sustainabilityreport2

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 6-K

REPORT OF FOREIGN PRIVATE

ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16 UNDER

THE SECURITIES EXCHANGE ACT OF 1934

Date: March 28, 2024

UBS Group AG

(Registrant's Name)

Bahnhofstrasse 45, 8001 Zurich, Switzerland

(Address of principal executive office)

Commission File Number: 1-36764

UBS AG

(Registrant's Name)

Bahnhofstrasse 45, 8001 Zurich, Switzerland

Aeschenvorstadt 1, 4051 Basel, Switzerland

(Address of principal executive office)

Commission File Number: 1-15060

Credit Suisse AG

(Registrant's Name)

Paradeplatz 8, 8001 Zurich, Switzerland

(Address of principal executive office)

Commission File Number: 1-33434

Indicate by check mark whether the registrants file or will file annual

reports under cover of Form

20-F or Form 40-

Form 20-F

☒

Form 40-F

☐

This Form 6-K consists of UBS Sustainability Report 2023,

which appears immediately following this

page.

Sustainability Report

2023

Thinking and acting with the long term in mind

Table of contents

Page

Introduction

................................................................

...................................................

The importance of sustainability and culture to UBS

................................................................

..................................................

About this report ................................................................

................................................................

.....................................

Banking on sustainability

................................................................

..........................

Our integration journey – at a glance ................................................................................................

.......................................

Our business model

................................................................

................................

Sustainability drives our ambitions

................................................................

..........

Strategy ................................................................................................

................................................................

.......................

Our sustainability and impact strategy ................................................................................................

....................................

Our aspirations and progress

................................................................

..................

Governance

................................................................

..................................................

Our sustainability governance

................................................................

.................

Environment

................................................................

................................................

Contributing to a low-carbon economy ................................................................................................................................

Supporting our clients’ low-carbon transition

................................................................

.......................................................... 27

Reducing our environmental impact ................................................................................................

.......................................

Monitoring the environmental impact of our supply chain ................................................................................................

......

Managing the risks of climate change to our business ................................................................

............................................

Social

................................................................

............................................................ 45

People and culture make the difference

................................................................

Driving social impact ................................................................................................

.............................................................. 54

Respecting human rights

................................................................

........................

Managing our supply chain responsibly ................................................................................................

..................................

Supporting opportunities

................................................................

...........................

Global Wealth Management ................................................................

................................................................

..................

Asset Management

................................................................

................................

Investment Bank ................................................................

................................................................

....................................

Personal & Corporate Banking

................................................................

................

Managing sustainability and climate risks ................................................................................................................................ 75

Sustainability and climate risk management framework

................................................................

..........................................

Appendix ................................................................................................

................................................................

...................

100

Appendix 1 – Governance

................................................................

....................

100

Appendix 2 – Environment ................................................................................................

...................................................

104

Appendix 3 – Entity-specific disclosures

for Credit Suisse AG

................................................................

.................................

116

Appendix 4 – Other supplemental information ................................................................................................

.....................

130

Sustainability Report 2023

| Introduction

Introduction

The importance of sustainability and culture to UBS

The acquisition of the Credit Suisse Group made 2023 an exceptional year

in our firm’s history. We completed the

first-ever combination of two global systemically important financial institutions (G-SIFIs) and have embarked on a

major

program

integrate

the

two

banks.

Our

sustainability

frameworks

are

exception.

have

made

significant progress

in aligning

our frameworks

for the

combined firm

and will

continue with

this alignment

in 2024

and

beyond.

2023

also

saw

significant

developments

corporate

disclosure

requirements,

particularly

the

European Union’s Corporate

Sustainability Reporting Directive

(the CSRD), as well as

in the availability of emissions

data and standards. In

addition, market volatility and the

conflicts in Ukraine and

the Middle East presented new

challenges for sustainable investing.

Integration of Credit Suisse

have

made

significant progress

integrating

UBS

and

Credit

Suisse’s

sustainability

policy

frameworks

and

processes:

–

have

implemented a

revised

sustainability and

climate

risk

policy

framework and

associated processes

reflect the full suite of activities of the combined

business and a consistent approach.

–

are

minimizing

our

scope

and

greenhouse

gas

(GHG)

emissions

through

energy

efficiencies

and

switching to more sustainable energy sources,

across the combined firm.

–

We have developed

updated scope 3

emissions targets

reflecting the combined

profile of the

combined firm

and

evolving regulatory

and data

standards. We

have updated

our previous

emissions targets

for real

estate mortgage

lending, as

well as

the fossil

fuels, power

generation and

cement sectors,

reflecting both

the combined

portfolios

of the two

firms and methodology changes.

We have added

targets for shipping, and

iron and steel

based on

the

materiality

these

sectors

our

combined

financing

portfolio

and

have

dropped

sectors

that

are

not

material.

–

We have made progress towards

the alignment of our sustainable investing

products standards across the firm

and will

benchmark Credit

Suisse’s products

against these

standards. We

expect to

incorporate products

that

meet our standards across our platforms in 2024.

–

We have

integrated our

performance evaluation and

compensation structures, including

our fair

pay practice.

We are

also aligning

social plans or

severance payments at

UBS and

Credit Suisse

in the

respective country to

ensure that all employees are treated equally.

We still have

significant milestones to deliver

in 2024 and

beyond. We firmly

believe, however, that

our activities

are already strengthening our creation of long-term value for our

shareholders, clients and other stakeholders. As

we progress with

the integration,

we aim to

leverage the

most effective

ideas and

capabilities of

both organizations

as we strive to build a highly dependable and

trustworthy firm globally.

We strongly believe that

institutions are defined by

their culture and, with

our “three keys to

success”, we have an

established concept

for advancing

the culture

across our

combined organization.

Our culture

is decisive

in achieving

our ambitions, and client centricity, accountability with integrity, collaboration, and risk

management are all areas

where our combined strengths can make the

biggest difference and as such, are a

key priority.

We continued

to make

good progress

on the

execution of

our Group-wide

sustainability and

impact strategy

2023, as

outlined in

this Sustainability

Report. While

market volatility

and rising

geopolitical tensions

over the

course

of 2023

proved challenging,

flows into

sustainable funds

and ETFs

remained positive.

Sustainable investing

also

gained

ground

alternative

markets,

including

real

estate

and

hedge

funds.

Against

this

backdrop,

saw

sustainable

assets

under

management

increase.

Overall,

our

efforts

across

sustainability

and

culture

have

been

reflected in solid results in key environmental,

social, governance (ESG) ratings.

Sustainability Report 2023

| Introduction

Trends

Policymakers

and

regulators

increasingly

require

corporations

embed

ESG

considerations

within

their

own

operations and

value chains,

and to

disclose them.

One example

of this

is the

CSRD, which

came into

effect in

2023

and will require

compliant reporting

within annual

financial reporting

for the first

wave of in-scope

entities for

fiscal

year 2024,

with reporting

2025. While

we welcome

this

move toward

greater transparency

and reliability

information, we continue to seek greater alignment across

existing and emerging disclosure requirements in order

to enable greater comparability.

While climate continues

to dominate the

sustainable finance

landscape, there

has been a

notable shift in

emphasis.

After

two

years

formulating

and

refining

net-zero

commitments

across

industries,

the

ongoing

progress

methodologies, data

and transition

finance frameworks

has

allowed discussions

to shift

toward the

quality and

ambition level of net-zero

targets. Transition has

become more widely

recognized as a

requisite path. As our

clients

look to a shift

in their business models to

prepare for the future, the

fast pace of technological innovation, along

with high inflation and input costs, are

key considerations as they develop their transition

strategies.

Emerging

trends

which

have

all

gained

momentum

2023

include

nature,

impact

transparency

and

blended

finance. The most advanced

of these is nature where there

has been a growing awareness

of the impact of society

the

world’s

biodiversity and

natural

capital.

New

frameworks are

being rolled

out

enhance

transparency,

including the release of the recommendations of the Taskforce on Nature-related Financial Disclosures (the TNFD).

This will improve the availability of good, economy-wide nature and biodiversity

data, contributing toward greater

transparency and providing an important

tool for investors and companies alike.

Turning to impact,

the increasing disclosure requirements

and growing demand

for transparency from

clients are

encouraging

the

development

new

measurement

methodologies.

the

last

year,

have

also

seen

governments and development finance institutions launch blended finance initiatives, using capital from public or

philanthropic sources

to increase

private sector

investment in

sustainable development. In

the past

decade, such

initiatives have mobilized over USD

200 billion in capital

toward sustainable development in developing countries

and we see significant opportunity for this to

grow further.

Our commitment

By 2050, our ambition

is to achieve net-zero

greenhouse gas emissions across

our scope 1 and

2, and specified scope

3 activities.

We recognize

there is

more to

do and

aim to

phase in

additional scope

3 activities

over time.

It is,

however,

important to

note that the

decarbonization of

the global

economy, emissions

reductions by

clients, and the

realization

of our own targets and ambitions all

depend on a variety of factors, some

of which are beyond our direct influence.

The decarbonization of the

global economy will

require governments, regulators, all industries

and consumers to

move in

the same

direction. Clear

guidance by

governments

through thoughtful

regulations, policies

and incentives,

including mechanisms to factor in the price of carbon,

as well as the development and scaling of key technologies

and broader changes in the behavior of our

society, will be critical.

Our ambition

to be

a global

leader in

sustainability remains

unchanged. We

are committed

to supporting

our clients

in the transition

to a low-carbon

world, leading by

example in our

own operations,

and sharing our

lessons learned

along the way with the rest of the world.

We hope you will join us on the journey.

Colm Kelleher

Chairman of the Board of Directors

Sergio P.

Ermotti

Group Chief Executive Officer

UBS was among the 43 companies that first signed

the UN Global Compact in 2000 and is also

a member of the

Global

Compact Network

Switzerland, meaning

are

committed

its

principles

human

rights, labor

standards, the environment and anti-corruption. As reflected in detail in this report, we have a comprehensive set

of goals and activities in place pertaining to

the principles of the UN Global Compact.

Sustainability Report 2023

| Introduction

About this report

Overview

The reporting period

for this UBS

Group Sustainability Report, which

also covers Credit

Suisse, is 1

January to 31

December 2023, which is aligned with the financial reporting period of UBS Group

AG. All 2023 data included in

the report

is therefore

for this

period. Historical

data (for

e.g., 2022

and 2021)

pertains to

Pre-acquisition UBS,

unless otherwise

stated. For

UBS’s own

environmental footprint,

the reporting

period has

changed from

July to

June (as applied

in the UBS

Sustainability Report 2022) to

January to December (for

this report) to

align with the

UBS

financial

reporting

year.

2022

data

restated

the

relevant

tables.

Data

showing

progress

against

our

decarbonization sectorial targets,

including net-zero ones, pertains

to 31 December 2022

(due to the unavailability

of relevant 2023 data, as explained in the respective section

of this report).

Unless otherwise

noted, the

information included

in this report

is presented

at the

consolidated level

for UBS

Group

AG, UBS AG and Credit Suisse AG.

›

Refer to “Note 29 Interests in subsidiaries and other entities” in the UBS Group AG Annual Report 2023 for

supplementary information regarding certain significant subsidiaries

This report

comprises the

“non-financial” disclosures

required for

UBS Group

AG, and

its subsidiaries,

including

UBS AG

and Credit

Suisse AG,

under the

Swiss Code

of Obligations

Art. 964b.

It also

comprises disclosures

required

for UBS AG by the German law implementing EU directive 2014/95 (CSR-Richtlinie-Umsetzungsgesetz

/ CSR-RUG)

(nichtfinanzieller

Konzernbericht)

(the

Non-Financial

Reporting

Directive).

table

the

end

this

report

(Appendix 4)

provides the

references to

such non-financial

information. This

report also

contains information on

UBS AG and UBS Europe SE pursuant to Art.

8 of the EU Taxonomy Regulation (Appendix

4).

UBS is

in the

process of

implementing a combined

and aligned sustainability-and-climate-risk dataset

across UBS

Group

and

including

Credit

Suisse

AG.

For

this

reason,

UBS

will

publish

UBS

Group

and

Credit

Suisse

sustainability and climate risk metrics required pursuant to FINMA Circular 2016/1 "Disclosure – banks", Annex 5,

supplement

the

UBS

Group

Annual

Report

and

the

UBS

Group

Sustainability

Report

line

with

the

publication timeline for the

semi-annual Pillar 3

disclosures in the

third quarter of 2024.

The current inventory of

quantitative sustainability

and climate

risk metrics,

including exposure

to carbon-related

assets, climate-sensitive

sectors and nature-related risks for UBS

AG, is disclosed in this report.

Additional information

pertaining to

the content

of this

report is

provided

in a

supplementary

document. All

climate-

and nature-related information contained

in this report and in the supplementary

document is also made available

through

separate

UBS

Group

Climate

and

Nature

Report

2023.

The

latter

report

follows

the

structure

recommended

the

Task

Force

Climate-related

Financial

Disclosures

(the

TCFD)

and

also

leverages

the

framework of the Taskforce on Nature-related

Financial Disclosures.

›

Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to this report,

available at

ubs.com/sustainability-reporting

for information on the implementation of the environmental risk

regulations in Singapore and the Hong Kong SAR by both UBS AG and Credit Suisse AG and disclosures in

connection with the legal entity reporting requirements of the ESG Sourcebook in the Business Standards section

of the UK Financial Conduct Authority Handbook, and for information pertaining to UBS Group AG’s approach to

the “Swiss Ordinance on Due Diligence and Transparency

in relation to Minerals and Metals from Conflict-Affected

Areas and Child Labor”

Our

Sustainability

Accounting

Standards

Board

(SASB)

index

and

our

Principles

for

Responsible

Banking

(PRB)

reporting and self-assessment are available at

ubs.com/sustainability-reporting

›

Refer to “Key terms and definitions”

in the appendices to this report for terms and abbreviations used in this report

Credit Suisse integration – explanations and

related assumptions

On 12

June 2023, UBS

Group AG

acquired Credit

Suisse Group AG,

succeeding by operation

of Swiss law

to all

assets and liabilities of Credit Suisse Group AG, and became

the direct or indirect shareholder of all of

the former

direct

and

indirect

subsidiaries of

Credit

Suisse Group

AG.

UBS

Group

holding

company and

conducts

substantially all

its

operations

through

UBS

and

Credit

Suisse

AG,

and

subsidiaries thereof.

UBS

aims

substantially complete the integration of Credit

Suisse into UBS by the

end of 2026. As part

of the integration of

Credit

Suisse,

UBS

plans

simplify

the

legal

structure,

including the

merger

UBS

and

Credit

Suisse

planned for 2024.

In June 2023, the International Sustainability Standards Board (the ISSB) finalized its first set of requirements for corporate disclosures regarding sustainability

matters: IFRS S1 and IFRS S2. The standards incorporate

the recommendations of the Task Force on Climate-related Financial Disclosures (the TCFD).

Sustainability Report 2023

| Introduction

In compliance with applicable regulatory requirements, information on Credit

Suisse AG has been included in

the

UBS Group Sustainability Report 2023.

›

Refer to “Appendix 3 – Entity-specific disclosures

for Credit Suisse AG” in the appendices to this report for more

information about Credit Suisse AG disclosures.

The legal structure of the UBS Group

The chart below gives an overview of our principal

legal entities and our legal entity structure.

›

Refer to the “Risk factors” and “Regulatory and legal developments” sections and the “Acquisition and integration

of Credit Suisse” section of the UBS Group AG Annual Report 2023 for more information

Assurance

This report has been

reviewed by Ernst &

Young

Ltd (EY). The content has

been prepared in accordance

with the

Global Reporting Initiative (GRI) Standards. We use the GRI as the basis

for this report and apply a careful process

weighing up the

materiality and relevance

of the information reported

and the expectations of

our stakeholders.

also

apply

our

firm’s

information

policy

and

disclosure

principles.

The

GRI

content

index,

supplementary

information, and EY’s assurance

report can be downloaded from

ubs.com/sustainability-report

. Selected metrics in

this report have

been subject

to reasonable or

limited assurance by

EY. A list of these

metrics and level

of assurance

can be found in the assurance report.

›

Refer to “Appendix 4 – Other supplemental information” in the appendices to this report for the assurance report

›

Refer to the Supplement to this report available at

ubs.com/sustainability-reporting

for more information on the

metrics definitions, approaches and scope (Basis of Reporting)

Explanation of dependencies

Certain activities

of UBS

that pertain

to the

implementation of

its sustainability

and impact

strategy are

directly

impacted

factors

that

UBS

cannot

influence

directly

can

only

influence

part.

These

include

pertinent

governmental actions (e.g., when it comes to

the achievement of the Paris Agreement

and thus the achievement

of our

firm’s net-zero

ambitions); the

quality and

availability of

(standardized) data

(e.g., in

such areas as

emissions);

the development

and enhancement

of required

methodologies and

methodological tools

(e.g., on

climate- and

nature-related risks); the ongoing evolution

of relevant definitions (e.g., sustainable

finance); and the furthering of

transparency (e.g., pertaining to

company disclosures of

data). Areas

where these dependencies

are of particular

relevance (including in particular

regarding the examples noted

above) are explained

in the relevant sections

of this

report.

28 March 2024

UBS Group AG

Contacts

Our Sustainability

Chief Financial

Officer (the

sCFO) and

our Corporate

Responsibility (CR)

teams manage

UBS’s

sustainability disclosures. Information to stakeholders about the

content of this report is provided by the CR team,

part of the UBS Group Chief Sustainability

Office (CSO).

cr@ubs.com

Sustainability Report 2023

| Introduction

Terms used in this report, unless the context requires otherwise

Description

”UBS,” ”UBS Group,” “UBS Group AG consolidated,” “Group,”

“the

Group”, “we”, “us” and “our”

UBS Group AG and its consolidated subsidiaries

“UBS Group excluding the Credit Suisse AG sub-group”

All UBS Group entities, excluding the Credit Suisse

AG sub-group

"UBS Group excluding Credit Suisse”

All UBS Group entities, excluding Credit Suisse AG

and its consolidated

subsidiaries, Credit Suisse Services AG, and other

small former Credit Suisse

Group entities now directly held by UBS Group AG

“UBS AG” and “UBS AG consolidated“,

“UBS AG sub-group“

UBS AG and its consolidated subsidiaries

“Pre-acquisition UBS”

UBS before the acquisition of the Credit Suisse Group

“Credit Suisse AG”, “Credit Suisse AG consolidated” and

“Credit

Suisse AG sub-group”

Credit Suisse AG and its consolidated subsidiaries

“Credit Suisse Group” and “Credit Suisse Group AG consolidated”

Credit Suisse Group AG and its consolidated subsidiaries,

before the

acquisition by UBS

“Credit Suisse”

Credit Suisse AG, its consolidated subsidiaries, Credit

Suisse Services AG, and

other small former Credit Suisse Group entities now directly held

by UBS

Group AG

“UBS Group AG” and “UBS Group AG standalone”

UBS Group AG on a standalone basis

“Credit Suisse Group AG” and “Credit Suisse Group AG standalone”

Credit Suisse Group AG on a standalone basis

“UBS AG standalone”

UBS AG on a standalone basis

“Credit Suisse AG standalone”

Credit Suisse AG on a standalone basis

“UBS Switzerland AG”

UBS Switzerland AG on a standalone basis

“UBS Europe SE consolidated”

UBS Europe SE and its consolidated subsidiaries

“UBS Americas Holding LCC”

UBS Americas Holding LLC and its consolidated

subsidiaries

“Pre-acquisition Global Wealth Management”

The UBS Global Wealth Management business division

before the acquisition

of the Credit Suisse Group (data, if any, from before the date of the

acquisition of the Credit Suisse Group)

“UBS AG Global Wealth Management”

The Global Wealth Management business division

of UBS AG and its

consolidated subsidiaries

“Wealth Management (Credit Suisse)”

The Wealth Management business division of Credit

Suisse AG and its

consolidated subsidiaries

“Pre-acquisition Personal & Corporate Banking”

The Personal & Corporate Banking business

division before the acquisition of

the Credit Suisse Group (data, if any, from before the date of the acquisition

of the Credit Suisse Group)

“UBS AG Personal & Corporate Banking”

The Personal & Corporate Banking business

division of UBS AG and its

consolidated subsidiaries

“Swiss Bank (Credit Suisse)”

The Swiss Bank business division of Credit Suisse

AG and its consolidated

subsidiaries

“Pre-acquisition Asset Management”

The Asset Management business division before the

acquisition of the Credit

Suisse Group (data, if any, from before the date of the acquisition of the

Credit Suisse Group)

“UBS AG Asset Management”

The Asset Management business division of UBS

AG and its consolidated

subsidiaries

“Asset Management (Credit Suisse)”

The Asset Management business division of Credit

Suisse and its consolidated

subsidiaries

“Pre-acquisition Investment Bank”

The Investment Bank business division before the

acquisition of the Credit

Suisse Group (data, if any, from before the date of the acquisition of the

Credit Suisse Group)

UBS AG Investment Bank

The Investment Banking business division of

UBS AG and its consolidated

subsidiaries

Investment Bank (Credit Suisse)

The Investment Bank business division of Credit

Suisse AG and its

consolidated subsidiaries

“Non-core and Legacy”

The Non-core and Legacy Portfolio

Sustainability Report 2023

| Introduction

Banking on sustainability

Our commitment

We want to be the financial provider of choice for clients

who wish to mobilize capital toward the achievement of

the

United

Nations

Sustainable

Development

Goals

(the

SDGs)

and

the

orderly

transition

low-carbon

economy. We are supporting

our clients in the transition

to a low-carbon economy,

leading by example in our

own

operations, and sharing our lessons learned along the way with the rest of the world. By 2050, our ambition is

achieve net-zero greenhouse gas (GHG) emissions

across our scope 1 and 2, and specified

scope 3 activities.

Continued ambition to be a global leader

in sustainability

The

acquisition

the

Credit

Suisse

Group

enlarged

our

exposure

sustainability

matters,

reflected

the

increased qualitative and quantitative content we are disclosing in this Sustainability Report. Since the acquisition,

we have been working to

progressively align governance, policies, methodologies and frameworks. We expect to

complete this work during 2024.

Our ongoing alignment includes making UBS

sustainable product standards the

benchmark, with Credit Suisse’s sustainable financing and investment products undergoing a detailed assessment

to ensure compliance with our standards, frameworks and expectations.

Our revised sustainability and climate risk

policy

framework

and

associated processes

reflect

the

full

suite

activities

the

combined

organization and

ensure a consistent approach.

Our priorities

Planet

Making climate a clear priority as we shift

toward a low-carbon economy

People

Addressing societal challenges through client

and corporate philanthropy, as well as

employee engagement.

Partnerships

Working with other thought leaders to achieve

impact on a truly global scale.

Our achievements in 2023

Serving clients’ sustainable finance

needs

–

USD 292.3 billion of sustainability focus and

impact investments (UBS

AG) (10% increase)

–

USD 11.2 billion clients' impact investing

assets (UBS AG Global Wealth

Management)

–

1,611 ESG resolutions voted upon (UBS AG Asset

Management)

–

46.5% sustainable investments share of assets

under custody reached

(UBS AG Personal & Corporate Banking)

–

102 green, social, sustainability or sustainability-linked

bond deals

facilitated

Among the leaders in key sustainability

ratings

–

Dow Jones Sustainability Index member (S&P

Global)

–

A– rating and included in Leadership band

(CDP)

–

AA rating (MSCI ESG)

–

Medium risk rating (Sustainalytics)

Addressing societal challenges

–

USD 328 million in donations raised by the

UBS Optimus network of

foundations

–

7 million beneficiaries reached across our social impact

activities (UBS

AG)

Transitioning to a low-carbon economy

–

Made progress toward our ambition of achieving net-zero GHG

emissions by 2050 across our scope 1 and 2, and

specified scope 3

activities and undertook an extensive review of the

decarbonization

targets of the UBS Group, as part of the integration

of Credit Suisse

–

Established decarbonization targets to address the

emissions of our in-

scope lending activities for specified sectors

and made progress toward

them

–

Analyzed the facilitated emissions from capital

markets activities for

select carbon-intensive sectors

–

Decreased carbon-related assets proportion of total customer lending

exposure to 7.2% in 2023 from 7.5% in 2022 (UBS

Group excluding

Credit Suisse)

–

Share of climate-sensitive sectors at 12.1% (transition

risk) and 9.7%

(physical risk) of our total customer lending exposure

(UBS Group

excluding Credit Suisse)

–

Exposure to nature-sensitive sectors at 15.1% of our total

customer

lending exposure (UBS Group excluding Credit Suisse)

–

57.3% positive progress against climate corporate engagement

objectives

–

157 companies at which we voted upon climate-related

resolutions

–

Reduced net GHG footprint for scope 1 and

2 emissions by 21%

–

65% of our GHG key vendors declared their emissions

on CDP and also

set 2050-aligned net-zero goals

Shaping a high-performing organization

–

29.5% of all Director level staff and above are women

–

24.3% of UK / 25.1% of US staff at Director level and

above are held by

employees from ethnic minorities

–

EQUAL-SALARY Foundation certification for equal pay

practices in

Switzerland, the US, the UK, the Hong Kong

SAR and Singapore (UBS

Group excluding Credit Suisse)

Investment Bank

figure is

102 of

which UBS

AG figure

is 93

and Credit

Suisse figure

is 16.

The metrics

include transactions

such as,

but not

limited to,

Investment Bank Global Banking bonds issued under the voluntary ICMA Green Bond Principles, Sustainability Bond Principles, and Sustainability-Linked Bond

Principles. The principles

include a recommendation

that the issuer

appoints an external review

provider to undertake

an independent external

review (e.g.,

second-party opinion). This is consistent with market practice.

The metrics also include sustainability-themed bonds

(e.g., Transition). Transactions are counted

only once, there is no double counting

(e.g., if and where UBS AG and

Credit Suisse were involved in the

same transaction). UBS has performed

an assessment

for Credit Suisse green,

social, sustainability and sustainability-linked bonds reported

in this report and

deemed them to be

aligned to UBS sustainable bond

guidelines.

Sustainability Report 2023

| Introduction

Our integration journey – at a glance

Following the

acquisition of

Credit Suisse

Group AG

by UBS

Group AG

on 12 June

2023, we

implemented integration

measures across our sustainability and culture

activities. We have set out key

measures in the table below.

Strategy

Sustainability and impact strategy applies

Group-wide

–

The sustainability and impact strategy of Pre-acquisition

UBS applies to UBS Group, including Credit Suisse.

While certain

sustainability-related policies, processes and activities continued

at Credit Suisse AG,

they are applied within the overarching strategy

of UBS Group.

Governance

Senior level governance spans the

entire Group

–

The responsibility for sustainability of UBS Group AG’s

Board of Directors (the BoD) spans the entire Group, including

Credit Suisse

AG. The five committees that support the BoD

each have specific ESG (environmental, social, governance)-related

responsibilities, with

the Corporate Culture and Responsibility Committee

(the CCRC) having primary responsibility for overseeing

our Group-wide

sustainability and impact strategy.

–

The Group CEO has delegated responsibility for setting

the sustainability and impact strategy

and developing Group-wide

sustainability and impact objectives, in agreement with

fellow GEB members, to the Group Executive

Board (GEB) Lead for

Sustainability and Impact. The GEB Lead for

Sustainability and Impact manages the UBS

Group Sustainability and Impact (GSI)

organization and, together with the Chief

Sustainability Officer (the CSO), co-chairs the Group-wide

Sustainability and Climate Task

Force (the SCTF).

–

In 2023, alignment with the Group’s strategies, objectives

and guidelines was ensured by UBS personnel being

represented on the

governance bodies of Credit Suisse. The overarching

governance of sustainability at Credit Suisse

AG was integrated into UBS Group

and certain CS governance bodies were retired. In 2024,

we aim to complete the integration of Credit Suisse

sustainability governance

bodies into the UBS Group sustainability governance.

Environment

Group-wide ambition to achieve net-zero greenhouse

gas emissions across our scope 1 and 2, and

specified scope 3

activities, by 2050

Financing:

–

In 2023, we revised our decarbonization targets to

reflect the combined lending portfolios and resulting

exposures to carbon-intensive

sectors.

–

In 2023, we calculated the emissions metrics

shown for 31 December 2021 and 31 December

2022 on the basis of the joint loan

books of UBS AG and Credit Suisse AG on those

dates, on a pro forma basis.

Investing:

–

In 2023, we undertook an extensive review of our

approaches to setting decarbonization targets, to

reflect the activities of the

combined organization and evolving standards

and methodologies.

–

In 2023, UBS AG Asset Management made

progress toward delivering its 2030 target of aiming to align

20% of UBS AG Asset

Management’s total assets under management

(AuM) with net zero, using science-based portfolio

alignment approaches. This Pre-

acquisition UBS aspiration will be reassessed in 2024.

Own operations:

–

For 2023, we disclosed the environmental footprint

of the joint operations of UBS Group, including

Credit Suisse,

unless otherwise

stated.

–

We integrated the greenhouse gas (GHG) emissions calculations

for the combined firm, with a new joint

base year set to

2019.

–

We integrated Credit Suisse energy consumption in UBS’s

15% reduction target by 2025.

–

For UBS Group excluding Credit Suisse, we continued

to apply an internal carbon price of

USD 400 per metric ton for scope

1 and 2 emissions in our capital investment business

cases in order to incentivize carbon reductions.

Supply chain:

–

In 2023, we revised and updated the list of

GHG key vendors (defined by us as those vendors

that collectively account for more than

50% of our estimated vendor GHG emissions)

from 83 to 95 to include Credit Suisse vendors.

