6-K
UBS AG (AMUB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 6-K
REPORT OF FOREIGN PRIVATE
ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
Date: August 23, 2024
UBS Group AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
(Address of principal executive office)
Commission File Number: 1-36764
UBS AG
(Registrant's
Name)
Bahnhofstrasse 45, 8001 Zurich, Switzerland
Aeschenvorstadt 1, 4051 Basel, Switzerland
(Address of principal executive offices)
Commission File Number: 1-15060
Indicate by check mark whether the registrants file or will file annual
reports under cover of Form 20-F or Form
40-
F.
Form 20-F
☒
Form 40-F
☐
This Form 6-K consists
of supplementary sustainability and climate
risk disclosures for 2023
required under Swiss
law, which appear immediately following this page.
Sustainability and climate
risk
disclosures
Supplementary 2023 disclosures
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Publisher: UBS Group AG, Zurich, Switzerland | ubs.com
Language: English
© UBS 2024. The key symbol and UBS are among
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Introduction
Sustainability and climate risk
3
Transition risk
6
Physical risk
8
Nature-related risks
10
Climate and nature related risk metrics
Appendix
12
Cautionary statement
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
1
Terms used in this report, unless the context requires otherwise
“UBS,” “UBS Group,” “UBS Group
AG consolidated,” “Group,”
“the Group,” “we,” “us”
and “our”
UBS Group AG and its consolidated subsidiaries
1
“UBS AG” and “UBS
AG consolidated”
UBS AG and its consolidated subsidiaries
“Credit Suisse AG” and “Credit
Suisse AG consolidated”
Credit Suisse AG and its consolidated subsidiaries
2
“Credit Suisse Group“ and “Credit Suisse Group
AG consolidated”
Pre-acquisition Credit Suisse Group
”Credit Suisse”
Credit Suisse AG and its consolidated subsidiaries,
Credit Suisse
Services AG and other small former Credit Suisse Group
entities now
directly held by UBS Group AG
“UBS Group AG” and “UBS
Group AG standalone”
UBS Group AG on a standalone basis
“Credit Suisse Group AG” and
“Credit Suisse Group AG standalone”
Credit Suisse Group AG on a standalone basis
“UBS AG standalone”
UBS AG on a standalone basis
“Credit Suisse AG standalone”
Credit Suisse AG on a standalone basis
“UBS Switzerland AG” and “UBS
Switzerland AG standalone”
UBS Switzerland AG on a standalone basis
“UBS Europe SE consolidated”
UBS Europe SE and its consolidated subsidiaries
“UBS Americas Holding LLC” and
“UBS Americas Holding LLC consolidated”
UBS Americas Holding LLC and its consolidated subsidiaries
“1m”
One million, i.e., 1,000,000
“1bn”
One billion, i.e., 1,000,000,000
“1trn”
One trillion, i.e., 1,000,000,000,000
1 Based on
consolidated IFRS
numbers (inclusive
of purchase price
allocation adjustments
recorded in
UBS Group
AG as
a result
of the
acquisition of
Credit Suisse
Group AG
in compliance
with IFRS
3, Business
Combinations).
2 The financial information disclosed
for Credit Suisse AG and its consolidated
subsidiaries does not represent financial statements
under the respective GAAP / IFRS Accounting
Standards, but is an
extract of financial
information from
UBS Group AG,
including purchase price
allocation adjustments
recorded in UBS
Group AG
as a result
of the acquisition
of Credit Suisse
Group AG
in compliance
with IFRS 3,
Business Combinations.
In this report, unless the context requires otherwise,
references to any gender shall apply to all genders.
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
2
Introduction
On the date
of the publication
of the UBS
Group Annual
Report 2023
(i.e., 28 March
2024), UBS
was in the
process
of implementing
a combined
and aligned
sustainability-and-climate-risk dataset across
UBS Group
and including
Credit
Suisse AG.
For
this
reason,
UBS
announced
that
it
would
publish
the
UBS
Group
and
Credit
Suisse AG
sustainability and climate risk metrics required pursuant to FINMA Circular 2016/1 “Disclosure – banks”, Annex 5,
as supplementary
information in
line with
the publication
timeline for
the semi-annual
Pillar 3 disclosures
in the
third quarter of 2024.
The following
disclosure is
fully aligned
with “Sustainability
and climate
risk” in
the “Risk
management and
control”
section of
the UBS Group
Annual Report 2023,
available under “Annual
reporting” at
ubs.com/investors
, except
that full UBS Group numbers are reflected and
2023 Credit Suisse AG numbers are separately
disclosed.
Sustainability and climate risk
Managing
sustainability
and
climate
risk
is
a
key
component
of
the
UBS
Group’s
corporate
responsibility.
