Go sustainable

21 August 2026, 09:35 UTC Chief Investment Office GWM Investment Research

Strategic: Go sustainable Go sustainable Author: Sagar Khandelwal, Strategist, UBS Switzerland AG

Why? 1) Sustainable investing can deliver competitive returns and alignment with sustainability goals. 2) The current geopolitical environment has reinforced the strategic importance of the energy transition for both security of supply and affordability. 3) We favor diversification across asset classes and exposure to private impact investments (subject to their unique risks).

CIO identifies a number of transformational innovations that and climate resilience. look set to shape global equity markets in the years to come. Each is closely linked to sustainability. Artificial intelligence, We therefore believe the secular case for investing in a Power and resources, and Longevity, which represent CIO's sustainable portfolio approach—diversified across equities, three Transformational Innovation Opportunities (TRIOs), are bonds, hedge funds, and private markets—remains firm. all themes that invest in companies addressing challenges and opportunities across varied fields like resource efficiency, All major asset classes offer sustainable options, which food and water security, and rising clean energy demand. historically have shown similar return characteristics to traditional investments, though risk characteristics differ These topics align with the priorities driving the global particularly for alternatives. We believe that the longer-term sustainability transition, where investment momentum has performance of diversified sustainable investing strategies been building. The International Energy Agency (IEA) has will be driven more by investment fundamentals and the reiterated that to remain on a net-zero pathway, annual economic environment than by politics. clean energy investment must increase to USD 4.5tr by 2030. A key theme from the 2026 Zurich Climate week Sustainable investors can put money to work depending on was the key role of physical enabling technologies— their intentions and objectives. particularly in power infrastructure—in supporting both decarbonization and adaptation. The electrification of Equity options include: industry, transport, and heating is accelerating demand for grid expansion and modernization. Investment is pouring • Strategies that predominantly invest in equities of issuers into high-voltage cables, advanced and assets providing solutions to sustainability or climate transition challenges; transformers, and grid optimization solutions, all of which are essential to integrate renewables, manage distributed • Engagement equity strategies that predominantly invest in equities of issuers demonstrating better operational energy resources, and enhance system resilience against sustainability or climate transition performance relative to extreme weather. peers; We expect companies supplying cables, transformers, • Strategies that look to generate progress by investing in switchgear, and grid management software to see robust equities of issuers that have potential to show improved growth, supported by regulatory tailwinds and public sustainability or climate transition performance over time; investment. These technologies are not only critical for emissions reduction, but also for ensuring energy security

This report has been prepared by UBS Switzerland AG. Please see important disclaimers and disclosures at the end of the document.

• Alignment strategies where equity fund managers Some investors may seek impact investing, a subset actively engage with issuers with the aim of driving of investment solutions, where investors actively fund progress on sustainability or climate transition-related or engage with investments to generate measurable, topics. verifiable, positive environmental or social impact alongside competitive financial returns.

• Strategies that predominantly invest in bonds of issuers demonstrating better operational sustainability or climate transition performance relative to peers;

• Strategies where bond fund managers actively engage with issuers with the aim of driving progress on sustainability or climate…