–

In 2024 and 2025, our requirements to reduce the environmental impact

of vendors that provide services from offshore development

centers (ODCs),

as currently applied to UBS ODC vendors, will be

rolled out to Credit Suisse ODC vendors.

Social

Building a unified culture

Workforce

–

In 2023, we achieved the implementation

of a combined and fully integrated performance

management approach for all employees,

including Credit Suisse.

–

In 2023, we fully integrated former Credit Suisse

Group employees into our fair pay practices and continued

to monitor and improve

our pay equity position in our leading

countries.

–

For 2023, we are reporting consolidated workforce figures, unless

otherwise stated.

–

In 2023, we continued with our DE&I aspirations

(for the combined organization) and retired the Credit

Suisse DE&I aspirations.

Responsible supply chain:

–

In 2023, we established a combined spend

and vendor inventory for UBS AG and Credit Suisse

AG. In 2024, the UBS Responsible

Supply Chain Management framework will be

rolled out to Credit Suisse AG (which, in 2023, continued

to apply its Third-Party Risk

Management due diligence approach.

Sustainability Report 2023

| Introduction

Supporting

opportunities

Leveraging the power of the combined

firm for the benefit of clients

–

In 2023, we made UBS sustainable product standards

the benchmark going forward, with Credit Suisse AG’s

sustainable financing

and investment products undergoing a detailed

assessment to ensure compliance with our standards, frameworks

and expectations.

In 2024, we intend to fully incorporate

Credit Suisse data into our sustainable finance

and investing disclosures.

–

For 2023, we reported sustainable investments

(SI) for UBS AG. Credit Suisse AG sustainable investing

products and associated

invested assets continued to be classified under

the Credit Suisse AG Sustainable Investing Framework

(SIF) and reported separately.

All Credit Suisse AG green, social, sustainability and sustainability-linked

bonds reported were aligned to UBS guidelines.

–

In 2023, the Investment Bank, operating under

a single consolidated governance at

end-of-year, has combined sustainability

expertise from Credit Suisse AG to strengthen UBS Group’s offering across

Global Markets, Global Banking and Research. New

sustainable finance content, products and other

services taken over from Credit Suisse AG follow UBS Group standards

and approval

process. The Credit Suisse Sustainable Activities Framework,

as well as its related external USD 300 billion

sustainable finance

commitment, was retired.

–

In 2023, Credit Suisse (Schweiz) AG continued

to offer its sustainable products to its clients.

The development of new products was

paused, in light of our review and vetting of the

sustainable products of Credit Suisse (Schweiz) AG

against the UBS sustainable

product frameworks.

–

In 2024 and 2025, we will bring selected Credit

Suisse sustainable and impact investing

solutions onto the merged Global Wealth

Management platform. These solutions will

be subject to existing UBS Global Wealth Management

sustainable investing frameworks,

diligence, and instrument selection approaches. During

the migration of solutions, clients, and assets,

we will phase down dual

governance, with the aim of aligning

under the existing UBS Global Wealth Management

sustainable investing governance.

–

In 2024, the UBS AG Asset Management

SI product classification framework will be applied

to the Credit Suisse AG Asset

Management products when onboarded to the UBS shelf.

A joint governance forum is in place to

support the alignment of policies,

methodologies and frameworks.

Managing

risks

Combined sustainability and climate risk

appetite

–

In 2023, we revised our sustainability and climate

risk policy framework and associated processes

across UBS Group to reflect the full

suite of activities of the combined business

and ensure a consistent approach. We enhanced these by

adding Credit Suisse standards

relevant to the combined bank, for shipping, project finance,

and mining.

–

In 2023, Credit Suisse AG’s sector-specific client

energy transition framework (CETF) underpinned

its climate risk management, until

its decommissioning at end of year. A Group-wide approach is being developed

by the combined firm to assess clients’

energy

transition readiness.

–

For 2023, we disclosed climate risk metrics for

UBS AG, with Credit Suisse AG climate risk

metrics to be published in 2024 when

aligned data is fully available.

In 2024, we will also progressively align Credit Suisse AG’s

approach to the assessment of climate risk

materiality and its risk reporting cycles and metrics

with those of UBS AG, in parallel with the integration

of underlying processes and

controls.

Sustainability Report 2023

| Introduction

Our business model

UBS – who we are

UBS

leading

and

truly

global

wealth

manager,

enhanced

synergetic

investment

banking

and

asset

management capabilities, and the

leading bank in Switzerland. We

enable people, institutions and

corporations to

achieve

their

goals

providing

financial

advice

and

solutions.

have

unique

capital-generative and

well-

diversified business

model with

strong competitive

position in

our target

markets and

an attractive

long-term

outlook on return on capital. Our business model, our strong

culture, our respected brand with over 160 years

history and our capital prudence have made

it possible to both grow profits and deliver

high return on equity.

We are focused on driving sustainable

long-term growth while maintaining

risk and cost discipline

Our

objective

generate

value

for

our

shareholders

and

clients

driving

sustainable

long-term

structural

growth, as well

as capital

returns. To accomplish

this, we are

building on

our scale, content

and solutions, while

remaining disciplined on

capital, risk and costs.

Maintaining a balance sheet

for all seasons remains

the foundation

of our success. This will

give us the capacity to

invest strategically and will

enable us to deliver against

our financial

targets and commercial ambitions, which are outlined in the “Targets, capital guidance and ambitions” section of

the UBS Group Annual Report.

We benefit

from an

attractive business

mix, with

more than

one-third of

our risk-weighted

assets (RWA)

in our

global

asset-gathering

Global

Wealth

Management

and

Asset

Management

business

divisions,

which

are

structurally attractive from the risk, growth and capital

consumption perspectives and generate more than half of

our revenues. Roughly another

third of our RWA are

in Personal & Corporate

Banking in Switzerland, an

attractive,

stable

and

well-diversified

economy

with

low

historic

credit

losses.

Furthermore,

operate

capital-efficient

Investment

Bank

business

division,

which

limited

less

than

25%

Group

RWA

(excluding

Non-core

and

Legacy).

Moreover, we are aiming to maximize

our impact and that of our

clients to create long-term sustainable

value. We

also

have

responsibility

toward

the

communities

serve

and

our

employees.

have

outlined

selected

environmental, social

and governance

(ESG) aspirations,

which should

support our

financial and

commercial targets.

The acquisition of the Credit Suisse Group

is accelerating our strategy

The

acquisition

the

Credit

Suisse

Group

enhances

our

client

franchises

increasing

scale

while

adding

complementary

capabilities

and

gaining

talent.

Our

strategic

focus

remains

building

out

our

leading

global

investment platform. The acquisition

of the Credit Suisse Group

enables us to combine and

optimize our resources

and

target

investments

that

enable

provide

superior

levels

client

service.

Our

geographical

growth

segments will remain the Americas and Asia

Pacific, with Switzerland remaining our home

market. The acquisition

of the Credit Suisse Group will further shift our

business mix toward wealth management,

asset management and

our Swiss

business. The

acquisition also

strengthens our

investment banking

capabilities, without

compromising

our model, as the Investment Bank will consume

a limited share of the Group’s RWA.

We have a global, diversified business model

Our invested assets of more

than USD 5trn are regionally

diversified across the globe.

We give our clients access

a broader,

more relevant

and customizable

range of

solutions, which,

together with

our thought

leadership and

capabilities,

position

well

become

their

partner of

choice.

Our

strategic

ambitions

are

reflection

the

outlook

long-term

demographic

and

social

trends

affecting

wealth

distribution,

product

demand

and

client

experience.

Regionally, more than

half of

our wealth

management clients’ invested

assets are

in the

US, which

is the

largest

wealth pool

globally, with

solid wealth

generation. Here

we are

a top player,

and we

are focused

on improving

scale

and

profitability

deepening

our

relationships

with

core

clients

and

building

out

our

digital-supported

capabilities and banking platform.

In Asia Pacific, which is the fastest-growing

wealth market, we are by far the

largest wealth manager

, and we are

building on that scale

to drive growth.

We are further developing

our businesses in

China and working

to offer our

capabilities in a more cohesive way to our

clients in Southeast Asia.

Asian Private Banker,

23 January 2024.

Sustainability Report 2023

| Introduction

In EMEA,

we are

focused on

improving profitability

and driving

focused growth

by optimizing

our domestic

footprint

and providing holistic coverage for entrepreneurs.

Finally, in Switzerland, we have a highly integrated business and

aim to reinforce our position as the leading bank.

are

driving

our

digital

transformation,

improving

the

client

experience

and

focusing

capturing

selected

growth opportunities.

Our growth plans are underpinned by

cross-divisional collaboration

We want to serve our clients

as one firm. The collaboration between

our business divisions is critical to the

success

of our strategy and is

a source of competitive advantage. This

collaboration also provides further revenue growth

potential and enables us to better meet client needs

in our core wealth and global family and institutional wealth

(GFIW) segments

alike. Our

Asset Management

business division

provides clients

with a

broad offering

and exclusive

access to

premium personalized

services, while

our investment

banking capabilities

support our

growth plans

across

the

client

franchise

with

unique

insights,

execution,

and

risk

management.

collaboration

between

our

businesses adds value

for clients, including

access to private

markets, alternatives and

ESG products, and

we are

continuously striving to enhance our holistic

client offering.

Clients are at the center of everything

we do

Helping clients to achieve their financial and personal goals is the essence of what we do. We aim to differentiate

our service by

delivering a client

experience that is

personalized, relevant,

on-time and seamless.

This is our

promise

to clients.

With evolving

client needs,

we are

adapting by

making our

wealth coverage

more needs-based,

digital and

effective.

In wealth management, our focus remains on our core wealth and GFIW clients, while expanding our coverage of

entrepreneurs,

women

and

the

generation

wealthy

individuals.

are

launching

and

scaling

digitally

customizable

services,

enhancing

personally

advised

wealth

with

digital

support,

and

expanding

our

custom

offerings for GFIW to cater for the different

needs of our clients.

We are investing in our technology as an

enabler for client experience, simplicity

and efficiency

The trusted and personal

relationship with our clients

across our businesses is

evolving. Today, our clients

expect us

to provide

our services

seamlessly across

the firm

in a

personalized,

relevant and

timely fashion,

with increasing

demand for services that are

digital first and available anytime and anywhere.

This presents an opportunity for us

to fully embrace technology, through which

we aim to differentiate the firm.

continue

invest

technology,

such

Artificial

Intelligence,

with

the

goals

improving

efficiency

and

effectiveness, driving and enhancing growth and

better serving our clients. We believe the continued

optimization

of our processes, our platforms, our organization

and our capital resources will help us to

achieve this.

Sustainability Report 2023

| Introduction

Sustainability drives our ambitions

We partner with

our clients

to help them

mobilize their

capital toward

a more sustainable

world. Our aim

is to meet

clients’ demands for credible sustainable offerings. We want

to be the financial provider

of choice for clients that

wish to

mobilize capital

toward the

achievement of

the United

Nations Sustainable

Development Goals

and the

orderly transition to a

low-carbon economy, including in Switzerland, where, as

the leading bank, we are

helping

to finance this transition.

Our ESG policies and guidelines support

the implementation of our sustainability

and culture agenda

Our

Code

Conduct

and

Ethics

(the

Code)

sets

out

the

principles

and

commitments

that

define

our

ethical

standards and

the

way

business.

outlines

UBS’s

aspiration

create

fairer,

prosperous

society,

champion a healthier

environment and address inequalities.

It also contains

our commitment to

fulfil compliance

obligations. We are committed to

obeying the laws, rules and

regulations of the areas where

we live, work and do

business. The

Code covers our

dealings with clients,

counterparties, shareholders,

regulators, business

partners and

colleagues.

the

basis

for

our

policies,

guidelines

and

procedures,

including

environmental,

social

and

governance (ESG) matters.

›

Refer to the “Key policies and principles ” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

for the summary of our related key policies and principles

Key regulatory and market developments

impact our approach to sustainability

During 2023, the

regulatory and policy agenda

on sustainability and climate

continued to evolve,

as regulators and

supervisors

increasingly

required

ESG

considerations to

embedded

across

own

operations

and

value

chains.

Expanding reporting and disclosure requirements and risk management expectations,

a growing focus on broader

sustainability

issues

including

nature,

and

social

impact

are

all

contributing

increased

pressure

firms.

Meanwhile, a

regulatory

focus on

the

prevention of

greenwashing is

fueling initiatives

taxonomies, product

labels, ESG data and ratings, and corporate sustainability

due diligence.

A number of important developments

relating to corporate sustainability disclosure

and reporting standards took

place during 2023, including the swift adoption by companies globally of the recommendations of the Task

Force

on Climate-related Financial Disclosures (the TCFD)

in their annual reporting. Elsewhere, we saw finalization

of the

Corporate Sustainability Reporting Directive

(the CSRD) in

the European Union,

and issuance of

the International

Sustainability Standards Board’s (the ISSB) inaugural standards. These efforts are expected to

contribute to greater

harmonization of

sustainability reporting

standards globally,

thereby helping

to mitigate

greenwashing concerns

and improve the quality of sustainability data.

Alongside a

continued focus

on climate

matters in

corporate disclosures

and regulatory

frameworks, there

is an

increasing recognition of the degree to which the world’s biodiversity

and natural capital are being damaged. This

growing

concern,

many

business

sectors

rely

natural

resources

operate

effectively

and

efficiently;

eroding those

resources could

have profound

implications, both for

the global

economy and wider

society.

New

frameworks have been rolled out to enhance transparency in this area, notably by the Taskforce on Nature-related

Financial Disclosures

(the TNFD)

in September

2023. The

publication of

the TNFD

guidelines and

their adoption

may

well lead

regulators to ask

businesses to take

into consideration more

effectively the impact

of their activities

nature. We expect that, over

time, this will also drive further

client interest in natural capital and

biodiversity topics

and corresponding products and solutions.

Finally,

after

two

years

formulating

and

refining

net-zero

commitments,

2023

saw

strong

focus

implementation.

With ongoing progress in methodologies, data and transition

finance frameworks, the emphasis

of industry discussions is shifting toward the quality

and ambition level of net-zero targets. For

many of our clients

meanwhile, developing the right transition strategies,

given the fast pace

of technological innovation, along with

high inflation and input costs, is a key consideration.

Voluntary carbon markets will likely play an

important part in

the world’s

transition to

low-carbon economies,

but they

continued to

suffer from

relatively depressed

prices in

2023. Nonetheless,

market and policy

standards aiming

to safeguard against

known market

weaknesses continued

to evolve.

›

Refer to

ubs.com/code

for the full UBS Code of Conduct and Ethics

›

Refer to “Our strategy, business model and environment” in the UBS Group

Annual Report 2023

Sustainability Report 2023

| Strategy

Strategy

Our sustainability and impact strategy

What sustainability means to us

We all have a role to play in securing a more sustainable world,

and the financial industry is no exception.

At UBS,

we reimagine

the power of

people and capital

to create a

better world for

everyone,

striving toward a

fairer society,

a more

prosperous economy and

a healthier

environment. That is

why we

partner with

our clients

to help

them

mobilize their capital toward a more sustainable world and it is why we have made sustainability a significant part

of our culture.

Group-wide application of sustainability

and impact strategy

The sustainability and

impact strategy of Pre-acquisition

UBS now applies to

UBS Group. Credit Suisse

AG does not

maintain a separate sustainability strategy, but its activities are integrated

within the strategy of UBS Group. While

certain sustainability-related

policies, processes

and activities continued

at Credit Suisse

AG, they are

applied within

the overarching

strategy of

UBS Group

which is

focused on

three key

priorities to

achieve it:

Planet, People

and

Partnerships.

›

Refer to “UBS Sustainability objectives and achievements 2023 and objectives 2024 ” section in the Supplement to

the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

for more information

about our sustainability and impact key mid- and long-term aspirations.

Supporting our clients’ low-carbon transition

Helping our clients to navigate the orderly transition to a low-carbon economy and build climate-resilient business

models is

a key

objective of

our approach

to climate,

as is

the mobilization

of private

and institutional

capital toward

this transition. Aligning our in-scope lending and investment portfolios to the objectives of the Paris Agreement is

an important part of this approach and so

are the products and services we offer.

Planet first

We acknowledge that achieving the orderly transition to a

low-carbon economy is highly ambitious. Nonetheless,

we are committed to doing

our part, which is why the shift

to a lower-carbon future is a

priority for UBS and a key

focus of our sustainability strategy.

order

protect

our

clients’

assets

and

those

our

firm

from

the

impacts

climate

change

and

loss

biodiversity,

we are

focused on

managing the

risks related

to climate

and natural

capital.

However, at

the same

time, we recognize that the low-carbon transition

also presents consequential opportunities.

›

Refer to the “Environment” section of this report for more information about our approach to climate

›

Refer to the UBS Group Climate and Nature Report 2023, available at

ubs.com/sustainability-reporting

which brings

together all climate- and nature-related information in this report

People matter

As a large, diverse and inclusive organization with a global presence, we want to use our influence

to help people

advance. We do

this through our

interactions with each

other, the communities

in which we

operate and our

other

stakeholders. We also

believe this approach

can support the

creation of a

diverse, equitable and

inclusive society

and help build a virtuous cycle of viable, long-term

economic and social development.

›

Refer to the “Social” section of this report for more information about UBS’s employees and its philanthropic

activities

Partnerships bring it together

The sustainability-related challenges our world faces

cannot be solved by

one organization alone. That is

why we

partner with other thought leaders and standard setters to unite around

common goals that can drive change on

a global scale.

›

Refer to the Supplement to this report available at

ubs.com/sustainability-reporting

for more about our

partnerships and our stakeholder engagement

Sustainability Report 2023

| Strategy

Our aspirations and progress

We work with a long-term

focus on providing appropriate

returns to our stakeholders

in a responsible manner.

are committed to

providing transparent aspirations or

targets and reporting

on the progress

made against them.

Following

the

acquisition

the

Credit

Suisse

Group,

our

exposure

increased

accordingly,

reviewed

our

aspirations. Amendments that arose from

this review process were

considered by the Group

Executive Board and

the UBS Group Board of Directors' Corporate Culture and Responsibility Committee. This table reflects the overall

outcomes of this process with more detailed

information provided throughout this

report.

Our priorities

Our aspirations or targets

Our progress in 2023

Planet, people,

partnerships

Sustainable investments.

Increased invested assets in sustainable investments

in UBS AG to

USD 292.3 billion (compared with USD 266 billion in 2022).

Planet

Following the acquisition of the Credit Suisse Group,

refined the UBS Group lending sector decarbonization

targets

to reflect the activities of the combined organization

and

evolving standards and methodologies:

Reduce emissions intensity associated with

UBS in-scope

lending by 2030 from 2021 levels for:

–

Swiss residential real estate by 45%;

–

Swiss commercial real estate by 48%;

–

power generation by 60%;

–

iron and steel by 27%; and

–

cement by 24%.

Reduce absolute financed emissions associated

with UBS in-

scope lending by 2030 from 2021 levels for:

–

fossil fuels by 70%.

Continue disclosing in-scope ship finance portfolios

according to the Poseidon Principles decarbonization

trajectories with the aim of aligning therewith.

Calculated progress against pathways for revised targets.

Changes

in emissions intensity associated with

UBS in-scope lending

(end of 2022 vs. 2021 baseline):

–

Swiss residential real estate reduced by 6%;

–

Swiss commercial real estate increased by 2%;

–

power generation reduced by 13%;

–

iron and steel reduced by 4%; and

–

cement reduced by 1%.

Changes in absolute financed emissions associated

with UBS in-scope

lending (end of 2022 vs. 2021 baseline) for:

–

fossil fuels reduced by 29%.

In-scope ship finance portfolio remains below the

existing International

Maritime Organization (IMO 50) decarbonization

trajectory.

Aim, by 2030, to align 20% of UBS AG Asset

Management’s

total assets under management (AuM) with

net zero. This

Pre-acquisition UBS aspiration will be reassessed in 2024.

Aligned 2.9% of UBS AG Asset Management’s

total AuM with net zero.

Minimize our scope 1 and 2 emissions through

energy

efficiencies and switching to more sustainable energy

sources. After which, procuring credible carbon removal

credits to neutralize any residual emissions down to zero by

2025.

Reduced net GHG footprint for scope 1 and 2

emissions by 21% and

energy consumption by 8% (compared with 2022);

continued replacing

fossil fuel heating systems and monitored delivery of

contracted carbon

removal credits; achieved 96% renewable electricity coverage in

line

with RE100 despite challenging market conditions.

Offset historical emissions back to the year 2000

by sourcing

carbon offsets (by year-end 2021) and by offsetting credit

delivery and full retirement in registry (by year-end 2025).

The scope is UBS Group excluding Credit Suisse.

Continued to follow up on credit delivery and retirement of

sourced

portfolio.

Engage with our greenhouse gas (GHG) key vendors,

for

100% of them to declare their emissions and set

net zero-

aligned goals by 2026, and reduce their scope 1

and 2

emissions in line with net-zero trajectories by 2035.

We invited the vendors that accounted for 67%

of our annual vendor

spend to disclose their environmental performance

through CDP’s

Supply Chain Program, with 70% of the invited vendors

completing

their disclosures in the CDP platform.

65% of GHG key vendors (defined as those

vendors that collectively

account for more than 50% of our estimated vendor

GHG emissions)

have declared their emissions on CDP and set net-zero-aligned

goals.

People

(aspirations)

By 2025, 30% of worldwide roles at Director level and

above

held by women.

Increased to 29.5% (2022: 27.8%) of worldwide

roles at Director level

and above held by women.

By 2025, 26% of US roles at Director level and above held

by employees from ethnic minority backgrounds.

Increased to 25.1% (2022: 20.5%) of US roles at Director level

and

above held by employees from ethnic minority backgrounds.

By 2025, 26% of UK roles at Director level and above

held

by employees from ethnic minority backgrounds.

Increased to 24.3% (2022: 23.4%) of UK roles at Director

level and

above held by employees from ethnic minority backgrounds.

By 2025, 4% of UK roles at Director level and above held

black employees.

Stable at 2.1% (2022: 2.2%).

By 2025, 25% of Americas financial advisor

/ client advisor

roles held by women (UBS Group excluding Credit Suisse).

Increased to 16.8% (2022: 16.6%).

By 2025, 18.8% of US financial advisor

/ client advisor roles

held by employees from racial / ethnic minority backgrounds

(UBS Group excluding Credit Suisse).

Decreased to 12.2% (2022: 12.4%).

Raise USD 1 billion in donations to our client

philanthropy

foundations and funds and reach 26.5 million beneficiaries

by 2025 (cumulative for 2021–2025).

Achieved a UBS Optimus network of foundations

donation volume of

USD 328 million in 2023,

totaling USD 763.9 million since 2021

(both

figures include UBS matching contributions).

Sustainability Report 2023

| Strategy

Our priorities

Our aspirations or targets

Our progress in 2023

Reached 7 million beneficiaries in 2023

and 18.5 million beneficiaries

across our social impact activities since 2021.

Partnerships

Continue to position UBS as a leading facilitator

discussion, debate and idea generation.

Delivered a variety of insights, including through interviews

with subject-

matter experts, individual research reports and comprehensive white

papers, via the UBS Sustainability and Impact

Institute, including key

publications

The Rise of the Impact Economy and Rethink,

rebuild,

reimagine.

Co-organized, with the Institute of International

Finance, the second

Wolfsberg Forum for Sustainable Finance.

Drive standards, research and development, and product

development.

Co-led financial-sector-specific working group of the

Taskforce on

Nature-related Financial Disclosures (the TNFD) and supported the

launch of the TNFD framework.

Co-chaired the UNEP FI Principles for Responsible

Banking Nature

working group that developed initial guidance on

nature target setting

for financial institutions.

As part of the integration

of Credit Suisse, UBS has

retired the Pre-acquisition UBS sustainable

investing aspiration of USD

400 billion in SI invested

assets.

While we continue to take steps to align our business activities to our targets, it is important to note that progress towards our targets may not be linear and

that the realization of our

own targets and aspirations

is dependent on various

factors which are outside of

our direct influence. We will

continue to adjust our

approach in line with

external developments

and evolving best practices

for the financial

sector and climate

science. Refer to the

Supplement to the UBS

Group

Sustainability Report 2023 for parts

of the value chain within

sectors covered by metrics and

targets. Metrics are based on

gross exposure, which includes total

loans and advances

to customers, fair

value loans and

guarantees as well

as irrevocable

loan commitments. Exclusions

from the

scope of

analysis primarily

include financial services, credit card and

other exposure to private individuals.

As part of our ship

finance strategy, ships

in scope of Poseidon Principles

(PP) are assessed on criteria which aim at aligning portfolios

to the PP decarbonization trajectories. The

PP are a framework for assessing and disclosing, on an

annual basis, the climate alignment

of in-scope ship finance

portfolios to the ambition of

the International Maritime

Organization (the IMO), including

its 2023

Revised GHG Strategy for GHG emissions

from international shipping to decrease

to net zero by or around 2050 (compared with 2008

levels).

Refer to the

“Environment” section of this

report for further

information. The inherent one-year

time lag between the

as-of date of

our lending exposure and

the as-of

date of emissions can

be explained by

two factors: corporations

disclose their emissions

in annual reporting only

a few months after

the end of a

financial year;

and specialized third-party data providers take up to nine

months to collect disclosed data and make it

available to data users. Consequently, the baselines for

our decarbonization targets are calculated on

year-end 2021 lending exposure and 2020

emissions data. Our 2022

emissions actuals are based on

year-end

2022 lending exposure and 2021 emissions data. For

asset financing (e.g., real estate, shipping) there is no time

lag, and exposure and emissions actuals refer

to the same year.

The 20% alignment

goal amounted to

USD 235 billion

at the time of

Pre-acquisition Asset Management’s

commitment in 2021.

By 2030,

the weighted average carbon intensity

of funds is to be 50% below

the carbon intensity of the

respective 2019 benchmark.

Scope 2 emissions are market-

based emissions. The remaining scope 1 and 2 emissions may be in excess of the approximately 5–10% residuals required for net zero (per the definition of a

“net-zero target”

by the ESRS E1 Climate Change per

delegated act, adopted on 31 July

2023), which is our ambition

for 2050. In 2024, we will be reviewing

our 2025 scope 1 and 2 target for

achievability for the combined organization

and alignment with latest guidance.

In 2024, we may review our targets for

GHG key vendors

for the combined

organization and alignment with

latest guidance. Our GHG

key vendors are

those vendors that

collectively account for

more than

50% of

our estimated

vendor GHG

emissions.

Figures provided

for the

UBS Optimus

network of

foundations are

based on

unaudited management

accounts and

information available

as of

January 2024.

Audited financial

statements for

UBS Optimus

network of

foundations entities

are

produced and

available per local market regulatory guideline.

Cautionary note:

We have

developed methodologies that we

use to set

our climate-related targets

and identify climate-related risks

and which underly

the

metrics that are

disclosed in this report.

Standard-setting organizations and regulators continue

to provide new

or revised guidance and

standards, as well

new

enhanced

regulatory

requirements

for

climate

disclosures.

Our

disclosed

metrics

are

based

upon

data

available

us,

including

estimates

and

approximations where actual or specific data is

not available. We intend to update our

disclosures to comply with new guidance

and regulatory requirements as

they

become applicable

UBS.

Such

updates may

result

revisions

our

disclosed metrics,

our

methodologies and

disclosures, which

may

substantial, as well as changes to the metrics

we disclose.

Sustainability Report 2023

| Governance

Governance

Our sustainability governance

Our sustainability and corporate culture

activities are grounded in our

Principles and Behaviors and

overseen at the

highest level of our organization. These principles

are laid down in our Code of Conduct and

Ethics (the Code).

›

Refer to “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for more

details on how Credit Suisse sustainability governance was integrated into UBS Group

Board of Directors and Group Executive

Board

The Board of Directors of UBS Group AG (the BoD) has ultimate

responsibility for the

success of the Group and for delivering sustainable shareholder value

within a framework

of prudent and effective controls.

The BoD

decides on

the Group’s

strategy and

the necessary

financial and

human resources,

on the

recommendation

of the Group Chief Executive

Officer (the Group CEO),

and also sets the Group’s

values and standards to ensure

its

obligations to shareholders

and other stakeholders

are met. The

BoD oversees the

overall direction, supervision

and

control of the

Group and

its management.

It also supervises

compliance with

applicable laws,

rules and regulations.

The Chairman

of the

BoD, together

with the

Group CEO,

takes responsibility

for UBS’s

reputation and

is closely

involved in, and

responsible for, ensuring

effective communication with

shareholders and stakeholders, including

government officials, regulators and public

organizations.

Five committees support the BoD in fulfilling its duty through the respective responsibilities and authority given to

them. All BoD committees have

specific responsibilities pertaining

to ESG matters.

For example, the Compensation

Committee is responsible

for ESG-related compensation

topics, the

Risk Committee supervises

the integration of

ESG

risk

management,

the

Governance

and

Nominating

Committee

supports

the

Board

establishing best

practices in corporate governance and the Audit Committee

has oversight of the control framework underpinning

ESG metrics.

Sustainability Report 2023

| Governance

The BoD’s Corporate Culture and Responsibility Committee

(the CCRC) is the body primarily

responsible for corporate culture, responsibility,

and sustainability.

The CCRC oversees our Group-wide sustainability and impact strategy and key activities across environmental

and

social

topics.

This

includes

climate,

nature,

and

human

rights.

