UOBAM’s Sustainable Investment and Active Ownership Approach

Sustainable Investing Vision and Goals

 

At UOB Asset Management (UOBAM), our vision is to be a leading fund manager in sustainability in Asia. We have been a signatory to the United Nations-supported Principles for Responsible Investment (PRI) since 2020 and are also a signatory to the Singapore Stewardship Principles (SSP) for Responsible Investors.

With sustainability as a key strategic pillar, we focus on creating long-term value and positive impact for our stakeholders, while making sustainable investments accessible to all. We believe that the integration of ESG considerations into our investments contributes positively to risk mitigation and long-term performance.

 

 

Sustainability Investment Governance Structure

 

UOBAM’s sustainability investment governance structure provides oversight on our policies and initiatives. The UOBAM Board of Directors reviews long-term business and organisational goals and provides the strategic direction for our sustainable investments and practices. Management Committee members, who also make up the Regional Investment Committee, are responsible for implementation, with support from the Regional and Local Sustainability Groups, and Sustainability Offices.

Sustainable Investment Framework

As part of our commitment towards sustainability, we have put in place our sustainable investing policy as part of our sustainable investment framework, as set out in the table below.

 

SUSTAINABLE INVESTMENT FRAMEWORK
ESG issues will be incorporated into existing investment practices using a combination of two approaches: integration and screening (where applicable in investment mandates)
Sustainable Investing Strategies Integration Screening
UOBAM's Sustainable Investing Policy
Description Systematically include ESG considerations in investment analysis and decisions, to better manage risks and improve returns Application of filters to lists of potential investments to rule companies in or out of contention for investment, based on best-in-class and negative screening approaches

 

We believe that ESG integration into our investment process, together with fundamental analysis, contributes to performance and risk mitigation by enabling us to identify high-quality companies which are resilient, well-managed, able to grow sustainably, and are likely to maintain their competitiveness in the long term.

Additionally, for selected sustainability funds, we utilise a combination of ESG integration, fundamental analysis, and our AI-augmentation model. UOBAM leverages investment-related technologies in a prudent way to enhance investment solutions and outcomes for our investors. Our proprietary AI-Augmentation model supplements our existing investment expertise and process with technology-driven analyses and insights. This is done through 3 implementation levels: screening (the model screens the investment universe to generate shortlists), selection (where analyst selections and ratings are incorporated into the model), and optimisation (where risk-constrained security/sector weights are added through an optimisation process).

UOBAM’s ESG scoring methodology involves the assessment of material ESG factors of companies, determined by UOBAM’s proprietary materiality map which was developed taking reference to the Sustainability Accounting and Standards Board (SASB). We also apply ESG pillar weights to companies across 11 sectors that are classified using the Global Industry Classification Standard (GICS).

ESG scores are formulated using research and data sources which include multiple industry-leading third-party data providers and the local expertise of our regional sustainability analysts. In order to make the scores comparable across sectors and countries, adjustments are also made through normalisation methodology.

We also rely on our ESG Controversy Alert System, which is an artificial intelligence machine learning model that combs through news reports daily and assigns controversy scores for human review.

Our final adjusted ESG scores will be mapped to the following letter ratings:

Letter Rating Adjusted ESG Score Definition
A 7.5 to 10.0 Very good sustainability performance and ESG leadership
B 5.0 to below 7.5 Good sustainability performance and potential ESG leadership
C 2.5 to below 5.0 Average sustainability performance
D 0.0 to below 2.5 Below average sustainability performance

 

As of May 2025, based on UOBAM’s database coverage of over 9,100 companies, our ESG score distribution is as follows: A (23%), B (40%), C (28%), D (9%).

UOBAM recognises the double materiality of environmental and climate risks within the thermal coal industry. Hence, our Environmental Approach includes provisions to support companies committed to transition toward cleaner energy sources, recognising that Asia remains reliant on conventional sources of energy, including thermal coal, and the transition requires both time and resources.

  • Exclusion of companies that derive ≥20% of their revenue from thermal coal mining and/or power generation.
  • Energy Transition provision to allow up to 10% of total portfolio weight for companies that derive ≥20% of their revenue from thermal coal mining and/or power generation but have initiatives and policies to transition towards cleaner energy sources, to ensure that only high-quality names committed to energy transition are held within our portfolios.

UOBAM’s Environmental Approach is applied across all portfolios firmwide, except for portfolios managed by external fund managers, portfolios that are subject to specific instructions given by clients, or any portfolios that we do not have discretion over security selection.

UOBAM’s Controversial Weapons Approach addresses the adverse social impact associated with the production, manufacturing, sale/purchase, and brokerage of controversial weapons, in alignment with broader international standards and our commitment to social responsibility.

The Controversial Weapons Approach outlines how we manage investments in companies involved in the production, manufacturing, sale/purchase and brokerage of controversial weapons. The scope of controversial weapons takes reference from broader international standards, and covers areas such as biological and chemical weapons, incendiary weapons, and cluster munitions.

Ratings from an external data provider are utilised to indicate confirmed involvement in the production, manufacturing, sale/purchase, and brokerage of controversial weapons. Companies red-flagged under our Controversial Weapons Approach will not be invested in for as long as they remain flagged. We will monitor their status on a regular basis and will re-consider investing if their status changes.

UOBAM’s Controversial Weapon Approach is applied across all portfolios firmwide, except for portfolios managed by external fund managers, portfolios that are subject to specific instructions given by clients, or any portfolios that we do not have discretion over security selection.