UBS
defines sustainability and
climate risk
as the
risk that
UBS negatively
impacts, or
is impacted
by, climate
change,
natural capital,
human rights,
and other
environmental, social
and governance
(ESG) matters.
Sustainability and
climate risks may
manifest as
credit, market, liquidity,
business and non-financial
risks for UBS,
resulting in potential
adverse financial, liability and reputational impacts.
The Group-wide
sustainability and
climate risk
management framework
and related
policy standards
and guidelines
underpin UBS’s management practices and control
principles, enabling the firm to
identify and manage potential
adverse impacts on
the climate, the
environment and human
rights, as well
as the associated
risks affecting UBS
and its clients while supporting the transition toward
a net-zero future.
Over the last
few months,
UBS has continued
its data integration
effort to align
the Credit Suisse AG
dataset as per
the requirements
of the combined
sustainability and climate-risk
metric process. To
arrive at the climate
risk metrics
for Credit Suisse AG and the UBS Group, we have used the same Group approach that had already been used for
the UBS AG excluding Credit Suisse metrics.
This section presents
the current inventory
of quantitative sustainability
and climate
risk metrics, including
exposure
to carbon-related assets,
climate-sensitive sectors and
nature-related risks for
the UBS Group and
Credit Suisse AG.
UBS’s
overall
approach
to
managing
a
sustainability, climate
and
nature-related risk
and
policy
framework was
published in
the UBS
Group Annual Report
2023 and the
UBS Group
Sustainability Report 2023
and the
related
supplement thereto.
›
Refer to “Managing sustainability and climate risks” in the UBS Group Sustainability Report 2023, available under
“Annual Reporting” at
ubs.com/investors,
for more information
›
Refer to “Sustainability and climate risk policy framework” in the Supplement to the UBS Group Sustainability
Report 2023, available under “Annual reporting” at
ubs.com/investors
, for more information
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
3
Transition risk
Climate-driven
transition
risks
arise
from
the
efforts
to
mitigate
the
effects
of
climate
change.
They
cover
the
financial impact on UBS clients or on UBS itself through the creditworthiness of our counterparties or the value of
collateral we
hold. The
financial impacts
from climate
transition risk
could materialize
through three
key risk
factors:
–
climate policies, affecting operating expenses
(e.g., carbon taxes), analyzed both
directly and indirectly;
–
low-carbon technologies and
their potential for
disruption, affecting capital expenditure
requirements and / or
market share due to low-cost competition;
and
–
shifts in
consumer or
investor sentiment,
affecting revenues
(shifts in
consumer demand)
or market-perceived
value.
The transition
risk heatmap
shows that,
at the
end of
2023, the
exposure of
the UBS
Group to
climate-sensitive
sectors and related activities has
increased, as expected, with the inclusion
of Credit Suisse AG exposure. As
of the
end of
2023, the
corporate lending
portfolio of
Credit Suisse AG
was of
similar size
and composition
compared
with UBS AG.
Climate-driven
transition-risk-sensitive
exposure
accounted
for
16.7%
of
the
total
customer
lending
exposure,
mainly driven by exposure
of Credit Suisse AG to the
commercial real estate, industrials
and transportation sectors.
The
increase in
commercial real
estate
exposure is
of similar
size
and
profile
to that
of
UBS AG, as
both
banks
operated in the same local market
prior to the acquisition. Comparatively, Credit Suisse AG had a
higher share of
exposure
in
the
industrials
and
transportation
sectors,
including
ship
and
aircraft
financing
contributing
to
transition-risk-sensitive exposure.
›
Refer to “Managing sustainability and climate risks” in the UBS Group Sustainability Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
4
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
5
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
6
Physical risk
Climate-driven physical risks arise from acute hazards, which are
increasing in severity and frequency, and chronic
climate risks
arise from
an incrementally changing
climate. These effects
may include increased
temperature and
sea-level rise, and
the gradual changes
may affect productivity
and property values
and increase the
severity and
frequency of acute hazards.
Our
physical
risk
heatmap
methodology
groups
together
corporate
counterparties
based
on
exposure
to
key
physical risk factors (risk
segmentation), by rating sectoral,
sub-sectoral and geographical vulnerabilities
to climate-
driven acute physical
risks. These vulnerabilities
were identified using
a proprietary in-house
UBS model. The
Group
model,
developed
in
2023,
is
applied
to
Credit
Suisse AG
exposures.
In
its
current
state,
the
model
takes
a
conservative approach in its key assumptions, reflecting
limited incorporation of geographical and sectoral
sources
of physical risk.
The physical
risk heatmap
below shows
that, at
the end
of 2023,
the exposure
of the
UBS Group
to climate-sensitive
sectors
was
12.0%.