Annually,

considers

and

approves

our

firm’s

sustainability (including

climate) and

impact objectives.

part of

this process,

also

considers the

impact and

financial materiality of climate-related risks and

opportunities on UBS’s business and

strategy.

The

CCRC’s

function

forward-looking

that

monitors

and

reviews

societal

trends

and

transformational

developments

and

assesses

their

potential

relevance

for

the

Group.

undertaking

this

assessment,

reviews

stakeholder concerns and expectations pertaining to

the societal performance of UBS

and to the development of

its corporate

culture. UBS

has various

mechanisms (including

complaint and

feedback procedures)

in place

to ensure

that such concerns and expectations are received,

managed and, where necessary, brought to the

attention of the

Group

Executive Board

(the GEB)

and

the BoD.

The

CCRC

also responsible

for conducting

the annual

review

process for the Code and for proposing amendments to the BoD. This process includes a prior review of the Code

by the GEB and is led by the Group CEO.

›

Refer to

ubs.com/code

for the full UBS Code of Conduct and Ethics

The GEB develops the Group strategy and is responsible for managing

our assets and

liabilities in line with that strategy and our regulatory commitments

and in the interests of

our stakeholders.

As determined by

the BoD’s Risk

Committee, the GEB manages

the risk profile

of the Group

as a whole

and has

overall

responsibility

for

establishing

and

implementing

risk

management

and

control.

The

Group

CEO

has

delegated responsibility for

setting the sustainability and

impact strategy and developing

Group-wide sustainability

and

impact objectives,

agreement with

fellow GEB

members, to

the GEB

Lead

for Sustainability

and Impact.

Progress against the strategy and associated

targets are reviewed at least once a year

by the GEB and the CCRC.

The GEB

Lead for Sustainability

and Impact also

manages the Group

Sustainability and Impact

(GSI) organization

and, together

with the

Chief Sustainability

Officer (the

CSO), co-chairs

the Sustainability

and Climate

Task Force

(the SCTF). Both the GEB Lead for Sustainability

and Impact and the CSO attend the CCRC meetings.

›

Refer to the “Supplement to Governance“ section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for an explanation and depiction of the sustainability governance at

UBS Group AG, including the main bodies involved in this governance

Integration of Credit Suisse

The BoD

is responsible

for sustainability

across the

Group, including

Credit Suisse.

Until its

acquisition by

UBS Group

in June 2023, Credit Suisse

Group AG had an

established sustainability governance system. It was exercised at

its

Board of

Directors, Executive

Board, and

senior management

levels, thus

integrating

sustainability

into line

processes

and structures,

as well

as through

boards and

committees specifically

focused on

sustainability topics.

With the

integration of Credit Suisse

into UBS Group in 2023,

this governance was adapted

for Credit Suisse and

integrated

into UBS Group, which included the successive

retirement of certain CS governance bodies.

In 2023, alignment

with the Group’s

strategies, objectives

and guidelines has

been ensured through

representation

of UBS personnel in the

governance bodies of Credit

Suisse. The governance of

sustainability at Credit

Suisse AG is

exercised through its established governance bodies, thus integrating sustainability into operational processes

and

structures, as

well as

through those

boards and

committees specifically

focused on

sustainability topics.

Certain

Credit Suisse

sustainability governance bodies

have already

been retired

in 2023

and it

is our

aim to

achieve full

integration

the

relevant

bodies,

together

with

their

associated

procedures

and

policies,

into

the

overall

UBS

Group sustainability governance during 2024.

›

Refer to “Appendix 3 – Entity-specific disclosures

for Credit Suisse AG” in the appendices to this report for an

explanation and depiction of the sustainability governance (including the main bodies involved) at Credit Suisse AG

Sustainability Report 2023

| Governance

Group Sustainability and Impact

GSI (Group

Sustainability and

Impact) comprises

the Chief

Sustainability Office

and the

Social Impact

Office, headed

by the CSO and the Head of Social Impact

respectively.

The

CSO

responsible

for

driving

implementation

the

following:

the

Group-wide

sustainability

and

impact

strategy,

the approach to climate across all in-scope activities, and the ESG data strategy. In addition, the CSO has

responsibility for supporting

the business divisions and Group

Functions in the design of

sustainability frameworks,

the

implementation of

sustainability regulations

and the

development of

education and

awareness programs

relation

sustainability.

Furthermore,

the

CSO

also

manages

external

relationships, industry

advocacy

and

the

annual sustainability disclosure.

The

Head

Social

Impact

responsible

for

driving

and

implementing

the

Social

Impact

strategy,

including

Community Impact, Philanthropy Services and UBS Global Visionaries. Reporting

to the Head of Social Impact, the

regional

Heads

Social

Impact

and

Philanthropy

are

responsible

for

extending

the

reach

and

maximizing

the

effectiveness of our

social impact activities

locally, nationally and

globally. In addition, they

have responsibility for

all our programs’ operations and risk management,

client engagement, and employee volunteering.

Progress made in

implementing Group-wide

sustainability and

impact objectives is

reported as part

of UBS’s annual

sustainability

disclosure. This

reporting is

reviewed

and

assured

externally according

the

requirements of

the

Sustainability

Reporting

Standards

the

Global

Reporting

Initiative

(the

GRI

Standards).

UBS

Group

excluding

Credit Suisse is

also certified under

the ISO 14001

standard for its

products, services and

activities in all

business

divisions

and

locations.

this

degree,

UBS

seeks

continuously

improve

environmental

and

sustainability

performance,

well

pollution

prevention,

where

possible,

across

UBS.

The

GSI

governance

and

framework

document complements

the Code,

and together

they govern

UBS’s Environmental

Management System,

according

to ISO 14001.

›

Refer to the “Supplement to Governance” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for additional information about our sustainability governance

Sustainability and climate risk

Our management

of sustainability

and climate

risk is

steered at

the GEB

level. Reporting

to the

Group CEO,

the

Group

Chief

Risk

Officer

responsible

for

developing

and

implementing

control

principles

and

appropriate

independent control framework for sustainability and climate risk within

UBS, together with integrating it into the

firm’s overall risk management and risk appetite frameworks.

The Chief Risk Officer for Sustainability supports the

GEB

by providing

leadership on

sustainability in

collaboration with

business divisions

and Group

Functions. Our

Sustainability and Climate Risk

Policy Framework is applied

Group-wide to relevant activities,

including client and

supplier relationships.

Sustainability Chief Financial Officer

The Sustainability Chief Financial Officer (the sCFO) supports the new and

expanding requirements that are being

driven by our global sustainability agenda. Reporting to

the Group Chief Financial Officer (the GCFO) and the GEB

Lead for

Sustainability and

Impact, the

sCFO also

works closely

with the

Group Controller

and the

Chief Accounting

Officer’s team and

is the primary

lead on sustainability

topics for the

GCFO. The sCFO

ensures that sustainability

considerations are

embedded into

our financial

decision-making processes

and supports

the expanding

external

sustainability disclosures arising from both new regulatory requirements and the voluntary commitments made by

our

firm.

addition,

the

sCFO

ensures

the

continued

development

the

financial

control

environment

that

underpins our disclosures.

Sustainability and Climate Task Force

The SCTF is the cross-divisional and cross-functional authority for sustainability and climate governance, as well as

the Group’s

sustainability and

climate governance

body. Its

role includes

agreeing on

the actions

required to

achieve

UBS’s sustainability and impact

strategy, monitoring progress

against that strategy and

providing assurances to the

GEB that UBS is managing sustainability and climate

risks

and opportunities in an appropriate manner.

The SCTF relies on the

Sustainability and Climate

Implementation Group to

ensure cross-divisional, cross-functional

and

cross-regional

(if

needed)

alignment

sustainability

and

climate

activities. It

oversees

the

following

cross-

divisional

and

cross-functional

workstreams:

Net

Zero,

Corporate

Disclosures

and

Reporting,

Regulatory

and

Market,

Financial

Risk

Management,

Non-Financial

Risk,

Investment

Product

Regulations,

Commercial

Opportunities, Data and Methodology,

and

Educate

workstreams

Sustainability Report 2023

| Governance

Key topics and working groups

Net-zero workstream

Our approach

to climate outlines

our ambition

to support clients

through the

world’s transition to

a low-carbon

economy and embed

considerations of climate change

risks and opportunities

across the bank

for the benefit

our stakeholders. As part

of this, it is our ambition

to achieve net-zero greenhouse gas

(GHG) emissions across our

scope 1 and 2, and specified scope 3 activities

by 2050. The net-zero workstream coordinates the implementation

and execution of this ambition,

in line with UBS’s

fiduciary responsibilities. It is

one of the workstreams

reporting

into the SCTF and includes members from the business

divisions and Group Functions.

Own operations: in-house environmental management

Our in-house environmental management

is steered by

Group Corporate Services (GCS).

Reporting to the Group

Head Human Resources and Corporate Services, GCS is responsible for driving the reduction in the environmental

impact arising

from our

offices, technology

and supply

chain. GCS

implements

the sustainability

and impact

strategy

within UBS’s

operations by

ensuring compliance

with local

legislation, monitoring

and measuring

environmental

and energy performance, and making continuous improvements in

accordance with ISO 14001, the international

environmental management standard, and ISO 50001

(EMEA region).

Nature

Our approach to nature and

the environment is part of

the group-wide sustainability and

impact strategy overseen

by the CCRC. The GEB is responsible for driving our nature-related efforts, as part of the

measures to achieve our

sustainability and

impact strategy.

The

business divisions

and Group

Functions ensure

that UBS’s

nature-related

strategy

and

risk

management

frameworks

are

implemented.

Through

strategy

management

reports,

GSI

periodically

updates

the

GEB

and

CCRC

our

approach

nature.

annual

basis,

the

CCRC

receives

dedicated updates on nature and biodiversity,

including the progress of

the Taskforce

on Nature-related Financial

Disclosures (the

TNFD) and

UBS’s own

activities relating

to the

TNFD, as

well as

updates on

the evolving

frameworks

and regulations, and potential nature-related risks and opportunities

facing the firm.

›

Refer to the “Appendix 2 – Environment” in the appendices to this report for more information on our approach to

nature

Human rights

our

Human Rights

Statement articulates,

the governance

outlined above

also applies

to our

commitment to

respecting internationally recognized human rights

across UBS globally.

›

Refer to

ubs.com/sustainability-reporting

for our Human Rights Statement

Financial crime prevention

The GEB oversees

our efforts to

combat money

laundering, corruption

and terrorist

financing. A dedicated

financial

crime team of anti-money laundering compliance

experts leads these efforts.

›

Refer to “Appendix 1 – Governance” in the appendices to this report for more information on financial crime

prevention

People and culture

Our GEB and

CCRC oversee our approach

to corporate culture overall,

as well as

to culture integration.

The GEB

also oversees our approach to diversity,

equity and inclusion (DE&I). Our global head of DE&I drives a Group-wide

strategy, complemented by divisional and regional initiatives.

›

Refer to the “Social” section of this report for more information

Sustainability Report 2023

| Environment

Environment

Contributing to a low-carbon economy

Following the

acquisition of

the Credit

Suisse Group,

we have

conducted an

extensive review

of the

decarbonization

targets to reflect the activities of the combined organization

and evolving standards and methodologies.

Based on

this

review,

have

undertaken

revisions

the

decarbonization

targets

and

also

explicitly

described

in-scope

activities where we have detailed plans, supported

by short- and medium-term targets.

2050,

our

ambition

achieve

net-zero

greenhouse

gas

(GHG)

emissions

across

our

scope

and

specified scope 3 activities. Our current targets

include:

Scope 1 and 2:

–

minimizing our

scope 1

and 2

emissions through

energy efficiencies

and by switching

to more sustainable

energy

sources; after which,

procuring credible carbon

removal credits to

neutralize any

residual emissions

down to zero

by 2025

;

Scope 3:

–

engaging with

our GHG key

vendors, for 100%

of them

to declare their

emissions and

set net zero-aligned

goals

by 2026, and reduce their scope 1 and 2 emissions

in line with net-zero trajectories by 2035

;

–

addressing our financed emissions by aligning

specified sectors to decarbonization pathways;

and

–

aiming, by 2030, to align

20% of UBS AG Asset

Management’s total assets under

management (AuM) with net

zero.

We recognize that

there is more

to do, and

we aim to

phase in additional

scope 3 activities

over time. While

continue to take steps to align our business activities with the ambition set out above, it is important to note

that

progress towards our targets may not be

linear. Our priority is to

support the transition of clients to a

low-carbon

economy, and their transition-financing needs.

In the area of client investments, the scope

of our investments that

are subject

to net-zero

targets and

our ability

to meet

our ambitions

depend on

our fiduciary

duties as

an investment

manager and on the terms of the mandates

agreed to with clients.

Reaching net

zero will

require collaboration

across the

private and

public sectors.

Decarbonization of

the global

economy,

emissions

reductions

clients,

and

the

realization

our

own

targets

and

ambitions

all

depend

various

factors outside

of our

direct influence.

Clear guidance

governments through

thoughtful regulations,

policies and incentives, the development and scaling of key technologies,

and broader changes in the behavior of

our society are needed.

We actively

participate

in political

discussions

to share

our expertise

on proposed

regulatory and

supervisory changes

and engage in discussions relating to sustainability and climate (e.g.,

via the International Institute of Finance (the

IIF),

the Association

for Financial

Markets in

Europe (the

AFME) and

the Swiss

Bankers Association (the

SBA)). In

addition, our participation in sustainability-

and climate-focused organizations and associations helps us to deliver

on our commitments whilst promoting the transition

to a low-carbon economy.

We will

continue to

adjust our

approach in

line

with external

developments and

evolving best

practices for

the

financial sector and climate science. This may

also lead us to revisit previously agreed

voluntary commitments.

Scope 2 emissions are

market-based emissions. The

remaining scope 1 and

2 emissions may be in

excess of the approximately

5-10% residuals required for net

zero (per the definition of a “net-zero target” by the ESRS E1 Climate Change per delegated act, adopted on 31 July 2023), which is our ambition for 2050. In

2024, we will be reviewing our 2025 scope 1 and

2 target for achievability for the combined

organization and alignment with latest guidance.

In 2024, we may review our targets for GHG key vendors for the combined

organization and alignment with latest guidance.

Our GHG key vendors are those

vendors that collectively account for more than 50%

of our estimated vendor GHG emissions.

This Pre-acquisition UBS aspiration will be reassessed in

2024.

Sustainability Report 2023

| Environment

Own operations

In 2023,

we reduced

our scope

1 and

market-based scope

2 emissions

by 21%

and, for

UBS Group

excluding Credit

Suisse, we continued to apply

an internal carbon price of

USD 400 per metric

ton for scope 1

and 2 emissions in

our

capital

investment

business

cases

support

the

transition

away

from

carbon-intense

building

systems.

addition,

we were able to achieve 96% renewable electricity

in line with the stringent RE100

guidelines.

›

Refer to “Use of carbon offsets and carbon removal credits” in the “Environment” section of this report for more

information about our internal carbon price

With regards to our supply chain, we have

continued a process of engagement with our

vendors, asking them to

provide their

climate disclosures

and set

net zero-aligned

goals. The

number of

our vendors

completing their

climate

disclosures in

CDP increased

by 74%

from 2022

to 2023.

Meanwhile, 65%

of our

GHG key

vendors (which

define as those

vendors that collectively

account for more

than 50% of

our estimated vendor

GHG emissions) have

declared their emissions in CDP and set net zero-aligned

goals.

Financing activities

We evaluated

the combined

lending portfolios

and resulting

exposures to

carbon-intensive sectors following

the

acquisition of

the Credit

Suisse Group in

June 2023 and

have set

revised decarbonization targets

for the

Group.

We have updated

our previous emissions

targets for real estate

mortgage lending, as

well as for the

fossil fuels (oil,

gas and coal), power generation

and cement sectors,

reflecting both the combined

portfolios of the two firms

and

the methodology

changes. We

also identified

iron and

steel and

shipping as

additional target

sectors.

For the

Credit

Suisse AG

in-scope shipping portfolio,

we continue

to disclose

the portfolio’s

climate alignment

to the

Poseidon

Principles decarbonization index. In addition, we undertook further assessment of the overall emissions

associated

with our lending and real estate mortgages and conducted a preliminary analysis of the facilitated emissions from

our capital markets activities for select carbon-intensive

sectors.

Investing activities

UBS AG Asset Management made progress during

2023 toward delivering its 2030 target of aiming to align 20%

of UBS

AG Asset

Management’s total

assets under

management (AuM)

with net

zero, using

science-based portfolio

alignment approaches. This included implementing

revisions to fund documentation and investment

management

agreements in certain portfolios to align with our net-zero-aligned framework. This Pre-acquisition UBS aspiration

will be reassessed in 2024.

Our Global

Wealth Management business

division is

a large

distributor and

manager of

investment solutions for

clients, including sustainable investing solutions and climate-focused investments. We

supported private investors

and family

offices seeking

to decarbonize

their overall

holdings by

offering related

investment solutions

across asset

classes and increasing climate awareness

through dedicated client education sessions.

Supporting climate-focused frameworks

are

committed

helping

our

clients

achieve

their

decarbonization

goals

and

supporting

the

work

governments around the world

in their transition to

a low-carbon economy in

alignment with the objectives

of the

Paris Agreement. In our home country of Switzerland,

we support the new Climate and Innovation Act, passed in

June 2023, through regulatory engagement,

industry partnerships and collaboration.

›

Refer to the “Environment” section of the Supplement to the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more information about our climate-related methodologies and targets

›

Refer to the “Our transition plan” section in “Appendix 2 – Environment” in the appendices to this report for a

high-level overview of our activities to support our own transition and that of our clients

RE100 is

an international guideline

on renewable

electricity procurement

that outlines

the approach

for credible

claims and

frameworks, including specific

market boundaries and the standard

of third-party verification amongst other requirements.

RE100 is considered a

revised interpretation of the GHG

Protocol

Corporate Standard market-based scope 2 accounting

standards.

Sustainability Report 2023

| Environment

Our climate roadmap

Sustainability Report 2023

| Environment

Our climate-related metrics

Evolving our climate-related metrics

Standard-setting organizations and regulators continue to provide

new or revised guidance and standards, as

well as

new or enhanced regulatory requirements for climate

disclosures. We have developed methodologies that

we use to

set our climate-related targets

and identify climate-related risks

and opportunities. These methodologies underlie

the

metrics that

are disclosed

in this

report and

are based

upon data

available to

us, including

estimates and

approximations

where actual or specific data is not

available. We intend to update our disclosures to

comply with new guidance and

regulatory requirements as they

become applicable to

UBS. Such updates may

result in possibly substantial

revisions to

our disclosed metrics methodologies and

related disclosures. They may

also change the metrics we

disclose.

Our

climate-related targets

have

been

set based

the

methodologies, data

and assumptions

currently in

use.

Changes to these

methodologies, data and

assumptions may

affect our progress

toward these targets

and our net-

zero ambition,

as well as their achievability.

Our net-zero ambition and

related targets for

scope 3 emissions

have a

critical dependency

on the

overall progress

made by

all sectors

and countries

toward net-zero

carbon emissions.

Across

many

jurisdictions,

substantial

governmental

action

will

required

achieve

that

progress.

such

advances are not made, our targets and ambitions

with respect to scope 3 emissions will not

be achievable.

Climate-related risks and opportunities metrics

2023

Climate-related risks and opportunities metrics

For the year ended

% change

from

31.12.23

31.12.22

31.12.21

31.12.22

Risks (UBS Group excluding Credit Suisse)

Carbon-related assets (USD billion)

1, 2, 3, 4, 5

34.2

33.6

36.0

1.7

Exposure to climate-sensitive sectors, transition

risk (USD billion)

1, 2, 4, 5, 6

58.1

52.5

52.4

10.6

Exposure to climate-sensitive sectors, physical risk

(USD billion)

1, 2, 4, 5, 6

46.2

38.0

36.7

21.4

Exposure to nature-related risks (USD billion)

1, 4, 5, 6, 7

72.0

64.6

67.3

11.4

Opportunities (UBS Group)

Number of green, sustainability, and sustainability-linked bond deals

34.8

Total deal value of green, sustainability, and sustainability-linked bond deals (USD billion)

49.3

42.4

63.3

16.3

UBS-apportioned deal value of above (USD

billion)

11.6

8.8

13.2

31.6

Methodologies for assessing climate-

and nature-related risks

are emerging and may

change over time. As the

methodologies, tools, and data

availability improve, we will

further

develop our risk identification and measurement approaches. Lombard lending rating is assigned based on the

average riskiness of loans.

Metrics are calculated and restated based

on the 2023 methodology, across three years of reporting, 2021–2023.

As defined by the Task Force on Climate-related Financial Disclosures (the TCFD), in its expanded definition

published in 2021, UBS defines carbon-related assets through industry-identifying attributes of the firm’s banking book.

UBS further includes the four non-financial sectors addressed

by the TCFD, including, but not limited to, fossil fuel extraction,

carbon-based power generation, transportation (air,

sea, rail, and auto manufacture), metals production

and mining,

manufacturing industries, real

estate development,

chemicals, petrochemicals,

and pharmaceuticals, building

and construction

materials and

activities, forestry,

agriculture, fishing,

food and beverage production, as well

as including trading companies that may

trade any of the above (e.g., oil

trading or agricultural commodity trading

companies). This metric is

agnostic of risk

rating, and therefore

may include exposures

of companies that

may be already

transitioning or adapting

their business models

to climate risks,

unlike UBS climate-

sensitive sectors methodology,

which takes a risk-based

approach to defining

material exposure to climate

impacts.

Total

customer lending exposure

consists of total loans

and

advances to customers and guarantees, as well as irrevocable loan commitments (within the scope of expected credit loss) and is based on consolidated and standalone IFRS

numbers.

The credit

exposure includes

portfolio adjustment

bookings, which are

either directly

impacting the

metrics, and have

been reflected

in the heatmaps,

or are

impact assessed

and

immaterial to the metrics representation.

UBS continues to collaborate to resolve methodological and data challenges, and seeks to integrate both impacts to and dependency on

a changing natural and

climatic environment, in

how it evaluates risks

and opportunities.

Climate-

and nature-related risks

are scored between

0 and 1, based

on sustainability

and climate risk transmission channels,

as outlined in the Supplement

to the UBS Group Sustainability

Report 2023. Risk ratings represent a

range of scores across five-rating categories:

low, moderately low,

moderate, moderately high, and

high. The climate- or nature

-sensitive exposure metrics are

determined based upon the

top three of the

five rated categories:

moderate to high.

Nature-related risk metric methodology has been further strategically enhanced, as part of an ongoing collaboration between UBS and UNEP-FI.

The metrics

include transactions such

as, but not

limited to, Investment

Bank Global Banking

bonds issued under

the voluntary ICMA

Green Bond

Principles, Sustainability Bond

Principles, and

Sustainability-Linked Bond Principles. The principles include a recommendation that the issuer appoints an external review provider to undertake an independent external review (e.g.,

second-party opinion). This is consistent with

market practice. The metrics also include

sustainability themed bonds (e.g., Transiti

on). Transactions

are counted only once, there

is no

double counting (e.g., if and where UBS AG and Credit Suisse were involved

in the same transaction). UBS performed an assessment for Credit Suisse green,

social, sustainability and

sustainability-linked bonds reported in the 2023 Sustainability Report and deemed them

to be aligned to UBS sustainable bond guidelines.

›

Refer to the “Supporting our approach to climate – our climate-related materiality assessment” section of the

Supplement to the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more

information about our approach to climate-related risks and opportunities

›

Refer to the “Managing sustainability and climate risks” section of this report for more details on climate-related

risk metrics

Climate-related lending metrics 2023

Based on the guidelines

by the World Resources Institute

(the WRI) and the World

Business Council for Sustainable

Development (the WBCSD)

for reporting in the

event of a

material acquisition

, the emissions

metrics shown for

December 2021

and 31

December 2022

are calculated

on the

basis of

the joint

loan books

of UBS

and Credit

Suisse

on those dates, on a pro forma basis. As in previous Sustainability Reports, climate-related lending metrics are not

shown for the current reporting year, due to the inherent time-lag in the availability of emissions data.

Based on

an assessment

of qualitative

and quantitative

criteria such

as alignment

with industry

guidance, availability

and quality

of data

and consistency across

sectors in

existing targets

disclosed by

Pre-acquisition UBS and

Credit

Suisse Group, 2021 has been adopted as the baseline

year for all sectors.

›

Refer to the “Climate-related methodologies – decarbonization approach for our financing activities” section of the

Supplement to the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more

information about our climate-related methodologies

GHG Protocol Corporate Value chain (Scope 3) Accounting and

Reporting Standard

Sustainability Report 2023

| Environment

Climate-related lending metrics (UBS Group)

For the year ended

% change

from

31.12.22

31.12.21

Lending

Baseline 2021

Swiss residential real estate (scopes 1 and 2 kg CO

e / m

ERA)

36.5

38.7

(6)

Swiss commercial real estate (scopes 1 and

2 kg CO

e / m

ERA)

32.1

31.3

Fossil fuels (oil, gas and coal; scopes 1, 2 and 3 million metric

t CO

45.9

64.7

(29)

Power generation (scope 1 kg CO

e / MWh)

297

339

(13)

Iron and steel (scopes 1 and 2 metric t CO

/ metric t of steel)

1.68

1.75

(4)

Cement (scopes 1 and 2 metric t CO

/ metric t of cementitious)

0.63

0.64

(1)

Based on gross

exposure, which

includes total

loans and

advances to

customers, fair

value loans and

guarantees as

well as irrevocable

loan commitments.

Refer to

the “Basis

Reporting” section

of the

Supplement to

the UBS

Group Sustainability

Report 2023,

available at

ubs.com/sustainability-reporting

for more

information about

our climate-related

methodologies.

ERA: Energy Reference Area.

Credit Suisse AG completed its Poseidon Principles

disclosure for 2023, as disclosed in the following

table.

Climate-related lending metrics – Poseidon Principles (Credit Suisse AG consolidated)

For the year ended

% change

from

31.12.22

31.12.21

Poseidon Principles disclosure

Shipping (delta alignment to Poseidon Principles

“IMO 50” trajectory)

-4.6%

-1.3%

n/a

Shipping (delta alignment to “IMO 2023

minimum trajectory”)

11.5%

n/a

Shipping (delta alignment to “IMO 2023

striving for trajectory”)

15.7%

n/a

Poseidon Principles

“IMO 50” trajectory is not 1.5°C aligned.

The IMO Revised GHG Strategy sets out the following

absolute reduction levels of ambition: (i) to reduce total annual

GHG emissions by at least 20%, striving for 30%, by 2030 (compared with 2008); (ii) to reduce total annual GHG emissions by at least 70%, striving for 80%, by 2040 (compared with

2008); (iii) GHG emissions to peak as

soon as possible and to reach

net-zero GHG emissions by or around

2050; and (iv) carbon intensity to decrease

in order to reduce CO

emissions

per transport unit

by at least

40% by 2030

(compared with 2008).

The Revised GHG

Strategy considers well-to-wake

e emissions, i.e.,

it includes upstream

emissions, as well

accounting for the impact of methane (CH4) and nitrous oxide (N

O). The updated IMO trajectories are not 1.5°C aligned.

Climate-related investing metrics 2023

Metrics relating to net-zero

investments, portfolio emissions,

and voting apply to

UBS AG Asset Management

only.

Climate-related investing metrics (UBS AG)

For the year ended

31.12.23

31.12.22

31.12.21

Opportunities – net-zero investing

Number of net-zero ambition portfolios

Net-zero ambition assets share of total assets under management

(%)

2.9

Portfolio emissions

UBS AG Asset Management investment-associated

emissions (absolute; in t CO

46,266,089

UBS AG Asset Management investment-associated

carbon intensity (in t CO

e per USD million invested)

62.0

Weighted average carbon intensity – by asset

class

1, 2

Weighted average carbon intensity – active equity

assets (t CO

e per USD million of revenue)

105.6

130.4

109.8

% AuM weighted average carbon intensity below

benchmark (active equity)

81.3

75.7

62.4

Weighted average carbon intensity – active fixed income

assets (t CO

e per USD million of revenue)

114.9

145.3

198

% AuM weighted average carbon intensity below

benchmark (active fixed income)

65.0

63.5

76.3

Weighted average carbon intensity – indexed equity

assets (t CO

e per USD million of revenue)

100.7

128.3

128.9

Weighted average carbon intensity – indexed fixed income

assets (t CO

e per USD million of revenue)

127.9

139.8

169.8

Weighted average carbon intensity – direct real

estate (kg CO

e per square meter)

4, 5

26.89

31.5

Carbon footprint - by asset class

1, 2

Carbon footprint – active equity assets (t

e per USD million invested)

44.1

% AuM weighted average carbon intensity below

benchmark (active equity)

79.1

Carbon footprint – active fixed income assets

(t CO

e per USD million invested)

45.5

% AuM weighted average carbon intensity below

benchmark (active fixed income)

20.6

Carbon footprint – indexed equity assets

(t CO

e per USD million invested)

45.9

Carbon footprint – indexed fixed income assets

(t CO

e per USD million invested)

108.3

Stewardship – voting

Number of climate-related resolutions voted upon

157

160.0

89.0

Proportion of supported climate-related resolutions

(%)

69.4

71.2

78.6

Based on data for scope 1 and 2

GHG emissions of investee companies from a third-party data provider.

Carbon intensity and carbon footprint of an asset

class are the aggregates

of the individual portfolios weighted by portfolio size.

