credit-suisse Environmental Report 1997/1998 Unabridged version

ENVIRONMENTAL REPORT1997/98

NOVEMBER 1998

Unabridged version 7.12.1998 http://www.csg.ch/ecoreport98

SUISSECREDIT GROUP

http://www.credit-suisse.com/ecoreport98

Page 2 Environmental Report 1997/98 Credit Suisse Group

CONTENTSALL THE TOPICS COVERED IN OUR REPORT

FOREWORD Page 3

PORTRAIT OF CREDIT SUISSE GROUP 4Bank in transition 4Credit Suisse Group and the environment 5System limit of this report 5Key figures 5

ENVIRONMENTAL MANAGEMENT 6Environmental policy 7Planning 10Implementation 13Milestones 14Monitoring 16Benefits 17Communication 18Future and trends 19

PRODUCT ECOLOGY 20Environmental risks are business risks 21

Environmental risks associated with the granting of loans and with real estate business 22Environmental risks relating to project financing 23Environmental risks in relation to third-party liability and property insurance and real estate business 23Risk management in the environmental sector � environmental liability 25

Environmental aspects of investment business 26Eco Efficiency 26Fellowship Trust 28Sustainable Performance Group goes public 29

Niche products in the environmental sector 30WinCAT � catastrophe bond (Cat bond) 30Energy contracting 30Recycling of car components at Winterthur 31

Future and trends 32Annex: Flow chart for checking credit risks 33

OPERATIONAL ECOLOGY 34Ecology reflected by the reorientation 34Environmental performance evaluation of Credit Suisse Group (Switzerland) 1996/97 36Overview of our analyses 37Future and trends 38Key environmental figures � significance of comparisons 38

COMMUNICATIONS 40External communications and commitments 40Sponsorship and contributions 40Internal communications 41Our environmental standpoint 42Our most important affiliations 42Publications and literature 43

GLOSSARY 44

LINKS TO ENVIRONMENT-RELATED INTERNET PAGES 46

INFORMATION AND CONTACTS 47

Page 3Environmental Report 1997/98 Credit Suisse Group

FOREWORDCONTINUING COMMITMENT TO ENVIRONMENTAL PROTECTION

Dear Reader,

In our second environmental report, we provide our staff, customers and shareholders, as wellas ecologically-oriented investors and interested members of the public, with information onour commitment to the environment. In April 1997 we were awarded the ISO 14001 environ-mental certificate for our Environmental Management System at our Swiss bank sites. As thefirst Swiss bank and the first major bank anywhere in the world to receive environmental certi-fication we know that this distinction is helping to strengthen our good reputation among ourstakeholders.CSG is one of the first financial service providers to have committed itself to comprehensiveenvironmental protection and we want to continue to play a pioneering role in the future. Ouraim is to find ways of integrating environmental considerations into our banking and insurancebusiness. Having already achieved a good number of successes in the field of operationalecology, we shall increasingly be turning our attention to product ecology and the new risksand opportunities that exist in the field of climate change. We want to utilise the major growthpotential that exists in the field of ecologically-oriented asset management. The very goodperformance of our two environmental funds Eco Efficiency and Fellowship Trust shows thatwe are on the right track in this respect. A special challenge that we need to address is theevaluation of ecological risks in the context of project financing.As regards expanding our Environmental Management System and introducing new cost-cut-ting measures, we shall increasingly focus on our major sites outside Switzerland as well. Ex-perience has shown that efficient use of energy and materials can also result in lower costs.A process of transformation is taking place not just within Credit Suisse Group (CSG), butthroughout the whole media landscape. We have therefore decided to break new ground withour environmental report: in addition to this electronic version of the unabridged text, we arealso publishing a 12-page summary in English, French, German and Italian. As well as savingpaper, this approach also ensures that you always have access to our most up-to-date infor-mation.Environmental protection is an ongoing process. This report tells you about our successes todate and our ambitious targets. We would like to thank everyone who has helped produce thisenvironmental report. We would also be interested to hear your views and constructive criti-cisms; we look forward to your feedback.

Lukas Mühlemann Peter LienhartChief Executive Officer of Member of the CS Executive BoardCredit Suisse Group Environmental Officer of CSG

Our strengths, weaknessesand near-term objectives

To give you a quick overview, a textbox in the margin of each chapterwill provide a brief summary of ourstrengths, weaknesses and near-term objectives in the area in ques-tion.


Credit Suisse Group (CSG) is a global financial services company offering a compre-hensive range of banking and insurance products. Represented on all continents and in allmajor financial centres, it comprises four banking business units and one insurance businessunit, each of which is geared to specific customer groups and markets:

Credit Suisse (CS) Corporate and individual customerbanking in Switzerland

Credit Suisse Private Banking (CSPB) Services for Swiss and internationalprivate investors

Credit Suisse First Boston (CSFB) Global investment banking

Credit Suisse Asset Management (CSAM) Services for institutional investorsworldwide

Winterthur Insurance Global insurance business

Bank in transition

Since it published its first environmental report in 1996, Credit Suisse Group has undergonea fundamental change. On 1 January 1997, CS Holding, as it was then known - and whichconsisted primarily of the two full-service banks Credit Suisse (CS) and Swiss Volksbank(SVB) and the investment bank CS First Boston - became Credit Suisse Group.A separate environmental performance evaluation carried out to assess the environmentalimpact of the restructuring revealed that in the medium term the quantitatively measurableimpact was roughly equivalent to that of one week of normal banking operations.Credit Suisse Group merged with Winterthur Insurance in the autumn of 1997, althoughWinterthur remains an operationally independent insurance company.In the context of the restructuring process, various operations with an environmental impactwere outsourced to external contractors subject to agreements laying down ecological con-straints; these operations include, in particular, building management and storage and distri-bution in the material management sector.

CSG organisation chart: position as at 1 January 1998. Insurance sites abroad only includenational and company head offices

PORTRAITCREDIT SUISSE GROUP


Credit Suisse Group and the environment

About 20 years ago, an Environmental Management System (EMS) was set up in the variouscompanies comprising what is today Credit Suisse Group. As part of the reorientation of theGroup, it was decided to use the EMS of Credit Suisse � the most sophisticated in the Groupat the time � for the entire CSG.The Environmental Management System of the Swiss banking sites is certified toISO 14001.

Environmental focal points In addition to its environmental efforts on the operational front(primarily aimed at cutting energy consumption), CSG focuses mainly on checking environ-mental risks when granting credit or insurance cover. Increasingly, major earnings potentialand opportunities are also emerging in the products sector.

System limit of this report

Unless otherwise indicated, this environmental report refers to the whole of CSG includingWinterthur. The environmental performance evaluation referred to in the operational ecologysection covers CSG�s banking sites in Switzerland and does not include Winterthur (referencedate 1 January 1997).

Key figures

Key financial figures in CHF m CSG 1997 Credit Suisse (group) 1995

Balance sheet total: 689 568 m 245 000 mAnnual profit: 397 m 1 230 m

Key staff figures

Staff 62 242 26 200- in Switzerland: Bank 21 442 21 800

Insurance 7 108- outside Switzerland: Bank 13 235 4 400

Insurance 20 457

Branches

Total 1 166- in Switzerland: Bank 304 430

Insurance 694- outside Switzerland: Bank 118 106

Insurance* 50 *National and company head offices only

PORTRAITOUR KEY FIGURES


In April 1997, Credit Suisse Group became the first Swiss bank and the first major bank anywhere in theworld to be awarded the ISO standard 14001 environmental certificate. The certification process providesindependent confirmation of the fact that the Environmental Management System complies with thisstandard and that ongoing improvement in environmental performance has been provided for. This wasalso confirmed by the first control audit conducted in June 1998. Our EMS will be steadily expanded andextended along the lines of a modular system. The environmental certificate paves the way for our inclu-sion in portfolios of environmentally-oriented investors. Along with cost-savings and risk reductions, thisrepresents the added value which we have created for our shareholders by taking account of environmen-tal considerations. The signing of the UNEP statements on the environment for both financial institutionsand the insurance industry confirms this stance.

The main aims of environmental management

An Environmental Management System (EMS) conforming to ISO 14001 is designed toachieve the following objectives:n Compliance with all relevant environmental laws and regulationsn Commitment to the steady improvement of corporate environmental performance through

the formulation and implementation of defined objectives

Steady improvement of corporate environmental performance of CSG

ENVIRONMENTAL MANAGEMENTCERTIFIED TO ISO 1400


The EMS is a feedback loop designed to achieve ongoing improvement. The various phasesof the loop can be subdivided into environmental policy, planning, implementation, monitoring(certification, internal audits and review by senior management), as shown in the diagram onpage 6. The following chapter is subdivided according to the same individual phases.

1 Environmental policy

Uses and function of environmental policy Environmental policy defines the priorityassigned to environmental protection within CSG, as well as representing a commitment toenvironmental protection vis-à-vis personnel, customers (private and corporate alike) andother stakeholders. Some of the important functions required of environmental policy are:n To underline the importance that CSG attaches to environmental protectionn Commitment to observe relevant environmental legislationn Commitment to continuous improvement of environmental performancen To take account of the demands of internal and external stakeholders

Environmental policy based on the UNEP statements for financialservice providers In signing the UNEP statements for financial institutions and the in-surance industry, CSG has committed itself to the systematic incorporation of environmentalconsiderations into all areas of its business activities. In 1992, the then Credit Suisse be-came the first signatory of the UNEP Statement by Financial Institutions and in 1995,Winterthur signed the UNEP Statement by the Insurance Industry. The signatories (110banks + 70 insurers by May 1998) endorse the principles laid down in the two statementsand strive to promote environmental interests and sustainable development in their businesspolicies and operations.

Review of environmental policy In the autumn of 1998, our environmental policy wasupdated and approved by the Chief Executive Officer of CSG. Key changes are the inclusionof Winterthur and the commitment to remaining environmentally certifiable. Maintenance ofconformity with environmental legislation was included as an explicit goal.The environmental policy will be reviewed every three years, at the latest in the autumn of2001.The text of the environmental policy is reproduced on the following two pages.