Like
climate-driven
transition
risk,
the
climate-driven
physical
risk
of
the
UBS
Group
has
increased in
absolute terms with
the integration
of Credit
Suisse AG. When
compared with
the climate-sensitive
physical risk exposure of UBS AG, Credit Suisse
AG’s climate-sensitive exposure includes a
lower contribution from
financial services
and intermediary
activities but
higher contributions
from the
industrials and
transportation sectors.
At Group level, most of
the climate-sensitive physical risk
exposure is located within countries
that have a relatively
high adaptive capacity
to manage physical
risk hazards,
which is an
important aspect
to consider when
interpreting
the 12.0% exposure to physical risk.
Until the
end of
2023, prior
to the
methodology alignment,
Credit Suisse AG
continued to
use a
flooding risk
metric
that measured its Switzerland-
and UK-based real estate
financing exposure subject to
a high-to-medium level of
fluvial flood
risk. For 2023,
in Switzerland, 10.7%
of real
estate exposure, the
same as for
2022, falls within
the
high-to-medium category. In the UK, all
properties continue to be categorized as
very low, the same
as for 2022.
In
2024,
we
have
aligned the
methodologies and
started
using
our
physical
risk
heatmap
model
for
all
of
the
Group’s exposure,
retiring the use of the flooding risk metric.
›
Refer to “Managing sustainability and climate risks” in the UBS Group Sustainability Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
7
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
8
Nature-related risks
Nature-related
risks refer
to how
humans and
organizations
depend on
and impact
the natural
environment.
Natural
resources are
referred to
as natural capital
that, in
combination, provides
the ecosystem
services that
benefit people
and the planet. Below
is a description of
UBS’s understanding of
how its business model
may depend on
or impact
those services, resulting in financial and non-financial
risk for UBS.
In 2022, we
initially piloted a
quantification approach for nature-related
risks solely based
on dependency of our
clients
on
the
natural
environment,
using
the
ENCORE
methodology.
This
approach
enabled
us
to
assess
vulnerability to nature-sensitive economic activities by our
clients, which may drive financial
risks for UBS, such as
reduced creditworthiness
of our clients or
the value of
companies’ debt or
of equity posted
as collateral for
lending
activities.
In
2023,
we
expanded
the
definition
of
our
“nature-sensitive
metric”
to
now
include
both
dependencies
and
impacts
on
nature,
its
assets,
and
the
ecosystem
services
nature
provides
to
sustain
human
activities.
Our
methodology assigns ratings on the same
scale and granularity as
our climate-driven sector-level heatmaps. As in
the case
of the
climate-driven heatmap assumptions,
UBS takes
a conservative
approach in
assigning the
overall
nature-sensitive risk
rating to
each
of
the UBS
industry codes.
The
key
assumption
here is
driven
by
taking the
higher of the two values between the ENCORE-defined
impact and the dependency ratings.
The nature-related risk heatmap below shows that at the end of 2023,
the exposure of the UBS Group to nature-
sensitive sectors was 20.3%
of its total customer
lending exposure. Sensitive
sectors that either have
a high impact
or a
high dependency
on the
natural environment
are common
to both
UBS AG and
Credit Suisse,
with both
having
a
similar
nature-sensitive
exposure,
except
for
the
industrials
and
transportation
sectors,
where
Credit
Suisse’s
exposure is relatively higher. The approach chosen leads to reporting of higher nature-related risk exposure, in the
short term.
We continue
to focus
on further
developing the
nature-related risk
methodology to
align with
emerging
regulations
in
Switzerland
and
the
EU,
while
maintaining
the
conservatism
we
have
already
built
in
our
methodology.
›
Refer to “Managing sustainability and climate risks” in the UBS Group Sustainability Report 2023, available under
“Annual reporting” at
ubs.com/investors
, for more information
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
9
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
10
Climate and nature-related risk metrics
In developing our
metrics, we consider
the inputs and
guidance provided by
standard-setting organizations,
as well
as new or enhanced regulatory requirements
for climate disclosures.
The table below includes climate and nature-related
risk metrics for the UBS Group, Credit Suisse
AG consolidated
and Credit Suisse (Schweiz) AG. Due to Credit
Suisse’s exposure integration and its methodology
alignment to the
Group, the trend analysis of the exposure
of the UBS Group is not included.
The
proportion
of
the
UBS
Group’s
total
customer
lending
exposure
accounted
for
by
carbon-related
assets
increased to 10.2%
in 2023. In
2023, the share
of climate-sensitive exposure
for the UBS
Group was 16.7%
for
transition risk, 12.0% for physical risk and
20.3% for nature-related risk, of the Group’s
total customer lending.