UOBAM’s Active Ownership Approach serves to facilitate dialogue, engagement, and proxy voting. We leverage our regional footprint and the local expertise of our regional investment teams to execute meaningful dialogues and engagement which will drive strategic investment decisions for the sustainable investments we make.

These activities form a key component of our responsible investment approach and fulfils UOBAM’s fiduciary duty as an investment manager to act in the best long-term interests of our clients.

Company Engagement:
We leverage our regional footprint to identify a range of thematic and material ESG issues that can affect our investee companies in the long-term and engage them to ensure that they are well prepared to mitigate these issues.

By engaging with companies, we can also encourage improvement in their ESG disclosures, identify the need to advocate positive change, communicate our concerns, and improve their practices on ESG issues, where necessary.

We prioritise our engagements based on several factors, including the geography of companies, size of our holdings, severity of identified material ESG issue, potential to generate long-term value following a successful engagement, and specific client request(s). UOBAM engages with companies through a variety of channels, but we do not currently disclose the details of our conducted engagements.

As part of our escalation strategy, UOBAM may pursue various courses of action should a company constantly fall short of the expected targets, including voting at annual company meetings, reducing our investment holdings, or divestment.

Proxy Voting:
In Singapore, we work with the Institutional Shareholder Services (ISS) on proxy voting and consider internationally recognised sustainability-related standards in support of ESG resolutions. While we have authorised ISS to vote on our behalf, we retain full discretion over all voting decisions and reserve the right to exercise our votes contrary to the recommendations by ISS.

There may be situations where UOBAM may choose not to vote or abstain from voting:

  • Where administrative or other procedures result in the costs of voting outweighing the benefits;
  • The voting securities are part of a securities lending program and UOBAM is unable to vote securities that are out on loan;
  • A meeting notice is delivered close to the meeting date and UOBAM has insufficient time to adequately assess the issues being tabled at the shareholders’ meeting and / or process the vote;
  • UOBAM sells shares prior to a company's meeting date and decides not to vote those shares, on the basis that UOBAM shall not be restricted from trading in a security due to an upcoming shareholder meeting; and
  • Voting securities have been blocked from trading in order to be tendered for voting purposes and UOBAM believes that preserving the ability to trade the security is in the best interest of the beneficiaries;
  • In event of a situation where regulatory obligations and rulings of the SIC imposed on UOB Group that also apply to UOBAM, may prohibit UOBAM from voting on securities due to its deemed affiliation for a corporate action.

Environmental Risk Management

UOB Asset Management (UOBAM) recognises that climate change is one of the most defining issues of our time. As asset managers, we acknowledge our responsibility in driving the transition toward a low-carbon economy for a resilient future. As such, UOBAM has incorporated environmental risk in the management of investor assets. The Environmental Risk Management Framework is part of UOBAM’s integral risk management framework and in line with UOB Group’s Environmental Risk Management Framework and the recommendations of the Task Force on Climate-Related Financial Disclosures (“TCFD”).

UOBAM’s Board of Directors is accountable for overall risk and the oversight of risk-taking activities in UOBAM. These include identifying environmental risks and opportunities over the short and long-term and evaluating the actual and potential impact of these risks and opportunities on UOBAM’s strategies, business plans and products.

UOBAM considers the following aspects of environmental risk:

  • Physical risk, which arises from the impact of weather events and long-term or widespread environmental changes.
  • Transition risk, which includes the implementation of regulatory policies, disruptive technological developments, and shifts in consumer and investor preferences.
  • Reputational risk, which can arise at the firm level when asset managers invest into companies that carry out business activities that negatively impact the environment.

In addition to our Environmental Approach, UOBAM’s Portfolio Risk Management1 also includes the following:

  • Environmental Risk Management: Identification, assessment and monitoring on individual investments and portfolios are conducted on a regular basis, with climate related data from a third-party data provider. Various metrics are used for risk identification and assessment which may include, but are not limited to, measuring carbon emissions and intensity and climate risk-related scenario analysis. This is conducted in line with the Guidelines set out by the Monetary Authority of Singapore (MAS) and the recommendations of the TCFD.
  • Scenario Analysis: Conducted on a periodic basis as part of climate stress testing to further assess UOBAM’s portfolios’ environmental risk profile. The approach is based on climate scenarios provided by the International Energy Agency (IEA).
  • Capacity Building: Raising awareness and equipping staff with the necessary skillsets on environmental risk management are conducted through relevant training sessions, via a combination of internal and external courses.

1With focus on selected sustainability funds

Approach to Sustainability Issues & Strategic Partnerships

UOBAM recognises the following non-exhaustive list of key sustainability issues, which are incorporated into our ESG scoring methodology for companies based on their materiality map classification. Our ESG controversy alert system also assists in the detection and monitoring of any ongoing corporate involvement in the following:

  • Climate Change
  • Corporate Governance
  • Deforestation and Biodiversity Loss
  • Health and Safety
  • Human Capital and Labour Management

Strategic Partnerships

We look to take a proactive approach towards driving sustainable investing, in line with the PRI Principles, where our external efforts include establishing strategic investment partnerships with global sustainability leaders such as Robeco and Fukoku Capital Management.

Through such external partnerships, we aim to further enhance our capabilities and develop the accessibility of sustainable investment opportunities in Asia for investors. Examples include sustainability mandates, working together in policy consultation, and responsible investment education and thought leadership.