For further information on UNEP,see links on page 46

Strengths

n ISO 14001 certification of all CSG�sSwiss banking sites since April 1997

n Environmental policy extended toWinterthur

n Outsourcing: ecological targetsagreed

Weaknesses

n Systematic environmental manage-ment so far only introduced in Swit-zerland

n Organisational structures and pro-cedures in environmental manage-ment still tied strongly to specificindividuals

Next steps / objectives

n Maintenance of eligibility for certifica-tion

n Extension of Environmental Manage-ment System to sites outside Switzer-land and subsidiaries

ENVIRONMENTAL MANAGEMENTBASIC FEATURES OF OUR ENVIRONMENTAL POLICY


ENVIRONMENTAL MANAGEMENTOUR ENVIRONMENTAL POLICY

Environmental missionstatement / objectives�We support efforts to protect the envi-ronment and ease pressure on naturalresources. By acting in an environmen-tally responsible fashion we wish tocontribute to sustainability and there-fore create added value for our com-pany, our customers and the environ-ment.�

1. Corporate leadership and management We are actively committed to environ-mental protection. Our commitment stems from the belief that our future depends on theconservation of natural resources.We strive to be among the most progressive companies in terms of environmental manage-ment and we maintain an environmental management system in compliance with the relevantstandards. We always seek to use the most ecologically sound technology wherever this iseconomically viable. We are committed to satisfying the regional, national and internationalenvironmental standards applicable to our business operations and services and our commit-ments under the UNEP and ICC Declarations. We use a systematic eco-monitoring strategyto manage, evaluate and document the progress of our work.

2. Human resources work and organisation All employees of our bank are respon-sible for protection of the environment in their particular area of activity. They are supportedby internal or external experts.We take measures to ensure that staff recognise their ecological responsibility and act ac-cordingly; activities which have an impact on the environment should also be assessed fromthe ecological point of view.

3. Communications and marketing Our bank is an environmentally conscious com-pany. We therefore conduct an open dialogue both inside the company and outside. Our en-vironmental data are accessible. We co-operate actively with external environmental organi-sations.Meeting our ecological responsibilities forms part of our strategy to secure long-term earn-ings and sustainable corporate development.

4. Banking and insurance products We aim to include environmental considerationsin existing and new products and services in order to avoid ecological risks. We take accountof such risks in evaluating lending and insurance transactions and provide support for ourclients in dealing with risks and claims. Moreover, we aim to identify and avoid risks likely toharm the reputation of our institute.We are open to the development of new banking and insurance instruments for assessingecological opportunities and risks and support research in this area. We promote efforts todemonstrate environmental costs and benefits and to evaluate ecological aspects instockmarket analysis, both through our own developments and through active co-operation inresearch groups.


The current environmental policy wasapproved on 27 November 1998. Itwill be reviewed at least every threeyears and adapted where necessary.

ENVIRONMENTAL MANAGEMENTOUR ENVIRONMENTAL POLICY

5. Production and operations We ensure our high environmental and safetystandards by continuously improving our environmental performance. Both in back-office operations and in the production process, we are committed to ensuring that ourservices are performed in the safest and most environmentally friendly manner possi-ble. We closely involve our procurement, management and logistics partners. We placeparticular emphasis on minimising electricity consumption and conserving resources,particularly in the processing of our standardised retail business.By systematically measuring, recording and monitoring energy and resource consump-tion, emissions, waste and environmental risks, we are paving the way for continuousimprovements.We take measures to prevent environmentally harmful accidents and to contain thepotential repercussions.

6. Infrastructure and facilities All available environmental data on design, mate-rials, operational matters and energy consumption are taken into account in the plan-ning and construction of new premises and facilities.We involve our contractors and suppliers in our efforts to protect the environment inorder to ensure that they apply our environmental standards and codes of practice. Inthis context, we request information on potentially harmful building materials and othersubstances and on the impact of products supplied to us.

7. Implementation of the environmental policy To implement the environ-mental policy, we continue to pursue our internal corporate process aimed at promotingenvironmentally conscious behaviour at all levels. We attach great importance to theenvironmental policy being taken into account in all environmentally relevant decisions.

Lukas Mühlemann Peter LienhartChief Executive Officer of Member of the Executive Board Credit SuisseCredit Suisse Group Environment Officer of Credit Suisse Group


ENVIRONMENTAL MANAGEMENTPLANNING

2 Planning

Dealing with the restructuring process and corresponding system changes

The operations of a global financial services group involve a wide range of environmentalconsiderations. CSG�s ever stronger and more global network is making the environmentalsphere more complex. Piecemeal approaches to improving environmental performance are nolonger adequate; the issue itself needs to be integrated into management.On the way to ISO certification, CSG had to surmount the hurdle of ongoing restructuring andsystem changes. Outsourcing measures are attributable to CSG�s concentration on its corebusiness. However, the reorientation is also of environmental relevance. The following impor-tant services have been outsourced:

Services Contractor

n Building management MIB AGn Decentralised IT systems IT Servicesn Catering Amongst others SV-Service

(CSG�s biggest catering contractor)n Storage and distribution of office supplies, Mühlebach AG Logistic

printed matter and advertising materials

In the following we set out our approaches to finding solutions:

Agreements with companies in charge of outsourced areas Contracts andagreements were concluded which commit the contractors MIB AG, IT Services, SV-Serviceand Mühlebach AG Logistic to continuous improvement of their environmental performanceand to compliance with CSG�s strict environmental standards. Among other things, thesecontractors are required to endorse CSG�s environmental policy and energy guidelines and toestablish their own environmental management system. Open communication and co-opera-tion on environmental issues plays an important part in this.Whenever any service was contracted out, an important objective was to enable CSG to influ-ence environmentally-relevant decisions taken by the contractors concerned. The environ-mental standard of the outsourced services was to be maintained or improved. Through itscontracts and agreements, CSG is still able to exert influence over environmental matters andits business partners benefit from CSG�s experience of environmental management.

Reform of environmental organisation of CSG Within CSG, environmental activitiesare co-ordinated by the environmental management unit. Focal points include maintaining anEnvironmental Management System eligible for certification through the use of environmentalcontrolling and environmental performance evaluations and internal and external communica-tion by means of environmental reports and the drafting of statements. Specific technical re-sponsibility and the implementation of environmental measures are largely matters for thevarious line and specialist units; a number of full-time specialists are employed both in theEnvironmental Risk Unit in the Credit Management area of Credit Suisse and in Winterthur�senvironmental unit for third-party liability risk. CSG also has its own specialist units for en-ergy/building ecology, safety, operational ecology and ergonomics. In addition, in the fields ofcleaning/waste disposal and catering, among other sectors, we can count on the specialistsof the partner firms mentioned above. In a number of areas with an environmental impact, wecan also turn to specific contact persons responsible for environmental issues.


In the field of environmental investment, which is of increasing interest and at the same timecomplex, CSG can rely on close co-operation with the Zurich-based company SustainableAsset Management AG. The whole environmental sector is controlled by the EnvironmentalExecutive Board, which handles strategic and business policy tasks. Chaired by CSG�sEnvironmental Officer, the Environmental Executive Board includes representatives from allbusiness units and from the Environmental Management unit.

Shift in important environmental aspects For a long time, environmental protectionwas only regulated by laws and binding technical provisions. This meant that companies� ac-tivities were confined to eliminating and alleviating environmental effects after the event. Ac-cordingly, environmental measures were mainly aimed at areas of operational ecology such assaving energy or reducing waste. To promote sustainable development, the approach shouldbe targeted at the causes of the environmental effects. As a result of the growing environ-mental awareness of stakeholders (investors, shareholders, NGOs), the focus is now also onthe indirect environmental impact of products. However, if environmental issues are to begiven the consideration they deserve, comprehensive environmental management is essential.Thus, over the past few years, the main focus of environmental concern among providers offinancial services has shifted to ecological risks, particularly in the third-party liability and prop-erty insurance business and in the credit sector. The more recent widening of this focus toinclude product ecology has also affected the investment sector, encouraging the emergenceof niche products. This has been reinforced by increased communication with ourstakeholders on environmental issues.

Objectives and specific targets In line with the structure of this environmental report,our objectives and individual targets have been subdivided into EMS, product ecology, opera-tional ecology and communications targets. In each case, the concrete targets are listed inthe insets enumerating strengths, weaknesses and near-term objectives.




Operative areas and partners of Credit Suisse Group

The chart below shows:n in which business unit the co-ordination unit for the whole group is situatedn which environmentally-relevant specialist or line units with specialist responsibilty exist in

the different business units and who they work for in additionn which partners and contractors with a high level of environmental relevance have their own

environmental units and which business unit is responsible for this third-party-relationship


ENVIRONMENTAL MANAGEMENTIMPLEMENTATION

3 Implementation

Putting environmental policy into practice In implementing environmental manage-ment measures, CSG intends to adhere to the environmental policy obligations it has as-sumed. Components of the implementation phase include:n Environmental controllingn Environmental standardsn Training of personneln Environmental report

Implementing environmental policy is the task of the Environmental Management unit ofCSG. CSG�s Environmental Management System is modular in structure. For a number ofyears, CSG�s environmental commitment has been pursued in accordance with ISO stand-ards. In the following, we enumerate the principal milestones in this process. To highlight theimplementation of our environmental policy more effectively, we have assigned the individualmilestones to the components of environmental policy.

Environmental controlling As an important process in our Environmental ManagementSystem, environmental controlling involves systematically planning, recording, controlling andmonitoring CSG�s impact on the environment. With a view to fulfilling our environmental tar-gets, over 100 measures have been defined for 1997/98. In addition, environmentalcontrolling has been extended to include product ecology.

Environmental standards We depend on the active support of our staff to ensure thatCSG continues to improve its environmental performance. Since 1995, environmental stand-ards have been distributed to provide staff with guidance on their environmental conduct bothat work and in their private lives. Since autumn 1998, the new updated edition of practicaltips is being issued to all employees in Switzerland in the form of a bookmark.