Risk management – climate- and nature-related metrics
For the year ended
31.12.23
Climate- and nature-related risk metrics (USD bn, except where indicated)
1
Carbon-related assets: UBS Group
1, 2, 3, 4
79.1
Carbon-related assets, proportion of total customer lending exposure, UBS Group gross
(%)
1, 2, 3, 4
10.2
Carbon-related assets: Credit Suisse AG consolidated
1, 2, 3, 4, 5
45.0
Carbon-related assets: Credit Suisse (Schweiz) AG
1, 2, 3, 4, 5
26.4
Exposure to climate-sensitive sectors, transition risk: UBS Group
1, 3, 4, 6
130.0
Climate-sensitive sectors, transition risk, proportion of total customer lending
exposure: UBS Group gross (%)
1, 3, 4, 6
16.7
Total exposure to climate-sensitive sectors, transition risk: Credit Suisse AG consolidated
1, 3, 4, 5, 6
71.9
Total exposure to climate-sensitive sectors, transition risk: Credit Suisse (Schweiz) AG
1, 3, 4, 5, 6
46.7
Exposure to climate-sensitive sectors, physical risk: UBS Group
1, 3, 4, 6
93.2
Climate-sensitive sectors, physical risk, proportion of total customer lending
exposure: UBS Group gross (%)
1, 3, 4, 6
12.0
Total exposure to climate-sensitive sectors, physical risk: Credit Suisse AG consolidated
1, 3, 4, 5, 6
47.0
Total exposure to climate-sensitive sectors, physical risk: Credit Suisse (Schweiz) AG
1, 3, 4, 5, 6
12.8
Exposure to nature-related risks: UBS Group
1, 3, 4, 6, 7
158.0
Climate-sensitive sectors, nature-related risks, proportion of total customer lending
exposure: UBS Group gross (%)
1, 3, 4, 6, 7
20.3
Total exposure to nature-related risks: Credit Suisse AG consolidated
1, 3, 4, 5, 6, 7
86.1
Total exposure to nature-related risks: Credit Suisse (Schweiz) AG
1, 3, 4, 5, 6, 7
56.5
Flooding risk exposure, real estate financing (Switzerland and UK):
Credit Suisse AG consolidated
8
16.4
Flooding risk exposure, proportion of total real estate financing:
Credit Suisse AG consolidated (%)
8, 9
10.7
Flooding risk exposure, Switzerland: Credit Suisse AG consolidated
8
16.4
Flooding risk exposure, UK: Credit Suisse AG consolidated
8
0.0
Flooding risk exposure, real estate financing (Switzerland and UK):
Credit Suisse (Schweiz) AG
8
16.2
Flooding risk exposure, proportion of total real estate financing:
Credit Suisse (Schweiz) AG (%)
8, 9
10.9
Flooding risk exposure, Switzerland: Credit Suisse (Schweiz) AG
8
16.2
Flooding risk exposure, UK: Credit Suisse (Schweiz) AG
8
0.0
1 Methodologies for assessing climate- and nature-related risks are emerging and may change over time. As the methodologies,
tools, and data availability improve, we will further
develop our risk identification and
measurement approaches. Lombard lending rating is assigned based on the average riskiness of loans.
2 Task Force on Climate-related Financial Disclosures (the TCFD), in its expanded definition published in 2021,
encourages banks
to use a
consistent definition
to support
comparability. UBS
defines carbon-related
assets through industry-identifying
attributes of
the firm’s
banking book. UBS
further includes
the four
non-
financial sectors
addressed by
the TCFD,
including, but
not limited
to, fossil
fuel extraction,
carbon-based power
generation, transportation
(air,
sea, rail,
and auto
manufacture), metals
production and
mining,
manufacturing industries, real estate development,
chemicals, petrochemicals, and pharmaceuticals,
building and construction materials and
activities, forestry, agriculture,
fishing, food and beverage production, as
well as including
trading companies
that may trade
any of the
above (e.g.,
oil trading
or agricultural
commodity trading
companies). This
metric is agnostic
of risk rating,
and therefore may
include exposures of
companies that may be already transitioning or adapting
their business models to climate risks, unlike
UBS climate-sensitive sectors methodology, which
takes a risk-based approach to defining
material exposure to
climate impacts.
3 Total customer lending exposure consists of total loans and advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected
credit loss) and is based
on consolidated IFRS numbers (inclusive of purchase price allocation adjustments recorded in UBS
Group AG as a result of the acquisition of Credit Suisse Group AG in compliance
with IFRS 3, Business Combinations).
4 UBS continues to collaborate to resolve methodological
and data challenges, and seeks to
integrate both impacts to and dependency on
a changing natural and climatic environment, in
how it evaluates risks and
opportunities.
