Sustainability is one of the most urgent topics in the world right now, and it’s a sector no player in financial services can ignore. Today, finance.swiss speaks to Michael Baldinger, Chief Sustainability Officer at UBS. He talks about the importance of being UBS’s first CSO, why sustainability is “the Silicon Valley of finance,” and how this is a massive opportunity for Switzerland.
“Reimagining the power of investing. Connecting people for a better world.” That’s the purpose statement of UBS. What does it mean exactly when it comes to sustainability?
Whenever we want to do a deal, whenever we want to invest in something, we always ask ourselves that question: What is the long-term impact on our firm, our clients, and our shareholders? And that is really very powerful. What do we do with sustainability? We really translate that statement, that core belief in what we do, across the firm. So this is not just creating a couple products as add-ons. It’s really an integral part of our long-term strategies.
You’re the first Chief Sustainability Officer at UBS. How does this role support your purpose statement?
I’m really proud to be the first CSO at UBS, I must say. What a great honor! But it also shows you the reason why the executive board made this call and created this job. It has become really complex out there when it comes to sustainability. For me, the CSO is kind of the “sense-maker.” I see what’s going on out there, bring it back to the firm, and make the argument why it’s relevant for what we do and who we are, why it’s relevant for our clients, and how we integrate it into our strategy. Do we have to adapt certain business models? Do we need to change something?
But it seems that it’s also very challenging?
Oh, no doubt about that! You know the great thing about sustainability is that it’s the best topic out there. It’s the fastest growing topic. It’s the most innovative topic. So for me, it’s really the Silicon Valley of finance. It is tangible, it is all positive. You can talk with your kids at the dinner table about it. But it’s complex, and you have to demystify the topic. It’s the perfect topic to lose focus, so we have to make sure we are really focused on what we do. The second challenge, I would say, is still the availability of data. We need a lot of data to do our assessments. That is still a challenge for us as well.
You mentioned data, but transparency is also critical for making decisions when investing. Can standards such as those of the Task Force on Climate-Related Financial Disclosures (TCFD) move the needle or does the topic remain challenging for investors?
TCFD is such a great framework and we all support it. We have been supporting TCFD for a while at UBS; the Swiss government now supports it as well. It is really important that we have a clear standardization of corporate reporting, because only then we can do our assessments. And if you just think about what you said about transparency: Transparency changes our business models. Since we have smartphones, every question you have can get answered right away. In a grocery store, it is clearly indicated on a package how much sugar is in a product, how much fat, so we can compare them as customers. And the same is happening in finance. Everything on the investment side, what you report back to your clients, has to be transparent. And only then can a client make an individual decision about what to invest in and what to finance.
And talking about clients, what does it change when working with them on a daily basis?
We should not forget, for example, when it comes to climate, there are the net-zero commitments for 2050 mostly. More than half of global GDP has made a net-zero commitment, over 30,000 big corporate clients have made net-zero commitments. So they are all on the same journey. And we see it with us; we made a net-zero commitment on April 17 at UBS, and we execute this now. It’s quite an undertaking. It does change things: It changes how we invest, it changes how we lend, how we conduct certain businesses, and half the world is on the same path. So for us, it’s very important to create that platform, that sustainability platform, across all businesses. It’s almost like a plug-and-play situation, where we can really work together with our clients. If it’s an asset owner, pension fund, or if it’s a corporation, someone who goes public in the marketplace, it is really across all client segments, where we can—with our platform—create that relationship with our clients to help them.
Let’s talk about Switzerland’s financial services industry. What do you see as the role of Switzerland in supporting the transition to a net-zero economy?
First of all, I think it’s a fantastic business opportunity for Switzerland. We should not forget, we have always been extremely innovative when it comes to sustainability topics. My previous employer, RobecoSAM, was the founder, the innovator, of the Dow Jones Sustainability Index, the most important corporate benchmark when it comes to sustainability. We have great microfinance companies, and we have in UBS the leader in sustainable investing in the world. We have such a tremendous client reach across all client segments, so if we work together with them to create those solutions when it comes to net-zero on climate particularly, I think it’s a fantastic chance for us in Switzerland.