Training of personnel The personnel concerned are provided with training in environ-mental matters by means of blocks of lectures on the environment as part of apprentice train-ing, seminars for university graduates and internal audits in environment-related areas. Per-sonnel with specialist responsibilities are offered practical basic and ongoing training (e.g.energy management and building ecology in property management). In the field of productecology, the Environmental Risk unit provides credit specialists with special training in identi-fying environmental opportunities and risks.

Environmental report This second environmental report follows on from our first publi-cation (1995/96 environmental report). In the current edition, the product ecology chapterforms the main focus for the first time. The structure of the report is based on the VfU (Asso-ciation for Environmental Management in Banks, Savings Banks and Insurance Companies)guide to environmental reporting for financial service providers.


ENVIRONMENTAL MANAGEMENTMILESTONES ON THE WAY TO IMPLEMENTATION

Year Milestones Aspect ofenvironmental policy

1976-79 Planning and construction of the Uetlihof in Zurich: pioneering decisions interms of thermal insulation, environmentally-friendly construction, furniture,and eco-planting of buildings and environs; repositioning of train and tramstops for more convenient use of public transport.

1977 Launch of ten-year energy-saving programme throughout Switzerland, featur-ing action to remedy areas of high energy consumption, energy competitionsand janitor training. By 1989, specific heat consumption per m² had been cutby 33%. Institutionalisation of energy accounting.

1989 Creation of post of full-time environmental officer.1990 Environmental protection becomes an explicit part of corporate philosophy

within the Credit Suisse guiding principlesIntroduction of investment fund oriented towards environmental technology

1991 Formation of Credit Suisse & Environment Working Group, chaired by amember of the Executive Board, underscores importance of environmentalprotection for Credit Suisse

A further indication of the continuous improvement of environmental performance is the assignment of the individual milestonesto the seven aspects of the environmental policy (see pages 8 and 9). The steadily increasing environmental commitment isalso apparent from the growing number of crosses in the right-hand columns. This shows that we are actually implementing ourenvironmental policy.

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1992 Credit Suisse signs the International Chamber of Commerce Charter for long-termsustainable development (ICC Charter) and the UNEP Statement by Banks onthe Environment and Sustainable DevelopmentFirst directive issued on lending business: environmental risks in lending

1993 Credit Suisse is awarded the City of Zurich�s Green Prize for the nature-compatible design of roofs, facades and environs at its Uetlihof site

1994 Establishment of Environmental Risk unit at Credit SuisseEstablishment of Environmental unit at Winterthur

1995 Environmental performance evaluations in Zurich and GenevaExecutive Board approves environmental policy, energy guidelines and environ-mental standardsSigning of UNEP Statement by the Insurance Sector on the Environment andSustainable Development

1996 Credit Suisse implements environmental controlling conceptCredit Suisse publishes 1995/96 environmental report

1997 Credit Suisse Group (banking sites in Switzerland) becomes the first major bankto obtain ISO 14001 certification, documenting the introduction and application ofan Environmental Management System conforming to the ISO 14001 standard.Repositioning of the Eco Efficiency environmental fundContracts and agreements concluded with suppliers and service partners(MIB AG, IT Services, SV-Service and Mühlebach AG Logistic)CSG merges with Winterthur

1998 1996/97 environmental performance evaluation of Credit Suisse Group Switzer-land (all banking sites)First control audit passedUetlihof receives award from Foundation for Nature and the Economy (StiftungNatur und Wirtschaft)Revised environmental standards sent to all bank personnel of CSG SwitzerlandRevision of environmental policy and environmental organisationCredit Suisse publishes 1997/98 environmental report

ENVIRONMENTAL MANAGEMENTMILESTONES ON THE WAY TO IMPLEMENTATION

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4 Monitoring

Our motivation in seeking certification An external inspection enhances the credibil-ity of our Environmental Management System and gives CSG the confirmation that it is oper-ating a functioning EMS. We see this as having the following advantages for us:n CSG can be evaluated more simply and effectively by environmentally-oriented investors.n In terms of environmental management, CSG can position itself as a progressive provider

of financial services.n Presentation of CSG as a company that is aware of its responsibilities gains credibility in

the eyes of the public and CSG personneln More detailed first-hand knowledge of the facts when performing credit analysis of certi-

fied corporate customers.n The Executive Board of CSG has evidence to show that its own Environmental Manage-

ment System is performing effectively and efficiently.

SGS-ICS [Société Générale de Surveillance � International Certification Services AG], a sub-sidiary of SGS, the world�s biggest testing, inspection and quality assurance organisation, wascommissioned to carry out the inspection.

Internal audits Over 25 sector-specific checklists were prepared for internal audits. Inindividual cases, external specialists were also brought in to carry out checks. Remedialmeasures are integrated in environmental controlling.

Certification process The certification audit took place in April 1997. The focus was onthe practical implementation of the environmental commitment on the part of the line organi-sation. The auditors questioned 50 key environmentally-relevant personnel at head office inZurich (from environmental risk, personnel, training, communication, construction & real es-tate, computer centres, evaluation, procurement, maintenance and disposal of computerequipment, building management, waste disposal, transport/travel service, material purchas-ing and catering), in four regions (Geneva-Lancy, Berne-Murifeld, Basel and St. Gallen) andin certain branches (Uster and Wädenswil).The audit report produced by the certifying company (SGS-ICS) confirms the success ofCSG�s environmental management. As well as bearing out the evidence of steady improve-ment, the report also lists remedial measures.The certificate is valid for three years providing that the annual monitoring audits are com-pleted successfully. The Group passed the first audit in June 1998.

ENVIRONMENTAL MANAGEMENTMONITORING


Benefits of certified environmental management

So far, certified environmental management has brought benefits to CSG in several areas:

Areas of benefit Description of benefit

Inclusion in environmentally-oriented portfolios n Inclusion of CSG registered shares in environmentally-oriented portfolios

Competitive advantages n Environmental performance is relevant as an additional indicator of successful(commercial) corporate management and therefore shareholder value

Cost savings n Enhancement of environmentally-significant resource efficiencyn Reduction in environmental impact and in costs caused by waste and emissionsn Support in cost and revenue-oriented management of real estate portfolion Recognition of potential for optimisation (e.g. videoconferencing instead

of air travel)

Compliance with environmental legislation n Systematic testing and monitoring proceduresn Assurance of compliance with current and foreseeable environmental

legislation (legal compliance)

Risk avoidance and reduction n Systematic recording of all environmental risks associated with CSG�s businessactivities

n Increasing the awareness of staff and training them in relation to high-riskactivities

Credibility through external assessment n External assessment of CSG�s Environmental Management System enhancescredibility

Synergies n External communication facilitatedn Integration of EMS into higher-ranking management system promotes integration

of measures where crucial business processes are planned and controlled

ENVIRONMENTAL MANAGEMENTBENEFITS


ENVIRONMENTAL MANAGEMENTCOMMUNICATIONS

Internal communications � supported by the Intranet CSG sets great store byinternal communication. In addition to conventional channels such as the staff magazine andlocal notices, the Intranet is also becoming very important. Both the Environmental Manage-ment sector and various environmentally-oriented specialist units have their own homepagesproviding access to their services, missions, general information, checklists, publications, linksto other important homepages, a glossary and contact addresses.

Dialogue with our business partners CSG�s own experience with environmental man-agement makes it more competent in assessing the problems and implications of certificationfor other companies. Ideas and experience gained from its own Environmental ManagementSystem are passed on to interested, innovative companies. This exchange is targeted prima-rily at smaller and medium-sized companies.n Publication series: Credit Suisse �Orientierung� 106: issue 106 of this series of publica-

tions portrays comprehensive bases for establishing integrated management systems. Thisissue of the guide is primarily intended to assist small and medium-sized enterprises toestablish their own management systems. It lists all necessary information onISO standard models and total quality management, as well as specific instructions onhow to establish a quality, environmental and occupational safety system.

n Customer events: CSG is eager to encourage its customers to embrace environmentalprotection. For example, in December 1997 it organised a customer event in Berne onthe topic of �environmental management systems�. Over fifty small and medium-sizedcompanies were invited and provided with information on the various aspects of environ-mental management systems and ISO 14001.


ENVIRONMENTAL MANAGEMENTFUTURE AND TRENDS

David Nelson, President and CEO,EnviroSearch International, SaltLake City, USA:

�Sophisticated companies are nowadopting environmental managementsystems as a crucial business manage-ment tool. Such companies understandthe increasing pressure of regulatoryregimes, international environmentalagreements and treaties, shareholderdemand, environmental organisations aswell as public demand, requirements ofdevelopment agencies, and new interna-tional environmental management stand-ards such as ISO 14000. The compa-nies who understand this increasinglydiverse agenda and genuinely respond tothese forces with sound managementpractices will benefit economically, so-cially and ethically.�

Future and trends

Validated environmental performance evaluations and certificated environmental managementsystems are increasingly important in assessing whether a company is best-in-class. Accord-ingly, central importance is attached to questions from environmentally-oriented investorsconcerning the introduction of environmental management systems and their possible certifi-cation, as well as management involvement and endorsement and questions concerningproduct ecology. The following aspects will become increasingly important:n Highlighting the benefits of an EMSn Social compatibility � international standards are emerging in relation to this

issue (e.g. SA 8000). CSG is seeking to address this consideration through the intro-duction of integrated health management (comprehensive occupational medicine, healthpromotion, welfare counselling and ergonomics).


In the field of environmental policy, we have committed ourselves to gradually incorporating the �environment� factorinto new and existing services and products. The main focus of our efforts in the field of product ecology is on riskmanagement both in the context of granting credit and of providing third-party liability insurance cover. We see earn-ings potential and opportunities in the sector of environmentally-oriented financial investments and niche products.Eco-efficient commercial management leads to long-term success and is rewarded by the financial markets in theform of higher valuations. The growing number of environmentally-oriented investors bears witness to this.

Ecology in the products sector

CSG�s environmental activities in the products sector can be classified into credit business,insurance business, investment business and new financial products (see table below). At thesame time, the classification may vary depending on how the area is viewed. For example,the product WinCAT could be regarded as coming under the heading of investment businessrather than that of niche products. Moreover, the distinction between environmental risks andinvestment business will inevitably be blurred since environmental risks are incontestably alsoplaying an increasingly important role in this area of business.