5 The financial information disclosed
does not represent financial statements under
the respective GAAP / IFRS Accounting
Standards, but is an extract
of financial information from UBS Group
AG,
including purchase price allocation adjustments recorded in UBS Group AG
as a result of the acquisition of Credit Suisse Group AG
in compliance with IFRS 3, Business Combinations
6 Climate- and nature-related
risks are scored between 0 and 1, based
on sustainability and climate risk transmission channels,
as outlined in the Supplement to the UBS
Group Sustainability Report 2023. Risk ratings represent
a range of scores
across five-rating
categories: low,
moderately low,
moderate, moderately
high, and
high. The
climate-
or nature-sensitive
exposure metrics
are determined
based upon
the top
three of
the five
rated categories:
moderate to high.
7 Nature-related risk metric is calculated based on 2023 methodology,
which is the result of ongoing collaboration between
UBS and UNEP-FI.
8 The metric measures Credit Suisse’s
exposure
to river and sea flood risk and
ignores pluvial flooding, which relates
to ground water and flash
floods. The metric
measured the flooding risk exposure in
high to medium category i.e.,
a chance of flooding at least
once in 100 years.
9 In the TCFD metrics section of the Credit Suisse Sustainability Report 2022, Switzerland flooding risk exposure infographics shows zero exposure in high category due to incorrect mapping.
The
issue is remediated and the split of flooding risk
exposure is restated to high (2%) and medium
(9%) category. Similar to that of 2022, 2023 analysis shows flooding
risk exposure across high (2%) and medium (8.7%)
category for Credit Suisse AG. For Credit Suisse (Schweiz) AG,
2023 analysis shows the flooding risk exposure is split across high (2%) and medium (8.9%) category.
The table below presents a view of UBS’s risk
profile within sectors and across climate-
and nature-related risks. It
shows
the
total
exposure
of
the
UBS
Group
in
each
sector,
followed
by
an
exposure-weighted risk
rating
and
climate-sensitive exposure. This
is presented for
all three
risk types. Exposures
may appear under
one or
more of
the risk
types and,
therefore, cannot
be added
together; this
is
because the
methodologies are
distinct in
their
approach and application.
Although sensitive exposure
has increased both in
absolute and relative
terms, overall, the UBS Group
continues to
have an average rating of moderate for transition
risk and moderately low for physical and nature-related
risk
.
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures
| Sustainability and climate risk
11
Risk exposures by sector for UBS Group
1,2,3,4
Transition risk
Physical risk
Nature-related risk
5
Sector / Subsector
2023
(USD bn)
Weighted average
transition risk
rating 2023
6
2023 transition
risk climate
sensitive exposure
(USD bn)
4
Weighted average
physical risk rating
2023
6
2023 physical risk
climate sensitive
exposure
(USD bn)
4
Weighted average
nature-related risk
rating 2023
6
2023 nature-
related risk climate
sensitive exposure
(USD bn)
4
Agriculture
Agriculture, fishing and forestry
1.27
Moderately Low
0.58
Moderate
0.81
Moderately High
1.11
Food and beverage
8.68
Moderately High
8.68
Moderate
5.70
Moderate
8.41
Financial services
Financial services
93.26
Moderately Low
0.00
Moderate
23.85
Low
0.47
Fossil fuels
Downstream refining, distribution
0.80
High
0.80
Moderate
0.32
Moderate
0.46
Integrated oil and gas
0.32
Moderately High
0.32
Moderately Low
0.00
High
0.32
Midstream transport, storage
0.24
Moderate
0.24
Moderate
0.22
Moderately Low
0.00
Trading fossil fuels
6.95
Moderately High
6.95
Moderate
0.87
Moderate
6.63
Upstream extraction
0.33
High
0.33
Moderate
0.21
High
0.33
Industrials
Cement or concrete manufacture
1.07
High
1.07
Moderate
0.13
High
1.07
Chemicals manufacture
5.76
High
5.76
Moderate
2.82
Moderately High
5.76
Electronics manufacture
6.27
Moderately Low
0.00
Moderate
2.41
Moderate
1.99
Goods and apparel manufacture
6.68
Moderately High
6.68
Moderate
3.92
Moderate
5.89
Machinery manufacturing
10.42
Moderately High
8.87
Moderate
1.48
Moderately High
10.34
Pharmaceuticals manufacture
4.21
Moderately High
4.21
Moderate
2.01
Moderate
2.65
Plastics and petrochemicals manufacture
2.41
Moderately High
2.41
Moderate
1.09
Moderate
1.43
Metals and mining
Mining conglomerates (incl. trading)
3.18
Moderately High
3.18
Moderate
0.13
Moderate
3.18
Mining and quarrying
1.79
Moderate
0.75
Moderate
1.03
High
1.57
Production of metals
1.43
Moderately High
1.43
Moderate
0.83
Moderately High
0.85
Services and technology
Services and Technology
40.57
Moderately Low
0.00
Moderate
23.41
Moderate
23.17
Sovereigns
Sovereigns
4.60
Moderately Low
0.09
Moderately Low
0.05
Low
0.00
Transportation
Air transport
3.98