Portfolios and benchmarks measures are the

aggregates of individual issuers weighted by share

of portfolio or benchmark. Data

coverage thresholds are applied

in determining which portfolios

are included.

The disclosure for %

AuM weighted average carbon

intensity below benchmark (active

equity) and

(active fixed income) have been updated for 31.12.21 to be

reflected in percentages of 62.4% and 76.3% instead of the decimals previously presented.

Data is collected from direct

real estate assets for discretionary funds and mandates that participate in the Global Real Estate Sustainability Benchmark. The numbers used represent either reported data grossed up

to 100% (where area coverage, ownership days or occupancy is less

than 100% and greater or equal to 50%) or an estimate based

on proxy where area coverage, ownership days

occupancy is less than 50%.

The data includes Scopes 1,2

and if available scope 3

GHG emissions with one-year time

lag.

Due to the lag in

the availability of emissions data,

our

disclosure is reported on a one

year lag (please refer to the

Basis of Reporting section of

the Supplement to the UBS

Group Sustainability Report 2023, available at ubs.com/sustainability-

reporting for further details).

In the 2022 Sustainability Report, the number

calculated in 2022 was incorrectly reported

as 2022 and t CO

e, when the underlying data was related

2021 and kg CO

The 31.12.21 comparative number has now been updated

reflecting methodology changes and increased data

availability since the previous reporting period.

Data for

2021 excludes

proposals

to Japanese

companies that

included changes

to companies’

articles of

association. Data

includes proposals

by both

management

and

shareholders and reflects common market definition of climate-related proposals.

Sustainability Report 2023

| Environment

Climate-related own operations metrics 2023

Climate-related own operations metrics (UBS Group)

For the year ended

% change

from

31.12.23

31.12.22

31.12.21

31.12.22

Own operations

Net GHG footprint (1,000 metric tons CO

169

133

(0)

Change from baseline 2019 (%)

(53)

(63)

Share of renewable electricity (%)

Net GHG footprint equals gross

GHG emissions minus GHG

reductions from renewable

electricity (gross GHG emissions

include: direct GHG

emissions by UBS Group;

indirect GHG

emissions associated with the generation of

imported / purchased electricity (grid average

emission factor), heat or steam; and other

indirect; GHG emissions associated with

business

travel, paper and water consumption, energy related activities and waste disposal). Refer to the “Environment” section

of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for a breakdown of our GHG emissions (scopes 1, 2 and 3).

Our approach to nature

We recognize

the challenges

of transitioning

toward a

society that

can meet

human needs

while respecting

the

limits of

our planet’s

natural resources.

These challenges

are reflected

in stark

numbers: for

example, the

World

Economic Forum estimates that approximately USD 58 trillion of economic value depends

on the natural world in

some

way,

yet,

according

recent

United

Nations Environment

Programme report, annual

financial flows

nature-based solutions need

to more

than double

by 2025

(from USD 200

billion to USD

436 billion)

and nearly

triple to USD 542 billion by

2030 to reach climate, biodiversity

and land degradation targets

. However, challenges

can represent

opportunities.

That is

why we

look forward

to the

setting of

global policy

objectives and

goals through

the Convention on Biological Diversity and welcome the milestone

set of policy goals adopted by

governments in

the shape

of the

Kunming–Montreal Global

Biodiversity Framework.

This is

a key

enabler for

setting critical

direction

for economy-wide

transitions aimed

at safeguarding

global biodiversity.

We firmly

believe that

public policy

and

frameworks

have,

and

will

continue,

play

critical role

steering and

incentivizing

markets

support the

transition toward a sustainable economy.

Our approach

to understanding

impacts and

dependencies related

to natural

capital and

biodiversity,

and managing

the

resulting

risks

and

opportunities

across

our

activities,

reflects

our

commitment

mobilize

capital

toward

achieving

the

SDGs.

Nonetheless,

are

aware

that natural

capital is

inherently more

challenging to

define

financial terms due to a lack of easily

available data and standardized methodologies. Therefore, we strive to play

an active role

in creating new

global standards that

can help clients,

companies and the

financial sector manage

nature-related

risks

and

develop

opportunities, while

also

addressing

potential adverse

impacts

and

generating

positive impacts. That

is why we

were honored to

be part of

the efforts of

the Taskforce

on Nature-related Financial

Disclosures (the TNFD), including leading its

financial sector working group, and contributing

to the development

of the recommendations it released in September

2023.

Building on our

first integrated UBS Group

Climate and Nature

Report for 2022, we

developed our activities and

disclosures

for

2023

leveraging

the

recommendations

set

the

TNFD.

will

continue

develop

our

disclosures on

nature dependencies,

impacts, risks

and opportunities

over the

next few

years, aligned

with the

TNFD

recommendations and regulatory requirements.

During the course of 2023,

we also contributed to the debate

and improvement of knowledge and innovation in

this area

through our thought

leadership activities and

capacity building exercises.

For instance,

we ran

a Nature

Academy to train key staff about nature-related

issues, frameworks, standards, risks

and opportunities.

›

Refer to the “Managing sustainability and climate risks” section of this report and the “Our approach to nature”

section in “Appendix 2 – Environment” in the appendices to this report for more information about our

management of nature-related risks and opportunities

›

Refer to our UBS Group Climate and Nature Report 2023, available at

ubs.com/sustainability-reporting

Source : UN Environment Programme,

State of Finance for Nature 2023

Sustainability Report 2023

| Environment

Supporting our clients’

low-carbon transition

Helping our clients to navigate the orderly transition to a low-carbon economy and build climate-resilient business

models is

a key

objective of

our approach

to climate,

as is

the mobilization

of private

and institutional

capital toward

this transition.

Aligning our in-scope lending and investment portfolios to the objectives of the Paris Agreement is

an important part of this approach and so are the products and services

we offer. Specifically,

these include:

Offering sustainable finance products and

services

By offering innovative sustainable financing, investment and capital markets solutions, we strive to provide

clients

with the choices they need to meet their specific

sustainability objectives while supporting their transition

to a low

carbon economy.

We are developing innovative

advisory, lending, basic banking and

transition financing solutions,

as well as offering our clients access to various sustainable investment (SI) solutions.

By combining targeted advice

with our research, thematic insights, and data and analytics services,

we aim to help clients better understand and

mitigate

risks

and

identify

new

opportunities.

Further,

provide

support

the

form

tools,

platforms

and

education.

›

Refer to the “Supporting opportunities” section of this report for more information about our sustainable finance

product and service offering and an overview of key developments in 2023

Engaging with our investees and clients

Through

collaboration

and

engagement

with

industry,

investees

and

our

clients,

help

clients

access

best

practices, robust science-based approaches,

standardized methodologies and

quality data that help

them to better

measure and mitigate

climate risks

and act on

climate-related opportunities. Our

aim is to

better understand where

we should focus our engagement efforts to best support our investees and clients,

which is why,

as a first step, it

is important that we assess where investees and

corporate clients are on their low-carbon journey.

do this, we

are developing a framework that considers existing categorization frameworks used by UBS

AG and Credit Suisse

AG, such as the Credit Suisse Client Energy Transition Framework (CETF).

›

Refer to “Our transition strategy levers” and “Supporting our investing clients’ low-carbon transition” section for

more information about our engagement with our clients and to the “Asset Management” section of this report for

more information about our active ownership approach and climate engagement program with our investees

›

Refer to “Appendix 3 – Entity-specific disclosures

for Credit Suisse AG” in the appendices to this report for a

description of Credit Suisse’s CETF

Developing thought leadership

Our aim is to further inform and facilitate

our engagement activities by acting

as a thought leader in sustainability,

providing our clients with deep

insights and research content from

across our business areas and

central initiatives.

Our main

Group sustainability

thought leadership initiative,

the UBS

Sustainability and Impact

Institute, develops

insights into the long-term developments needed to support the transition to a low-carbon, sustainable

economy.

Our

Global

Wealth

Management

Chief

Investment

Office

and

our

Investment

Bank

Research

offer

actionable

insights on

sustainable investments and

finance. Meanwhile, our

Investment Bank, Global

Wealth Management,

Asset Management and Personal &

Corporate Banking business divisions each

delivered a variety

of conferences,

webinars, reports, papers and other events during 2023

to discuss some of the most important developments

and

themes around sustainability with our clients.

›

Refer to the “Expanding insights” section of the Supplement to the UBS Group Sustainability Report, available at

ubs.com/sustainability-reporting

for more information about our thought leadership activities

Sustainability Report 2023

| Environment

Supporting our financing clients’

low-carbon transition

Our lending sector decarbonization targets

As set out in

the UBS Group Sustainability

Report 2022, Pre-acquisition

UBS set targets

to address in-scope lending

emissions for

the residential

and commercial

real estate,

fossil fuels

(oil, gas

and coal),

power generation

and cement

sectors,

while the

Credit Suisse

Group had

(as set

out in

the Credit

Suisse Group

Sustainability Report 2022)

set

targets for

the oil,

gas and

coal, power

generation,

commercial real

estate, iron

and steel,

aluminum and

automotive

sectors.

For the shipping

sector,

the Credit Suisse

Group disclosed the

portfolio’s climate

alignment to

the Poseidon

Principles decarbonization index.

During

2023,

following

the

acquisition

the

Credit

Suisse

Group,

refined

the

UBS

Group

lending

sector

decarbonization targets based on the integration of

the Credit Suisse Group portfolios and in

alignment with our

net zero ambition.

We prioritized

sectors that

have the highest

carbon impact,

as per the

guidelines of the

Net-Zero

Banking Alliance

(NZBA), and

also applied

additional considerations.

These include

the materiality

of sectors

in terms

of financial exposure and the

availability of data and applicable methodologies to

estimate baselines and develop

pathways toward net zero. We performed additional analysis to establish transparency around the contribution of

each sector in our portfolio to the total.

Decarbonization targets

have

been

established for

Swiss

real

estate

mortgages

(commercial

and

residential real

estate) and for

financing of in-scope activities

in the fossil fuels

(oil, gas and

coal), power generation,

iron and steel

and cement sectors.

For the Credit

Suisse AG in-scope

shipping portfolio, we

continue to disclose

the portfolio’s

climate

alignment

the

Poseidon

Principles

decarbonization

index.

the

automotive

and

aluminum

sectors

previously reported

by the

Credit Suisse

Group did

not meet

the exposure

or emissions

materiality thresholds

calculated based on estimated 2023 exposure for the combined portfolios,

they have been deprioritized for target

setting at this time.

We will continue

to assess the

materiality of

the deprioritized

sectors annually

and aim

to develop

additional targets

for

the

remaining material

carbon-intensive sectors

line

with our

commitment to

the NZBA

and

data and

methodologies become available.

Sustainability Report 2023

| Environment

›

Refer to the “Supplement to Environment” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for more information about our targets

›

Refer to the “Basis of Reporting” section of the Supplement to the UBS Group Sustainability Report 2023, available

ubs.com/sustainability-reporting

for more information about our climate-related lending metrics

Sustainability Report 2023

| Environment

Our approach to

target-setting is based

on the guidance

from global standards and

initiatives such as

the NZBA,

the

Partnership

for

Carbon

Accounting

Financials

(PCAF),

the

Paris

Agreement

Capital

Transition

Assessment

(PACTA) and

the Science-Based

Targets Initiative

(the SBTi).

UBS acknowledges

that Credit

Suisse had

a commitment

to SBTi to have its 2030 targets externally validated. To develop the combined 2030 targets, we have utilized SBTi

guidance where possible and we continue to assess

the options for target validation and

assurance.

We strive to measure and monitor progress

toward our targets and their alignment

with our climate commitments

and emerging standards. It is important to note that progress towards our targets may not be linear, and year-on-

year volatility is

expected due to

changes in the portfolios’

composition over time.

We plan to disclose

our progress

publicly on an

annual basis. In

line with NZBA

guidelines for climate

target-setting,

we intend, as

a minimum, to

review our targets every five years to ensure

consistency with the most recent climate

science and best practices.

How we aim to underpin our targets with transition

strategies

underpin our targets and guide our transition

strategies and actions, we followed a two-step

process:

–

assessing

the

overall

emissions

associated

with

UBS’s

in-scope

lending

portfolio,

including

Swiss

real

estate

mortgages and

estimated

emissions reductions

2030 (by

business division

and sector),

considering client’s

historical emissions trends as well as public

decarbonization commitments;

and

–

considering

anticipated

changes

the

size

and

composition

our

in-scope

lending

portfolios

arising

from

lending structures and business strategy.

Alongside these estimated emissions reductions, we defined three

key transition strategy levers where we

believe

we can have an impact and facilitate additional

emissions reductions to reach our

targets.

Our transition strategy levers

A. Engage: engaging with our clients

Building on the review of our clients’ public

decarbonization commitments, we further

assess where they currently

stand on

their journey

toward a

low-carbon and

climate-resilient business

model. By

establishing a

view on

our

clients’ current decarbonization

ambitions and activities,

we aim to work

alongside them to

support their transition

efforts.

This

can

include

encouraging the

disclosure

current

emissions,

the

setting of

future

decarbonization

targets in line with Paris-aligned pathways and

the development of credible transition plans.

Through

our

ESG

Advisory

Group,

are

also

providing

the

necessary

lens

help

our

clients

assess

ESG

(environmental, social, governance) topics throughout the corporate lifecycle and critically analyze a corporation’s

ESG profile from a business and investor perspective.

›

Refer to the “Investment Bank” section of this report for more information about our ESG Advisory Group

Sustainability Report 2023

| Environment

B. Grow: offering sustainable finance solutions

We complement our

engagement efforts with

sustainable and sustainability-linked financial

advice and solutions

(advisory,

lending,

basic

banking

and

transition

financing

solutions)

help

our

clients

transition

sustainable future. These

solutions can

be on-balance

sheet (e.g.,

green or sustainable

loans and

mortgages) or

off-

balance sheet (such as access to debt and

equity capital markets). They can also include

transaction structuring.

For example, in

the corporate client business, we

focus on supporting our

clients by advising them

as part of

the

strategic dialogue and partnering with them

in the implementation of new

solutions. We offer sustainable-linked

loans

(SLL)

incentivize

the

borrower’s

achievement

ambitious,

predetermined

sustainability

performance

targets.

Our

SLL

offering

open

qualifying

corporates

from

all

sectors

wishing

reflect

their

sustainability

ambitions in their funding strategy and benefit

from meeting agreed sustainability performance

targets.

›

Refer to the “Supporting opportunities” section of this report for more information about our sustainable finance

product and service offering,

and specifically to the “Personal & Corporate Banking” section for more information

about our corporate client business

We continue

to develop

and refine

our sustainable

finance solutions

and approaches

on an

ongoing basis

to support

our clients in orienting their business efforts

toward the objectives of the Paris Agreement.

C. Prioritize: providing capital for lower-carbon-intensity

activities

As previously highlighted, our

aim is to direct capital toward

lower-carbon activities, or to clients with

credible net-

zero

targets and

plans to

transition to

low-carbon and

climate-resilient business

models. This

is in

line with

our

sustainability risk

process which

may trigger

enhanced due

diligence for

clients in

those carbon-intensive sectors

that have higher climate-related impacts and

risks. At the same time, as

the global economy shifts toward

lower-

carbon activities, we see opportunities

to provide financing and advisory services

to clients that are well positioned

to benefit from this transition.

Evolving our transition strategy

Managing and monitoring our financing

activities remains an ongoing

focus. We continue

to build on and

refine

our transition strategy

and further tailor

it to

our business divisions.

Our aim

is to

make our

approach to climate

“business as

usual”

and to

orient our

new and

existing business

efforts toward

net zero

by 2050.

strive to

routinely consider

the climate

impact resulting

from our

financing activities,

take an

active approach

to growing

our

low-carbon

business

and

address

our

financed

emissions

engaging

with

clients

and

supporting

their

transition. We strive

to further strengthen our

operating model and increase

our efforts in

the fields of transition

and green finance.

We also expect

new technologies

to emerge,

along with

policies and

actions from

governments,

that will support the transition

to a low-carbon economy. We regard such developments

as dependencies for

us to

contribute toward meeting the objectives of the Paris

Agreement.

As we work toward

our targets and further

develop our transition strategies, we

aim to consider a

just transition

to a low-carbon

economy,

one that is

as fair and

inclusive as possible.

In this regard,

we contributed

to the market’s

understanding of

the concept

as part

of the

Principles for Responsible

Banking (the PRB)

Just Transition

working

group.

Carbon reduction and removal

In accordance with the NZBA

guidelines, offsetting can play a

role that is supplemental to

sectoral and economy-

wide

decarbonization. We

support

transparent

investment in

carbon

markets that

are

aligned

with

the

current

publicly

available consensus

high

integrity

standards and

robust

governance (including

the

VCMI

(Voluntary

Carbon Markets Integrity

Initiative) Claims Code

of Practice, the

ICVCM (Integrity

Council for the

Voluntary Carbon

Market)

Core

Carbon

Principles

and

the

Oxford

Principles

for

Net-Zero-Aligned

Carbon

Offsetting).

Any

decarbonization strategies,

including offsetting, that

UBS applies to

its own in-house

operations or advises

other

organizations on must meet these standards.

Our

transition

plan

prioritizes

emissions

reductions

line

with

science-based

climate

targets

and

credible

trajectories to

achieve these

targets. In

addition, we

anticipate that

the deployment of

carbon-removal solutions

will be needed to counterbalance

hard-to-abate emissions and

supplement the reduction

strategies of some

of our

clients. For example,

certain industrial processes

cannot yet achieve

absolute zero emissions

as technologically or

financially viable

emissions-elimination alternatives do

not exist.

Those industries,

however, still

provide products

and services

that are

important to

society and

are likely

to remain

relevant in

the future.

In these

cases, carbon

removals

are

critical

balance

residual

emissions.

best

practice

guidance,

regulation,

methodologies

and

technologies develop, our approach to decarbonization,

including offsets, will continue to evolve.

Sustainability Report 2023

| Environment

Sustainable lending operating model

operationalize our approach to climate,

it is important to

embed sustainability and climate

considerations into

our

lending

operating

model,

leading

regular

adjustment

evaluation

and

decision-making

frameworks,

governance structures, control and monitoring

processes, and underlying systems.

For example,

following the

acquisition of

the Credit

Suisse Group,

UBS reassessed

the emissions

and targets

for

sectors with a

high-carbon impact for

the combined organization. To

operationalize our target

approach, we are

reviewing

whether

our

planning

and

governance

processes,

risk

appetite,

sector

strategies,

and

are

still

appropriate.

In parallel,

we are

assessing required

enhancements to

our loan

origination, credit

granting, monitoring

and reporting processes.

Our approach to measuring facilitated emissions

from our capital markets business

Investment

Bank

The Investment

Bank offers

our clients

access to

the world’s

primary, secondary and

private capital

markets,

through

an array

of sustainability-

and climate-focused services,

products, research

and events. Our

role in

capital market

transactions helps our clients access capital

for their businesses.

We facilitate clients’ capital raising and,

therefore,

think it is important to monitor the related emissions

which we are involved in.

Facilitated emissions differ from financed emissions in two aspects: Firstly, they are off-balance sheet

(representing

services rather

than financing)

and secondly,

our role

is completed

within a

short timeframe

rather than

a long-term

loan-related exposure.

As a

result, and

in line

with industry

guidance, we

distinguish between

on-balance sheet

“financed” and off-balance sheet “facilitated”

emissions.

By disclosing our

facilitated emissions for select

carbon-intensive sectors

, we aim

to provide transparency on

the

emissions we

facilitate as

result of

our

capital market

activities. We

are currently

assessing methodologies

for

calculating facilitated emissions for the remaining NZBA

carbon-intensive sectors

. We calculated UBS’s facilitated

emissions in

line with

PCAF’s draft

accounting and

reporting standard

for facilitated

emissions, including

public

equity capital markets

and public debt

capital markets,

where UBS, including

Credit Suisse,

held a lead bookrunner

or lead manager

/ co-manager

role on the

transaction. Facilitated

emissions are

not shown for

the current reporting

year due to the inherent time-lag in the availability of emissions data. We have conducted an initial assessment of

our approach against the final PCAF Standard released in December 2023 and identified select areas to be

further

explored in 2024.

It is important

to note that

reporting facilitated emissions from

transactions that took

place in the

reporting year

will introduce volatility in our numbers as it

will be related to the volume of capital markets

activity in the year and

our market share. Global capital markets activity was

strong post-Covid in 2020 and 2021 but slower in 2022 and

2023. When market activity

rebounds, we would expect our facilitated emissions

to see a similar increase.

Disclosed for those

sectors where data

and methodology are

available: fossil fuels (coal,

oil and gas),

power generation, iron

and steel, aluminum,

cement,

automotive and air transportation.

The

NZBA identifies

nine priority

sectors: agriculture,

aluminum, cement,

coal, commercial

and residential

real estate,

iron

and steel,

oil and

gas, power

generation and transport.

Sustainability Report 2023

| Environment

UBS reviews and assesses

every Global Banking transaction

and employs a robust

business selection process. This

means that,

our capital

markets activities

for carbon-intensive

sectors, we

consider the

potential climate

and

sustainability impacts of the transaction and related

material risks and opportunities.

continue

review

and

assess

emerging industry

guidance

and

target-setting methodologies

for

facilitated

emissions.

31.12.22

31.12.21

Facilitated

amount

(USD

billion)

Facilitated

emissions,

scopes 1

and 2

(million

metric t

Facilitated

emissions,

scope 3

(million

metric t

PCAF

score,

scopes 1

and 2

PCAF

score,

scope 3

Facilitated

intensity

(million

metric t

e /

USD

billion)

Facilitated

amount

(USD

billion)

Facilitated

emissions,

scopes 1

and 2

(million

metric t

Facilitated

emissions,

scope 3

PCAF

score,

scopes 1

and 2

PCAF

score,

scope 3

Facilitated

intensity

(million

metric t

e /

USD

billion)

Facilitated

emissions

Select carbon-

intensive sectors

12.0

2.0

2.3

1.6

2.3

0.4

23.0

5.1

16.3

1.6

2.8

0.9

Select carbon-

intensive sectors

as % of total

5.7%

5.9%

Other sectors

197.7

368.2

Total facilitated

amount

209.7

391.3

Select carbon-intensive sectors comprise:

fossil fuels (coal, oil and

gas), power generation, iron

and steel, aluminum, cement,

automotive and air transportation.

Refer to the sector

approach in

the “Climate-related

methodologies –

decarbonization approach

for our

financing activities“

section of

the Supplement

to the

UBS Group

Sustainability Report

2023,

available at ubs.com/sustainability-reporting,

for more information about

the parts of the

value chain in-scope within sectors.

PCAF data quality score

has been combined for

the

key sectors and weighted by the facilitated amount.

Includes all sectors.

›

Refer to the “Investment Bank” section of this report for more information about our capital market activities

›

Refer to the “Basis of Reporting” section of the Supplement to the UBS Group Sustainability Report 2023, available

ubs.com/sustainability-reporting

, for more information about our methodology to calculate facilitated emissions

Sustainability Report 2023

| Environment

Supporting our investing clients’

low-carbon transition

Asset Management

UBS AG

Asset Management

became a

founding member

of the

Net Zero

Asset Managers

(NZAM) initiative

in 2020,

committing to support

its ambition of

net-zero GHG emissions

by 2050. Membership

of the NZAM

initiative entails

a range of expectations at an organizational

level and for in-scope assets under management

(AuM). Through this

commitment, our aim

is to further

support our clients

in reaching their sustainable

investment and decarbonization

objectives.

In order to provide choice

to our clients and to effectively

monitor our progress toward

our target, we use a clearly

defined framework to

assess whether a

product has a

net-zero ambition. This

framework is based

on the NZAM

initiative’s guidance

on assets

committed to

be managed

in line

with attaining

net-zero emissions

by 2050

or earlier,

as well as guidance

from other industry bodies. From

this we have derived

the following guiding principles when

defining an investment portfolio as having a net-zero

ambition:

–

The

portfolio

has

defined

decarbonization

target,

commitment

increasing

portfolio

coverage

SBTi-

verified targets and/or invests in climate solutions

that enable net-zero global GHG emissions

by 2050.

–

The

portfolio

makes

contribution

the

transition

low-carbon

economy

where

relevant

companies,

partners, managers, borrowers, tenants

and vendors that are not currently meeting or

aligned with net zero are

the subject of direct or collective engagement

and stewardship actions.

–

Offsets may be used to enable or

support long-term carbon removal where there are no technologically and/or

financially viable alternatives to eliminate emissions.

–

Monitoring and annual disclosure of progress

toward portfolio-level targets.

›

Refer to the “Supplement to Environment” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for UBS AG Asset Management’s science-based methodologies

2030 target for the proportion of assets to

be managed in line with net zero

Our

Asset

Management

business

division

set

target

aiming,

2030,

align

20%

UBS

Asset

Management’s total

assets under

management (AuM)

with net

zero.

Net zero

portfolio alignment

currently focuses

on areas of its business where methodologies exist and there is credible data to support tracking and reporting of

our progress, namely active equities, active fixed income, indexed equities and some of our real estate investment

activities. We believe, however,

that only a proportion of these assets

can be feasibly managed in ways

that align

with net

zero by

2030, consistent

with their

respective intended

investment objectives,

the needs

of our

clients,

and

market

evolution.

There

also

portion

assets

for

which

there

currently

agreed

accepted

methodology for

net-zero alignment.

These include

asset classes

such as

multi-asset funds, hedge

funds, private

markets,

money

markets,

sovereign

bonds,

and

municipal

issuers.

Portfolio

alignment

will

pursued

once

acceptable data and methodology solutions

are identified.

During 2023,

we implemented

revisions to

fund documentation

and investment

management agreements

in certain

products

align

with

our

net-zero-aligned

framework. UBS

Asset

Management currently

has

available

products being managed in line with net zero,

representing 2.9% of our total AuM.

Our plans for making further progress toward our target include investing in the

necessary data and infrastructure

to support

the management

and monitoring

of portfolios,

continuing to

assess net-zero

alignment at

the issuer

level, and our active ownership efforts

toward the transition to a low-carbon economy.

We draw on a wide variety of data sources to inform our assessment of climate-related risk and opportunities

and

recognize that approaches

to achieving net-zero are

likely to develop over time

as both data availability

and quality

continue to improve. Consequently, we also

expect our portfolio alignment approach to

evolve as the transition to

low-carbon

economy

progresses

and

further

data

and

methodologies

become

available.

For

example,

enhanced

our assessment by adding

temperature alignment and

climate solutions approaches,

as well as exploring

how to best incorporate scope 3 metrics into our

data model.

This Pre-acquisition UBS aspiration will be reassessed in

2024.

Sustainability Report 2023

| Environment

Helping clients understand net zero

We understand that our

approach to net-zero investing is

determined by our clients’ choices. We

believe that we

have

important

role

play

working

collaboratively

with

our

clients

climate

risk

education,

providing

information about

best practices

in climate

risk management,

climate-related opportunities

and approaches

for net-

zero-aligned portfolios.

help

our

clients and

other investors

understand the

journey to

net

zero,

as well

as the

range

of options

for

allocating capital that

we offer, we

launched a digital

campaign during 2023

that provides educational

materials

and

thought

leadership

content.

are

using

various

media

avenues

available

increase

awareness,

including a

redesigned web

experience, videos

and podcasts,

Adobe campaigns,

and our

social media

platform.

Our

investment

experts

delivered

individualized

education

clients

and

prospects

specific

components

sustainable investing. Some of our

investment approaches include rules-based net-zero strategies, climate-related

indexing and factor-based investing.

Net-zero active ownership by UBS AG Asset Management

We recognize

that the transition

of investment portfolios

requires

real-economy emission reductions

and we

see

our

active

ownership

strategy

powerful

tool

influencing

corporate

behavior

achieve

real-economy

outcomes. We have

had a dedicated

climate engagement

program in place

for five years

to address climate-related

risks

with

measurable

progress

tracked.

2023,

applied

sector-specific

approach

and

engaged

with

companies from the

following sectors: oil

and gas, electricity

and other utilities,

diversified mining, steel,

chemicals,

and construction material.

We set our engagement objectives and expectations based on company target-setting,

decarbonization measures,

capital deployment

and progress

toward stated

commitments. We

also widened

our

engagement coverage to

include the

highest-emitting companies across

our investment universe,

expanding the

range of sectors and geographies we cover.

We have also linked our climate engagement with our voting

actions. In this respect, we clarified our climate and

net-zero expectations

of companies

in our

policy framework.

In 2022,

we outlined

our criteria

for management

say-on-climate proposals. In 2023, we have further evaluated such proposals against the following six key factors:

climate

governance,

net-zero

ambition

and

targets,

quality

decarbonization

strategy,

net-zero

performance

alignment, lobbying and policy engagement,

and use of offsets.

›

Refer to the “Supporting opportunities” section of this report for more information about our active ownership

approach and climate engagement program

Collaborative engagement by UBS AG Asset

Management

UBS

Asset

Management

co-lead

and

collaborative

investor

Climate

Action

100+,

engaging

with

companies on the initiative’s focus list that are key to driving the global net-zero emissions transition.

In 2023, we

joined,

and

have

been

participating

the

Institutional

Investors

Group

Climate

Change

(IIGCC)’s

Net

Zero

Engagement Initiative (NZEI), which was set up

to build on and extend

the reach of investor engagement beyond

the Climate

Action 100+

focus list.

This includes

a broader

spectrum of

companies that

are driving

demand for

fossil fuels due

to their business

activities. In 2023,

we were signatories

to a CDP

campaign encouraging

more than

2,000

companies

adopt

science-based

climate

targets,

and

co-signatories

two

investor-led

letters

policymakers encouraging the acceleration of decarbonization

goals at state-owned companies.