PRODUCT ECOLOGYENVIRONMENTAL ASPECTS OF SERVICES AND PRODUCTS

Sector Business unit Product/Service Chapter

Lending business CS n Credit checking and 1 Environmental risksreal estate valuation

n Energy contracting 3 Niche products

CSFB n Project financing operations 1 Environmental risks

Insurance Winterthur n Risk examination 1 Environmental risks

n WinCAT 3 Niche products

n EnviroWin 1 Environmental risks

n Recycling of car components 3 Niche products

Investment CSAM, CSPB, CS n Eco Efficiency (Lux) 2 Investment business

business CSAM n Fellowship Trust (UK) 2 Investment business

CSFB n Listing of SPG shares 2 Investment business

Winterthur n Unit-linked life policy 2 Investment businessof CS Life (see Eco Eff.)

New financial CSFB n Marketable 4 Future/trendsproducts emission certificates

n Financing of environmentally- 4 Future/trendsoriented products

Strengths

n Risk management in the context ofgranting credits and of third-partyliability and property insurance

n Two powerful special funds: Eco Effi-ciency (Lux) and Fellowship Trust(UK)

n Open for innovative, environmentally-oriented products, such as WinCATand energy contracting

Weaknesses

n Training and support material in in-vestment business still too piecemeal

n Review of environmental risks andopportunities in project financing sofar not adequately systematised


n Greater sensitisation and informationconcerning products with an environ-mental impact

n Structured procedure for assessingenvironmental risks and opportunitiesin project financing


Innovations in product ecology since the last environmental report

Since the publication of the last environmental report (1996), our bank has witnessed anumber of innovations.In 1997, the Environmental Technology equity fund introduced in 1990 was aligned on theconcept of eco-efficiency and repositioned.More and more environmentally-oriented funds are emerging around the world (a volume ofaround 1 billion Swiss francs was invested in environmentally-oriented funds and investmentfoundations in Switzerland in 1998; this is equivalent to roughly half a percent of the totalfund capital. In the United States, every tenth dollar is currently invested according to at leastone ethical-environmental criterion [Bernadette Calonego, Der Standard, 23 March 1998]).In the UK, too, Credit Suisse Asset Management has been offering a successful ethical-environmental country fund since 1986.The fact that CSG is increasingly being considered for inclusion in portfolios of environmen-tally-oriented investors shows that its environmental performance is gaining recognition. Inthe niche products sector, a number of products have been developed that show potential,including WinCAT and Energy Contracting.

1 Environmental risks

Companies that neglect environmental factors (such as environmental risks) may be puttingtheir profitability or value at risk. For a company and its insurer or lending bank, it is thereforeimportant to be familiar with the facts and to respond to environmental risks as appropriatelyas possible. This not only enables the environmental impact to be reduced but also avoidscostly remediation measures, depreciations and write-offs. Moreover, this area of activity alsoopens up attractive commercial opportunities such as technical assistance in tackling con-taminated site remediation and the financing of such measures.

Environmental risks are business risks Environmental risks stem from a variety ofcauses. The cost of cleaning up a contaminated site can be enough to bankrupt a company.So-called liability risks arise where the bank takes over the ownership of real estate, e.g. inthe context of bankruptcy proceedings. In Switzerland, if the bank owns the land, it is obligedto pay for the clean-up.Commercial risks relating to environmental factors arise where real estate or plant facilitiesplummet in value as a result of environmental pollution or degradation. The causes could, forexample, lie in the incorrect storage of hazardous substances, an incident or a shift in publicopinion or legal requirements. Risks to a company�s reputation, or risks arising from its linkswith an associated entity (i.e. where the bank�s reputation is compromised by its connectionswith a business partner responsible for environmental damage or through its representationon the board of such a company) are currently becoming increasingly important.Environmental risks are likely to be encountered in the following three areas of business:A Granting of loans and real estate ownership (Credit Suisse)B Project financing (Credit Suisse First Boston )C Third-party liability and property insurance and real estate ownership (Winterthur)

Example illustratingenvironmental risks

A discarded cigarette causes a majorfire in the warehouse of a chemicalfactory. Because the warehouse flooris not sealed in accordance with regu-lations, toxic liquids seep into the soilwhile the fire is being extinguished.After the fire, the site, which previ-ously had an estimated value of15 million Swiss francs, is only worth5 million Swiss francs.If the operating risk had been estab-lished by our specialist EnvironmentalRisk unit when the loan was granted,the company would have been alertedto the shortcomings in the warehouse.This could have prevented the liquidsfrom escaping and the resulting dropin the site�s value.

PRODUCT ECOLOGYINNOVATIONS


PRODUCT ECOLOGYENVIRONMENTAL RISKS

A Environmental risks associated with the granting of loans and withreal estate business

Credit Suisse only conducts business with corporate customers in Switzerland. Since 1992, ithas been systematically analysing all loan applications (whether for new loans, extensions ofexisting loans, or increases in limits) for environmental risks. Here, Credit Suisse is also meet-ing an obligation assumed when it signed the UNEP statement. The procedure for examiningcredit risks can be found in the Annex on page 33. Environmental hazards inherited from thepast can be an important factor not only in the field of loans but also in the valuation of realestate forming part of real estate funds.If there are any signs of danger, credit specialists enter into discussions with the customer totry to establish what environmental risks exist, what their extent is and whether they can becovered by insurance. To arrive at an assessment, our credit specialists consult both internalworking instruments and the official land registry of sites where a contamination is suspected.The former identify vulnerable sectors and indicate which environmental risks in particularneed to be taken into account.Where necessary, the specialist Environmental Risk unit assists our credit specialists in theirevaluation and in recommending measures. In addition to this support function, the activitiesof Credit Suisse�s specialist Environmental Risk unit also include holding numerous internaland external training events.In recent years, the specialist unit has become more important. Consideration of environmen-tal risks has come to form an integral part of any credit check. In this way, we also createadded value for many of our customers: in the context of the background documentation andinformation required for credit checks, environmental issues are systematically reviewed inorder to pinpoint environmental risks at an early stage. If a problem arises, the bank is avail-able to the customer as a competent partner with contacts with specialists and the authori-ties.

Facilitation of environmental assessment in the business sector Our ownexperience in environmental management puts us in a better position to assess the signifi-cance of a customer�s certification. Lending banks or insurers are concerned first and fore-most with environmental aspects that can become credit or insurance risks, with the marketopportunities created representing an additional secondary interest.At present, however, the significance of certified EMS systems is difficult to assess in termsof the impact of environmental management on the balance sheet and earnings situation. Forexample, the fact that a company holds a certificate does not give any indication of its envi-ronmental performance. Furthermore, issues relating to the choice of site and process, liabil-ity risks, the extent of insurance cover, safety at work and contaminated sites are not primaryconsiderations in certification. Nonetheless, from the bank�s vantage point, a customer withan EMS certificate does have a number of advantages:n The environmentally-relevant information has been obtained and the environmental aware-

ness of the company�s management has greater credibilityn Use of innovative and progressive management instrumentsn Particularly in environmentally-vulnerable industries, in which environmental risks account

for a large proportion of financial risks, a bank knows that the company is meeting its en-vironmental responsibilities, is aware of its risks and intends to deal with them on a profes-sional basis.



However, for the lending bank the decisive factor is always the overall perspective in terms ofrisks and opportunities. After all, when granting a loan, it is not so much the borrower that isassessed, but the loan and its general conditions.Certification makes it easier for the bank to examine environmental risks relating to the cus-tomer since specific environmentally-relevant information, validated by the certification, is al-ready available and the persons responsible for environmental matters are named. However,certification does not replace verification. Even where a certificate is held, Credit Suisse al-ways checks loan applications for environmental risks.

B Environmental risks relating to project financing

Environmental risks may also arise in connection with project financing. This mainly affectsCredit Suisse First Boston in its role as a financing partner. In most cases the financing isundertaken with other banks acting jointly with the World Bank; in examining the risks, theirenvironmental standards are applied accordingly.For CSG, the assessment of the borrower�s quality continues to play a central part in the fi-nancing of projects. However, environmental considerations can affect that quality.CSG realises that environmental risks are becoming increasingly important in assessingcredit quality. Such risks may have a legal or a �political� basis:n Legal factors relate to the site and operation: e.g. environmental liability.n �Political� factors may arise from public opposition. These environmental risks can have a

significant adverse impact on project earnings, real estate values, the project timetableand the lender�s equity.

The following instruments are used to avoid such risks, depending on the project: due dili-gence checks, enquiries to clarify the legal context and insurance cover.In international business Credit Suisse First Boston consults external specialists, where nec-essary, to enable it to tailor its response to differing operating conditions and legal frame-works in the countries in question.We are working on more systematic ways of recording, assessing and weighting these veryspecific risks in the future.

C Environmental risks in third-party liability and property insurance andin relation to real estate business

The environmental issue affects virtually the entire range of insurance products offered byWinterthur. Thus, cover components in which environmental factors play a part are to befound in the comprehensive motor vehicle insurance sector (e.g. hail damage), in the buildingor property insurance sector (for example storm damage, cover for clean-up and decontami-nation costs), in company and product liability insurance (cover for personal injury and dam-age to property and for damage prevention costs resulting from environmental degradation)and in compulsory liability insurance for subsidiaries (exclusion of losses resulting from envi-ronmental degradation).

Natural disasters and global climate change Winterthur is expecting the propertyinsurance sector to be particularly severely affected by global climate changes. It is thereforerecording its risk exposure in this area on a targeted basis by calculating claims forecasts forvarious disaster scenarios on the basis of portfolio analyses. Winterthur uses the results ofsuch studies to review and adjust its underwriting policy.


One of Winterthur�s main interests lies in overcoming the consequences of natural disastersfrom a technical underwriting point of view. However, it would also like to gain a betterunderstanding of the climatic context and of the repercussions of human activities on the cli-mate. In this context, Winterthur is not only interested in current environmental factors, butalso attempts, on the basis of the data collected and with the aid of models, to anticipatewhat the environment might be like in the future.Even today, the biggest insured losses are already attributable to climate events. However,if non-insured losses are also taken into account, earthquakes exact the heaviest economictoll. For example, the property damage caused by the Kobe earthquake in Japan is estimatedat USD 100 billion. Losses totalling around USD 2.5 billion were insured.As an insurance company with global operations, Winterthur bears a proportion of suchlosses. The cost of the losses in each case depends on the value of the property insured (i.e.risks) in the area affected.