Moderately High
3.98
Moderate
3.71
Moderately High
3.98
Automotive
1.88
Moderate
0.81
Moderate
1.64
Moderate
1.88
Rail freight
0.85
Low
0.00
Moderate
0.74
Moderate
0.61
Road freight
1.22
Moderately High
1.22
Moderate
0.69
Moderately High
1.22
Transit
1.00
Moderately Low
0.00
Moderate
0.84
Moderate
0.42
Transportation parts and equipment supply
1.83
Moderately High
1.83
Moderate
1.00
Moderate
1.83
Water transport
8.75
Moderately High
8.75
Moderate
5.34
Moderate
8.75
Utilities
Power generation
4.28
High
4.22
Moderate
3.16
Moderately High
4.28
Waste treatment
0.85
Moderately High
0.84
Moderate
0.20
Moderately Low
0.03
Real estate
Development and management
10.79
Moderately High
10.34
Moderately Low
1.52
Moderately High
10.79
Commercial real estate
98.01
Moderate
45.65
Moderately Low
3.05
Moderate
48.62
Residential real estate
267.18
Moderately Low
0.00
Low
0.00
Low
0.00
Private lending
Lombard
160.74
Moderately Low
0.00
Moderately Low
0.00
Low
0.00
Private lending, credit cards, other
7
7.18
Not classified
0.00
Not classified
0.00
Not classified
0.00
Not classified
7
8.91
Not classified
0.00
Not classified
0.00
Not classified
0.00
Total
777.68
Moderate
129.99
Moderately Low
93.19
Moderately Low
158.04
1 Methodologies for assessing climate- and nature-related risks are emerging and may change over time. As the methodologies,
tools, and data availability improve, we will further develop our risk
identification and
measurement approaches. Lombard lending rating is assigned based on the average riskiness
of loans.
2 Total customer lending exposure consists of total loans and advances to customers
and guarantees, as well
as irrevocable loan commitments (within the scope of expected credit loss) and is based on consolidated IFRS Accounting Standards numbers (inclusive of purchase price allocation adjustments recorded in UBS Group
AG as a result of the acquisition of Credit Suisse Group AG in compliance with IFRS 3, Business Combinations).
3 UBS continues to collaborate to resolve methodological and data challenges, and seeks to integrate
both impacts to and dependency on a changing natural and climatic environment, in how it evaluates risks and opportunities.
4 Climate- and nature-related risks are scored between 0 and 1, based on sustainability
and climate risk transmission channels, as outlined
in the Supplement to the UBS
Group Sustainability Report 2023. Risk ratings represent
a range of scores across five-rating categories:
low, moderately low, moderate,
moderately high, and high. The climate- or nature-sensitive exposure metrics are determined based upon the top three of the five rated categories: moderate
to high.
5 Nature-related risk metric is calculated based
on 2023 methodology , which is the result of ongoing collaboration between UBS and UNEP-FI.
6 Displayed ratings represent exposure-weighted averages for a given sector scope.
7 Not classified represents the
portion of UBS's business activities where methodologies and data are not yet able to provide a rating, e.g.
private individuals, due to pending CS data integration work.
Sustainability and climate risk disclosures
– Supplementary 2023 disclosures |
Appendix
12
Appendix
Cautionary statement
regarding forward-looking statements
|
This report contains
statements that
constitute “forward-looking
statements,” including
but
not limited to management’s
outlook for UBS’s financial performance,
statements relating to the
anticipated effect of transactions
and strategic initiatives on
UBS’s
business and
future
development and
goals
or
intentions to
achieve climate,
sustainability and
other social
objectives.
While
these
forward-looking
statements represent
UBS’s judgments,
expectations and
objectives concerning the
matters described,
a number
of risks,
uncertainties and
other important
factors could cause actual developments and results to differ materially from UBS’s expectations. In particular,
terrorist activity and conflicts
in the Middle East,
as well as the continuing Russia–Ukraine
war, may have significant impacts on global markets,
exacerbate global inflationary pressures, and slow
global growth.
In addition,
the ongoing
conflicts may
continue to
cause significant
population displacement,
and lead
to shortages
of vital
commodities, including
energy
shortages and food insecurity outside the areas immediately involved in armed conflict. Governmental responses to the armed conflicts, including, with
respect
to the Russia–Ukraine war, coordinated successive
sets of sanctions on
Russia and Belarus,
and Russian and Belarusian
entities and nationals, and
the uncertainty
as to whether
the ongoing conflicts will
widen and intensify,
may continue to
have significant adverse effects
on the market and
macroeconomic conditions,
including
in
ways
that cannot
be anticipated.