Sustainability Report 2023

| Environment

Annual disclosure by UBS AG Asset Management

UBS

completed

the

annual

CDP

disclosure

July

2023,

including

pertinent

information

about

UBS

Asset

Management.

Since this

disclosure, UBS

AG Asset

Management has

made additional

progress against

our 2030

target as disclosed

above, expanding our

available net-zero product

shelf and further

increasing those

AuM that

are being managed in line with net-zero objectives.

also

participated

other

industry

and

disclosure

initiatives,

and

the

development

regional

best

practice

climate-related

guidance,

such

the

new

Swiss

Climate

Scores

(SCS).

UBS

was

part

the

working

group

developing

the

SCS,

initiative

conducted

the

Swiss

government

collaboration

with

industry

and

non-

governmental

organizations.

The

SCS

are

based

international

standards

and

aim

encourage

investment

decisions that contribute

to achieving the

global climate goals.

As the

largest financial institution

in Switzerland,

we are committed

to this transparency

milestone and

were the first

major bank

to launch

SCS reports

for 136

funds

(as of

31 December 2023). In

accordance with the

recommendations put forward

by the

government, our initial

focus is on equities

and fixed income funds

domiciled in Switzerland.

More funds and

products will follow

in 2024.

Available UBS SCS reports for funds can

be viewed on the UBS Quotes

data and information platform. For clients

interested in climate-related topics,

advisors can use the SCS to

demonstrate the climate compatibility

of products,

based on the latest international information

available.

›

Refer to

sif.admin.ch/swissclimatescores

for more information about SCS

›

Refer to

UBS quotes

for more information about UBS SCS reports for funds

Global Wealth Management

is a distributor

of sustainable

investing solutions,

including climate

investing. While

recognize that

not every

investor might have

net-zero ambitions or

an affinity

for investing in

the transition to

low-carbon economy, we aim to provide a range of options

for private investors and family

offices to address their

own decarbonization

targets where

possible. We

do this

through

allocations to

climate-related

solutions in

our

discretionary mandates

where relevant,

as well

as by

curating climate investment

options for

advisory portfolios.

The focus on providing a

range of credible solutions is

complemented by building investor awareness and

driving

solutions innovation across asset

classes and strategies.

We also

continue to build an

understanding of how best

to integrate climate risk into portfolios.

Extending the range of investment options

and allocating capital

In 2023,

Global Wealth

Management continued

to increase

the number

of investment

solutions across

asset classes

and strategies to support clients’ decarbonization objectives.

We launched a low-carbon single equity module and

a sustainability-focused fund

of hedge funds

solution,

which includes allocation

to climate-focused equity

hedge

strategies, credit options for renewable infrastructure and a carbon markets strategy. We also extended our credit

research

coverage

individual

green

bonds,

expanding

the

available

universe

for

clients

who

prefer

direct

investments to fund solutions.

We work

closely with

our industry

partners on

developing new

sustainable solutions,

including those

aiming to

address decarbonization. We aim to identify relevant and

compelling investment opportunities and credible tools,

and to

support the

launch of

new solutions

where possible

and relevant

for client

portfolios. We

continue to

believe

that the transition to a

low-carbon economy requires an “all-of-the-above” approach where investments

in clean

energy

infrastructure

and

green

technologies

are

complemented

effective

and

credible

shareholder

and

bondholder

engagement

with

heavy

polluters

decarbonization.

such,

dedicate

portion

our

discretionary

portfolios

impactful

engagement

strategies,

including

those

that

invest

companies

with

the

objective of engaging on decarbonization.

Helping clients understand net zero

Our investment specialists provide

education and training to

advisors, clients and prospects

on various aspects of

sustainable investing

and how

to incorporate

these strategies

into portfolios.

These training

sessions include

general

education

and

discussions

around

decarbonization

and

climate

investing.

also

work

with

clients

that

are

interested in setting their own portfolio decarbonization targets or are exploring how to build exposure to carbon

markets.

addition

individual

client

meetings,

host

broader

client

events

specific

topics

including

decarbonization and climate investing. Our conversations emphasize that investing in the transition

is relevant not

just to investors who want to

drive positive environmental impact, but

rather to all investors, given the

importance

of climate change to business models and capital

markets.

Sustainability Report 2023

| Environment

also

incorporated

discussions

the

investment

relevance

climate

and

broader

sustainability

topics

publications

for

private

clients

throughout

2023.

provided

private

investor

perspective

emerging

investment opportunities

tied to

the low-carbon

transition, including

both regulatory

and voluntary

carbon markets.

Our

analysts continued

to cover

broad range

of longer-term

investment themes

with links

the low-carbon

transition, including within energy efficiency, energy transition, clean air and carbon reduction, smart mobility,

the

circular economy,

and the

food revolution.

other topics).

This was

an average

of 1.91

training days per employee.

Performance management

Our

performance management

approach

reflects

our

strategy

and

supports

our

high-performance culture.

The

Objective-setting process fosters accountability with objectives

focused on outcomes to align

the organization on

what

matters

most.

support

appropriate

management

risks

and

strong

and

proactive

risk

culture,

all

employees

set

risk-related

objective.

Further,

consider

both

performance-

and

behavior-related

objectives

because we value

not only “what” an

employee accomplishes

but also “how”

they accomplish it

and demonstrate

our behaviors – accountability with integrity, collaboration, and innovation.

An embedded Feedback

app allows employees

to easily give

and receive feedback

in real time throughout

the year,

supporting continuous improvement. We counted more than 296,330 instances of feedback

across the combined

organization by the end of 2023, and 100%

of eligible employees received a performance

review for the year.

Self-

and

line

manager

reviews,

along

with

additional

management

discussions

validate

performance,

help

support fair and transparent

decision-making. Line managers play

a key role in the quality

of our approach and

are

ultimately responsible for year-end performance

decisions. Leaders at all levels are also expected

to role-model our

House

View

Leadership.

Its

principles

are

integrated

into

all

our

core

processes,

including

hiring,

performance management, training, succession

planning, and promotions.

For

2023

year-end, we

ran a

combined

fully integrated

performance management

approach for

all

employees,

including our

Credit Suisse

colleagues. Supporting

a one-bank

employee experience

helps all

employees understand

what matters most to drive a sustainable high-performance culture. The completion of our year-end approach is a

significant milestone for our organization

and a success that accelerates our cultural

integration journey.

Employee engagement

Our

employees

want

heard

and

are

involved

shaping

their

daily

experience.

such,

provide

opportunities

throughout the

year for

them to

share their

views and

to connect

with management

on topics

ranging

from strategy and engagement to the work environment.

In 2023,

we conducted

employee lifecycle

surveys, in-depth

analyses of

specific business

issues, and

“pulse” surveys

to learn

about employees’

views and

concerns. One

such pulse

survey, conducted

across the

combined organization

November

2023,

showed

high

levels

psychological

safety,

respect,

collaboration

and

empowerment.

particular, 87% of

respondents reported experiencing a

professional and respectful work

environment, and 83%

reported that their function

collaborates well with different areas.

Further, 77% of respondents

felt empowered to

make decisions

and

86% felt

able

to speak

and raise

concerns

. All

of these

results

are

above the

financial

services benchmark

Employee feedback

in 2023 also

included virtual

focus-group sessions

with more

than 5,000 participants

across the

combined organization. Those conversations, along with feedback received

through our internal communications

channels and

various events,

allowed employees

share their

perspective and

insights on

the integration,

and

provided employee sentiment data points to

track progress.

Result shown is

the sum of “strongly

agree” and “agree” scale.

Questions: 1) In my

business division or

function, we provide

a professional and

respectful work

environment, 2) Where I work, we

collaborate well with different areas,

3) I'm empowered to

make appropriate decisions in

my job and 4) I am

able to speak up

and raise concerns if I see things I consider

to be wrong

Benchmarks provided by Ipsos Karian and Box

as of Q3 2023

Sustainability Report 2023

| Social

In addition, a dedicated online integration hub, accessible

to both UBS and Credit Suisse employees from the date

the

legal

close,

enabled

communicate

key

strategic,

organizational

and

operational

decisions

and

information, and

to start

building a

unified identity

and culture.

Initiatives like

our regular

“Ask the

CEO” event

gave employees the chance to learn about (and

ask questions on) topics such as strategy

and direction.

Employee representation

addition

seeking

out

employee

feedback,

maintain

open

dialogue

with

our

formal

employee

representation groups. We have European works councils representing 17 countries and consider topics related to

our performance and operations. Local works councils (such as the UBS Employee Representation Committee and

the Credit

Suisse Staff

Council in

Switzerland) discuss

benefits, workplace

conditions and

redundancies, among

other topics. Collectively, these groups represent approximately 51.5%

of our global workforce.

Where applicable, our operations are subject to collective bargaining agreements (CBA). Benefits are aligned with

local markets and often go beyond legal requirements

or market practice.

Fair and equitable pay

Fair

and

consistent

pay

practices

are

designed

ensure

that

employees

are

appropriately

rewarded

for

their

contribution. We pay for performance, and

we take pay equity seriously.

We have embedded clear commitments

in our global compensation

policies and practices.

We regularly conduct internal

reviews and independent external

audits on

pay equity, and

our statistical

analyses show

a differential between

men and

women in

similar roles

across

our major locations of less than 1%.

In 2020,

we completed

an equal

pay analysis

in Switzerland,

as required

by the

Swiss Federal

Act on

Gender Equality.

The results

confirmed that

we are

fully compliant

with Swiss

equal pay

standards. Beginning

in 2020,

Pre-acquisition

UBS was

certified (through

2023) by

the EQUAL-SALARY

Foundation

for our

HR practices,

including compensation,

Switzerland,

the

US,

UK,

the

Hong

Kong

SAR

and

Singapore,

covering

than

two-thirds

our

global

employee population.

All of our HR policies are

global, and we apply the

same standards across all

locations. Furthermore, we review

our

approach and policies

annually to support

our continuous improvement.

In 2023, we

fully integrated former

Credit

Suisse Group

employees into

all of

our fair

pay practices

and continued

to monitor

and improve

our pay

equity

position in our leading countries.

We also aim to

ensure that all employees

are paid at least

a living wage

. We regularly assess employees’

salaries

against local living wages,

using benchmarks defined

by the Fair Wage Network.

Our analysis in 2023

showed that

employees’ salaries were at or above the respective

benchmarks.

›

Refer to our UBS Compensation Report 2023 at

ubs.com/annualreporting

and to

ubs.com/diversity

for our 2023 UK

Gender & Ethnicity Pay Gap report

Environmental, social and governance (ESG)

objectives in the compensation process

Our compensation

determination process

considers ESG

objectives in

objective-setting, performance award

pool

funding,

performance

evaluation

and

individual

compensation

decisions.

ESG-related

objectives

have

been

embedded

our

Pillars

and

Principles

since

they

were

established

2011.

2021,

introduced

explicit

sustainability objectives in

the non-financial category

of the Group CEO

and GEB performance

scorecards. In 2023,

further

enhanced

the

GEB

performance

scorecard

framework

establishing

separate

Environmental

Sustainability and

People &

Governance categories.

The objectives

in these

categories are

linked to

our sustainability

priorities,

and

their

progress

measured

via

robust

quantitative

metrics

and

qualitative

criteria.

Sustainability

objectives are assessed

for each

GEB member

on an

individual basis,

directly impacting

their respective

performance

assessments and compensation decisions.

The determination of the Group performance award pool funding

also takes into account ESG factors. Aside from

financial performance,

an assessment

of progress

is made

against objectives

linked to

our focus

areas of

Planet

(including climate-related

goals), People

(including progress

made against

our diversity

aspirations) and

Partnerships,

alongside other key non-financial considerations.

For more information on the gender certification,

refer to the

EQUAL-SALARY Foundation website

Excluding our US financial advisor staff (as their

compensation is primarily based on a formulaic

approach).

Sustainability Report 2023

| Social

Therefore,

ESG

taken

into

consideration

when

the

Board

Directors’

Compensation

Committee

assesses

performance and compensation

for GEB members.

Additionally, the assessment

impacts the

overall performance

award pool for the Group. Going forward, we will continue to review and refine the role of ESG considerations in

our performance

and compensation

framework to

ensure they

remain aligned

to our

strategic priorities

and the

sustainable growth of shareholder value.

›

Refer to “GEB performance assessments”

in the UBS Compensation Report 2023 for more information

›

Refer to “Our focus on sustainability and climate,” “Employees,” and “Social impact” in our UBS Group Annual

Report 2023 available on

ubs.com/annualreport

for more information

›

Refer to

ubs.com/sustainability-reporting

for more information about ESG-related topics

Employee support

We are committed to being a responsible employer, and that includes supporting our employees’ health and well-

being. Social, physical, mental and

financial well-being elements are woven

into our HR policies

and practices, as

well as

into employee-focused initiatives to

increase awareness

and educate employees

on how

to improve

their

well-being. Supporting employee health and well-being remained a priority in 2023. Resources to support holistic

well-being

included

range

programs,

benefits

and

workplace

resources,

along

with

bespoke

eLearning

curriculum that aimed

at helping our

employees manage their

health, foster well-being,

strengthen their resilience,

and support the sustainability of the organization. For example, in

the first part of 2023, UBS became a

founding

partner of #WorkingWithCancer to improve our support

for employees impacted by cancer.

During the second half of

2023, we focused on helping

our employees across the

combined organization adapt to

changes related to the integration of Credit

Suisse.

In this context, we expanded our offering

to include guidelines

and instructor-led

sessions on

managing organizational

change, uncertainty,

and resilience.

Credit Suisse

employees

also had access to holistic personal health

coaching support.

Benefits and assistance

All

our

employees

have

access

competitive

benefits, such

healthcare,

well-being and

retirement

benefits,

insurance (such as

life and disability

insurance), and flexible

leave policies. Benefits

are set

in the

context of local

market practice and are regularly reviewed for competitiveness.

Employee assistance programs and internal

teams help employees and

their family members manage personal

work-related issues

that may

affect their

well-being.

UBS Group

excluding Credit

Suisse’s absentee

rate in

2023

was 1.9% globally and Credit Suisse’s absentee rate was 2.3% in Switzerland

of total scheduled days, according

to the number of illness or accident absences

recorded in the respective self-service HR tools.

In 2023,

we announced

that the

social plans

or severance

payments at

UBS and

Credit Suisse

in the

respective

countries will be

aligned to ensure

that all employees

are treated equally.

The terms of

the social plans

or severance

payments are harmonized according to a

“best of both” principle to support employees

affected by redundancy

Should business or

organizational circumstances arise that

lead to

employee redundancy, we

offer redeployment

and outplacement services with a

key focus on redeployment

within UBS and we

have significantly increased the

budget

for

education

and

training

all

business

divisions

and

regions.

Those

services

are

designed

help

employees find

new internal

roles or

to transition

out of

UBS. We

believe that

these measures

help skilled

employees

who

are

affected

restructuring

position

themselves

favorably

the

labor

market

within

outside

the

financial services industry. Additionally, employees considering retirement have access to various resources to help

prepare them for this transition, including access

to educational sessions and individual

assistance.

›

Refer to the Supplement to the UBS Group Sustainability Report 2023 for UBS’s health and safety statement

›

Refer to

ubs.com/employees

for more information about benefits and assistance

Equal opportunities and whistleblowing

Building

high-performing

and

inclusive

workplace

includes

providing

equitable

access

employment

and

advancement opportunities. We

are an

equal opportunity employer,

and our policies

do not tolerate

harassment

of any kind.

We have measures

in place to

prevent bullying, victimization, harassment,

and retaliation, as well

anti-harassment representatives who independently review relevant training,

policies and protocols.

Credit Suisse does not currently and has

not in the past reported absenteeism globally,

as Credit Suisse’s systems capture this

data on a regional rather than

global level and definitions between regions differ, impacting the accuracy of

a global number.

Due to local legal or consultation requirements,

in five countries alignment remains in progress

Sustainability Report 2023

| Social

Our policies encourage employees

to raise concerns

openly and to

report any potential violations

of our Code

Conduct

and

Ethics

(the

Code).

Group-wide,

staff

have

multiple

ways

(including

confidential

whistleblowing

hotlines

and

online

applications

that

offer

anonymity)

raise

concerns

about

any

suspected

breach

laws,

regulations, rules

or other

legal requirements,

policies, sexual

misconduct or

harassment, or

any violation

of the

Code. We do

not tolerate any

form of retaliation

against any employee

who reports

a concern that

they reasonably

believe is a breach or violation.

Diversity, equity and inclusion

UBS, we

aim to

build a

culture of

belonging, where

employees from

all backgrounds

and identities

can feel

recognized and valued, and where everyone can unlock their full potential. To succeed, we need to enable UBS to

deliver the greatest possible impact for our stakeholders – both external (our clients,

our communities and society,

and our

suppliers) and

internal (our

employees). Our

employee diversity,

equity and

inclusion (DE&I)

strategy is

built

four pillars:

how we

hold ourselves

accountable, how

we hire,

how we

develop talent

and

how we

build

culture of

belonging. We leverage

all four pillars

as we move

toward achieving our

ambitious gender and

ethnic

diversity aspirations,

disability integration and in creating an inclusive

culture for all.

›

Refer to the “Supporting opportunities” section of this report for more information about our clients

›

Refer to the “Driving social impact” section of this report for more information on the topic of community and

society

›

Refer to the “Managing our supply chain responsibly”

section of this report for more information about our

suppliers

Accountable

Our accountability framework

embodies the oversight

of the GEB

and its commitment

to achieving our

aspirational

goals,

along

with

empowering

leaders

drive

our

DE&I

strategy

forward.

use

data

monitoring,

fair

pay

practices, management dashboards,

and toolkits to support accountability.

All GEB members and their leadership

teams are evaluated on

their efforts toward achieving our

aspirations.

Furthermore, supporting business-led DE&I

councils and

people forums

ensures

that accountability

is a

shared responsibility Group-wide.

Externally, we partner

with initiatives such as

the UK government’s

Women in Finance Charter to

support the progression of women

into

senior roles and to publicly report on progress.

We also

believe that

transparency is

key to

achieving our aspirations.

In 2020,

we outlined

specific intentions to

increase our female and

ethnic minority representation, especially among

management. Specifically, by 2025, we

aspire to have

30% of Director

level

and above roles

globally held by

women and 26%

of Director level

and above

roles in

the US

and

the UK

held

ethnic-minority talent,

along with

additional regional

aspirations.

Our DE&I

aspirations remain

unchanged for

the combined

organization and

the Credit

Suisse DE&I

aspirations have

been

retired.

For all data in the DE&I section of this report, 2023

data reflects the combined firm unless otherwise

stated. Prior-year data reflects UBS only, unless otherwise

stated.

We informed employees that as of 1 April

2024, the firm will adapt its organizational

titles to the UBS structure. This change is primarily

one of nomenclature;

role, responsibilities,

employment terms

and conditions

are all

unchanged. The

title of

managing director

is unchanged.

Credit Suisse

directors will

become

executive directors, and vice

presidents will become directors.

Assistant vice presidents/associates

will become associate

directors. Employees with

a staff title will

ultimately be

aligned to

either employee or

authorized officer,

depending on

their role,

responsibilities, and experience

and following

a thorough

review by

management, supported by HR.

Sustainability Report 2023

| Social

It is important to note that improving representation is rarely

linear. Moreover, progress is based in part on drivers

like promotion rates, as well as on various

business and market conditions, employees’ willingness to self-disclose

demographic

information,

and

other

factors.

therefore

aim

ensure

that

every

element

our

people

management

process

positive

influence.

For

instance,

implementing

processes

and

controls

mitigate

unconscious bias in the

hiring process, talent reviews

and promotions have

helped to maintain a

continuous line of

progress,

with

the

number

diverse

new

hires,

promotions

and

retentions

slowly

improving

our

overall

representation, particularly regarding female and

ethnic minority employees.

For

example,

women

now

account

for

40.9%

our

workforce

and

29.5%

our

Director

level

and

above

population, up from 27.8%

in 2022 and 26.7%

in 2021. Women also

represent 30.5% of management

positions,

and 22.6% of management

positions in revenue-generating functions.

In addition, 37.5% of members

of the GEB

and 33.3%

of members of the Board of Directors (BoD) are women,

as are 30.3%

of senior managers who report

directly to a member of the GEB.

Due to variations

in legal requirements

and historical progress, we

take a country-specific

approach to increasing

the representation of

ethnic minorities, with

a particular focus

on making

progress in the

US and

the UK, where

ethnicity data is more

readily available. As at

the end of 2023,

ethnic minorities held 24.3% of

Director level and

above roles in the UK, up from 23.4% in 2022 and 21.9%

in 2021, and 2.1% of these roles were Black talent.

at the

end of

2023, ethnic minorities

held 25.1% of

Director level and

above roles in

the US, up

from 20.5% in

2022 and 20.1% in 2021.

Sustainability Report 2023

| Social

Hire

Over

the past

five years,

we have

put strong

foundational processes

place to

optimize diverse

hiring even

uncertain

markets

and

times

considerable

attrition.

continue

focus

training

recruiters

and

hiring

managers to help mitigate unconscious bias in the hiring process and hire the best-suited candidate for each role,

regardless of

background. In 2023,

our hiring ratios were

strong for women

at all levels

(43.3% hired compared

with 40.9% headcount representation). Our ethnicity hiring ratios improved for US talent (46.9%

hired compared

with 31.9% headcount

representation), UK talent

(40.4% hired compared

with 29.2% headcount

representation),

and for UK Black talent (16.4% hired compared with 3.6%

headcount representation).

support

talent

who

have

been

out

the

workforce,

our

UBS

Career

Comeback

and

the

Credit

Suisse

Real

Returns programs were designed to support

talent returning from a longer career

break or career shift. Introduced

in 2016

and offered

globally since

2019, UBS

Career Comeback

helped 19

participants (15

women and

4 men)

return to corporate jobs

in 2023, and a

total of 253 individuals

since its inception. Since the

launch of the Credit

Suisse

Real

Returns

program

2014,

363

the

543

participants

were

hired

into

permanent

roles

after

the

program. In 2023, the

program helped 11 participants (10 women

and 1 man). Going

forward, the Credit Suisse

program will be retired.

Develop

Part of building an inclusive

workplace is providing equitable access

to advancement opportunities. To help ensure

employees at

all career

stages have

equitable development

opportunities, we

sponsor key

talent and

leadership

development programs. As examples,

in 2023, our new Growth Alignment

Experience was launched for

Associate

Director and

Director level

employees of

UBS Group

excluding Credit

Suisse in

the US

identified through

a self-

nomination process. Over

a six-month

period, 50 initial

participants worked with

external coaching professionals

to enhance

their strategic planning

skills, expand

their networks

and build

connections. Selected ethnic-minority

employees in the

UK at Associate

Director and Director

levels were

invited to participate

in Not in

Your

Image, a

nine-month development program to build skills and leadership readiness in which they were paired with a senior

sponsor for

longer-term

career development.

In addition,

in the

US and

the UK,

we participate

in the

Executive

Leadership Council’s Institute

for Leadership Development

and Research, which offers

leadership development

and

action-based planning

for Black

professionals,

to facilitate

individual growth

that in

turn strengthens

our talent

pipeline.

The strength and potential of our development

programs and talent processes were

reflected in female promotion

rates for 2023

at Director, Executive

Director and Managing

Director levels. For

example, 35.6% of

Director level

and

above

promotions

were

female

(compared

with 31.5%

2022).

Similarly, the

ethnic

minority

rate

for

Director level and above promotions was 33.9% in

2023 (vs. 19.6% in 2022) and the UK

ethnic minority rate for

Director level and above promotions was 28.7%

in 2023 (vs. 24.8% in 2022).

Belong

sense

belonging

helps

drive

engagement

and

important

for

overall

well-being.

strive

create

environment where every

employee feels they

have a place

and are recognized

and respected for

who they are

and

what they add

to our workplace.

Many of our

policies, including

fair pay and

equal opportunities,

along with

highly

valued

employee

options

such

hybrid

working

arrangements, support

workplace environment

that

fosters

belonging. In the

same way,

our 64 combined employee

networks are vital

to building a

sense of belonging and

strengthening our inclusive

culture. Whether the

topic is gender, gender identity, sexual orientation,

culture, ethnic

diversity,

cultural background, disability, parenting,

elder care, veteran status or life stage, employee volunteers in

every

region

host

numerous

events

every

year

promote

understanding,

engagement

and

belonging,

and

support our overall

DE&I strategy.

One of our

networks’ key offerings

is mentoring, including reverse

mentoring.

For

example,

our

race

and

ethnicity

and

gender

networks

use

mentoring

programs

help

members

level

opportunities for

career

development. Allyship

initiatives further

extend engagement

and

reach,

particularly for

gender, gender identity,

and ethnicity efforts.

All employee networks were integrated by

the end of 2023, enabling

us to combine programming and resources

and to extend our networks’ impact to a much

larger audience.

Sustainability Report 2023

| Social

Our commitment to

the Valuable 500,

a global business

collective of 500

CEOs and their

companies, who innovate

in support of disability inclusion, also continues to be a primary focus. We uphold

this commitment by providing a

barrier-free application,

recruiting and

onboarding process

for all

candidates, providing

inclusive disability

awareness

training

for

professionals

with

focus

working

with

people

with

disabilities.

Providing

toolkits

for

line

managers and all employees

enables them to leverage

disability etiquette, facilitate

accessible meetings, and

more,

and we

support and promote

our Ability employee

networks, world-wide. In

2023, we also

implemented robust

global accessibility standards

that inform our Disability

strategy,

and our digital accessibility

and IT specialists

began

implementing the

latest international

Web Content

Accessibility Guidelines

(WCAG 2.2)

to further

enhance and

optimize our digital accessibility.

›

Refer to

ubs.com/diversity

for additional information on diversity, equity and inclusion topics and progress against

our aspirational goals

›

Refer to

ubs.com/employees

ubs.com/careers

for more topics of interest to employees and potential applicants

›

Refer to the “Supporting our strategic goals – our engagement in partnerships” section of the Supplement to the

UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more information about

our external commitments pertaining to DE&I

Sustainability Report 2023

| Social

Driving social impact

Social

Impact

has

continued to

strong

differentiator, with

its

activities

underpinning our

sustainability and

impact strategy.

With the

integration of Credit

Suisse, we

will continue

to put

clients and people

first across

the

combined organization,

helping clients maximize their impact

locally and globally.

Our vision is to contribute to and scale an impact economy,

an economy that values the

well-being of all people and the planet. This means building partnerships

that drive greater

impact transparency, more impact ventures and innovative ways

of financing and paying for

impact.

Philanthropy services and collective impact

More than half

of the world’s

population is still

not covered by

essential health services.

More than 648

million live

below the international

poverty line, with

up to 40 million

living in modern

slavery.

Over 600 million young

people

lack

basic

mathematics and

literacy

skills.

Adding

these

challenges,

climate change

and

the

degradation

nature are furthering inequalities.

Despite exponential growth, philanthropy

alone is not enough to

fill the funding

gap required.

We believe that by working collectively, philanthropists and public and private organizations have the

potential to

create lasting

change and

maximize a

positive impact

for people

and planet.

We provide

comprehensive advice,

insights

and

execution services,

working

with

our

clients

and

finding

ways

tackle

some

the

world’s

most

pressing social

and environmental

problems. We

aim to mobilize

USD 1 billion

in philanthropic

capital and

positively

impact over 26.5 million people by 2025 (cumulated

since 2021).

Collective impact

The power of philanthropic partnerships will be critical in achieving systemic scalable change. Led by our in-house

philanthropy team, we

have three Collectives

comprising philanthropists

who bring together

their efforts, skills

and

resources during a

two-year learning journey.

By combining our

expertise and investor capital,

our aim is

to fund

initiatives that address

child protection, climate

change, and health

and education-related issues.

Each Collective

provides

investors

with

the

opportunity

work

alongside

peers

and

expert

practitioners

achieve

systemic

change. An important part

of the Collectives journey

is for clients to experience

the impact of those

programs they

are funding.

Members

the

UBS

Collectives,

namely,

the

Accelerate

Collective,

the

Climate

Collective

and

the

Transform

Collective,

concluded

their

two-year

journey

2023,

with

new

cohorts

for

each

Collective

ready

launch

January 2024.

The UBS

Optimus network of

foundations’ program team

is key

in supporting

the impact

of the

UBS Collectives

and identifying the partners we

work with across the three

Collectives in order to ensure

our clients are making an

effective and scalable impact.

Helping our clients structure their philanthropy

– donor-advised funds

Donor-advised funds offer clients an alternative charitable-giving vehicle to set up their own foundations, offering

greater choice and personalization,

and are managed in line

with their usual investment

approach. Their charitable

donations can

be invested

within the

parameters they

select (such

as capital,

growth

or income),

helping them

grow their

fund to give

grants at a

later date. Administrative

fees are

borne by UBS.

UBS offers

these services in

Switzerland, Singapore

and the

UK, and

in 2023

they were

launched in

the Hong

Kong SAR,

with USD 317.7

million

in donations in 2023.

Based on information from the World Health

Organization, see

who.int/news/item/18-09-2023-billions-left-behind-on-the-path-to-universal-health-coverage

Based on information from the World Bank, see

https://blogs.worldbank.org/developmenttalk/half-global-population-lives-less-us685-person-day#

and

https://www.iom.int/news/more-40-million-modern-slavery-152-million-child-labour-around-world

Based on information from UNICEF, see

https://www.unicef.org/education

Figures provided for UBS Optimus network of foundations

and donor-advised funds are based on unaudited

management accounts and information available

as of January 2024.

