Universidad de Navarra
Master in Banking and Financial Regulation
Financial Ethics and Corporate Social Responsibility
Rodrigo González, Diego Ortiz, Andrés Ruiz-Tagle, Santiago Rodríguez
UBS UNMASKED: UNVEILLING ITS NON-SUSTAINABLE PRACTICES
February 2024
I.Introduction
UBS is a multinational investment bank and
financial services company headquartered
in Zürich, that emerged in 1988 throughout
the merger of the Union Bank of Switzerland
and the Swiss Bank Corporation. Following
the acquisition of Credit Suisse in March of
2023 it turned into the 6th largest bank in
Europe in terms of assets under
management (AUM), and one of the leading
providers of private banking services
worldwide. Despite its robust presence in
the banking sector, this paper focuses into
specific case studies that shed light on UBS’
financial undertakings, raising questions
about their alignment with the company’s
stated commitments to environmental,
social and governance (ESG) principles.
This research has been mainly carried out
with the help of BankTrack, a global tracking
organisation dedicated to assessing high-
impact business sectors and their
implications on both social and
environmental issues.
II.Sustainability projections
UBS has made some key advances
according to its last sustainability report of
2022. These improvements include
providing an easier accessibility for clients
to invest in sustainable investments
products and services, and stablishing
numerous partnerships with companies,
issuers and standard setters to help them
make a demonstrable contribution towards
sustainability. In terms of figures, UBS has
achieved a reduction of its net greenhouse
gas footprint for scope 1 and 2 emissions
by 13% (compared with 2021). Additionally,
it has contracted more than 80,000 tons of
permanent carbon removal certificates.
Lastly, it has achieved 99% renewable
electricity in line with the RE100 initiative.
In regards to its short term goals, for 2025
it plans to have USD 400 billion invested
assets in sustainable investments and
achieve net-zero emissions resulting from
its own operations. On the other hand, its
long term goals for 2030 include reducing
by 71% the emissions associated with their
loans to fossil fuel companies, reducing by
49% the emissions intensity associated with
their loans to power generation companies,
reducing by 42% the emissions that come
from residential real state lending portfolio
and by 44% the emissions that come from
its commercial real state lending portfolio.
III.People and culture
“We aim to be a diverse and inclusive
organization with a global presence. We
believe it is not just the right thing to do, but
also that it creates a virtuous cycle of viable,
long-term economic and social
development”. This statement represents
the underlying building blocks of UBS’
culture and it has led the company to make
substantial changes in the gender
distribution of its workforce and their
ethnicity.
Analysing these statements, along with the
aid of real case studies, will provide valuable
insights into the extent of UBS’
environmental and social commitments.
IV.Case Studies
Glencore
Glencore is a multinational Swiss company
that engages in the extraction, refining and
trading of various commodities worldwide
including metals, minerals coal and crude
oil. Previously known as Marc Rich + Co.AG,
it was stablished in 1993 in Zug,Switzerland.
UBS has been financing Glencore’s
operational activities since 2012.Particularly
50% of loans and underwritings to Glencore
over the last six years came from European
banks, in which UBS lies among the top five.
Despite being among the top 20 largest
companies in the world, according to
Fortune magazine, it has been widely
criticised for its tax avoidance, poor health
and safety conditions in many of its mines
and its bad track record on environmental
pollution. A case is point is the report
published by Censat Agua Viva (CENSAT)
and the Center for Research and Popular
Education (CINEP), which identified
extensive environmental damage and
pollution caused by Glencore’s Cerrejón coal
mine in the department of La Guajira,
Colombia. The operational activities carried
out in this mine have affected nearby
indigenous people and biodiversity, causing
involuntary displacement and restriction of
natural resources such as water. Another
case is point is the recent bribery case in
Democratic Republic of Congo (DRC) for
which Glencore paid more than $100 million
to government officials in order to secure
business advantages or avoid audits. As a
result of the scandals, severe reputational
damage has been caused to both Glencore
and banks with significant financial ties to
the company, such as UBS.
Likewise, Glencore’s activities have proven
to deviate from UBS’ commitment towards
sustainability and culture of inclusion,
raising concerns about the credibility of its
transition path. Therefore UBS should take
immediate action by restricting its lending
activities to those companies of which core
business does not comply with human
rights and biodiversity conservation
principles.