The ten biggest natural disasters in terms of losses to the insurance industry.

Looking ahead to the future, Winterthur must focus on what changes might occur and where.In many parts of the world, civilisation has advanced into areas previously considered unin-habitable. They have been rendered habitable by the construction of protective structures andinfrastructure facilities such as dams, drainage systems, avalanche barriers, power lines etc.,which are all designed to cope with current known climatic conditions in the regions con-cerned. We can expect any shift in climate zone boundaries to increase the climate strain onsome of these structures and reduce it on others. Overall, there are likely to be more cases inwhich structures are subjected to greater strain; this will mean an increase in the number ofclaims, which will in turn increase the claims burden on insurers.Efforts by the insurance industry to raise public awareness and highlight the possible connec-tions represents an initial step towards avoiding future problems. In addition to publications onthis subject, the presentation of initiatives and policy documents at international conferenceson the environment and climate change (as held in Kyoto or Geneva) represents a contribu-tion on the part of the insurance industry to making the (adverse) effects of human activity onthe environment less ecologically damaging in the future.

Event Date Country Loss in USD bn

n Hurricane Andrewn Northridge earthquaken Typhoon Mireillen Winter gale Darian Hurricane Hugon Winter gale Viviann Kobe earthquaken Hurricane Opaln Winter gale Fridolinn Oakland forest fire

24.8.927.1.94

27.9.9125.1.90

5.9.8925.2.9017.1.954.10.9510.3.93

20.10.91

USAUSAJapanEuropeUSAEuropeJapanUSAUSAUSA

15.512.5

5.24.64.13.22.52.11.81.7



PRODUCT ECOLOGYRISK MANAGEMENT IN THE ENVIRONMENTAL SECTOR

Risk management in the environmental sector � environmental liability Theenvironmental aspects of the insurance products referred to above and of other insuranceproducts not only compel Winterthur to pay close attention to natural events and environmen-tal risks, but also to advise its customers before and above all after they take out their poli-cies. When calling on customers, (environmental) engineers discuss a wide range of environ-mental aspects, highlighting weak points and risks.Thus, by establishing a link between environmental considerations and insurance products,policyholders can be encouraged to behave in a more environmentally-friendly manner. How-ever, the insurance industry does not see itself as an environmental police force, but rather asthe partner of private individuals, trade and industry. Accordingly, in risk-prone, environmen-tally-sensitive areas, e.g. risks affecting landfill sites, Winterthur attempts to find solutionsthat go beyond classic insurance cover (risk transfer).Since 1994, Winterthur has had access to the Environmental Unit (part of Winterthur RiskEngineering since 1 January 1998), a unit involved in a wide range of tasks relating to prod-uct development, underwriting support in connection with environmental risks and the devel-opment of tools for assessing such risks. The unit also advises the claims departments in theevent of new or serious forms of environmental damage. In addition, it assists the businessunits in providing training on environmental issues and conducts PR work in the form of lec-tures and publications. However, apart from the Environmental Unit, Winterthur also hasother units concerned with environmental issues. One of these is Group Risk Management,which addresses such questions as the global climate problems referred to in our openingremarks.As explained above, the insurance industry has already been taking the subject of environ-mental liability seriously for many years. Winterthur has risen to the challenge and, in thisactuarially-sensitive area, has devised a solution - the EnviroWin concept - that gives the cus-tomer insurance cover over and above the standard market coverage while keepingWinterthur�s risk at a reasonable level. One of the key features of this environmental liabilityproduct is insurance cover for environmental damage resulting from normal operations whichcould not have been foreseen given current state-of-the-art in technology and science. Suchcover is only provided if the customer takes the necessary preventive safety measures.Instruments for assessing and evaluating environmental risks form the second key feature ofthe concept. Among these instruments, which have been developed by Winterthur itself, theEnviroWin Index takes pride of place. Using this index, the customer is given an initial envi-ronmental risk rating based on sector-specific risk characteristics. If the index indicatesheightened risks, a �risk dialogue� is initiated. On a confidential basis, engineers and scien-tists from Winterthur analyse and evaluate environmentally-relevant information which thecustomer furnishes by completing a questionnaire. Where appropriate, an inspection iscarried out on site. In the course of this risk dialogue, Winterthur also proposes measuresto improve the situation and indicates how such measures would affect premiums.


Which customers does theEco Efficiency Fund appeal to?

n Investors who are convinced thateco-efficient companies will have afuture strategic advantage.

n Clients who would like to invest in aglobally diversified equity fund thatmainly gives consideration to eco-efficient blue chips. Also included aresmall to medium-sized companiesthat are outstanding for their ecologi-cally innovative services, products ornew technologies and exhibit above-average growth potential.

PRODUCT ECOLOGYENVIRONMENTAL ASPECTS OF INVESTMENT BUSINESS

2 Environmental aspects of investment business

Eco Efficiency (security number 349 511)

In 1990, CSG became the first Swiss bank to launch an environmental technology fund(Oeko Protec). In common with virtually all environmental funds in the first half of the 1990s,the fund�s performance lagged behind the stock market average owing to a variety of factors(mainly one-sided concentration on environmental technology, recession and a weakerdollar).In the spring of 1997, a new fund management reviewed the investment concept and reposi-tioned the equity fund under the name Credit Suisse Equity Fund (Lux) Eco Efficiency.

Aim of the fund The fund offers investors an environmentally-compatible investment in-strument geared to sustainability, combined with attractive long-term earnings. The fund in-vests in the shares of companies whose value-added processes and range of products andservices are already optimised in terms of integrating ecological and social criteria alongsideeconomic considerations. By gearing their operations to sustainability, they are able to reducetheir risks and translate opportunities into market successes at an early stage.

Rating system The fund invests worldwide in leading-edge and pioneering companiesthat are successfully implementing the concept of eco-efficiency. The leaders include compa-nies that are at the forefront of their industries and use eco-efficient production techniques.The pioneers are smaller to medium-sized companies with outstanding credentials in terms ofenvironmentally innovative services, products or new technologies and with above-averagegrowth potential.Sustainable Asset Management (SAM) AG, Zurich, seeks out eco-efficient companies on thebasis of a rating system which it has developed itself and which includes ecological and socialcomponents (SAM Sustainability Rating). With an international network, SAM boasts one ofEurope�s most experienced research teams.Eco-efficiency gives companies throughout the world competitive advantages, and in thelonger term this will be reflected in their share price. Various studies show that companiesthat take account of eco-efficiency are also more innovative than their competitors in otherareas. Competitive advantages correlate positively with eco-efficiency in a variety of ways.

Stock selection The stocks proposed by SAM undergo final selection � taking account ofthe usual fund principles � at Credit Suisse Asset Management (CSAM) in a multistage proc-ess. In this way, CSAM invests worldwide in listed companies in all sectors that stand out byvirtue of their above-average environmental and financial performance. The largest fund posi-tions can be reviewed by accessing the website link shown on p. 46.

Credit Suisse Asset Managementposts outstanding performance

For the third time in a row, in 1997Standard & Poor�s Micropal judgedCredit Suisse Asset Management to bethe �Best Management Group� � i.e. theno. 1 fund management company in thecategory of major Swiss asset managers.


PRODUCT ECOLOGYECO EFFICIENCY

Promotion Ecologically-aware policyholders can also factor environmental considerationsinto their life insurance policies. Winterthur offers the fund-linked life insurance policy CSLife. Customers can invest in various funds, including the Eco Efficiency Fund. The Eco Effi-ciency Fund still accounts for a very limited proportion of the Life Fund. CSAM and SAMsupport CS and CSFB in selling the fund.

Performance The yield outlook is highly promising: since the fund�s repositioning, it hasposted above-average performance in international terms. Measured against traditional funds,its market share is still marginal.Links to websites providing up-to-date information on the performance of the fund can befound on the links page in the Appendix.

Services performed by SAM AG

n Management of individual mandatesfor institutional investors on the basisof sustainability criteria

n Individual advice and assistance forprivate customers on the basis ofsustainability criteria

n Portfolio analyses and screenings(for further information, see links onpage 46)


PRODUCT ECOLOGYFELLOWSHIP TRUST

Fellowship Trust

In the UK and the USA, ethically/environmentally-oriented funds have been established forsome time. In the Credit Suisse Fellowship Trust Fund of Credit Suisse Asset ManagementFunds (UK) Limited, CSG has a fund which has won several awards on the strength of suchcriteria. The Fellowship Trust, which is only available in the UK, is a country-specific fund thathas been investing in selected small and medium-sized companies since 1986.

Stock selection Stocks are selected according to both positive and negative (exclusion)criteria. The fund managers invest in companies that are committed to environmental and so-cial issues, while avoiding companies involved in activities that have a negative impact onhealth, the environment or human dignity (e.g. arms, pornography, tobacco, pesticides).

Performance The Fellowship Trust comprises a total volume of over 200 million Swissfrancs (July 1998) and has established a position in the UK equity growth unit trust sector:over the past three years its performance has ranked 10th (out of 134 funds) and over thepast five years it has ranked 18th (out of 125 funds). Its success shows that ethically/environ-mentally-oriented funds are meeting a market need.Up-to-date information can be accessed online by following the website link on page 46.