Audited financial statements for Optimus

and donor-advised foundation entities are produced

and available per local market regulatory

guideline.

Sustainability Report 2023

| Social

UBS Global Visionaries

Through our UBS Global Visionaries program, we aim to

(i) create opportunities for clients and prospective clients

connect

with

leading

social

entrepreneurs;

and

(ii) help

the

best

entrepreneurs

focusing

social

and

environmental

issues

scale

their

positive

change

expanding

their

network,

building

capacity

and

raising

awareness

about

their

work.

Since

the

program

started

2016,

have

onboarded

and

supported

entrepreneurs to accelerate their impact.

UBS Optimus network of foundations

The UBS Optimus network of foundations

also aims to contribute to an

impact economy that meets the long-term

needs of children and preserves the natural environment,

now and in the future. It connects clients with

programs

that are

making a

measurable, long-term

difference to

the most

serious and

enduring social

and environmental

problems.

With

24-year

track

record,

focused

incubating

impact

ventures,

scaling

impact

through

partnerships and

achieving impact

transparency. In 2023, the UBS

Optimus network

of foundations had

a presence

in 9 global locations.

It is now working on harmonizing the Credit Suisse

program portfolio.

In 2023, it raised USD 328 million in donations, including UBS matching contributions, and committed

USD 305.9

million in grants from the Foundation.

4,5

Key activities of the UBS Optimus network of

foundations in 2023 are set

out below.

Social and blended finance

The UBS

Optimus network

of foundations

is actively

developing larger-scale

investment vehicles,

in partnership

with

other parts of the bank,

by using a blended finance approach. In 2023,

it secured major investor commitments

for

a USD 100

million SDG

Outcomes blended

finance initiative

with Bridges

Outcomes

Partnership, British

International

Investment (the UK’s development

finance institution) and

the US International

Development Finance Corporation.

These anchor investors participated alongside

private investors, including Legatum,

family offices (such as the Tsao

Family Office) and other high net worth individuals.

Partnerships

The UBS Optimus network of foundations works to build capabilities, capacity and partnerships to strengthen the

social finance

ecosystem. In

2023, it

selected eight

organizations for

the first

cohort of

the 100x

Impact Accelerator,

a global impact

accelerator based

at the London

School of

Economics. Seven

of the eight

selected ventures operate

in emerging markets and six out of the eight have

female founders or co-founders. Its objective is to work closely

with these entrepreneurs as

they grow into social

zebra organizations.

Each organization received

GBP 150,000 in

capital and participated in a 12-week program focusing

on scale, impact measurement and fundraising

strategies.

In 2023, the UBS Optimus network of foundations continued to develop its

partnership with the State Secretariat

for Economic Affairs,

the Swiss Development

Cooperation Agency and

the Credit Suisse

Foundation.

One objective

of the SDG

Impact Finance

Initiative is to

raise CHF 100

million for innovative

financial solutions which

can mobilize

new capital around the

SDGs, and work toward our

target of unlocking CHF 1 billion

in private finance by 2030,

thereby accelerating progress toward delivering the SDGs.

In 2023, the four founding donors

committed nearly a

third

the

fundraising target

and

started

disbursing grants

the

seven

winners of

its

first

call

for

proposals,

tackling climate change, education access and

quality, smallholder farming and SME support.

Impact transparency

The UBS Optimus network of foundations’ vision is for impact to be measured using the highest quality standards

and for

that information

to be

publicly available

for the

benefit of

all. In

2023, it

developed and

rolled out

an owned

industry-aligned rating

tool that aims

to assess programs

against three impact

categories:

breadth of impact;

depth

and proof of impact; and likelihood of

scaling and sustaining impact. This facilitates:

the prioritization of programs

that contribute

the most to

the UBS Optimus

network of

foundations’ strategic

impact objectives;

the identification

of anticipated value

added; the documentation of

actions that can be

taken to improve

the program and

impact

potential, and the consistent

and transparent communication

of complex information

around its impact objectives.

2024,

the

UBS

Optimus

network

foundations

will

assessing

how

the

impact

rating

tool

can

bring

additionality to the social impact landscape

globally.

Figures provided for UBS Optimus network of foundations and donor-advised

funds are based on unaudited management accounts and information

available

as of

January 2024.

Audited financial

statements for Optimus

and donor-advised

foundation entities are

produced and

available per

local market

regulatory

guideline.

The UBS Optimus network of foundations

receives donations from all Business Divisions, with

the majority stemming from Global Wealth Management.

A Zebra represents a

business model that

strives for both profitability

and positive societal

impact, with a

strong focus on sustainability, community

involvement

and cooperation. This concept is presented as an alternative to the

traditional Silicon Valley unicorn model that often prioritizes rapid growth and

high returns

over other considerations.

Sustainability Report 2023

| Social

Emergency philanthropy

The UBS Optimus

network of foundations

and Social Impact

raise funds and

support partners

providing emergency

relief in

response to

disaster situations,

and sometimes

launch dedicated

appeals to

support these

efforts. Whenever

an appeal

is launched by

the UBS

Optimus network of

foundations, it will

act swiftly and

mobilize funding from

clients and employees to support immediate

relief,

as well as longer-term recovery and resilience.

Where budgets

allow, it

also aims

to provide

unrestricted support

to emergency-relief-focused

NGOs, so

that it

contributes

toward

strengthening

the

humanitarian

ecosystem;

supports

the

development

monitoring,

evaluation and

learning capacities

and evidence-based

decision-making by

implementing partners;

and supports

forgotten crises that receive little media attention.

In 2023, the UBS Optimus network of foundations raised and started

to distribute more than USD 25.4 million for

the Turkey and Syria earthquake, the Hawaiian wildfires, flooding in Pakistan and Italy and people affected by the

humanitarian crisis in

Israel and Gaza.

It also

continued to distribute

USD 56 million raised

for the Ukraine

Relief

Fund launched in 2022. To date USD 43.3 million

has been granted to our partners

on the ground.

UBS’s charitable contributions

Direct cash contributions by

UBS AG (including through

partnerships in the communities that

we operate in) and

our

affiliated foundations

in Switzerland,

as well

as contributions

to the

UBS

Optimus network

of foundations,

amounted to USD 62.6 million in 2023.

›

Refer to the “Supplement to Social” in the Supplement to this report available on

ubs.com/sustainability-reporting

for an overview of our charitable contributions in 2023 and additional information

Communities

We aim to

maximize our

impact in the

local communities

that we are

a part of

because we recognize

that our

long-

term success depends on their health and prosperity.

We regard our ongoing investment in

these areas as central

to furthering

the economic

and social

inclusion of

those people

that our

activities support.

have a

strategic

focus on education

and the development

of skills, as

we believe these

topics are where our

resources can make

the

most impact.

We endeavor to

create business and

community impact by

identifying innovative and

high-quality programs that

are

aligned

our

business,

providing

focused

financial

and

human

support,

including

employee

volunteering

programs and

client participation, where

appropriate. These programs

are delivered

through local execution

and

partnerships operating under a global framework

with coordination across regions.

Employee volunteering

Our well-established employee volunteering

model has been adapted to meet the

needs of our new hybrid ways

of working, with both face-to-face and virtual

opportunities to support our local communities.

We have global

targets for employee engagement through volunteering,

which are built bottom-up and on a best-efforts basis. In

2023, we successfully engaged 38% of

our global workforce in volunteering, and 45% of

the 199,633 volunteer

hours were skills-based.

Lower cash contributions compared

to previous years are due to the decision

to exclude business-related contributions

since these are donations made outside

of UBS’s

strategic Social

Impact strategy

and do

not support

the longer-term

impact we

are striving

to achieve

with our

strategic grantee

and volunteering

partners.

Sustainability Report 2023

| Social

Respecting human rights

We are committed to respecting and promoting human rights, as set out in the UN Guiding Principles on

Business

and

Human

Rights.

human

rights

standards

are

embedded

the

Sustainable

Development

Goals

(SDGs),

respecting human

rights is

a key

consideration in

our business

practices. When

assessing our

potential human

rights

impacts, we focus on three key stakeholder groups

(employees, clients and vendors), as well as

society at large.

›

Refer to “Supporting our strategy through stakeholder engagement” section of the Supplement to the UBS Group

Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more information about our

interactions with other stakeholders, including civil society groups

Employees:

We are

committed to

respecting human

rights standards

through our

human resources

policies and

practices, and

to meeting

the obligations

that a

responsible company

is required

to comply

with. These

are reviewed

on a regular basis in an effort to make sure we

continue to respect human and labor rights.

›

Refer to the “People and culture make the difference” section above and to the Supplement to this report,

available at

ubs.com/sustainability-reporting

, for more information about UBS’s human resources policies

and

practices

Clients:

We aim

to provide

our clients

with innovative

investment solutions

on themes

related to

human rights,

such

as health, education, gender and/or equality.

In addition,

we take human rights risks into account

in solutions that

address a broader range of sustainability issues. We identify

and manage actual and potential adverse impacts on

human rights to which our clients’ assets and

our own assets are exposed,

most notably through our sustainability

(including human rights) and climate risk policy

framework.

›

Refer to the “Supporting opportunities” section of this report for more details about our approach to sustainable

finance and investing and to the Supplement to this report, available at

ubs.com/sustainability-reporting

, for more

information about the sustainability and climate risk policy framework

Vendors:

We are

committed to

reducing the

negative societal impacts

of the

goods and

services UBS

purchases.

That is why, when we are establishing new contracts or renewals, we identify high-risk vendors based on whether

they

provide

goods

and

services

that

either

have

substantial

social

impact,

are

sourced

markets

with

potentially

high

social

risks.

Vendors

that

not

meet

the

minimum

applicable

standard,

because

they

are

associated with

actual and

potential human

rights risks,

have to

agree to

and comply

with a

remediation plan

before

signing a contract with us.

›

Refer to the “Managing our supply chain responsibly” section below for more details about our responsible supply-

chain management

Our human-rights-related

commitments and

actions are

set out

in our

Human Rights

Statement. The

statement

shows the

structures (governance

and policies)

and mechanisms

(procedures and

processes) UBS

has in

place to

support its commitments. UBS also publishes a Modern Slavery and Human Trafficking Statement pursuant to the

UK 2015 Modern Slavery Act and to the Australian

2018 Modern Slavery Act.

›

Refer to our Human Rights Statement and our Modern Slavery and Human Trafficking Statement, available at

ubs.com/sustainability-reporting

›

Refer to the Supplement to this report, available at

ubs.com/sustainability-reporting

, for more information about

“UBS Group’s approach to the Swiss Ordinance

on Due Diligence and Transparency

in relation to Minerals and

Metals from Conflict-Affected Areas and Child Labor”

Sustainability Report 2023

| Social

Managing our supply chain responsibly

We embed

environmental, social

and governance

(ESG) standards

into our

sourcing and

procurement activities.

The

Responsible

Supply Chain

Management

(RSCM)

framework for

UBS

Group

excluding

Credit

Suisse

based

identifying, assessing and

monitoring vendor practices

in the

areas of

human and

labor rights,

the environment,

nature, health and safety, and anti-corruption. Central to our RSCM framework are our Responsible Supply Chain

Standards (RSCS), to

which our

direct vendors

are bound

by contract.

The RSCS

define our

expectations toward

vendors

and

their

subcontractors regarding

legal

compliance, environmental

protection, avoidance

child

and

forced

labor,

non-discrimination,

diversity,

equity

and

inclusion,

remuneration,

hours

work,

freedom

association,

humane

treatment, health

and

safety,

anti-corruption measures,

and

whistleblowing protection

for

employees. In 2023, the Credit Suisse Third-Party Risk Management due diligence approach continued

to manage

reputational

risk

from

ESG

perspective

for

Credit

Suisse

AG.

ensure

consistent

and

high

standard

reputational

risk

coverage across

the

combined organization,

the

RSCM

framework will

rolled

out

Credit

Suisse in 2024.

›

Refer to

ubs.com/suppliers

for the RSCS

Identifying, assessing and monitoring

high-impact vendors

2023,

100%

new

vendors

were

screened

for

environmental

and

social

risk.

addition,

for

UBS

Group

excluding Credit

Suisse, we

identify high-impact vendors

when establishing

new contracts

or renewals

based on

whether the vendors

are providing goods

and services that

could either have

a substantial environmental

and social

impact or

be sourced

in markets

with potentially

high social

or governance

risks. Such

high-impact vendors

are

assessed against

our RSCS.

These vendors

are required

to provide

disclosures about

their management

practices

and corresponding evidence that is evaluated by

a specialist team. Actual and potential

negative impacts that are

considered in the

impact assessment

of purchased goods

and services include,

but are not

limited to, the

following:

–

adverse environmental impacts due to inefficient use of resources (e.g., water and energy),

poor environmental

practices and emissions during the life cycle

of a product;

–

hazardous substances,

emissions, pollutants

and the

limited recyclability

of products

that adversely

affect people,

nature and the environment;

–

modern slavery, forced labor or child labor;

–

unfair employment

practices, such

as low wages,

excessive overtime

and the absence

of occupational

health and

safety measures;

–

anti-corruption;

and

–

insufficient management of subcontractors

and suppliers regarding sustainability

aspects.

If our assessment reveals any non-compliance with our

standards, we define and agree (together with the vendor)

specific improvement

measures, and

closely monitor

the implementation

progress of

these remediation

actions.

Lack

improvement

may

lead

the

termination

the

vendor

relationship.

Vendors

are

reassessed

after

24 months

ensure

that,

even

long-term

contracts, UBS’s

expectations

regarding

environmental and

social

aspects

are

being

met

and

continuously

supervised.

also

regularly

screen

active

vendors

part

our

sustainability and climate risk control processes.

High-impact vendors go through assessments against UBS’s

RSCS. We also undertake assessments

on some non-

high-impact vendors

where we

have significant

ongoing relationships.

In 2023,

for UBS

Group excluding

Credit

Suisse, we carried out risk-based due diligence assessments on 266

vendors of newly sourced contracts, renewals

and ongoing contracts. To drive positive change in our supply

chain, we also require our vendors to improve their

management practices in line with our sustainability goals and

industry best practices. Of the vendors assessed for

UBS

Group

excluding

Credit

Suisse,

42%

were

considered

need

improving

their

management

practices.

Specific

remediation

actions

were

agreed

upon

and

implementation

progress

being

closely

monitored.

Additionally in 2023, for Credit Suisse, 15 vendors were assessed

against Credit Suisse’s environmental and social

standards. No actual

significant ESG risk

was identified with any

of the vendors

that were assessed

for both UBS

Group excluding Credit

Suisse and Credit

Suisse. We have

an overall assessment coverage

of 20% of

vendors by

spend for UBS.

Sustainability Report 2023

| Social

Contracts in high-risk countries include

specific contractual requirements relating to environmental

management,

human rights, labor rights

and anti-corruption. If we

were to become aware of

a case of modern slavery

or human

trafficking

occurring

within

our

direct

supply

chain,

would

address

through

our

governance

processes.

Depending on the severity

of the case, or

if satisfactory remediation is not

possible, the supplier relationship may

ultimately be terminated.

In 2023,

none of

our vendor

relationships

were terminated

as a

result of

our assessments

and no

human rights

issues with active vendors

were identified or reported. In

part, this was due

to having carried out

our assessment

process prior to the signing of contracts.

Embedding supplier sustainability in our

everyday activities

The goods

and services

we buy,

how we

buy them,

from where

and from

whom are

all crucial

elements of

our

sustainability impact. We are committed to making a positive environmental and

social impact, and we expect the

same

from

our

suppliers.

Our

procurement

policy

includes

taking

account

the

lower

ESG

impact

products/services when selecting

a vendor. Within

the policy, we

have also included

mandated minimum weighting

for ESG criteria in our tenders, as part of vendor

evaluation and selection. This ensures that we award business to

vendors with

strong ESG

performance and

incentivize vendors who

want to

work with

us to

show commitment

and improvement in these areas. This approach

will be extended to Credit Suisse in 2024.

We care

about our vendors’

ESG performance and

want to work

with vendors that

have strong ESG

credentials,

drive positive

environmental and

social impact,

and are

transparent about

their climate

disclosures. We

leverage

ESG

market

data

which

gives

deeper

insight

into

our

vendors’

ESG

performance

and

encourages

them

continuously improve

their practices.

In 2023,

90% of

spend in

deals >USD 1

million were

signed with

vendors

having an adequately high ESG performance.

›

Refer to the “Climate-related methodologies” in the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for more for details on the methodology applied

We have also

been reviewing our purchasing catalogues

to reduce the

number of items and

move to sustainable

products

wherever possible.

This

year,

focused on

driving responsible

consumption and

removed 444

items

(67%) from our office supplies catalogues.

This approach will also be applied to Credit

Suisse in 2024 and 2025.

We expect our suppliers to uphold high standards of

ethics, mitigate risks, and honor global and local labor laws,

human rights and environmental

responsibilities. Suppliers are required

to follow our global supplier

policies which

include a policy on anti-bribery and corruption,

sanctions, fraud, and anti-facilitation of

tax evasion.

›

Refer to our “Supplier Code of Conduct,” available at

ubs.com/suppliers

›

Refer to our “Global Supplier Policies,” available at

ubs.com/global/en/our-firm/suppliers/contracting-standards

›

Refer to the “Monitoring the environmental impact of our supply chain” section of this report on the reduction of

greenhouse gas emissions in our supply chain

Inclusive growth in the supply chain

2023,

extended

our

efforts

globally

support

inclusive

growth

the

use

diverse

suppliers

that

are

certified/recognized by a local/national government

authority or advocacy organization. These include,

but are not

limited to, minority-owned (including aboriginal-owned and indigenous-owned), women-owned, veteran-owned,

disabled-owned, and

LGBTQ-owned, as well

as disadvantaged-owned and

small businesses.

We actively

identify

and

include

diverse

vendors as

part

our

“rule

one”

guidance, which

aims to

include

least

one

diverse

supplier in every competitive tender. Globally, our diverse spend accounts for 8.5% of third-party spend.

We are

members of

diverse supplier

advocacy organizations

which give

us insights

into diverse

supplier markets

across the globe, as well as supporting supplier

outreach efforts and opportunity matching.

›

Refer to “Supplier Diversity” at

ubs.com/

global/en/our-firm/suppliers/supplier-diversity

›

Refer to “Supporting our strategic goals – our engagement in partnerships” section of the Supplement to the UBS

Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more information on our

sustainability-

and impact-related memberships

Sustainability Report 2023

| Social

Leveraging partnerships to help suppliers

build capability

Recognizing the role

small and medium-sized

enterprises (SMEs)

play in fostering positive

change across our

supply

chain, we

have partnered

with Heart

of the

City, a

UK charity

dedicated to

supporting SMEs

on their

journey toward

sustainability. Through a series of workshops, masterclasses

and webinars, the charity empowers small and diverse

business owners in

the UK to

navigate their sustainability

journeys effectively.

Not only do these

activities help drive

sustainability beyond our immediate supply chain,

they also support the communities in which

we operate.

are

also

partnering

with

the

United

Nations

Global

Compact.

This

year,

invited

Swiss

SME

suppliers

participate in a

series of six

sessions organized

by the UNGC

Network Switzerland

on sustainability topics,

including

climate action, environmental

stewardship, human and

labor rights. These sessions

offer our vendors opportunities

to exchange insights,

acquire knowledge,

and address challenges

related to sustainability.

Building their knowledge

and

sustainability

capabilities

helps

support

our

sustainability

goals

through

improved

vendor

compliance,

reduces risks from environmental or ethical issues

and builds commitment toward shared

sustainability objectives.

Sustainability Report 2023

| Supporting opportunities

Supporting opportunities

Sustainable finance

metrics listed

above and

throughout this

chapter are

either for

UBS Group,

including Credit

Suisse

entities,

UBS

(referenced

accordingly),

depending

data

availability

and

the

degree

which

sustainable product frameworks could

already be brought

into alignment in 2023.

For 2024 it

is our intention

fully incorporate Credit Suisse data into our

disclosures.

Our sustainable finance ambitions

Finance has an important

role to play

as companies and individuals

consider how best to

approach the transition

to a more sustainable,

lower-carbon world. At the same time,

the regulatory environment continues to evolve, as

the

associated

capital-raising

and

investment

opportunities.

Against

this

backdrop,

are

committed

supporting our clients’ sustainability ambitions,

whether their focus is on

reducing the carbon emissions footprint

of their business or portfolio, or encouraging

a fairer and more prosperous society.

Through our sustainable finance

product and service offerings,

we target four key

objectives in serving our

clients:

–

The

power

choice:

want

give

our

investing

clients

the

choices

they

need

meet

their

specific

sustainability objectives.

–

An orderly transition: we

aim to support our clients

through the world’s transition

to a low-carbon economy,

for

instance, by offering innovative sustainable financing

and investment solutions.

–

Managing

risks

and

identifying

opportunities:

offer

research

and

thematic

insights,

well

data

and

analytics

services.

Combined

with

targeted

advice,

these

are

designed

help

clients

better

understand and

mitigate risks and identify new opportunities.

–

Making sustainable

finance an

everyday topic:

we want

to make

sustainability topics

tangible throughout our

interactions with clients. To help us do that,

we provide support in the form of tools, platforms,

and education.

Sustainability Report 2023

| Supporting opportunities

Our approach to sustainable finance

It is important to set out how we define

sustainable finance, as no uniformly accepted

definition currently exists in

the industry.

We consider sustainable finance

to include any

financial product or service

(including both investing

and financing

solutions) that

aims to explicitly

align with

and/or contribute

to sustainability-related

objectives, while

targeting

market-rate

risk-adjusted

financial

returns.

Sustainability-related

objectives

may

include,

but

are

not

limited

to,

the

Sustainable

Development

Goals

identified

the

United

Nations’

2030

Agenda

for

Sustainable

Development.

This

approach

sustainable

finance

also

reflected

our

UBS

sustainable

investing

framework,

which

specifically defines “sustainability focus” and

“impact investing” strategies.

Both categories reflect a

defined and

explicit sustainability

intention of

the underlying

investment strategy.

This intentionality

differentiates them

from

traditional investment

products,

or those

that consider

sustainability-related

aspects

but do

not actively

and explicitly

pursue

any

specific sustainability

objective, such

ESG

integration or

exclusions-only approaches. The

way we

define sustainable investments is reviewed on

a regular and ongoing basis in

order to ensure that it

appropriately

considers evolving market practice, client

expectations and relevant regulatory guidance.

›

Refer to the Supplement to this report, available at

ubs.com/sustainability-reporting,

for more on ESG integration

and exclusion

›

Refer to the ”Sustainability and climate risk policy framework“ or “Key terms and definitions” section of the

Supplement to the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

for our

definitions of sustainable bonds and loans

Sustainability Report 2023

| Supporting opportunities

Market developments in 2023

2023 was dominated by

persistently high inflation

and interest rates across

many key jurisdictions, correspondingly

high

energy

prices

and

significant

geopolitical

volatility

and

uncertainty.

These

challenges

also

negatively

contributed to tensions associated

with sustainability-related industries and political

discussions. Notwithstanding

these

challenges

and

tensions,

sustainable

finance

business

opportunities

continued

broaden

and

deepen.

Interest in

sustainable investing

(SI) and

financing solutions

continued to

be robust.

This was

bolstered by

major

legislative initiatives,

including the

Inflation Reduction

Act in

the United

States and

the European

Union’s Green

Deal Industrial Plan, as well as various ongoing

regulatory initiatives.

At the same

time, investors, corporations, and regulators have

continued to pay close

attention to greenwashing

risks.

Sustainable product

frameworks have

evolved, and

widely

expected that

standards will

subject to

further amendments,

given that certain frameworks

are still under review

and subject to further

development or in

the early

stages of

implementation (e.g.,

the EU

Sustainable Finance

Disclosure Regulation

and the

UK Sustainability

Disclosure Regulation).

Throughout the

year investors

took advantage of

higher interest

rates by moving

to income-producing

asset classes

and

money

market

products,

with

the

latter

attracting

over

USD 1.1

trillion

net

inflows.

Increased

investor

appetite for fixed income products was accompanied

by corresponding outflows from equity funds.

Investor appetite for

sustainability-oriented funds and ETFs continued.

Once again, after

2022 and 2021,

inflows

into sustainable

investment funds in

2023 outpaced

those into

their non-SI

counterparts,

albeit at

more modest

levels compared to the highs

seen in 2021. Throughout the year,

investors expanded their sustainable investment

allocations into alternative asset classes, including

hedge funds, real estate or infrastructure.

This was

also reflected

in our

clients continued

interest in

SI solutions.

Over the

course of

2023, UBS

AG’s SI

invested

assets

rose

USD 292.3 billion as

December

2023,

compared

with

USD 266

billion

the

end

2022,

representing a year-on-year increase of 10%. A

combination of factors contributed to this growth, including new

product launches, net new

money inflows as

well as market performance. SI

invested assets accounted for

6.5%

of UBS’s total invested assets at year-end

2023.

We expect the

acquisition of the Credit

Suisse Group to provide

UBS with additional

sustainability-focused assets

and clients,

a wider

selection of

products and

services and

even greater

in-house expertise.

However, there

are areas

of variance

between the

two organizations’

reporting and

product standards

that we

are actively

working to

analyze

and

harmonize.

UBS

sustainable

product

standards

will

the

benchmark

going

forward,

with

Credit

Suisse’s

sustainable financing and

investment products undergoing

a detailed

assessment to ensure

compliance with our

standards, frameworks and expectations.

The table below

provides additional detail

on SI invested

assets for UBS

AG. As stated

before, this table

and section

do not contain any values related to Credit Suisse

sustainable investment products.

›

Refer to the “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for more

information about the Credit Suisse Sustainable Investment Framework (SIF)

Sustainable Investments

For the year ended

% change from

USD billion, except where indicated

31.12.23

31.12.22

31.12.21

31.12.22

Total invested assets (UBS Group)

5,714.1

3,980.9

4,614.5

of which: total invested assets (UBS AG)

4,504.7

3,980.9

4,614.5

Sustainable investments (UBS AG)

Sustainability focus

270.4

246.9

222.7

Impact investing

21.8

19.2

28.1

Total sustainable investments

5,6,7

292.3

266.0

250.8

SI proportion of total invested assets (%)

6.5

6.7

5.4

The table above details UBS AG Sustainable Investing Invested Assets (IA) and the

evolution thereof. This table does not contain any Credit Suisse products and associated IA classified

under the Credit Suisse

Sustainable Investing Framework (SIF).

Credit Suisse IA in

accordance with the

SIF are reported separately

as figures are not

directly comparable with

the UBS

figures due to material differences in the

underlying sustainable investment frameworks and definitions

being applied. Please see "Appendix 3

Entity-specific disclosures for Credit Suisse

AG" for further details.

We focus our sustainable investment reporting on those investment

strategies exhibiting an explicit sustainability intention.

Strategies that have explicit

sustainable intentions

or objectives

that drive

the strategy.

Underlying investments

may contribute

to positive

sustainability outcomes

through products

/ services /

use of

proceeds.

Strategies that have

explicit intentions of

generating measurable, verifiable and

positive sustainability outcomes.

Impact generated is

attributable to investor

action and/or contributions.

Certain products

have been

reclassified during

2023 for

reasons including,

but not

limited to,

an evolving

regulatory environment,

periodic monitoring

of the

product shelf,

and

developing internal

classification standards.

Impact of

these movements

on sustainable

investment invested

assets was

a net

reduction by

USD 7

billion in

UBS AG

Global Wealth

Management Americas and a

net reduction by

USD 6 billion in

UBS AG Asset Management.

In line with general

market practice, IA reported

for sustainable investments

include

limited amounts of instruments not classified as sustainable investment, including cash and cash-like instruments that each fund and portfolio hold for liquidity management purposes,

as well as, subject to clear,

limiting restrictions, client-directed

investments included in sustainable investing

mandates managed by UBS Asset

Management.

The impact investing

and total sustainable investments

(UBS AG) disclosures

for 31.12.22 and

31.12.21 reporting periods

have been restated

to remove investments

that were duplicated

in the disclosed

values. As a result, the values disclosed for 31.12.22 and 31.12.21 for

both categories have each decreased by USD 1.6 billion and USD 0.4 billion,

respectively.

Total invested assets

(UBS AG) are used to calculate the SI proportion.

Morningstar

Sustainability Report 2023

| Supporting opportunities

Following a year of subdued debt market issuance

activity in 2022, green, social, sustainability, and sustainability-

linked (GSSS)

bond supply

rebounded in

2023, rising

7% year-on-year

(YoY).

The growth

was driven

by bonds

with green (+15%

YoY) and sustainability (+7%

YoY) labels. We

saw banks and corporate

issuers favoring green

bonds, while sovereign, supranational and agency (SSAs) issuers

primarily opted for the latter,

given a broader mix

of green and social

assets. Sustainability-linked issuance dropped 25% year-on-year driven

by heightened market

scrutiny around the

materiality and ambition

of the

key performance indicators

(KPIs) used,

compounded by SLB

issuers failing to reach their

annual targets.

Regionally, EMEA issuers accounted

for 52% of 2023 FY global

supply,

while APAC issuers were responsible for 29%. In line

with the overall GSSS bond market dynamics, the

number of

transactions facilitated by the Investment Bank

in 2023 increased to 102.

Looking ahead

Despite

another relatively

challenging

and

turbulent year

for

markets, we

believe

the

strong

market

growth

sustainable investing

and financing

products in

recent

years and

a general

increase in

investor demand

for innovative

sustainable finance

solutions indicates

clients’ ongoing

desire to

pursue sustainability-related

objectives.

