Sustainability Risk Management at Credit Suisse

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Sustainability Risk Management at Credit Suisse

• May 19, 2009
• Sustainability Practice Network The Revolution
  in Environmental Finance
• John Tobin de la Puente
• Head of Public Policy - Sustainability Affairs,
  Credit Suisse

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Sustainability is very important

• Sustainability is very important. The
  sustainability issues are important for us across
  a number of different elements. First of all, it
  starts with our business, but we also try to
  be careful on the other end. Especially when
  financing businesses that are not considered to
  be eco-friendly.
• ... Thats a tough balance for us to strike.
  Honestly, we do a very good job. But we clearly
  have to continue our efforts there.

Brady W. Dougan, Chief Executive Officer, Credit
Suisse Group Global Town Hall, November 6, 2007
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Public Policy Sustainability Affairs Responsibi
lities
Sustainability Governance
Sustainability Risk Management
Socially Responsible Investments (SRI)
Sustainability Affairs
Stakeholder Dialogue
Operational Ecology (Corp.Real Estate Services)
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Sustainability Risk Management What Constitutes
Sustainability Risk?

• Broadly speaking, any environmental or social
  issue that has the potential to negatively impact
  Credit Suisses reputation constitutes a
  sustainability risk.
• This includes actions or transactions that could
  involve...
• Controversial client and/or business activities
• Adverse environmental or social implications
• As laid down in Credit Suisses Global Policy on
  Reputational Risk
• Reputational risk is the potential that negative
  publicity regarding an institutions
• past or present business practices, whether
  true or not, will cause a decline in
• the customer base, costly litigation, or
  revenue reductions.
• (adapted from Federal Reserve Bank, USA)

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Sustainability Risk ManagementGovernance

• CEO
• Highest decision-making authority
• Appoints Chair Reputational Risk
  Sustainability Committee

BoD / RC Annual sustainability review

• Reputational Risk Sustainability Committee
  (4x/year)
• Tasks
• High-level review of transaction approvals /
  rejections
• Discuss update on sustainability/regulatory
  issues, trends and focal topics
• Determine CSGs strategy with respect to
  environmental and social issues (priorities,
  policies and positions) and evaluate the
  achievement of annual sustainability objectives
• Ensure implementation of CSGs environmental
  policy and sustainability commitments
• Endorse annual Environmental Management Review as
  part of ISO 14001 process

• Public Policy - Sustainability Affairs
• Supports RRSC through
• Monitoring of trends/competitors
• Coordination of projects
• Internal consulting and support Reporting

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Sustainability Risk Management Reputation Risk
Review Process (RRRP) at Credit Suisse

• Responsible

• Tasks
• Representation on Executive Board
• Sets policy, reviews key issues, can
• overrule a rejection
• Can veto an approval
• (but cannot overrule a rejection)
• After review, approves, rejects, or modifies a
  submission
• Business Area head or designee
• Supports or rejects a submission
• Initiates approval process

Reputational Risk Sust. Committee
Policy
Regional CEO
Veto
Reputational Risk Approver
Division Endorser
Approval
Originator (Any employee)
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Sustainability Risk Management Practical Ways to
Ensure Appropriate Review of Sustainability Risks

• Reputation Risk Review Process (RRRP)
• Regional Reputational Risk Approvers
• Public Policy Sustainability Affairs
• Regional sustainability contacts

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Sustainability Risk Management Why Does it
Matter?

• Credit Suisse was one of the first banks globally
  to take account of
• environmental and social issues in its business
  activities. Why?
• Credit Suisse has put governance processes in
  place that provide a good framework to ensure
  compliance with its sustainability commitments
• By considering sustainability-related
  reputational risks in business transactions, we
  add brand value and remain attractive for
  investors
• This also becomes a point of differentiation for
  employees and clients
• A careful consideration of environmental and
  social risk factors as part of the companys risk
  management reduces risk exposure (e.g., credit,
  liability or reputational risks)

? Build trust and confidence and lay the
foundation for long term business success
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• APPENDIX

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Sustainability Risk Management Transactions
reviewed by Sustainability Affairs
20061 33 6 20 2 5 3 14 8 4 0 0 4
Transactions reviewed in Total number Asia
Pacific Switzerland Americas
EMEA Forestry Oil Gas Mining Energy Chemicals
Hydro Others
2007 70 33 17 12 8 22 15 12 3 7 1 10
2008 124 76 26 15 7 24 22 40 13 2 2 21
1 Global Policy on Reputational Risk came into
force in May 2006
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Sustainability at a Glance CS Commitments and
Governance

• External commitments
• UNEP Finance Initiative
• (since 1992)
• UN Global Compact
• (since 2000)
• Equator Principles (since 2003)
• Carbon Principles (since 2008)
• Internal commitments
• Code of Conduct (since 2000)
• Credit Suisse Group
• Sustainability Policy
• (since 2006, replacing
• Environmental Policy)

Credit Suisse Code of Conduct Sustainability We
believe that ensuring a sustainable approach to
business including sustained profitability is one
of the keys to our long-term success. We
therefore take account of environmental and
social issues in our business decisions and when
managing our resources and infrastructure. We
have signed international agreements on
sustainable development and we abide by their
principles.
Credit Suisse Sustainability Policy 1. Mission
Statement Objectives for Sustainability 2.
Corporate Leadership and Management
Implementation at Credit Suisse 3. Our Employees
4. Our Role in Society 5. Products and
Services 6. Production, Infrastructure and
Facilities 7. Implementing the Sustainability
Policy
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Sustainability Risk ManagementRole of Public
Policy - Sustainability Affairs
Industry-specificpolicies¹
Transaction
Transactions with potential environmental or
social reputational risks

• Sustainability
• Affairs
• Awareness raising / training
• Assessment of transactions
• Advice to clients

Review / assessment
Lists ofprojects/companies under scrutiny
Reputation Risk Review Process
Decision(decline / adapt / adopt)
1 Industry-specific policies have been developed
/ are under development for the following
industries forestry, oil and gas, mining.