Criteria for stock selection

Positive criteria

n Companies with good environmentaltrack records

n Companies that make a positive so-cial contribution (mainly in relation totheir employees and their local area)

n Companies that engage in energyconservation, waste reductionthrough recycling and efficient wastemanagement

n Companies that offer alternatives toproducts tested on animals

Exclusion criteria

n Companies involved in the sale ormanufacture of arms and manufactur-ers of goods or services for militaryuse

n Companies that have attracted ad-verse attention as a result of environ-mental pollution in the past

n Companies known to be distributingpesticides in the UK that contain sub-stances banned in other countries.

n Tobacco producers or companies thatderive over 10% of their reportedannual turnover from the sale of to-bacco products

n Companies that make profits fromgambling

n Companies that print, publish or dis-tribute pornography

n Manufacturers of alcoholic beveragesor companies that derive over 10% oftheir reported annual turnover fromthe sale of such beverages


Bruno Letsch, Head of InvestmentCenter Europe, Swiss Re:

�We firmly believe that companies man-aged on a sustainable basis are attractiveinvestments.�

PRODUCT ECOLOGYINVESTMENT IN SUSTAINABILITY

Sustainable Performance Group goes public

SPG shares were floated on the stock market by Credit Suisse First Boston in the summer of1997. SPG is an investment company listed on the Swiss Exchange. It successfully investsin companies whose products and services generate economic, environmental and socialbenefits and in doing so achieve competitive advantages. This is the core concept ofsustainability.Credit Suisse First Boston is consulted for financial analysis.SPG�s aim and investment strategy:n Investment in 20 to 25 companies with pioneering and leading-edge credentials in the

field of sustainability. The portfolio is broadly diversified in terms of sectors, countries andcurrencies.

n Investment at an early stage in innovative pioneering companies offering new system so-lutions and operating in sectors that benefit from the growth of lasting megatrends insuch areas as mobility, energy or nutrition.

n Investment in leading-edge companies that integrate sustainability into their strategies toa high degree and in doing so achieve sustainable competitive advantages.

n Risk-optimised weighting of pioneering and leading-edge companies with a view toachieving a balanced ratio of opportunities to risks in the portfolio.

Performance In addition to its printed quarterly report, SPG also publishes information onits own homepage (see Internet links on page 46).For current prices, please see the website links on page 46.


For up-to-date information on WinCAT,access the link given on page 46.

PRODUCT ECOLOGYNICHE PRODUCTS IN THE ENVIRONMENTAL SECTOR

3 Niche products in the environmental sector

WinCAT � catastrophe bond (Cat Bond)

Innovative financial products allow the insurance industry to hedge against environmental riskson a broader basis. An example of such a product is Winterthur�s Cat Bond, launched withgreat success in 1997. The Cat Bond is a convertible bond with a very special additional con-dition attached: the annual coupon payment is not paid in years in which hail or storm damageis on a scale serious enough for Winterthur to receive more than 6,000 claims for damagedvehicles. To compensate for this risk, in years with less hail damage, investors receive a cou-pon bearing a higher rate of interest. This means that investors assume an insurance risk tra-ditionally borne by (re)insurance companies.Such investments offer investors a unique opportunity to diversify their portfolios. Since therisk of natural disasters bears no relation to other financial market risks, there is only a slightdanger of simultaneously sustaining losses both on the traditional markets and on the catas-trophe bonds. By including catastrophe bonds in a portfolio, the degree of risk can be re-duced without any change in the anticipated overall yield.In this way, Winterthur, Switzerland�s biggest motor insurer, and Credit Suisse First Boston,the innovative investment bank lead-managing the issue, have familiarised a wider Swiss pub-lic with the securitisation of insurance risks (i.e. the practice of passing on such risks to inves-tors in the form of a marketable security) for the first time. By incorporating environmentalfactors into financial market products, this bond creates new opportunities for customers andfinancial institutions alike.

Energy contracting

This financing and operating model involves commissioning a specialist outside firm to supplyenergy and maintain facilities. Instead of buying oil, gas and electricity, the energy user pur-chases heat, refrigeration, light or steam � in other words energy services.This enables companies to avoid expensive investments, for example in modern heating sys-tems, while � on the supply side � economies of scale and technical expertise can be system-atically exploited to supply heat on an energy- and cost-efficient basis. In the context of theSwiss Federal Government�s �Energy 2000� investment programme, Credit Suisse offerscontract-leasing models. For larger investments, we also examine project financing solutions.


PRODUCT ECOLOGYNICHE PRODUCTS IN THE ENVIRONMENTAL SECTOR

Recycling of car components at Winterthur

As Switzerland�s biggest motor insurer, Winterthur has addressed the question of what to dowith the hundreds of vehicles written off as a result of accidents because they are eitherbeyond repair or no longer worth repairing. In co-operation with representatives of the body-work industry, for nearly 25 years Winterthur has been running the car component recyclingcompany Auto-Bestandteile-Wiederverwertungs AG (ABW) in Grolley (Canton of Fribourg) asan eco-efficient and commercially attractive project and is regarded as a pioneer in this field.ABW collects over 200,000 components for a wide range of vehicle types.Parts that can still be used are removed, stored and resold at reasonable prices. Parts thatcannot be used, such as fluids, oils and acids are siphoned off and disposed of in an environ-mentally-compatible manner or sent for reprocessing.The recyclable components are tested original parts and do not impair the safety of the vehi-cles they are used in. By fitting used parts, vehicle owners can be offered repairs identical inquality to repairs carried out using new parts, but at substantially lower cost.


4 Future and trends

Emission certificates

The securitisation of environmental and health risks will become increasingly common.One example of this trend is emission certificates. These certificates are securities thatentitle their holders to emit set quantities of pollutants into the environment over a given pe-riod of time. They are sold (or issued) to individual companies by the government or an inde-pendent national or international authority and can subsequently be traded. Depending on thereduction target for the economy as a whole, the authority in question can influence thequantity of emission certificates through purchases. Accordingly, providers of financial ser-vices are called upon to establish a market and train market participants for this market.Emission certificates (e.g. for limiting greenhouse gases, especially CO2) are characterised byhigh environmental target attainment levels on the basis of free market mechanisms.For banks, the trading of certificates also opens up new business opportunities.

Development of new ecologically-oriented financial products

We are actively involved in research and discussion aimed at developing ecologically-oriented financial products.There is a huge need for finance to fund the implementation of international environmentalagreements (Convention on Climate Change, Biodiversity Convention). For financial serviceproviders, this means growing opportunities to participate in the financing of environmentalprojects or projects of benefit to the environment in close co-operation with multilateralbanks. CSG wants to tap into the opportunities in these business areas.

PRODUCT ECOLOGYFUTURE AND TRENDS

Electronic banking saves paper

Credit Suisse is Switzerland�s leadingprovider of electronic banking services(exchange of data by telephone, theInternet, phone banking etc.). As such, itis playing a pioneering role in showinghow banking transactions can be per-formed more efficiently but with a mini-mum of paper by using new media.Since mid-1998, around 500,000 trans-actions per month have been dealt withvia the Internet. Similarly, over 15% ofCredit Suisse�s securities trading ordersare issued electronically.


PRODUCT ECOLOGYANNEX: FLOW CHART FOR CHECKING CREDIT RISKS


Our company has stepped up its efforts in operational ecology even during the restructuring of CSG.Ourextended 1996/97 environmental performance evaluation for Credit Suisse Group (Switzerland) shows awelcome fall in paper consumption but a further rise in the consumption of power and heat. In addition,the evaluation revealed a number of areas where improvements could be made in the collection of data.These will be addressed in collaboration with our external building management contractor. One of thenext important steps must be to ensure that the environmental targets set for our contractual partners areadhered to and implemented.

OPERATIONAL ECOLOGYREFLECTED BY THE REORIENTATION

What is operational ecology?

Operational ecology is concerned with the environmental impact of a company�s business op-erations. In the case of a financial service provider such as CSG, the main focus is on highenergy and paper consumption.The aim of our endeavours in respect of operational ecology is to minimise the consumptionof resources through appropriate savings measures. This will enable us to substantially reduceour financial expenditure as well as our impact on the environment. For example, in 1996 theuse of videoconferencing as an alternative to business flights saved around one million airkilometres and resulted in savings of around CHF 750,000; there is still potential for furthersavings.As a management, control and monitoring instrument, operational ecology uses what isknown as environmental controlling. On the basis of the findings that emerge from the envi-ronmental performance evaluations, environmental objectives are defined and their implemen-tation is ensured. In this way, environmental controlling plays a central part in the environ-mental management system.

Ecology reflected by the reorganisation

Since the publication of our last environmental report in 1996, CSG has undergone severalmajor changes of significant environmental relevance. Following the reorientation of our bank-ing business on 1 January 1997, August 1997 saw CSG merge with Winterthur. This in-creased the size of our workforce and real estate holdings both within Switzerland and in par-ticular abroad.

Environmental performance evaluation of the reorientation process A separateenvironmental performance evaluation was prepared on the environmental repercussions ofthe reorientation of our banking business. In the process, we were able to calculate themedium-term expenditure incurred. The expenditure was roughly equivalent to 1% of the an-nual environmental impact generated by CSG. The restructuring process had less impact onthe environment than one week of ordinary banking operations. At this point in time, anystatement about the long-term impact of the restructuring process would be premature.The increase in changes of responsibilities and personnel, together with changes in thebranch network, have made it more difficult both to co-ordinate environmental managementand to collect environmental data.

Strengths

n Expansion of the environmental per-formance evaluation in terms ofbreadth and depth: extension of thesystem and improvement of method

n Reduction in paper consumption

Weaknesses

n Increased consumption of heat andelectricity

n Reorientation made data collectionand comparison more difficult


n Environmental controlling to be in-creasingly geared to energy savingmeasures

n Improved data management


OPERATIONAL ECOLOGYCO-OPERATION WITH OUR PARTNERS

Operational ecology: our environmental objectives*

Sector Savings target (1994 as baseline) Target to be achieved by

Electricity 10% reduction to 110 kWh/m² p.a. 2004Heat 10% reduction to 80 kWh/m² p.a.