That, in

turn, is

encouraging a greater

level of

active investor ownership, with

rising levels of

corporate engagement and

system-wide advocacy.

The ongoing

relevance of

sustainability for

institutional investors

and senior

management of

the world’s

largest

companies was

once again

evidenced by

a 2023

Bloomberg Intelligence

survey of

C-suite executives

and senior

institutional investor

representatives

. All

told, 85%

of investors

surveyed believe

that incorporating

ESG in

their

investments leads

to better

returns, more

resilient portfolios

and enhanced

fundamental analysis,

while 84%

surveyed executives

said ESG

helps them

shape a

more robust

corporate strategy.

These are

strongly supportive

results which confirm our belief that incorporating sustainability-related considerations

is ultimately good business

practice and will continue to inform business

leaders’ forward thinking and planning.

Additionally, our

own 2023

UBS AG

Asset Management

client survey

showed 74%

of clients

expect to

increase

their allocation

to sustainable

investments over

the next

five years.

The survey

results also

show an

encouraging

growth in

satisfaction with

the

way in

which we

are

increasing exposure

sustainable investments

within

the

various asset classes.

At the same time, high net worth individuals (HNWI) appear

to have become more selective about how they grow

their sustainable

investments, after

having done

so quite

aggressively in

2022. A

2023 Global

Wealth Manager

Investment Survey

by Mercer

noted that

34% of

respondents said

their clients

want to

grow their

exposure to

sustainable investments,

while another

34% wanted

to keep

it at

the same

level. This

followed 80%

of respondents

to the 2022 survey having reported rising client

demand for sustainable investments.

Meeting diverse needs

There is

no typical UBS

client. Each one

has varying needs,

but all

expect outstanding advice

and service, a

wide

range of product choices, and an excellent client

experience.

Our clients span ultra high and

high net worth individuals, families

and family offices worldwide,

affluent clients in

selected markets, and an

array of corporate, institutional,

private, small and

medium-sized enterprises, as well

retail clients in Switzerland.

We work hard to service our clients’ diverse sustainable financing, investing and/or advisory needs

in the best way

possible, leveraging the

knowledge of our

specialist teams. An

established rationale guides

our interactions with

clients,

and

starts

building

understanding

the

relevance

sustainability

for

their

business

and/or

investment portfolio.

The

following

graphic

provides

an overview

of sustainable

finance

products

and services

offered

by UBS.

Included

here

for illustrative purposes,

it is not

an exhaustive representation

of our sustainable

finance and investing

offering,

which

varies by

jurisdiction, booking

center and

client domicile

and is

subject to

client eligibility

and preferences.

Not all

products

and services

are available

to all clients.

Bloomberg, all market figures in this paragraph.

Investment Bank figure

is 102

of which

UBS (AG)

figure is

93 and

Credit Suisse

figure is

16. The

metrics include transactions

such as,

but not

limited to,

Investment Bank Global Banking bonds

issued under the voluntary ICMA Green

Bond Principles, Sustainability Bond Principles, and

Sustainability-Linked Bond

Principles. The

principles include

a recommendation

that the

issuer appoints an

external review

provider to

undertake an

independent external review

(e.g.,

second-party opinion). This is consistent with market practice. The

metrics also include sustainability themed bonds (e.g., Transition).

Transactions are

counted

only once, there is no double counting (e.g., if and where UBS AG and Credit Suisse were

involved in the same transaction). UBS performed an assessment for

Credit Suisse

green, social,

sustainability and

sustainability-linked bonds reported

in the

2023 Sustainability

Report and

deemed them

to be

aligned to

UBS

sustainable bond guidelines.

bloomberg.com/company/press/bioomberg-intelligence-survey-finds-investors-and-c-suite-embrace-esg-despite-concerns/

mercer.com/insights/investments/portfolio-strategies/wealth-management-investment-survey/

Sustainability Report 2023

| Supporting opportunities

›

Refer to the “Basis of Reporting” in the Supplement to this report, available at

ubs.com/sustainability-reporting

, for

details of which products are included in the calculations of sustainable product metrics.

Sustainability Report 2023

| Supporting opportunities

Global Wealth Management

Building on our unrivalled global scale and footprint in wealth

management,

with USD 3.8

trillion in assets under management,

we aim to help private clients and family offices

achieve their sustainability objectives in line with their targeted financial

performance. We

do this via an end-to-end research-driven investment value chain.

The starting point is

dedicated sustainability-focused investment research, including strategic

asset allocation,

thematic and asset-class views. These then translate into high-conviction

instrument

selection and advice.

This approach aims to provide insights for clients about sustainability risks

and opportunities and how to consider

them within a portfolio

context. These research

views inform our

sustainable and impact

investing solutions,

which

include

multi-asset investment

portfolios

and

suite of

advisory

options

across equities,

bonds,

and

alternative

investments.

Integration of Credit Suisse

The acquisition

of Credit Suisse

Group offers Global

Wealth Management

several discrete

opportunities to

enhance

our

existing

sustainable

investing

offering

with

potentially

complementary

capabilities

and

resources.

These

opportunities

include

enhancement

transparency

and

reporting

the

sustainability

characteristics

investments and

portfolios; as

well

the addition

of more

subject-matter experts

who

bring a

focus on

client

engagement and internal capacity building. We also look forward to

bringing select Credit Suisse sustainable and

impact investing

solutions onto

the merged

platform during

2024 and

2025. These

solutions will

be subject

existing UBS

AG Global

Wealth Management

sustainable investing

frameworks, diligence,

and instrument

selection

approaches.

Deviations

these

approaches

have

already

been

identified,

with

findings

integrated

into

the

migration planning. During

the migration

of solutions, clients,

and assets, we

will phase

down dual

governance,

with the aim of aligning

under the existing UBS

AG Global Wealth Management

sustainable investing governance.

2023 highlights

Continued delivery of actionable investment

insights

Global Wealth

Management CIO continued

to identify actionable

sustainability-related investment opportunities,

including SI frameworks and strategies across

carbon markets, selected areas of

fixed income, such as securitized

debt, and thematic

areas such as

the circular economy. We publish

a regular series

of sustainable

investment views,

including

monthly

Sustainable

Investing

Perspectives

series

and

longer-term-focused

quarterly

Sustainable

InSights

publication.

They are

complemented by the

Sustainable Investing in

Charts

and

SI Top

Holdings

reports,

both introduced during 2023.

The underlying

sustainable investing

research views

are integrated

into the

CIO

House View

and are accompanied,

where relevant,

by media such as videos or

podcasts, to facilitate client reach and

accessibility. A spectrum of topics

was covered during 2023, including impact

investing, green-tech, opportunities arising from public

capital programs,

carbon markets and the circular economy.

In addition, we introduced a framework

to help investors gain exposure to

securitized assets with a focus on

sustainability,

including mortgage-backed securities. We expect this

area to provide

more opportunities for innovation as investors increase

their focus on sub-asset classes within

fixed income.

Sustainability Report 2023

| Supporting opportunities

also

continued

include

sustainable investing

insights

the CIO

monthly

Messages

Focus

publication,

which provides private

clients with tactical,

actionable investment ideas. Additionally,

the flagship CIO

2024 Year

Ahead

publication outlined investment

implications for sustainable

investors in the year to

come and discussed the

impact of decarbonization over the coming decade.

We further enhanced

the methodology underpinning the

CIO Sustainability Scores

for issuers

, which now

covers

approximately 13,000 issuers and enables

issuer-, fund-, and portfolio-level transparency

to be delivered to clients.

Educating our clients and their advisors

Supporting our

clients, prospects

and advisors

with timely

research and

education on

sustainable investing is

important

part

the

advice

provide.

Given

the

rapidly

evolving

environment

around

sustainability

and

investments, it

is crucial for

advisors to

stay up-to-date

on industry trends,

regulatory developments

and investment

ideas. During 2023, we delivered a range

of voluntary learning opportunities

at various client events, including

the

APAC

flagship

sustainable

finance

conferences

(which

attracted

than

600

APAC

clients),

the

Emerging

Successors

Program,

Own

Your

Worth

Sustainability

Summit,

and

the

UBS

Unlocked

Foundation

Women’s

Summits. To

complement these events,

we also introduced additional sustainability-focused training opportunities

for advisors globally. These ranged from mandatory training modules to a series

of virtual discussions with internal

and external subject-matter experts

on topics like ESG politicization and investing

in oceans.

›

Refer to

ubs.com/global/en/wealth-management/sustainable-investing

for more information about our Global

Wealth Management’s sustainable investing insights

›

Refer to the UBS Group Annual Report 2023 available on

ubs.com/annualreport

for more information on the overall

business and financial profile of UBS Global Wealth Management as important context for the product and

financial information provided here

›

Refer to the “Supporting opportunities” section of this report for more information on the proportion of

sustainable investment assets as part of UBS Group’s total invested assets

Sustainability Report 2023

| Supporting opportunities

Asset Management

Sustainable Investing (SI) has been an integral part of our Asset

Management business for

over 20 years,

grounded in the clear belief that,

from our products and services to the way

we work and operate in society, sustainability means thinking and

acting with the long term

in mind. The array of sustainable investment (SI) strategies we offer

aims to drive financial

returns and sustainability outcomes.

Integration of Credit Suisse

our

combined

organization,

there

continued

focus

sustainability

and

innovation.

believe

the

integration

brings

opportunities

for

expanded

client

offering

and

influential

“seat

the

table”

for

stewardship and engagement activities, given our

increased asset base.

The existing

UBS AG Asset

Management SI

product classification

framework will

remain in

place and will

be applied

to the

Asset Management (Credit

Suisse) products when

onboarded to the

UBS shelf, starting

in 2024. Separate

governance structures

remain in

place as

of end

2023, while,

concurrently,

progress has

been made

to align

policies,

methodologies and frameworks. A joint governance

forum has been put in place to support this alignment.

2023

highlights

Active Ownership

We are convinced that

taking a focused, investment-led

and outcomes-driven approach

to active ownership

brings

benefits to companies, their shareholders,

and wider society. Effective engagement

can help companies contribute

value

creation

and

protection

the

company-specific

and

systemic

levels,

addressing

both

risks

and

opportunities.

Climate

UBS AG Asset Management has been running a

Climate Engagement Program for more than

five years. In 2023,

we sharpened the

program’s focus on

engaging with companies

to adopt targets

and transition planning

in line

with a net-zero pathway

and increased the

number of companies

covered by the

program. In addition

to our direct

engagement, we continued to use collaborative initiatives to scale

our impact, especially through our membership

of Climate Action 100+.

Sustainability Report 2023

| Supporting opportunities

We believe

we can

support industry leaders

in accelerating

the early

adoption of transformative

decarbonization

technologies. By

way of

example,

in September

2023, we

hosted an

engagement event

designed to

accelerate

decarbonization in

the shipping

sector. Cargo owners,

commodity shippers,

marine engine

manufacturers and

low-

carbon fuel providers,

as well as recognized

experts, used the

event to discuss key

barriers to alternative

fuels, such

as supply,

technical complexities,

and pricing.

The event

supported one

of the

main objectives

of our

Climate Action

fund. Launched

in December

2022, the

fund invests

in attractively

valued companies

in emission-intensive

industries

that need to

decarbonize over time. We

actively engage with these

companies one-on-one, and across

the value

chain, to monitor and support such efforts.

We also engage with companies to set climate targets in line

with net-zero pathways, which we see as critical for

credible climate risk management

and achieving the transition

to a low-carbon economy.

We were a signatory

to a

campaign led by

the Carbon Disclosure

Project, encouraging over

2,000 companies to

adopt science-based climate

targets.

were

also

co-signatories

two

investor-led

letters

policymakers,

calling

them

accelerate

decarbonization goals at state-owned companies.

Linking our climate

engagement with

voting action is

key to ensuring a

continued clear alignment

across our active

ownership approach. To support this, we have aligned our voting policy with our climate engagement efforts and

objectives in

our policy

framework and

clarified our climate

and net-zero

expectations of

companies. We have

clearly defined set of criteria which we use to

evaluate companies’ say-on-climate

proposals.

will

further

evaluate

climate

proposals

against

the

following

six

key

factors:

climate

governance,

net-zero

ambition and

targets, quality

of decarbonization

strategy, net-zero

performance alignment,

lobbying and

policy

engagement, and

use of

offsets. We

will also

support shareholder proposals

that seek

information about issuers

adopting

adhering

relevant

norms,

standards,

codes

conduct

universally

recognized

international

initiatives, including the recommendations of

the TCFD.

We have a fiduciary duty and fundamental objective to act in the best financial interests of our clients to

enhance

the long-term

value of

their investments.

We exercise

our

voting rights

manner which

we believe

is in

the

companies’ long-term financial

interests.

Nature

support our increasing focus on natural capital, Asset Management became a founding member of the Nature

Action

100

collaborative

engagement

initiative

and

joined

the

Principles

for

Responsible

Investment’s

Advisory

Committee for its stewardship initiative on nature.

Social

In 2023, we progressed against the engagement objectives of our Social Engagement Program, which launched a

year

earlier.

Our

three

focus

themes

are

human

capital,

human

rights

and

health.

complement

our

direct

engagement efforts, we continued to collaborate with

other investors to maximize our engagement

impact.

We have seen target engagement companies

enhance their labor practices, set time-bound

quantitative targets to

enhance gender diversity, conduct human rights risk assessments, and initiate plans to reduce risks and raise

their

focus on societal health. We also

filed a shareholder resolution, urging a company

to enhance gender diversity at

board level after several years of stewardship

activities led to no signs of progress.

In addition,

we took

up the

role of

Chair of

the global

engagement workstream in

the UK

Chapter of

the 30%

Club and we also co-chair the Investors

in Nutrition and Health initiative of the

Access to Nutrition Initiative. These

roles allow us to drive industry collaboration

and enhance our effectiveness in reaching

engagement outcomes.

Credit Suisse AG Asset Management

collaborated with other asset

managers to establish social and

human capital

key performance

indicators for

funds with

a social

objective in

the industry,

to build

financially and

socially important

data such as human capital turnover at the

levels of gender, ethnicity, and age group.

Sustainability Report 2023

| Supporting opportunities

Thought leadership research

Asset

Management

launched

special

Sustainable

Investing

edition

its

Panorama

series

during

2023.

The

publication

focused

the

opportunities

and

risks

sustainable

investing,

enhancing

the

effectiveness

stewardship by

asset

owners and

asset

managers, showing

how

customize sustainability

through active

and

index investing, and the role that natural capital

plays in sustainability investing approaches.

During 2023,

we also

published several

thought leadership

pieces, including

articles focused

natural capital,

chemical pollution

, embodied carbon, physical risk,

impact investing and active ownership.

They included:

–

Chemical pollution and the need to transition to

sustainable chemistry

;

–

No false starts: The race to reduce embodied

carbon

;

–

China and net zero

;

A recipe for alpha?

;

–

Finding our voice: Active owners need to bring

something to the table

; and

–

Green premium.

We also conducted extensive

thematic research on emerging sustainability

topics such as biodiversity,

to facilitate

engagement activities and portfolio investment

decision-making.

External awards recognition

UBS AG Asset

Management won several sustainability-themed awards

during 2023, underlining

the strengths of

our approach. Highlights include:

–

Top 5 Fastest Riser for ESG at the Broadridge

Distribution Achievement Awards;

–

Best ESG Fund House (Passive) and Best ESG

Emerging Markets Equity Fund (Passive)

at the ESG Clarity Awards;

–

Best

Equity

ESG

Investment Fund

the

ESG

Investment Leader

Awards

2023

for

the

Global

Equity

Climate

Transition Fund;

and

–

Strong results in the

2023 GRESB Real Estate and Infrastructure

Assessments

, with all 20 discretionary strategies

achieving

stars

and

outperforming

the

GRESB

average,

them

receiving

stars

and

four

the

strategies being ranked first in their peer group.

›

Refer to the UBS Group Annual Report 2023 available on

ubs.com/annualreport

for more information on the overall

business and financial profile of UBS AG Asset Management as important context for the product and financial

information provided here

›

Refer to the “Supporting opportunities” section of this report for more information on the proportion of

sustainable investment assets as part of UBS Group’s total invested assets

GRESB is a third-party organization that provides ESG data to financial markets. GRESB collects, validates, scores, and independently

benchmarks ESG data to

provide business

intelligence, engagement

tools, and

regulatory reporting

solutions for

investors, asset

managers, and

the wider

industry. UBS has

been a

member

of GRESB for over a decade. Award as of October 2023.

UBS submitted 2022 data to GRESB for the

2023 Assessments.

Sustainability Report 2023

| Supporting opportunities

Investment Bank

Our Investment Bank

offers clients global

advice and access

to the world’s

primary, secondary and private

capital

markets,

through

extensive

array

sustainability-focused

services,

products,

research

and

events.

The

Investment Bank

has incorporated

sustainability expertise from

Credit Suisse

to strengthen

UBS Group’s

offering

across Global Markets,

Global Banking

and Research. New

sustainable finance

content, products

and other services

taken over from Credit Suisse follow UBS Group standards and approval

process. As of the end-of-year 2023, the

Investment Bank has been operating under

a single consolidated governance. In 2023, we

honed our capabilities

through initiatives across Global Markets,

ESG Research, Global Banking and data-led offerings.

2023 highlights

Global Research

In 2023, ESG Research delivered thematic reports on topics including energy transition materials,

EV charging, the

EU and global sustainability-related regulatory landscape, PFAS (per-and polyfluoroalkyl

substances, also known as

“forever

chemicals”), battery

recycling

China,

biodiversity, and

alternative fuels.

generally,

through

our

research, we

addressed ways

in which

ESG factors

connect to

individual markets,

sectors and

companies in

our

coverage, for example in an expanded ESG Sector

and Company Radar product.

ESG research

is supported

by the UBS

Evidence Lab.

It provides data-driven

insights into

ESG-relevant questions

and

2023,

identified

six

themes

favored

family

offices

for

impact

investing:

education;

climate

change;

healthcare; economic

development and

poverty alleviation;

agriculture; and

broad

theme covering

alternative

food sources, clean water, and sanitation.

Sustainable finance at conferences and other

events

Throughout

the global

calendar,

ESG

and

sustainability-related topics

are

frequently

integrated into

proprietary

investor conferences

run by

the Investment

Bank,

and into

other industry

events. These

include targeted

events

focusing on sustainable finance

topics such as transition finance,

regulatory developments, impact technology

and

green equity.

We also incorporate sustainability

topics into sector- or

market-specific conferences including

our Energy Transition

Conference, Global Real Estate

CEO/CFO Forum and our

Greater China Conference. In

September 2023 we held

our annual

Investment Bank-wide

Sustainable Finance

Conference,

which addressed

areas such

as the

development

of supportive

regulation and

products to

support the

ongoing journey

to net

zero and

the development

of transition

finance.

Sustainability Report 2023

| Supporting opportunities

Global Banking

ESG Advisory Group

Increasingly, consideration of ESG is seen

as a central component

of any corporate

business strategy and

a key tool

in achieving sustainability in business

and corporate operating models. A recent

Bloomberg Intelligence-run survey

of senior corporate executives confirmed this trend.

As pressure from regulators and other key stakeholders, such

as customers, investors and employees,

grows,

so too does the need for transformation. The ESG Advisory Group

supports UBS’s clients in assessing ESG topics throughout

the corporate lifecycle.

Our

approach is

underpinned by

profiling framework

with

carefully

developed modules

critically analyze

corporation’s ESG

profile from

a business

and investor

perspective. The framework

lies at

the heart

of all

Global

Banking transactions and addresses four core components

(with examples of analytical modules in parentheses):

–

what you do

(stakeholder engagement framework);

–

how you do it

(ESG performance analysis, PAI

as a product explaining investor needs to corporates);

–

how you talk about it

(corporate sustainability report diagnostics);

and

–

what others say about you

(outside-in stakeholder analysis via artificial intelligence

(AI) platform).

Leveraged and debt capital markets

The

Investment

Bank

arranged

USD 53.7

billion

green,

social,

sustainability

and

sustainability-linked

(GSSS)

bonds through 102 bond deals

during 2023

. Our deal activity was

particularly strong in EMEA

and Australia while

also

solidifying our

market-leading position

the

Swiss-franc-denominated market

with

the

Investment Bank’s

market share at nearly 50%

In addition, we have

built a strong position in

Brazil’s local labelled ESG

debt market.

Deal

highlights

included the

structuring

and

execution of

the

Western

Australia

Treasury

Corporation’s (WATC)

inaugural AUD 1.9

billion green

deal,

and

winning the

structuring mandate

for the

Australian government.

The

funds

for

WATC

will

support

government

projects

targeting

environmental

outcomes,

such

investments

decarbonize the main electricity grid.

This includes batteries and wind

farms, EV charging infrastructures

as well as

rebates and standalone power systems.

Meanwhile, the establishment of the Australian

government’s green bond

framework highlights its

key priorities,

by referencing its

aim for

upcoming green bonds

to finance

projects that

will help Australia achieve its ambition to

be net zero by 2050.

In July 2023, we acted as a joint global coordinator,

physical bookrunner and sustainability coordinator

on a debut

EUR 270 million green senior secured notes

issuance in support of the leveraged

buy-out (LBO) of Amara Nzero by

a consortium

led by

Cinven. This

was the

first green

bond to

be issued

in EMEA

with LBO

use of

proceeds. In

August

2023,

facilitated

innovative

senior

non-preferred

sustainability-linked

loan

(SLL)

note

from

Nordea.

This

transaction represented the first banking SLL note

issued across core currency markets globally.

›

Refer to the UBS Group Annual Report 2023 available on

ubs.com/annualreport

for more information on the overall

business and financial profile of UBS Investment Bank as important context for the product and financial

information provided here

bloomberg.com/company/press/bioomberg-intelligence-survey-finds-investors-and-c-suite-embrace-esg-despite-concerns

Principal adverse impacts, as defined by the EU

Sustainable Finance Disclosure Regulation

Notional value. Investment Bank figure is USD 53.7 billion of

which UBS AG figure is USD 51.5 billion and

Credit Suisse figure is USD 4.6

billion.

The metrics

include transactions such as, but not limited

to, Investment Bank Global Banking bonds issued under

the voluntary ICMA Green Bond Principles, Sustainability

Bond Principles,

and Sustainability-Linked

Bond Principles.

The principles

include a

recommendation that

the issuer

appoints an

external review

provider to

undertake an independent external review

(e.g., second-party opinion). This

is consistent with market

practice. The metrics also

include sustainability themed

bonds (e.g., Transition). Transactions are counted only once,

there is no double counting

(e.g., if and where UBS

AG and Credit Suisse

were involved in the same

transaction). UBS performed

an assessment for

Credit Suisse green,

social, sustainability

and sustainability-linked

bonds reported in

the 2023 Sustainability

Report

and deemed them to be aligned to UBS sustainable

bond guidelines.

Investment Bank figure is 102 of which UBS AG

figure is 93 and Credit Suisse figure is 16.

Bloomberg

Sustainability Report 2023

| Supporting opportunities

Personal & Corporate Banking

In our home market of Switzerland,

our aim is to be the most progressive financial

institution when it comes to offering sustainable and sustainability

-linked financial advice

and products. As Switzerland sets course for a successful transition

to a low-carbon future,

we are developing innovative advisory, lending, basic banking,

and transition financing

solutions, while also offering our clients access to sustainable investment

solutions.

Integration of Credit Suisse

UBS Switzerland AG

and Credit Suisse

(Schweiz) AG currently

remain separate entities.

However, the sustainable

products

Credit

Suisse

(Schweiz)

have

been

reviewed

and

vetted

against

the

UBS

sustainable

product

frameworks. Based on this, Credit Suisse (Schweiz) AG continues to offer its sustainable products to its clients but

paused developing new products in 2023.

2023 highlights

Private clients

Supporting our

clients to

meet their

sustainability ambitions

remained a

focus in

2023. Our

private clients

continued

allocate

sustainable

investment

solutions

during

the

year,

helped

easy

access

the

relevant

product

offerings across both

sustainable funds

and sustainable

pension solutions using

our mobile

banking app,

UBS key4.

Forming sustainable partnerships and thought

leadership

Partnerships continue to play a key role in our efforts. In 2023, UBS entered into a new partnership with the

Ecole

Polytechnique

Fédérale

Lausanne

(EPFL)

support

innovation

sustainability

and

collaboration

through

joint

projects. In

addition, we

became the

first bank

to join

the Swiss

Green Fintech

Network, actively

supporting the

development

innovative and

scalable

technology

solutions,

and

the

development of

Switzerland

global

leader in

green fintech.

We continued

publishing articles

in order

to deepen

client dialogue

and engagement.

Jointly

with the business and group functions, we have participated

in various sustainability-related seminars

and events.

›

Refer to

ubs.com/sustainability-ch

for information on sustainability at UBS in Switzerland

›

Refer to the UBS Group Annual Report 2023 available on

ubs.com/annualreport

for more information on the overall

business and financial profile of Personal & Corporate Banking as important context for the product and financial

information provided here

Sustainability Report 2023

| Supporting opportunities

Group Treasury activities

2023,

Group

Treasury

continued

invest

its

high-quality

liquid

assets

portfolios

under

dedicated

ESG

Investment Framework as described

in UBS’s net-zero ambition

statement of 2021. This framework

integrates ESG

considerations

the

investment

process

alongside

traditional

economic

and

risk

dimensions.

supports

investments in

ESG-labelled securities

that have

a direct

link to sustainable

projects, promotes

investments in

issuers

with positive ESG characteristics and flags potential

risks.

At year-end 2023,

Group Treasury held

more than USD

8 billion of green,

social and sustainability

bonds in its

high-

quality liquid

assets (HQLA)

portfolios, up 20%

from the

USD 6.7 billion

it held in

2022. In comparison,

global GSSS

bond issuance increased 7%

in 2023.

Non-core and Legacy

In 2023, we

created Non-core and Legacy,

which includes positions and

businesses not aligned with

our strategy

and policies. Those

consist of the

assets and liabilities

reported as part

of the

former Capital Release

Unit (Credit

Suisse) and certain assets

and liabilities of the

former Investment Bank (Credit

Suisse), Wealth Management

(Credit

Suisse),

Swiss

Bank

(Credit

Suisse)

and

Asset

Management

(Credit

Suisse)

divisions,

well

the

former

Corporate Center

(Credit Suisse).

Non-core and

Legacy also

includes the

remaining assets and

liabilities of

UBS’s

Non-core and Legacy Portfolio,

previously reported in

Group Functions (now

renamed to Group Items),

and smaller

amounts of assets

and liabilities of

UBS’s business divisions

that we have

assessed as not

strategic in light

of the

acquisition of

the Credit

Suisse

Group. We

are

actively

reducing the

assets of

Non-core and

Legacy

order to

reduce operating costs and financial resource

consumption, and to enable us to simplify

infrastructure.

›

Refer to the UBS Group Annual Report 2023 for more information about the Non-core and Legacy business division

Upon

the

legal

the

acquisition

the

Credit

Suisse

Group,

have

applied

existing

UBS

prudent risk

management practices

to material

risks of Credit

Suisse. Positions

and businesses

not aligned with

the core strategy

and policies of UBS have been ring-fenced in the Non-core and Legacy business division, with the aim of ensuring

a timely and orderly wind-down.

›

Refer to the “Managing sustainability and climate risks” section of this report for a description of sustainability-

and climate-related de-risking activities

Bloomberg

Sustainability Report 2023

| Managing sustainability and climate risks

Managing sustainability and

climate risks

Introduction

Managing sustainability

and climate

risk is a

key component

of our

corporate responsibility.

We define

sustainability

and climate risk as the risk that UBS negatively impacts, or is impacted by,

climate change, natural capital, human

rights and other environmental,

social and governance

(ESG) matters. Sustainability

and climate risks may manifest

as credit, market,

liquidity, business or

non-financial risks for

UBS, resulting in potential

adverse financial, liability

reputational impacts.

Group

Risk

Control

(GRC)

responsible

for

our

firm-wide

sustainability

and

climate

risk

framework

and

the

management of

exposure to

sustainability

and

climate (financial)

risks

ongoing

basis

second

line

defense, while our Group

Compliance, Regulatory & Governance

(GCRG) function monitors the

adequacy of our

control

environment

for

non-financial

risks

(NFR),

applying

independent

control

and

oversight.

manage

sustainability and climate risk within a dedicated

risk management framework.

In 2023 we worked to revise this framework and our processes across UBS, following the acquisition

of the Credit

Suisse Group.

Recognizing that

it is

imperative to

have a

consistent approach

to managing

sustainability and

climate

risk across the consolidated banking group, we have merged the Sustainability and Climate Risk (SCR) units under

the Chief Risk

Officer (CRO)

for Sustainability. We

also developed a

combined Group policy

for sustainability and

climate

risks,

including

risk

appetite

standards.

Furthermore,

continued

work

toward

consolidating

our

sustainability and

climate risk metrics

and quantitative approaches

across the combined

entity, while enhancing

our

analytical capabilities and further integrating sustainability and climate risk considerations into traditional financial

and

non-financial risks,

for example

enriching our

risk

management processes

and

reporting around

nature-

related risks.

At the

same time

our sustainability

and climate

risk framework

continued to

mature through

our multi-year

initiative

focused on addressing

regulatory requirements and

enhancing core processes,

such as reporting

and disclosures.

This chapter presents our

approach to managing sustainability, climate and

nature-related risk, while highlighting

those areas where further work is ongoing to align the

Credit Suisse approach to the overall Group approach.

