UBS Group AG 6-K, filed Aug 23, 2024
UBS Group AG (UBS)
6-K
2024-08-23
For: 2023-12-31
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Added on
April 08, 2026
About this 6-K
UBS Group AG filed this 6-K on August 23, 2024.
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
☒
☐
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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Introduction
Sustainability and climate risk
3
6
8
10
Appendix
12
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
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,
›
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
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
4
Sustainability and climate risk disclosures – Supplementary 2023 disclosures
5
Sustainability and climate risk disclosures – Supplementary 2023 disclosures
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
7
Sustainability and climate risk disclosures – Supplementary 2023 disclosures
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
9
Sustainability and climate risk disclosures – Supplementary 2023 disclosures
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
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 |
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 |
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 |
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 |
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