3% from renewable energy sources 2004Water 15% reduction to 460 litres/m² p.a. 2004Traffic Consumption of less than 14 litres/100 km for goods vehicles

Consumption of less than 7 litres/100 km for passenger vehicles 2004Paper 15% reduction 2004

60% recycled grade 2004proportion of chlorine-bleached grade <5% 200415% recycling rate for copier paper 2004

* based on our energy guidelines, which are to be reviewed in 1999 and adapted as necessary

Outsourcing of the building service In the context of the restructuring process, anumber of � ecologically significant � technical functions were contracted out to externalfirms. Thus, from January 1998, our contractual partner Merkur Immobilien BewirtschaftungsAG (MIB AG) took over our building management operations, an area which we had previ-ously handled ourselves in Switzerland. To guarantee monitoring and control of operationalecology in the future, CSG needs to be able to rely on the co-operation of the building man-agement company. Under its contract, MIB AG has undertaken to steadily reduce energyconsumption levels and to actively co-operate in the implementation of the environmentaltargets through systematic environmental controlling, as well as by other means. MIB AG hastherefore contractually undertaken to comply with CSG�s strict environmental standards.These include the endorsement of our environmental policy and energy guidelines, thegradual establishment of MIB AG�s own certifiable Environmental Management System andopen communication and co-operation on environmental issues. A further focal point is thetraining of relevant personnel in environmentally-compatible behaviour.Since the summer of 1998, MIB AG has also been servicing properties occupied byWinterthur in Switzerland. This means that the same environmental requirements apply as forthe properties of the banking business units.

IT Services takes over computer systems In 1997, IT Services, which belongs toCSG, took over the management of our decentralised computer systems which consist ofaround 43,000 computers, 15,000 printers and 1,400 networks in Switzerland alone. Aswell as being responsible for installation and maintenance, IT Services also sees to theevaluation and disposal of equipment. To ensure that sound environmental procedures arefollowed IT Services, like MIB AG, is required to adhere to strict standards and liaiseregularly with our specialist environmental units.

Environmentally-aware catering partners CSG�s staff restaurants in Switzerland areoperated by several environmentally-aware catering firms. One of the firms in question is SV-Service, a pioneer in the field of environmentally-aware catering. SV-Service increasinglygives preference to seasonal Swiss produce obtained from monitored organic sources. AsSwitzerland�s biggest industrial caterer, it operates its own progressive Environmental Man-agement System and maintains close contact with CSG�s environmental specialists.


For further information, seelinks on page 46

OPERATIONAL ECOLOGYEXTENDED ENVIRONMENTAL PERFORMANCE EVALUATION

Environmental targets for storage and distribution Since 1997, Mühlebach AGLogistic has been in charge of the storage and distribution of CSG�s printed matter, officesupplies and advertising materials throughout Switzerland. The use of environmentally-soundstorage and transport facilities forms part of the contractual obligation, as does a packagingstrategy based on reusable containers and the systematic separation of waste. Drivers aresent on regular training courses to ensure that their driving techniques are optimised for fueleconomy.

Environmental performance evaluationof Credit Suisse Group (Switzerland) 1996/97

Corporate environmental performance evaluations are management tools that quantify thecompany�s own impact on the environment. They cover all environmentally-relevant flows ofmaterials and energy entering or leaving the company over a given period.The following details are taken from our report on the 1996/97 environmental performanceevaluation.

Extended system limit Our first environmental performance evaluation in 1994 covereda total of 30 Credit Suisse (CS) buildings in Zurich and Geneva (8,000 staff, 400,000 m² ofenergy reference area). They accounted for 60% of the energy reference area of the thenCredit Suisse (parent company). The second (1997/98) environmental performance evalua-tion of Credit Suisse Group Switzerland, covers the whole of CSG in Switzerland, with theexception of Winterthur (reference date 1.1.1997). This system covers around 470 sites withan energy reference area of 1,200,000 m² and 20,700 employees.

Fire extinguishing and cooling agents also covered Our first survey of stocks of fireextinguishing and cooling agents (halon and freons) at all our fixed installations brought tolight an accumulation of freon losses. Remedial measures have been initiated.

Environmental scarcity method For our evaluation we used the environmental scarcitymethod (EIP methodology) according to Braunschweig and Müller-Wenk.When collecting the data, an improvement in data quality was found to be both necessary andpossible in the waste disposal sector in particular. Appropriate steps have since been taken.

Changes since the 1994 environmental performance evaluation

As a result of the new corporate structure and the extended system limit of the environmentalperformance evaluation, direct comparisons between the 1994 and 1996 performance evalu-ations are not always appropriate. Nonetheless, certain trends are emerging.As a result of the expansion of our business activities and the increasing penetration of tech-nology into new areas, there was an increase in the consumption of electricity, heat and waterin absolute terms. The reduction in paper consumption is mainly attributable to steps taken toencourage the use of electronic media.The lion�s share of CSG�s direct environmental impact still stems from the provision and con-sumption of electricity and heat. Accordingly, our medium-term priorities in the field of opera-tional ecology focus on reducing these energy flows.


Overview of our analyses

Electricity consumption rising on account of increased use of technology In1996, our electricity consumption continued to rise in absolute terms, reaching 155 millionkWh. This is equivalent to the annual consumption of 28,000 average Swiss households.The main reason for the 17% rise compared with 1994 was a marked increase in IT memoryrequirements: between 1980 and 1996, memory capacity at our computer centres expanded270-fold.

Heat: networked systems cut costs In 1996, our bank�s heat consumption totalled116 million kWh. The slight increase is attributable to an expansion of floorspace occupied asa result of the merger with Swiss Volksbank and Neue Argauer Bank. As our floorspace ex-panded more than our heat consumption, our specific consumption rate fell by one third to97 kWh/m².The use of networked heating systems is enabling us to achieve significant annual savings inthe quantities of oil and gas we consume. As well as cutting emissions of air pollutants, thisalso reduces our expenditure on heating and air conditioning systems. The installation of acombined heat and power plant in the Uetlihof Centre in Zurich has enabled us to achieveannual savings of CHF 600,000.

Three quarters of travel above the clouds In 1996, we calculated the amount ofbusiness travel generated by all our Swiss sites for the first time. The total came to just under35 million km per year, or 1,700 km per employee. Air travel alone accounted for more than75% of the total. Our flights departing from Switzerland gave rise to emissions of 5,100tonnes of carbon dioxide (CO2), one of the atmospheric pollutants implicated in the green-house effect. The use of videoconferencing facilities enabled us to save around one millionair kilometres, as well as costs totalling CHF 750,000.The reorientation of our bank resulted in the relocation of several thousand jobs. We there-fore decided not to attempt to update our analysis of commuter traffic. Our 1994 studyshowed that our employees commute 47 million km per year, with public transport account-ing for 30 million km of the total.

Paper consumption cut by 10% In 1996, our paper consumption came to just under5,000 tonnes, which is equivalent to a 10% reduction compared with 1995. This fall is attrib-utable to the major expansion of electronic access to internal lists and documents (internalbank lists and continuous stationery account for over half our total paper consumption). Whilesubstituting electronic access for paper is reducing our paper consumption, it is leading to afurther increase in the amount of electricity we consume.

Waste: more transparency needed For the first time, total quantities of rubbish, paperand cardboard were calculated for all CSG buildings in Switzerland. In 1996, our sites gener-ated a total of around 6,000 tonnes of waste, or roughly 290 kg per employee. The slightincrease is partly attributable to the restructuring; branch closures involved disposing of ex-tensive stocks of materials.The targets set in our 1995-96 environmental report have not yet been achieved every-where. Action needs to be taken in terms of data collection and cost transparency and wewill be addressing this in co-operation with MIB AG.

Credit Suisse�s Uetlihof:�Nature reserve of the Swissbusiness world�

In June 1998, the Foundation for Natureand Business (Stiftung Natur und Wirt-schaft) awarded Credit Suisse�s Uetlihofcentre in Zurich the title of �Nature re-serve of the Swiss business world� inrecognition of the natural vegetationcover adorning its roofs and facades andthe landscaping of its grounds. Designedto approximate natural conditions asclosely as possible, the landscaping ofthe total of 77,000m² of green areasfeatures a small lake, several ponds andwildflower meadows. In designing theinterior courtyards, roofs and environs,care was taken to encourage the eco-logical coexistence of humans and indig-enous fauna and flora. Numerous nativespecies of birds can be observed at theUetlihof site. Twelve colonies of beesalso find abundant sources of foodamong the profusion of flowering plants.Several sheep graze on the meadows,eliminating the need for mowing.The Uetlihof site was awarded the City ofZurich�s Green Prize back in 1993.Further information can be found in thebrochure, �Semi-natural landscaping �the Uetlihof administrative centre�,Zurich.

OPERATIONAL ECOLOGYPAPER CONSUMPTION REDUCED


Key environmental figures for Credit Suisse Group (Switzerland) in 1996,based on the VfU standard

OPERATIONAL ECOLOGYOUR MEASURES AND OBJECTIVES

Future and trends

The co-ordination and responsibilities of the two operational ecology programmes run byCredit Suisse and Winterthur will be aligned on the new organisation. By sharing commonlogistics platforms, we aim to exploit as many synergies as possible. So far, no operationalecology organisation has been established for the many sites outside Switzerland, most ofwhich are small. In the longer term, in addition to the Swiss system, we also aim to includesites outside Switzerland that are relevant in terms of operational ecology. This plan affectsmainly Winterthur, which employs more personnel abroad than within Switzerland.

Reducing consumption of resources Our environmental aims envisage reducing ourconsumption of energy and resources for materials and services. We give preference to theuse of durable, upgradable materials and products and aim to increase recycling of the itemsused. To this end, when procuring materials, we not only examine their environmental com-patibility but also, increasingly, the manufacturer�s ecological commitment.

Key environmental figures � significance of comparisons

Differences in data quality From one bank to the next, key environmental figures differgreatly and exhibit considerable inconsistencies in terms of standards. The fact that compari-sons of key data do not take account of important background information on the bank con-cerned means there is room for improvement in terms of the significance of comparisons withexisting key figures. Such background information includes types of business activity, levels ofcomputerisation, sizes of computer centres and types of buildings.This was the conclusion that emerged from a comparison of the first set of key environmentaldata on 16 banks in the German-speaking countries reported on the basis of the VfU stand-ard (VfU = the Association for Environmental Management in Banks, Savings Banks and In-surance Companies). The figures were compared in a diploma dissertation written by ThomasFrei in 1997 at the Institute of Business Administration of the Swiss Federal Institute of Tech-nology (ETH) in Zurich.

emp. = employees


OPERATIONAL ECOLOGYINTERPRETATION OF KEY ENVIRONMENTAL FIGURES

VfU defines key figures for operational ecology The VfU has published guidelineson environmental reporting. In 1996, a working group agreed on a selection of 11 key fig-ures relating to operational ecology which express the environmental performance of financialservice providers. These key figures defined by the VfU relate solely to the field of opera-tional ecology. Key figures relating to product ecology (lending and investment business) ormanagement have not yet been defined. Meanwhile, a number of banks in German-speakingcountries have applied the VfU standard and collected corresponding environmental data inaccordance with the VfU guidelines.