The

current inventory

of quantitative sustainability

and climate

risk metrics, including

exposure to

carbon-related assets,

climate-sensitive sectors

and nature-related

risks for

UBS Group

excluding Credit

Suisse,

is disclosed

later in

this

section. UBS

is in

the process

of implementing

a combined

and aligned

sustainability-

and climate-risk

dataset across

UBS

Group

and

including Credit

Suisse

AG.

For

this

reason, UBS

will

publish

UBS

Group

and

Credit

Suisse AG

sustainability and climate risk metrics required pursuant to FINMA Circular 2016/1 "Disclosure – banks", Annex 5,

supplement

the

UBS

Group

Annual

Report

and

the

UBS

Group

Sustainability

Report

line

with

the

publication timeline for the semi-annual Pillar

3 disclosures in the third quarter of

2024.

›

Refer to the Supplement to this report, available at

ubs.com/sustainability-reporting

, for more information about

the UBS Group sustainability and climate risk policy framework

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability and climate risk management

framework

Our

firm-wide

sustainability

and

climate

risk

management

framework

and

policies,

standards

and

guidelines

underpin

our

management

practices

and

control

principles.

They

enable us to identify and manage potential adverse impacts on the climate, the environment

and human

rights, as

well as

the associated

risks affecting

us and

our clients,

while supporting

the transition to a low-carbon world.

Overseen by senior management, the framework

applies to the balance sheet, our own

operations and our supply

chain. It consists of four different phases: (i) risk identification and measurement; (ii) monitoring,

and risk appetite

setting; (iii) risk management and control; and

(iv) risk reporting and disclosure.

›

Refer to “Our investment management approach to sustainability and climate risks“ in this section for a description

of our sustainability and climate risk investment approach

Sustainability Report 2023

| Managing sustainability and climate risks

The

Group

Chief

Risk

Officer

(GCRO)

responsible

for

the

development

the

sustainability

and

climate

risk

framework and

risk appetite,

along with

its integration

into those

of the

Group. The

CRO for

Sustainability supports

the GEB by providing leadership on sustainability in collaboration

with business divisions and Group Functions and

is supported by the

Sustainability and Climate Risk unit (SCR

unit). In addition, the BoD

Risk Committee monitors

the progress of UBS’s efforts to address sustainability

and climate risk.

›

Refer to the “Supplement to Governance” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

for further details on the sustainability governance at UBS

Our

multi-year Sustainability

and

Climate Risk

Initiative (the

SCR

Initiative),

launched in

2020

Pre-acquisition

UBS’s SCR

unit, continues

to build

capacity through

expertise, collaboration,

technology and

data. This

initiative

was created to integrate sustainability and climate risk considerations into the firm’s traditional financial and non-

financial risk

management frameworks,

which address

these traditional

risks across

the firm’s

business divisions

and

legal entities, against a continuously evolving

regulatory context.

In 2023, the SCR Initiative

further advanced efforts

toward the goal of

fully integrating

qualitative and quantitative

sustainability

and

climate

risk

considerations

into

the

firm’s

traditional

risk

management

and

stress-testing

frameworks. 2023 developments

include introducing

climate-driven risk analytics

into the

credit decision-making

process

for

select

portfolios,

introducing

climate-driven

quantitative

risk

appetite

for

specific

legal

entities,

expanding climate

and nature-related

risk monitoring

internally, and

further refining

processes and

governance and

methodologies to drive forward more comprehensive

ESG reporting and disclosures.

Like that

of UBS,

Credit Suisse’s

approach to

the management

of sustainability

and climate

risk consists

of four

phases, (1) risk identification, (2) monitoring,

(3) management, and (4) reporting.

›

Refer to “Appendix 3 – Entity-specific disclosures for Credit Suisse AG” in the appendices to this report for a

description of Credit Suisse’s approach

to sustainability and climate risk management

Sustainability and

climate risk

management activities

conducted in

2023 are

described below,

across the

four phases

the

sustainability

and

climate

risk

framework.

These

activities

laid

the

foundation

for

the

creation

sustainability and climate risk management

framework for the combined organization.

›

Refer to the “Supplement to Governance” and “Supplement to Managing risks“ sections of the Supplement to the

UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for more details about our

sustainability and climate risk policy framework

Risk identification and measurement

annual

basis,

assessment

the

materiality

sustainability

and

climate-driven

risks

carried

out

accordance with the ISO 14001 standard for environmental management systems.

In 2023, we further advanced

our materiality assessment

methodology to integrate

documented transmission

channels that may

drive new forms

sustainability

and

climate-driven

financial

and

non-financial

risks,

leveraging

internal

and

external

expert

guidance.

aim

identify

sustainability

and

climate

risks

divisional

and

cross-divisional

levels,

both

through

the

sustainability and

climate risk-driven

materiality assessment

mentioned above

and,

increasingly, by

integrating them

into the

firm-wide traditional

risk identification

and measurement

processes. This

is also

applied to

significant Group

entities under UBS Group AG.

›

Refer to “Supplement to Strategy” section of the Supplement to the UBS Group Sustainability Report 2023,

available at

ubs.com/sustainability-reporting

, for details about our climate-related materiality assessment and the

underlying methodology

Our risk identification methodologies

collectively define UBS’s

materiality-driven approach, focus

areas and key risk

drivers. The outputs of these efforts define our

sustainability and climate risk management

strategy by:

–

identifying concentrations of climate

and nature-sensitive exposure

that may make

UBS vulnerable to

financial

and

non-financial

risks,

enabling

the

prioritization

resources

towards

enhanced

risk

quantification

and

subsequent management actions;

–

supporting delivery of a client-centric business strategy,

where the firm supports clients

with their sustainability

transition,

e.g., by low-carbon transition finance,

identifying clients that may benefit from

sustainability-focused

UBS products and services.

This provides information to senior management to support more informed decision-making on sustainability and

climate-driven

risks,

along

with

providing

decision-useful

information

stakeholders,

through

our

external

disclosures.

For the financial year 2023,

the materiality assessment covered UBS

Group excluding Credit Suisse.

Sustainability Report 2023

| Managing sustainability and climate risks

Transition risk

Climate-driven transition risks

arise from

global efforts

to mitigate

the effects

of climate

change. They

cover the

financial impact on our clients or on UBS itself through the creditworthiness of UBS counterparties or the value of

collateral held by UBS. Financial

impacts from climate-driven transition risks could

materialize through several key

risk factors:

–

climate policies: affecting operating expenses

(e.g.,

carbon taxes), analyzed both directly and indirectly;

–

low-carbon technologies

and

their

potential for

disruption: affecting

capital expenditure

requirements and/or

market share due to low-cost competition;

–

shifts in

consumer or

investor sentiment:

affecting revenues

(consumer demand

shifts) or

market perceived

value.

arrive

UBS

Group

excluding

Credit

Suisse

exposure

climate-driven

transition

risks,

have

analyzed

economic sectors within

UBS’s classification taxonomy,

with a view to defining

sub-sectors (hereafter referred

to as

“segments”) that

share similar characteristics

in their vulnerability

to the risk

factors identified above.

The approach

consists of grouping companies into these segments under an adverse risk scenario. This scenario is defined as an

immediate and disorderly approach

toward meeting the

well-below-2˚C Paris goal

over the zero-to-three-year time

horizon

(reflecting

the

business

planning

horizon).

The

outcome

this

process

sector-level

transition

risk

heatmap, where risk ratings range from low to high,

and ”climate-sensitive sectors” include the top three ratings

(high, moderately high and moderate).

In 2023, methodology enhancements on

the sector-level heatmap provided

for the incorporation of the additional

“disorderly” component (in

line with

the NGFS

immediate and

disorderly definition and

UBS’s in-house

scenario

developments).

Here,

disorderly

defined

differentiation

between

industrialized

and

emerging

market

countries: in the

short term, industrialized economies are

rated relatively riskier than

emerging economies due to

faster acceleration

in implementing

programs to

meet national

commitments made

within the

Paris Agreement

framework. These policies and programs are executed primarily through more stringent climate transition policies,

larger investments

in advanced low-carbon

technologies, and

the effects in

delivering affordable

and more climate-

friendly products (analyzed through price elasticity

in demand for these products).

The

transition

risk

heatmap below

shows

that,

year-end

2023,

our

exposure to

climate-sensitive sectors

and

related activities remains

relatively stable. Climate-driven

transition risk-sensitive exposure

now represents

12.1%

(up

from

11.7%

2022)

total

customer

lending

exposure,

mainly

driven

increase

exposure

commercial real

estate in

Switzerland. This

risk exposure

can be

associated with the

passage of

the Climate

and

Innovation

Act

Switzerland

and

the

expected

zero-to-three-year

impact

energy-efficiency

rules

the

commercial real estate sector. A slight reduction

in exposure can be observed in the fossil fuels trading

and mining

conglomerates sectors.

›

Refer to the “Supplement to Managing sustainability and climate risks” and the “Basis of reporting” sections of the

Supplement to the UBS Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for details

on methodologies

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Physical risk

Climate-driven physical

risks arise

from acute hazards,

which are increasing

in severity and

frequency, while chronic

climate risks arise

from an

incrementally changing climate.

These effects

may include increased

temperature and

sea-level rise, and

the gradual changes

may affect productivity

and property values

and increase the

severity and

frequency of acute hazards.

Our

physical

risk

heatmap

methodology

groups

together

corporate

counterparties

based

exposure

key

physical risk factors

(risk segmentation),

by rating sectoral,

sub-sectoral, and

geographical vulnerabilities

to climate-

driven

physical

risks.

These

vulnerabilities

were

identified

using

proprietary

in-house

UBS

model.

The

model,

developed in

2023, is

a significant

advance on

the historical

physical risk

heatmapping methodology

which Pre-

acquisition UBS

published in

2021 and

2022. By

leveraging over

1 billion

data points,

UBS analyzed

cross-sector

information on asset-level

data (sub-company

level), third-party

climate hazard ratings

through geospatial

datasets,

and

academic

insights

into

how

hazards

and

production

methods

may

aggravated

complementary

(transmission

channels).

The

analyses

are

then

quantitatively

aggregated

across

assets,

transmission

channels

(including value chains) and hazards at a

sub-sector/country or sub-country level of

granularity.

The refined

heatmap methodology

shows that

UBS Group

excluding Credit

Suisse physical

risk vulnerability

remains,

on average,

moderately low

(below the

sensitivity threshold

of moderate).

Given UBS’s

business profile,

the key

drivers

for

our

climate-sensitive

lending

(physical

risk) are

financial

intermediation activities,

and

collectively the

services, agriculture, and transportation sectors. In its current state, the model takes a conservative

approach in its

key assumptions,

limiting full

incorporation of

geographical and

sectoral sources

of variability

(which may

either

further amplify or mitigate financial vulnerability). We are committed to

addressing these and other limitations by

continuously improving the

modeling approach alongside

the industry, as it

continues to standardize

the disclosure

of physical

climate risk

data, integrates

regionalized scientific

climate models,

specializes in

its impact

on sectors

and assets, and collaborates

with a view to more informed decision-making.

More specifically, in 2024 and beyond, UBS will seek to expand its use of vendor data through both diversification

and

refinement,

further

address

the

limitations

presented

due

key

assumptions

the

model,

and

develop

approaches

address

data

limitations

other

types

assets

(e.g.,

real

estate).

will

also

explore

the

link

between

changing

climate

and

nature-related

financial

risks,

which

may

result

intensified

compounding

vulnerabilities.

Notably,

companies

that

depend

natural

capital

assets

may

adversely

affected

climate

change, which presents further risks to the

environment and the provision of ecosystem

services.

The physical

risk heatmap

below shows

that UBS

Group excluding

Credit Suisse

exposure to

climate-sensitive

sectors

was at

9.7% (up

from 8.4%).

This increase

is driven

by exposure

to the

services sector,

which includes

financial

services

activities

emerging

markets.

Most

the

climate-sensitive

physical

risk

exposure

located

within

countries that have high adaptive capacity to physical risk hazards; which

is an important aspect to consider when

interpreting the 9.7% exposure to physical risk.

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Nature-related risk

Nature-related

risk

refers

how

humans

and

organizations

depend

and

impact

the

natural

environment.

Natural resources

are referred

to as natural

capital which, in

combination,

provides the ecosystem

services which

benefit people and the planet. In the following we describe our understanding of how UBS’s business model may

depend on or impact those services, resulting in financial

and non-financial risk for UBS.

Biodiversity is

presented as

a function

of various

natural capital

assets providing

life on

earth with

a range

of services

(ecosystem services),

categorized and rated

for their role

in the development

of medicines,

technologies, and

more.

UBS‘s

development

insights

biodiversity,

among

other

nature-related

risks,

discussed

the

context

improving data

and methodology.

Like the

collaborative effort

that UBS

made on

climate-related risks

in earlier

years, we

have contributed

to global

efforts to

raise awareness

and exchange

knowledge on

nature-related risk

assessment methodologies. UBS

has made

these contributions through

its role

as a

member of

the Taskforce

Nature-related

Financial Disclosures

(the TNFD,

since 2021)

and the

United Nations

Environment Programme

Finance

Initiative (the UNEP-FI) working group on nature-related

risks (since 2018).

key

member of

the UNEP-FI

working group,

UBS

supported the

development of

methodology to

assess

nature-related risks

from both

the dependency

and impact

perspectives (to

the natural environment).

UBS took

part

the

collaborative

work

develop

the

Exploring

Natural

Capital

Opportunities,

Risks

and

Exposure

toolkit

(ENCORE),

central

UBS’s

initial

nature-related

risk

analysis.

The

UNEP-FI

coordinated

this

working

group

partnership

with

the

World

Conservation

Monitoring

Centre

(the

WCMC),

Global

Canopy,

the

Swiss

State

Secretariat for Economic Affairs (SECO), and

the Swiss Federal Office for the Environment

(FOEN).

In 2022 we

initially piloted

a quantification

approach for

nature-related risks

solely based

on the dependency

of our

clients

the

natural

environment,

using

the

ENCORE

methodology.

This

approach

allowed

assess

our

vulnerability to nature-sensitive economic activities by our

clients, which may drive financial

risks for UBS, such

reduced creditworthiness

of our

clients, or

the value

of companies’

debt, or

of equity

posted as

collateral for

lending

activities. In

2023 we expanded

the definition of

our “nature-sensitive metric”

to now include

both dependency

on, and impact on, nature, its assets,

and the ecosystem services that nature provides

to sustain human activities.

Our methodology assigns

ratings on the same

scale and granularity

as our climate-driven

sector-level heatmaps. As

in the case of the climate-driven heatmap assumptions,

UBS takes a conservative approach in assigning

the overall

nature-sensitive risk

rating to

each

the UBS

industry codes.

The

key

assumption here

driven

taking the

higher of the two values between the ENCORE-defined

impact and dependency ratings.

›

Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS

Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for further information on our

methodology

Our enhanced nature-related risk heatmap below

shows that at year-end 2023 UBS Group excluding

Credit Suisse

exposure to nature-sensitive sectors is at 15.1%

(up from 14.4% in 2022) of our total customer lending

exposure.

Sensitivity is

driven by

sectors that

either have

a high

impact or

a high

dependency on

the natural

environment.

These

include

metals

and

mining,

utilities

and

agriculture.

Our

business

activities

are

concentrated

Lombard

lending and

the financial

services sector

which are

rated as

relatively low.

A strong

correlation can

be observed

between

climate

risk

sensitivity

(both

transition

and

physical)

and

nature-related

risks,

showing

heightened

correlation identified in climate-sensitive sectors.

›

Refer to “Appendix 2 – Environment” in the appendices to this report for our approach to nature.

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Sustainability Report 2023

| Managing sustainability and climate risks

Climate scenario analysis

We use scenario-based approaches

to assess our exposure

to physical and transition risks

stemming from climate

change. We have

introduced a series

of assessments

facilitated by industry

collaborations to

harmonize approaches

for addressing methodological and

data gaps. We

have performed top-down balance-sheet

stress testing (across

Pre-acquisition UBS), as well as targeted, bottom-up

analysis of specific sector exposures covering

short-, medium-

and long-term time horizons.

The work performed includes

regulatory scenario analysis and stress

test exercises such as

the Climate Risk Stress

Test (CST) of the

European Central Bank (the

ECB), which assesses banks’

preparedness for dealing with financial

and economic

shocks stemming

from climate

risk; and

the Bank

of England

(BoE) 2021

Climate Biennial

Exploratory

Scenario (CBES).

These exercises enabled the identification of financial risks from climate change and allowed Pre-

acquisition

UBS

assess

management

actions

response

different

scenario

results,

well

perform

counterparty-level

analysis. While

these

exercises

showed

mild

losses

and

low

exposure

climate

risk

for

the

entities

scope,

the

analysis

allowed

UBS

enhance

climate

risk

scenario

analysis

and

stress

testing,

further

developing our capabilities for assessing risks

and vulnerabilities from climate change.

In 2023, we further advanced our capabilities surrounding internal climate risk scenario analysis and stress testing

for UBS Group excluding Credit

Suisse. We enhanced and refined

our climate risk scenarios with a

focus on both

transition and physical risk projections

across 30 years. Further,

we have been developing additional

corresponding

climate risk

models to

amend the coverage

of major

risk types and

have enhanced

consistent modelling

approaches

in the context of real estate energy performance

and location-specific physical risk.

Over

the

last

years

also

leveraged

industry-wide

initiatives,

such

the

Paris

Agreement

Capital

Transition

Assessment (PACTA) exercise launched by the Swiss Federal Office for the Environment (FOEN) in 2020 and 2022.

Through this exercise, we assessed the climate alignment of our listed investments (including equities and bonds),

mortgages and direct

real estate portfolios.

The assessment allowed

us to compare

our results with the

aggregated

performance of all participating banks’ portfolios,

showing progress made over time and efforts

still needed.

The following chart shows the evolution of

our scenario-based analysis and stress-testing over

time.

›

Refer to “Appendix 3 – Entity-specific disclosures

for Credit Suisse AG” in the appendices to this report for a

description of Credit Suisse’s scenario analysis

Sustainability Report 2023

| Managing sustainability and climate risks

›

Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS

Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for details about our climate

scenario analysis at UBS and Credit Suisse

Monitoring and risk appetite setting

Our sustainability

and climate

risk policy

framework

defines the

qualitative risk

appetite for

sustainability and

climate

risk and is

subject to periodic

updates and enhancements.

Following the acquisition

of the Credit

Suisse Group,

the

sustainability and

climate risk

appetites of UBS

and Credit Suisse

were revised to define

combined standards

for the

new combined organization,

aimed at supporting mitigation and de-risking

of the joint risk profile.

›

Refer to the “Supplement to Managing sustainability and climate risks” section of the Supplement to the UBS

Group Sustainability Report 2023, available at

ubs.com/sustainability-reporting

, for further details about our

combined risk appetite

As part of the sustainability

and climate risk monitoring

process, we have developed

methodologies and metrics

assess our ongoing exposure to

carbon-related assets and climate-sensitive sectors. In developing our metrics, we

consider the

inputs and

guidance provided

by standard-setting

organizations as

well as

new or

enhanced regulatory

requirements

for

climate

disclosures. In

2023

continued

working

methodologies covering

climate-driven

transition,

physical

and

nature-related

risks.

Examples

such

enhancements

include

adding

issuer

and

traded

products in

our risk

monitoring and

reporting capabilities.

The table

below includes

climate risk

metrics for

UBS

Group

excluding Credit

Suisse and

UBS AG

standalone basis,

as well

as for

UBS

Switzerland AG

and UBS

Europe SE, both on a

standalone basis. UBS will

publish UBS Group and

Credit Suisse AG sustainability

and climate

risk metrics in a supplement to

the UBS Group Annual Report and the

UBS Group Sustainability Report in line

with

the publication timeline for the semi-annual

Pillar 3 disclosures in the third quarter

of 2024.

Sustainability Report 2023

| Managing sustainability and climate risks

Carbon-related

assets

proportion

total

customer

lending

exposure

for

UBS

Group

excluding

Credit

Suisse

decreased

to 7.2%

2023

from 7.5%

2022. In

2023,

the share

climate-sensitive sectors

for UBS

Group

excluding

Credit

Suisse

was 12.1%

for

transition

risk and

9.7%

for

physical

risk

our

total

customer

lending

exposure.

The main

driver for

transition risk was

an increase

in exposure

to commercial real

estate in

Switzerland. This risk

exposure was associated with

the passing of the

Climate and Innovation

Act in Switzerland and

the expected zero-

to-three-year impact on energy-efficiency rules in the commercial real estate sector.

The key driver for physical risk

was exposure

to the

services sector, which

includes financial services

activities in emerging

markets. Most of

the

climate-sensitive physical

risk exposure

was located

in countries

that have

high levels

of capacity

to adapt

to physical

risk hazards.

The year-end 2023

exposure to

nature-sensitive sectors

of the UBS

Group was 15.1%

of the total

customer lending

exposure.

For

nature-related

risk,

sensitivity

was

driven

sectors

that

either

have

high

impact

high

dependency on the natural environment. These include metals and mining,

utilities, and agriculture. Our business

activities are concentrated in

Lombard lending and the

financial services sector, which are

rated as having relatively

low sensitivity to nature risk. A strong correlation can be observed between climate risk sensitivity (both transition

and physical) and nature-related risks, with

a heightened correlation in climate-sensitive sectors.

Sustainability Report 2023

| Managing sustainability and climate risks

Risk management – Climate- and nature-related metrics

For the year ended

change

from

31.12.23

31.12.22

31.12.21

31.12.22

Climate-

and nature-related metrics (USD billion)

1, 2

Carbon-related assets UBS Group excluding Credit Suisse

1, 2, 3, 4, 5

34.2

33.6

36.0

1.7

Carbon-related assets proportion of total customer

lending exposure, gross (%)

1, 2, 3, 4, 5

7.2

7.5

7.8

Carbon-related assets: UBS AG (standalone)

1, 2, 3, 4, 5

8.5

8.6

9.9

(1.5)

Carbon-related assets: UBS Switzerland AG

(standalone)

1, 2, 3, 4, 5

26.6

24.6

25.6

8.0

Carbon-related assets: UBS Europe SE (standalone)

1, 2, 3, 4, 5

0.0

(25.7)

Exposure to climate-sensitive sectors, transition

risk UBS Group excluding Credit Suisse

1, 2, 4, 5, 6

58.1

52.5

52.4

10.6

Climate-sensitive sectors, transition risk, proportion

of total customer lending exposure, gross

(%)

1, 2, 4, 5, 6

12.1

11.7

11.4

Exposure to climate-sensitive sectors, transition

risk: UBS AG (standalone)

1, 2, 4, 5, 6

9.9

9.2

9.6

7.8

Exposure to climate-sensitive sectors, transition

risk: UBS Switzerland AG (standalone)

1, 2, 4, 5, 6

47.5

41.2

41.1

15.1

Exposure to climate-sensitive sectors, transition

risk: UBS Europe SE (standalone)

1, 2, 4, 5, 6

0.0

(0.1)

Exposure to climate-sensitive sectors, transition

risk: Traded products, UBS Group excluding Credit Suisse

1, 2, 4, 5, 6, 7

0.9

Exposure to climate-sensitive sectors, transition

risk: Issuer risk, UBS Group excluding Credit Suisse

1, 2, 4, 5, 6, 8

4.6

Exposure to climate-sensitive sectors, physical risk

UBS Group excluding Credit Suisse

1, 2, 4, 5, 6

46.2

38.0

36.7

21.4

Climate-sensitive sectors, physical risk, proportion

of total customer lending exposure, gross

(%)

1, 2, 4, 5, 6

9.7

8.4

8.0

Exposure to climate-sensitive sectors,

physical risk: UBS AG (standalone)

1, 2, 4, 5, 6

52.7

44.8

42.1

17.7

Exposure to climate-sensitive sectors,

physical risk: UBS Switzerland AG (standalone)

1, 2, 4, 5, 6

15.7

14.8

16.0

5.8

Exposure to climate-sensitive sectors,

physical risk: UBS Europe SE (standalone)

1, 2, 4, 5, 6

0.0

122.3

Exposure to climate-sensitive sectors, physical risk:

Traded products, UBS Group excluding Credit Suisse

1, 2, 4, 5, 6, 7

7.2

Exposure to climate-sensitive sectors, physical risk:

Issuer risk, UBS Group excluding Credit Suisse

1, 2, 4, 5, 6, 8

15.7

Exposure to nature-related risks UBS Group excluding Credit Suisse

1, 4, 5, 6, 9

72.0

64.6

67.3

11.4

Exposure to nature-related risks, proportion of

total customer lending exposure, gross

(%)

1, 4, 5, 6, 9

15.1

14.4

14.7

Exposure to nature-related risks: UBS AG (standalone)

1, 4, 5, 6, 9

14.4

12.0

12.7

20.1

Exposure to nature-related risks: UBS Switzerland

AG (standalone)

1, 4, 5, 6, 9

56.3

49.8

49.7

13.0

Exposure to nature-related risks: UBS Europe

SE (standalone)

1, 4, 5, 6, 9

0.1

0.0

205.1

Exposure to nature-related risks: Traded products, UBS Group excluding Credit Suisse

1, 5, 7, 9

1.2

Exposure to nature-related risks: Issuer risk, UBS Group excluding

Credit Suisse

1, 5, 8, 9

3.5

Methodologies for assessing

climate- and nature-related

risks are emerging

and may change

over time. As

the methodologies, tools,

and data availability

improve, we will

further

develop our risk identification and measurement approaches. Lombard lending rating is assigned based on the average riskiness of loans.

Metrics are calculated and restated based

on the 2023 methodology, across three years

of reporting, 2021–2023.

As defined by the Task Force on Climate-related Financial

Disclosures (the TCFD), in its expanded definition

published in 2021, UBS defines carbon-related

assets through industry-identifying attributes of

the firm’s banking book. UBS further

includes the four non-financial sectors addressed

by the TCFD, including, but

not limited to, fossil fuel

extraction, carbon-based power generation,

transportation (air,

sea, rail, and auto manufacture),

metals production and mining,

manufacturing industries, real estate development, chemicals,

petrochemicals, and pharmaceuticals, building and construction materials

and activities, forestry, agriculture, fishing, food

and beverage production, as well as including trading companies that may

trade any of the above (e.g., oil trading or agricultural commodity trading

companies). This metric is agnostic

of risk rating, and therefore may

include exposures of companies that may

be already transitioning or adapting their business

models to climate risks, unlike

UBS climate-sensitive sectors

methodology, which takes a risk-based approach to

defining material exposure to climate

impacts.

Total customer lending exposure consists of total loans

and advances to customers

and guarantees, as

well as irrevocable

loan commitments (within

the scope of

expected credit

loss) and is

based on consolidated

and standalone IFRS

numbers. The credit

exposure

includes portfolio adjustment bookings, which are either directly impacting the metrics, and have been reflected in the heatmaps, or

are impact assessed and immaterial to the metrics

representation.

UBS continues to collaborate

to resolve methodological

and data challenges,

and seeks to integrate

both impacts to and

dependency on a changing

natural and

climatic environment, in how it evaluates risks and opportunities.

Climate- and nature-related risks are scored between 0 and 1, based on sustainability and

climate risk transmission

channels, as

outlined in

the Supplement

to the

UBS Group

Sustainability Report

2023. Risk

ratings represent

a range

of scores

across five-rating

categories: low,

moderately low,

moderate, moderately high, and high.

The climate- or nature-sensitive

exposure metrics are

determined based upon the top

three of the five

rated categories: moderate to high.

Traded products

are newly disclosed

for FY 2023. Risk

exposures consist of

receivables from securities

financial transactions, cash

collateral receivables on

derivative instruments and

financial assets measured at amortised cost.

Issuer Risk is newly disclosed for FY 2023. Risk

exposures consist of HQLA assets, debt securities,

bonds, liquidity buffer securities.

Nature-related risk metric methodology has been further strategically enhanced, as part of an ongoing collaboration

between UBS and UNEP-FI.

The table below presents a view of UBS’s risk

profile and changes year-on-year, within sectors and across climate-

and nature-related

risks. It

first shows

UBS’s total

exposure,

and trend,

to each

sector, followed

by an

exposure-

weighted risk

rating, the

trend in

the underlying

quantitative score

year-on-year, and

finally shows

the total

absolute

exposure rated as

moderate or higher

within that sector.

This is

presented for all

three risk types.

Exposures may

appear

under

one

the

risk

types

and

therefore

may

not

added

together;

this

because

the

methodologies are distinct in their approach

and application.

Overall,

UBS

Group

excluding

Credit

Suisse

has

moderate

moderately

low

outlook

across

the

three

risk

categories at the end of

2023. We found that most

year-on-year fluctuations were

driven by an increase in

lending

and changes in the

risk profile relating

to commercial real

estate activities, especially

in Switzerland. The

changes in

the risk profile can be attributed to regulatory

action in Switzerland regarding climate policies.

›

Refer to our transition and physical risk heatmaps above

Sustainability Report 2023

| Managing sustainability and climate risks

Risk exposures by sector for UBS Group excluding Credit Suisse

1, 2, 3, 4, 5

Transition risk

Physical risk

Nature-related risk

Sector / Subsector

2023

exposure

(USD bn)

2022-

2023

exposure

trend

Weighted

average transition

risk rating 2023

2022-

2023

weighted

average

transition

risk trend

2023

transition

risk

climate

sensitive

exposure

(USD bn)

Weighted

average physical

risk rating 2023

2022

risk-

rating