Cargill
When you think of a major company, Cargill
must be on the list. To give you an idea, it is
the largest non-publicly traded American
multinational in terms of profits. Its
business focus is a significant advantage for
the world, providing food, agricultural
inputs, and products to mitigate risks in
crops. In this way, it serves as a valuable ally
and a development mechanism for the
agricultural and aquaculture industry. As
mentioned, Cargill's main operational focus
is the direct impact on natural resources and
food production. In other words, being one
of the largest companies in the industry, if
not the largest, it also entails significant
responsibility not only in environmental
matters but also in actively collaborating in
the preservation of more organic and
natural foods with fewer chemical inputs.
Being a significant driver of development in
the food industry, the large American
corporation has various forms of financing
to support its multiple business lines,
production capacity, and constant
innovation in its processes. This leads us to
the research relevant to this essay, focusing
on the Swiss bank UBS, which, in 2022,
provided $11.7 million in financing to the
food giant. Both UBS and other banks,
investment funds, and pensions that have
collaborated to keep this corporation
operating and growing every day have faced
strong criticism. Cargill has been under
scrutiny for many years as the main suspect
in the deforestation of multiple forests in
South America, the high emission of
environmentally harmful gases, and
mistreatment of its employees.
“The destruction of the natural world is
driven by the agribusiness, and
agribusiness is driven by Cargill," stated
Todd Paglia, CEO of the environmental
group Stand Earth, during a press
conference in a suburb of Minneapolis
where Cargill is headquartered. Cargill
insists it has medium and long-term
programs to become a positive leader in the
industry and actively contribute to
environmental regeneration and a greener
world. However, public opinion perceives
these as empty promises, as there has been
no clear action from Cargill to improve its
processes not only to avoid environmental
destruction but also to propose game-
changing strategies for other companies in
the industry and their production processes
After our studies, classroom learning, and
analysis of sustainability and ESG topics, we
believe it is crucial to closely monitor the
case of Cargill. As future players in the
financial industry, consulting, or financial
strategy, we are aware that to achieve true
success, we must aspire to be the best
professionals possible while also ensuring
our values are reflected in every action. In
the specific case of Cargill, it is possible that
financing from banks and investment funds
to its projects may not be suspended.
However, it is essential to emphasize
significant changes in its environmental
plans as soon as possible to continue
supporting positive development. We
believe that those financing the food giant
should consider being more stringent with
their financing mechanisms for
corporations that do not meet the
requirements for conservation and
preservation of a culture based on
environmental stewardship, fairness to
employees, and a co-governance structure
with the capacity for positive management
and innovation.
TotalEnergies
TotalEnergies is a major multinational
energy company headquartered in France,
involved in various aspects of the energy
sector, including exploration, production,
refining, and marketing of oil and natural
gas. Originally founded in 1924 as the
Compagnie Française des Pétroles (CFP), it
underwent several name changes before
adopting the name TotalEnergies in 2021.
UBS has been actively involved in financing
TotalEnergies' operations, providing loans
and underwritings to support the
company's endeavors. Over the past several
years, UBS has consistently ranked among
the top financial contributors to
TotalEnergies.
Despite its significance in the energy
industry, TotalEnergies has faced criticism
for its environmental practices and
contributions to climate change. The
company has been implicated in projects
associated with high greenhouse gas
emissions, deforestation, and
environmental degradation. Notably,
TotalEnergies has been involved in oil and
gas exploration in sensitive ecosystems,
raising concerns about its impact on
biodiversity and ecosystems.
One prominent case is TotalEnergies'
involvement in oil extraction in the Amazon
rainforest, where it has faced accusations of
contributing to deforestation and negatively
impacting indigenous communities.
Environmental organizations and indigenous
rights groups have raised alarms about the
ecological and social consequences of
TotalEnergies' operations in such
environmentally sensitive areas.
Moreover, TotalEnergies' investments in
fossil fuel projects have drawn criticism in
the context of global efforts to transition
towards renewable and sustainable energy
sources. The company's commitment to
renewable energy has been questioned,
especially considering the increasing
awareness of climate change and the need
for a shift to cleaner energy alternatives.
