UBS Asset Management has divested from Exxon Mobil and four other energy companies across its suite of Climate Aware funds, including one it manages for UK master trust NEST, and its actively managed equity and fixed income sustainability funds.
NEST separately today also announced having set a climate change-related target for 2025.
Besides Exxon, UBS AM also divested from Imperial Oil, Kepco, Marathon Oil and Power Assets. As of the end of June 2021, these five represented £40m, or 0.25% of NEST’s total portfolio, with UBS said to have been carefully selling the shares over the past months to ensure a fair price was achieved.
UBS AM’s decision to divest the five follows a three-year engagement programme with 49 oil and gas and utilities companies.
Francis Condon, head of thematic engagement and collaboration at UBS AM, said most companies in the engagement programme had made progress on their climate strategy and transition to a lower carbon economy but that “where we have not seen tangible progress, we are taking action”.
Katharine Lindmeier, senior responsible investment manager at NEST, which seeded the UBS Life Climate Aware World Equity fund in 2017, said: “At NEST we aim to work with companies to encourage sustainable business decisions but will draw the line somewhere.
“The five companies being excluded have not done enough to convince us that we should remain shareholders.”
Launched in March 2018, the engagement programme ended in February, when UBS assessed the progress made by the companies on the focus list against tailored engagement objectives. This suggests that the exclusion of Exxon was decided before shareholders voted dissident candidates onto Exxon’s board; UBS did not respond to a question about this.
NEST has made a commitment to net-zero carbon emissions by 2050, including halving emissions from its investments, against a 2019 baseline, by 2030.
Today it said that to reinforce its commitment to net zero by 2050, it was introducing a commitment to reduce carbon emissions in public equities and fixed income by 30%.
“The new short-term climate target we’re announcing today should demonstrate not only our commitment on becoming net zero, but also that we’re not hanging around,” said Lindemeier.
“We want to be on the front foot for such an important issue like climate change to achieve better risk-adjusted returns for our members.”
UBS AM’s climate engagement programme initially targeted energy companies because they represent a significant proportion of the world’s greenhouse gas emissions and can equally provide capital and technologies to solve it.
However, it has extended the programme to cover other sectors, such as automobiles, chemicals and construction and materials.