Swiss bank UBS has loosened restrictions on its sustainability funds to allow investments in armament companies.
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This decision has been bitterly criticised by the sustainable investments advisor Ethos Foundation, but welcomed by Swissmem, the association of the mechanical and electrical engineering industry.
+ Swiss finance sector told to ‘green’ up its act
In concrete terms, the bank headed by Sergio Ermotti is relaxing its exclusion criteria. Until now, companies that generate more than 10% of their turnover with war materiel were taboo in products that integrate financial criteria with ethical, social and environmental aspects, known as ESG criteria.
The rule has now been removed, but investments in controversial weapons such as nuclear bombs, anti-personnel mines and cluster munitions continue to be prohibited.
+ Swiss ‘green finance’ funds more than double in past year
It is unclear why UBS has changed course and the bank declined to comment on the issue. However, the company’s stance carries a lot of weight, considering that it manages assets worth more than $6,000 billion, making it one of the world’s largest asset managers and by far the largest in Switzerland.
The move did not please Ethos, a foundation that advises shareholders by promoting good corporate governance. The relaxation of the exclusion criteria is worrying in the current geopolitical environment, spokesperson Vinzenz Mathys told the Awp news agency.
In his view, the bank is sending the wrong signal. “Large-scale production of weapons is generally contrary to respect for human beings and carries the risk of massive destruction of the environment,” he said.
Although weapons can also be used for self-defence and peacekeeping, the use and end users of armaments are often difficult to determine.
Other Swiss asset managers are reluctant to invest in the so-called defence industry. Swisscanto, a subsidiary of ZKB, the Zurich cantonal bank, generally excludes arms manufacturers from its sustainable fund, while the criteria are less strict for products labelled “responsible”.
In this case, investments are possible in industrial companies that generate less than 5% of their turnover from the production of weapons technology. Controversial weapons are banned from all Swisscanto investment products, explains a company spokesperson. “There are currently no plans to adjust our exclusion criteria.”
Other industry players, such as Vontobel, Lombard Odier and LGT, follow a similar approach.
Not everyone is critical of UBS’s rethink, however: Stefan Brupbacher, director of Swissmem, says he is satisfied. “For years, Swissmem has been fighting against the discrimination of the defence industry when it comes to banking services and funds,” says the manager on the Linkedin platform. “Although we have usually met with understanding, almost nothing has been done.” In his view, UBS now takes responsibility with its decision.
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Popularity of sustainable investment waning in Switzerland
Translated from Italian with DeepL/mga
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