UBS’s acquisition
of
the Credit
Suisse Group
has materially
changed its
outlook and
strategic direction
and
introduced new operational challenges. The integration
of the Credit Suisse entities into the UBS structure is expected
to take between three and five years and
presents significant
risks, including
the risks that
UBS Group AG
may be unable
to achieve
the cost reductions
and other benefits
contemplated by
the transaction.
This creates significantly greater uncertainty about
forward-looking statements. Other factors
that may affect UBS’s performance
and ability to achieve its plans,
outlook and other objectives also
include, but are not limited to: (i)
the degree to which UBS is successful
in the execution of its
strategic plans, including its cost
reduction and efficiency initiatives
and its ability to
manage its levels of
risk-weighted assets (RWA) and
leverage ratio denominator
(LRD), liquidity coverage ratio
and other financial resources,
including changes in RWA assets
and liabilities arising from higher
market volatility and the size
of the combined Group; (ii) the
degree to which UBS is successful in implementing changes to its businesses to meet changing market, regulatory
and other conditions, including as a result of
the acquisition of the Credit Suisse
Group; (iii) increased inflation and interest rate
volatility in major markets; (iv) developments in the macroeconomic climate
and in the markets in
which UBS operates or
to which it is
exposed, including movements
in securities prices or liquidity, credit spreads, currency
exchange rates,
deterioration or slow recovery
in residential and
commercial real estate markets,
the effects of
economic conditions, including elevated inflationary
pressures,
market developments, increasing geopolitical tensions, and changes to national trade policies on the financial position or creditworthiness of
UBS’s clients and
counterparties, as well as on client sentiment and levels of activity; (v) changes in the availability of capital and funding, including
any adverse changes in UBS’s
credit spreads and credit ratings of UBS, Credit Suisse, sovereign issuers, structured credit products or
credit-related exposures, as well as availability and cost of
funding to
meet requirements
for debt
eligible for
total loss-absorbing
capacity (TLAC),
in particular
in light
of the
acquisition of
the Credit
Suisse Group;
(vi) changes in central
bank policies or
the implementation
of financial legislation
and regulation in
Switzerland, the
US, the UK,
the EU and
other financial
centers
that have imposed, or resulted
in, or may do so
in the future, more stringent
or entity-specific capital,
TLAC, leverage ratio, net
stable funding ratio, liquidity
and
funding
requirements,
heightened
operational
resilience
requirements,
incremental
tax
requirements,
additional
levies,
limitations
on
permitted
activities,
constraints on remuneration, constraints
on transfers of capital
and liquidity and sharing of
operational costs across the
Group or other measures, and the
effect
these will
or would
have on
UBS’s business
activities; (vii) UBS’s
ability to
successfully implement
resolvability and
related regulatory requirements
and the
potential
need to make further changes to the
legal structure or booking model of
UBS in response to legal and regulatory requirements
and any additional requirements
due to its acquisition of the Credit Suisse Group, or other developments; (viii) UBS’s ability to maintain and improve its systems and controls for complying
with
sanctions in a timely
manner and for the detection
and prevention of money
laundering to meet evolving
regulatory requirements and expectations,
in particular
in current geopolitical turmoil;
(ix) the uncertainty arising from domestic
stresses in certain major economies;
(x) changes in UBS’s competitive
position, including
whether differences in regulatory capital and other requirements among the major financial centers adversely affect UBS’s ability to
compete in certain lines of
business; (xi) changes in the standards of conduct applicable to
its businesses that may result from new
regulations or new enforcement of existing standards,
including measures to impose new and enhanced duties when interacting with customers and in the execution and handling of customer transactions; (xii) the
liability to which UBS may be exposed, or possible
constraints or sanctions that regulatory authorities
might impose on UBS, due to litigation, contractual
claims
and regulatory
investigations, including the
potential for
disqualification from
certain businesses, potentially
large fines
or monetary
penalties, or
the loss
of
licenses or privileges as
a result of
regulatory or other governmental sanctions, as
well as the effect
that litigation, regulatory and similar
matters have on the
operational risk component of its RWA, including as a result of its
acquisition of the Credit Suisse Group, as well as the amount
of capital available for return to
shareholders; (xiii) the
effects on UBS’s
business, in particular
cross-border banking, of
sanctions, tax or
regulatory developments
and of possible
changes in UBS’s
policies and practices; (xiv) UBS’s ability to retain and attract the employees necessary to generate revenues and to manage, support and control its businesses,
which may
be affected
by
competitive factors;
(xv) changes in
accounting or
tax standards
or
policies, and
determinations or
interpretations affecting
the