These environmental concerns associated
with TotalEnergies' operations pose
reputational risks for UBS, given its financial
ties with the company. UBS, in aligning with
its commitment to sustainability and
responsible business practices, should
consider reevaluating its financial support
for TotalEnergies and prioritize investments
in companies that adhere to more
environmentally friendly practices.
Taking proactive measures to limit financial
involvement with companies that do not
align with UBS's commitment to
environmental responsibility is essential for
UBS to uphold its reputation and contribute
to a sustainable and responsible business
environment.
CoreCivic
CoreCivic is a United States-based company
specializing in the management and
operation of private prisons, detention
centers, and correctional facilities.
Established in 1983, CoreCivic, formerly
known as Corrections Corporation of
America (CCA), is headquartered in
Nashville, Tennessee.
UBS has been providing financial support to
CoreCivic, involving loans and underwritings
for the company's operations. Over the past
few years, a significant portion of the
funding for CoreCivic, around 50%, has
been sourced from various financial
institutions, with UBS consistently ranking
among the top contributors.
Despite its prominence in the private
prison industry, CoreCivic has faced
widespread criticism for ethical concerns.
The company has been accused of
contributing to issues such as mass
incarceration, poor living conditions
within its facilities, and a range of human
rights controversies. One notable case
involves allegations of inadequate
medical care and mistreatment of
detainees, leading to legal challenges
and public scrutiny.
Moreover, CoreCivic's practices have
raised questions about UBS's alignment
with its own commitment to ethical and
sustainable business practices. Concerns
regarding the treatment of individuals
within CoreCivic's facilities and the
broader impact on society challenge UBS's
dedication to human rights and social
responsibility.
An illustrative example is the scrutiny faced
by CoreCivic's detention centers, where
reports of inadequate
healthcare, overcrowding, and
questionable treatment of detainees have
surfaced. These issues not only raise
ethical concerns but also pose reputational
risks for UBS, given its financial
involvement with CoreCivic.
In light of these ethical challenges, it is
imperative for UBS to reassess its financial
support to companies like CoreCivic,
whose operations are at odds with
UBS's commitment to sustainability and
societal well-being. Taking prompt action
to limit financial ties with companies
that do not adhere to human rights
and ethical principles is crucial for UBS
to maintain its credibility and uphold its
corporate values.
VI.Conclusions
As a form of contemporary activism,
the role of social media and websites
has become increasingly prominent
in contributing to the exposure of
relevant information that has a profound
impact on millions of people worldwide. In
this age of digital connectivity, platforms
like Bank Track play a crucial role in
unmasking financial institutions
that, indirectly, collaborate with
companies causing negative impacts
globally through their financing
practices.
This dynamic interaction between technology,
finance and activism provides a unique lens
through which students and aspiring
professionals can delve into the intricate
complexities ofIn this specific case, Bank
Track emerges as a powerful tool,
shedding light on the financial dealings
of UBS that often go unnoticed by the
public.
These educational endeavours open new
ways for students and future professionals,
providing them with a deeper
understanding of the real-world challenges
that the global community faces on a
day-to-day basis. Aspiring individuals in
the banking industry, who will play a
pivotal role in shaping the financial
landscape of tomorrow, must
recognize the importance of being
conscious contributors to positive
change. The learnings derived from such
subjects goes beyond the theoretical
aspects of finance; it fosters a sense of
responsibility and ethical
considerations that are indispensable
in the contemporary business world. The
pressing need for a substantial change to
create a better world for all becomes
increasingly apparent. The planet,
facing environmental challenges and
social inequalities, necessitates a collective
effort for positive transformation. UBS
must recognize the environmental and
social issues described in this report and
embrace the opportunity to contribute to
a better tomorrow.
V.Bibliography
(1)UBS sustainability report 2022
(2)The financing of Xtrata and Glencore
(3)Europe’s 50 largest banks by assets 2023
(4)Dirty profits 2: A report on companies
and financial institutions benefiting from
violations of human rights
(5)Banking on climate chaos: Fossil fuel
finance report 2023
(6)Glencore core business model
(7)Fortune Global 500
(8) Does Cerrejón always win?: Between
corporate impunity for human rights
violations and the search for comprehensive
reparation in times of transition.

(9)DR Congo: Miner Glencore pays $180m

in latest corruption case
(10) Cargill: the company feeding the world
by helping destroy the planet