities will provide a unique platform for knowledge exchange between scholarship and financial services and support sustainable finance in becoming a major field of academic research globally.

It will also harness the “vast potential of the financial sector to drive environmental, social and economic transformation”, they said.

The five-year partnership will allow for both to create the first endowed senior academic post in sustainable finance at any major global research university.

Oxford University

Oxford University will establish a programme for the ongoing training of Lombard Odier investment professionals

As part of the partnership, Ben Caldecott – an expert in sustainable finance and investment who is the founding director of the Oxford Sustainable Finance Programme and the COP26 Strategy Advisor for Finance at the UK Cabinet Office – will become the Lombard Odier associate professor and senior research fellow of sustainable finance at the University of Oxford, based at the Smith School of Enterprise and the Environment within the School of Geography and the Environment.

Lombard Odier will work with Oxford University’s scholars to integrate the University’s pioneering work into the firm’s own proprietary research and investment solutions.

In addition, the university will establish a programme for the ongoing training of Lombard Odier investment professionals, while Oxford scholars will benefit from accessing the asset manager’s research and product innovation.

The two partners will also host a joint annual research forum, open to the wider academic and practitioner community.

Caldecott said: “Sustainable finance is a structural change in both the demand and provision of financial products and services. It is also mission critical for tackling the massive environmental and social challenges facing humanity.”

He added, however, that for sustainable finance to be itself sustainable “it needs greater academic rigour, as well as pedagogy to scale the adoption of best practice.”

FRC calls for participants in new reporting lab project

The Financial Reporting Council’s (FRC) Financial Reporting Lab is inviting investors and companies to participate in a new project on corporate disclosures on risks, uncertainties and scenarios.

Investors and other stakeholders are increasingly looking for information from companies about how they will evolve, adapt and respond to changes in the external business environment, FRC said.

It noted that the risks and uncertainties that could impact a company’s business model, strategy and viability will vary over the short, medium and longer term. Given the significant reassessment many companies are making to their longer-term business model and strategy, risk, uncertainty and scenario reporting is likely to become even more important, it added.
FRC said that how companies consider and report on business model, strategy, the reporting of risk, uncertainties and scenarios, viability and resilience, and the drivers of value is, necessarily, interconnected.

FRC expects to address these topics in due course as part of its previously announced Horizons project, but given the current level of uncertainty in the business environment, this project will focus on the reporting of risks, uncertainties and scenarios and consider what users want from these disclosures.
The scope of the project will likely explore whether and how companies’ risk identification, risk management and scenario planning processes are evolving and how this is impacting reporting and disclosure.

It will also try to determine whether the time horizons utilised in scenario planning have changed and will consider how companies communicate uncertainty in their disclosures.

FRC also said the project will likely discuss which areas of reporting are most challenging for companies and will explore examples of risks and related disclosures where investor focus has been heightened by the current pandemic – for example, supply chain risk, existential risk/viability of business model.

The Lab expects to publish a range of outputs across 2021.

Truvalue Labs and Solactive Launch a New Generation of AI-Powered ESG Indexes

Truvalue Labs, an artificial intelligence-driven environmental, social, and governance (ESG) data firm, along with Solactive, the German index engineering firm, have launched the Solactive Truvalue ESG Index Series.

These indexes are designed to provide investors with diversified exposure to global large- and mid-cap equities with strong ESG characteristics.

As assets in passive ESG funds doubled to $250bn (€209bn) in the past three years, investors are demanding better quality information, Truvalue Labs stated.

The firm claims it sources and analyses information differently than traditional ESG research firms do, using natural language processing and machine learning. Its insight scores are derived from real-time ESG information that is not dependent on company disclosures.

Using the Sustainability Accounting Standards Board (SASB) materiality framework, Truvalue Labs’ approach is “transforming investors’ expectations about ESG research, offering a timely, transparent and salient stakeholder perspective on sustainability issues”, it said.

The Solactive Truvalue ESG United States Index is the first benchmark in the series to apply Truvalue Labs’ volume and insight scores for component selection while avoiding exposure to fossil fuels, utilities and tobacco companies.

As of 26 August, index performance from February 2008 shows annualized returns of 12.43% compared with 10.38% for the Solactive GBS United States Large & Mid Cap Index, the parent index.

“We actively seek partners with diverse and creative approaches to develop differentiated indices of the highest quality,” said Steffen Scheuble, CEO of Solactive.

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