UBS Asset Management revealed today that it has divested its holdings in five energy companies from its suite of Climate Aware funds, and from its actively managed equity and fixed income sustainability funds, after engagement efforts with the companies failed to result in sufficient progress in managing climate risk. The five energy companies include Exxon Mobil, Imperial Oil, Kepco, Marathon Oil and Power Assets.
According to UBS, the divestment and exclusion decision followed a 3-year engagement program conducted with 49 oil and gas companies that had been identified as lagging on climate change performance. To date, 60% of the companies have made “good or excellent” progress towards transitioning their businesses to a low-carbon economy.
“We view engagement as fundamental to any sustainable investing approach. Through engagement, investors can be a force for good in influencing corporate behaviour and accelerating action in those sectors where it is most needed. Our three-year engagement programme provided companies with time to understand our concerns and act on them. We have seen positive progress from most companies in the program on their climate strategy and transition to a lower carbon economy. However, where we have not seen tangible progress, we are taking action.”
One of UBS AM’s Climate Aware funds is managed for UK pension fund Nest. As of June 2021, Nest’s share ownership in the five energy companies in the fund represented £40m. Nest stated that the companies will not return to its portfolio until clear progress is demonstrated on preparation for a low carbon economy.
Katharina Lindmeier, Senior Responsible Investment Manager at Nest, 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.”