UBS has rolled out a new structured note issued by the World Bank's International Bank for Reconstruction and Development (IBRD) that will support its sustainable development activities.

The note is a seven-year growth uncapped structure that will pay at maturity 105/115% of the positive performance of the Global Sustainability Signatories Index 7.5% VC ER, which provides exposure to up to 100 UN Global Compact Signatories selected according to their environmental, social and governance (ESG) ratings from Sustainalytics.

The index is unique in that it combines the UN Global Compact signatory members universe with Sustainalytics' research database, according to Michael Nelskyla (pictured), head of investor solutions at UBS Investment Bank. "It also uses both inclusionary and exclusionary screenings for sustainability in combination with positive earnings and liquidity filters, whilst maintaining benchmark type sector and market cap weightings," said Nelskyla, adding that combining the index with a World Bank sustainable bond and a targeted philanthropic effort by UBS Optimus provides "a unique market-leading proposition with strong evidence of impact".

The Global Sustainability Signatories Index 7.5% VC ER (GSSI) provides exposure to up to 100 Global Compact signatories who outperform their peers in terms of their environmental, social and governance performance. Tobacco and energy companies are excluded along with companies embroiled in serious controversies.

"Indices that use an ESG Leader approach are a great way for investors to align values with investments," said James Purcell, head of alternative and sustainable investing at UBS Global Wealth Management's chief investment office. "They can be confident that they are investing in companies that deliver best-in-class sustainability practices. In times of economic and political uncertainty, capital protected solutions often appeal to clients. In addition to benefiting from the IBRD's AAA rated credit rating, those who invest in the bonds and notes of the World Bank can be confident their money is supporting sustainable causes."

The launch extends UBS's partnership with the World Bank and other development banks to support fundraising for the Sustainable Development Goals (SDG). UBS is the exclusive underwriter of the new note and exclusive provider of financial products referencing the index, which was created by Sustainalytics and is administered by Solactive.

The notes will be available for UBS's investment banking clients globally and to its wealth management clients in the US and other select jurisdictions. UBS will issue "further products where relevant, most likely driven by demand for more shorter-dated tactical payoffs or local product requirements from UBS Global Wealth Management and our global client base" which "help align our client's financial objectives with their priorities to support sustainability", according to Nelskyla.

The new structured notes complement UBS' Insightshares, a new range of socially responsible thematic exchange-traded funds (ETFs): LGBT Employment Equality ETF and Patriotic Employers ETF.

"We expect (...) demand for ESG and SR Investments across most of our client channels globally," said Nelskyla. "In 2017 our Group Sustainable Investments grew to CHF1.1tr (€981bn) or to 35% of our total invested assets, which is a strong indicator for continued growth and demand in this space."

UBS will donate a percentage of its revenues from the notes to the UBS Optimus Foundation for projects linked to the UN Sustainable Development Goals. The offering period will end on October 22, 2018. The launch comes almost two years after the Swiss bank licensed the Dow Jones Sustainability Europe Diversified High Beta High Dividend Index as the underlying of index-linked products.

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