recognition of gain or loss, the valuation
of goodwill, the recognition of deferred tax
assets and other matters; (xvi)
UBS’s ability to implement new technologies
and business methods,
including digital services
and technologies, and
ability to successfully
compete with both
existing and
new financial service
providers,
some of
which may not
be regulated to
the same extent;
(xvii) limitations on the
effectiveness of UBS’s
internal processes for
risk management, risk
control,
measurement and modeling, and
of financial models generally; (xviii) the
occurrence of operational failures,
such as fraud, misconduct, unauthorized
trading,
financial crime, cyberattacks, data leakage and systems failures, the risk of which is increased with cyberattack threats from both nation states and non-nation-
state actors targeting
financial institutions; (xix) restrictions on
the ability of
UBS Group AG
and UBS AG
to make payments
or distributions, including due
to
restrictions on the
ability of its
subsidiaries to make
loans or distributions,
directly or indirectly, or, in the case
of financial difficulties,
due to the
exercise by FINMA
or
the
regulators
of
UBS’s
operations
in
other
countries
of
their
broad
statutory
powers
in
relation
to
protective
measures,
restructuring
and
liquidation
proceedings; (xx) the degree to which
changes in regulation, capital or
legal structure, financial results or
other factors may affect UBS’s ability
to maintain its
stated capital return objective;
(xxi) uncertainty over the scope
of actions that may
be required by UBS, governments
and others for UBS to
achieve goals relating
to climate, environmental and social matters, as well as the evolving
nature of underlying science and industry and the possibility of conflict
between different
governmental standards and regulatory regimes; (xxii) the ability of UBS to
access capital markets; (xxiii) the ability of UBS to successfully
recover from a disaster
or other
business continuity
problem due
to a
hurricane, flood,
earthquake, terrorist
attack, war,
conflict (e.g.,
the Russia–Ukraine
war), pandemic,
security
breach, cyberattack, power
loss, telecommunications failure or
other natural or
man-made event, including
the ability to
function remotely during
long-term
disruptions such as the COVID-19 (coronavirus) pandemic; (xxiv) the level
of success in the absorption of Credit Suisse, in the integration of the two groups
and
their businesses, and in the execution of the planned strategy regarding cost reduction and divestment of any non-core assets, the existing assets and liabilities
of Credit Suisse, the level
of resulting impairments and write-downs, the effect of
the consummation of the integration on the operational results,
share price
and credit
rating of UBS
– delays,
difficulties, or
failure in
closing the transaction
may cause market
disruption and challenges
for UBS
to maintain
business,
contractual and operational relationships;
and (xxv) the effect that these or other
factors or unanticipated events,
including media reports and speculations,
may
have on
its reputation
and the
additional consequences
that this
may have
on its
business and
performance. The
sequence in
which the
factors above
are
presented is not indicative of their
likelihood of occurrence or the potential magnitude of their
consequences. UBS’s business
and financial performance could
be affected by other factors identified in its past
and future filings and reports, including those filed
with the US Securities and Exchange
Commission (the SEC).
More detailed information about those factors is set forth in documents furnished by UBS and filings made by UBS with
the SEC, including the UBS Group AG
and UBS AG Annual Reports
on Form 20- F for the year
ended 31 December 2023. UBS
is not under any obligation
to (and expressly disclaims any
obligation to)
update or alter its forward-looking statements, whether
as a result of new information, future events, or otherwise.
Rounding |
Numbers presented throughout this report may not add up
precisely to the totals provided in the tables and text.
Percentages and percent changes
disclosed in text and tables are
calculated on the basis of unrounded
figures. Absolute changes between reporting periods disclosed in
the text, which can be
derived from numbers presented in related tables, are calculated on
a rounded basis.
Tables |
Within tables, blank fields generally indicate non-applicability or that presentation of any content would not be meaningful, or that information is not
available as of the relevant date or for the relevant period. Zero values generally indicate that the respective figure is zero on an actual or rounded basis.
Values
that are zero on a rounded basis can be either negative
or positive on an actual basis.
Websites |
In this report, any
website addresses are provided
solely for information
and are not intended
to be active links.
UBS is not incorporating
the contents
of any such websites into this report.
UBS Group AG
P.O. Box
CH-8098 Zurich
ubs.com
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this
report to be signed on their behalf by the undersigned, thereunto duly authorized.
UBS Group AG
By:
/s/
David Kelly
___
Name:
David Kelly
Title:
Managing Director
By:
/s/ Ella Campi
_
Name:
Ella Campi
Title:
Executive Director
UBS AG
By:
/s/
David Kelly
_
Name:
David Kelly
Title:
Managing Director
By:
/s/ Ella Campi
_
Name:
Ella Campi
Title:
Executive Director
Date:
August 23, 2024