Interpretation of key figures The study showed that comparisons of key figures withthose of other financial institutions (e.g. in terms of paper consumption) only revealed indica-tive information and trends. This indicative informationenables the plausibility of the key figures to be verified.Such comparisons allow banks to assess whether theirkey figures are within a reasonable range. The followingexample of paper consumption illustrates these possibili-ties.The chart opposite shows, for example, that CSG con-sumes paper on roughly the same scale as other bigbanks. All the smaller and medium-sized banks and sav-ings banks surveyed show a far smaller relative paperconsumption per employee (on average 130 kg/em-ployee). All banks within this group consume paper on thesame scale. One conclusion is that such comparisons areonly meaningful among banks of similar size and withsimilar business operations. It is difficult to apply suchcomparisons to the specialist banks since their businessactivities can differ widely. The nature of the business ac-tivity engaged in is therefore a very important factor. Thekey figures are not suitable as a basis for statements suchas �this bank is better than the others�.

The study has brought to light several deficiencies in key environmental figures:n Insufficient information on the origin of the key figures (understanding of system not uni-

versally guaranteed)n Cause and effect not apparentn Widely differing quality of data from one bank to the nextn Choice of reference value not ideal (among other things, very susceptible to system

changes)

When considering key figures, these shortcomings should be taken into account and appro-priate improvements aimed for. Moreover, key figures alone cannot completely cover thecomplex decisions in the field of environmental management. The quality of environmentalmanagement depends on making appropriate use of all management instruments.

0

50

100

150

200

250

300

350

A B C D E F G H I CSGCH

J K L M N

130 kg/emp.

260 kg/emp.

Smaller and medium-sized banks and savings banks in Germany Medium-sized banks and big banks in Switzerland Specialist banks

Difference 130 kg/emp.


COMMUNICATIONSGREATER USE OF ELECTRONIC MEDIA

Through direct contact with our internal and external partners, Credit Suisse Group strengthensenvironmental awareness. Through an exchange of experience and data, we also support theenvironmental efforts of the business and research communities. Because of this commitment,Credit Suisse Group is recognised by the public as an environmentally-aware company. In future,we shall be redoubling our training and communication efforts. These include our presence onthe Internet.

External communications and commitments

CSG is actively involved in numerous national and international bodies concerned with envi-ronmental protection, including the United Nations Environment Programme (UNEP) and theSwiss Bankers Association�s Working Group on the Environment. We organise events andlectures on environmentally-relevant topics such as environmental management and creditrisks for corporate customers. We also publish articles in specialist journals.Since the summer of 1998, we have been communicating via the Internet as well as inprinted form.

In contact with scientific bodies and environmental organisations CSG sup-ports scientific research by offering placements for practical work experience and for studentsstudying for diplomas or doctorates and by giving free access to its data. We value our linkswith environmental organisations and other interest groups.

Sponsorship and contributions

CSG does not regard its social and environmental commitment as sponsorship in the sense ofa marketing instrument but as a core component of its corporate culture. Our active involve-ment in environmental causes is not normally accompanied by explicit PR activities.Where CSG sponsors a project, it makes available its environmental expertise and facilitatesenvironmentally-compatible measures. Examples include the Swiss Bankers Association andUNEP checklists on environmental management in banks or the partial reimbursement oftravelling expenses incurred by persons travelling to the Swiss orienteering championships bypublic transport.

Strengths

n Use of the Internet for our internal andexternal communications

n Positive media response to our envi-ronmental activities

n Active involvement in environmentalbodies

Weaknesses

n Environmental awareness still insuffi-cient in certain areas


n Strengthen communication by use ofelectronic media

n Formulate and implement trainingconcept


We�re backing wind power In the context of its support for environmentally-friendlytechnologies, Winterthur provides support for Juvent SA. With its modern wind-power planton Mont Crosis in the Canton of Berne, Juvent SA has become the first company in Switzer-land to generate electricity from wind energy on a significant scale. Comprising three power-ful wind turbines with a maximum output of 600 kilowatts (kW) each, the plant generates anannual total of around 1.8 million kilowatt hours (kWh) of electricity under average wind con-ditions. This output is sufficient to meet the annual needs of around 600 households.As the supplier�s first major customer, Winterthur has committed itself to consuming 200,000kWh per year over the next ten years at an additional cost of CHF 30,000 per annum and tousing the power to supply electricity for its building in Neuchâtel. Given sufficient demand,the plan is to expand the wind-power plant. Juvent SA sells the electricity at cost price. Weare prepared to pay twice the usual electricity price for investment in this environmentally-friendly, renewable energy.

Internal communications

A company actively involved in environmental issues relies on its employees having a highlevel of environmental awareness. Our ecological aims can only be implemented andachieved if everyone is familiar with these aims, creating a corresponding corporate culture.The basis for such a culture is dialogue, together with regular information and training on thesubject of the environment. In our efforts, we encourage the individuals we are addressing toact in an environmentally-aware manner in their private lives as well.

Environmental Circle The steadily growing �Environmental Circle�, a forum for staffinterested in environmental issues, makes a key contribution toward achieving this aim. Itsmembers, who now number 1,300, receive information on environmental tips and issuesfrom the environmental management unit; events are also organised from time to time. Ouraim in setting up this informal network is to anchor environmental awareness on as broad abasis as possible.We also provide information in the form of articles in various staff magazines and externaltrade publications. In order to foster environmentally-compatible conduct in the workplace,we distribute copies of our environmental standards � recently issued in the form of a handybookmark � to all personnel.

Further training We attach importance to training our personnel in environmentally-soundbehaviour. To date, training events have been staged covering the areas of building and ma-terials management, catering and transport. New graduate recruits are provided with informa-tion explaining the impact of our business activities on the environment and are given tips onsound environmental conduct in the workplace. We also train our loan specialists to identifyenvironmental risks.We will be expanding our training strategy in order to strengthen our in-house training.

COMMUNICATIONFOSTERING ENVIRONMENTAL AWARENESS


COMMUNICATIONOUR ENVIRONMENTAL STANDPOINT

Our most important affiliations

National affiliations

n Swiss Bankers Association Working Group on Banks and the Environmentn Energy 2000 (energy saving programme of the Swiss Federal Government)n FHE (Fachgesellschaft für Haustechnik und Energie im Bauwesen � association for building technology and

energy in the construction sector)n IPB (Interessengemeinschaft privater professioneller Bauherren � association of private professional

builders; publishes regular recommendations for environmentally friendly building)n öbu (Schweizerische Vereinigung für ökologisch bewusste Unternehmensführung � Swiss association for

environmentally-aware corporate management)n SIA (Schweizerische Ingenieur- und Architektenverein � Swiss Society of Engineers and Architects)n Energy Model Zurich

International affiliations

n UNEP (United Nations Environment Programme)n Association for Environmental Management in Banks, Savings Banks and Insurance Companies

(VfU � Verein für Umweltmanagement in Banken, Sparkassen und Versicherungen e.V.)n ICC (International Chamber of Commerce)

Our environmental standpoint

CSG maintains contacts with authorities and associations. This enables us to introduce as-pects which are important for the financial sector into new standards at an early stage, as wellas allowing us to counter regulation which overshoots the mark.In principle, we are in favour of using economic instruments for ecological purposes. How-ever, the precondition is that such instruments should be environmentally justified, neutral intheir impact on foreign trade and government quotas, reasonable and amenable to planning.

Discriminating evaluation of environmental initiatives On the basis of such con-siderations, we are in favour of Switzerland�s proposed CO2 law in the framework of the envi-ronmental tax reform. This incentive tax is emission-related and encourages the use of envi-ronmentally-sound production methods. However, we reject the solar energy initiative and theenergy/environment initiative on the grounds that both involve resource taxes that put up thecost of manufacturing and place Switzerland at a disadvantage as a location for business.What is more, neither of these political initiatives are neutral in terms either of governmentquotas or of redistribution.As a major electricity consumer, CSG is in favour of the opening of the Swiss electricity mar-ket envisaged in the Swiss electricity market law. This liberalisation will lead to a reduction insubsidies and therefore in the long term to lower electricity prices that will increasingly incor-porate external costs (e.g. for environmental damage). It can therefore be assumed that re-newable forms of energy will become more competitive.

We are in favour of using emission certificates as an efficient market-economicinstrument of environmental policy. The introduction of such certificates should be amenableto planning, and the certificates must be issued in sufficient numbers. Any government in-come from the sale of certificates must be returned to consumers and companies (neutralityin terms of impact on government quotas).


COMMUNICATIONSPUBLICATIONS AND LITERATURE

Publications (see also page 46)

n Environmental Report 1997/98, CREDIT SUISSE GROUP, Zurich,1998n Umweltbericht 1997/98, CREDIT SUISSE GROUP, Zurich,1998n Rapport Environnemental 1997/98, CREDIT SUISSE GROUP, Zurich,1998n Rapporto Ambientale 1997/98, CREDIT SUISSE GROUP, Zurich,1998

n Environmental Report 1995/96 (four-page summary), CREDIT SUISSE, Zurich, 1996n Umweltbericht 1995/96 Schweizerische Kreditanstalt, CREDIT SUISSE, Zurich, 1996n Rapport Environnemental 1995/96, CREDIT SUISSE, Zurich, 1996

n Eco Performance Switzerland 1996/97, CREDIT SUISSE GROUP, Zurich, 1998n Ökobilanz Schweiz 1996/97, CREDIT SUISSE GROUP, Zurich ,1998n Écobilan Suisse 1996/97, CREDIT SUISSE GROUP, Zurich, 1998n Ecobilancio Svizzera 1996/97, CREDIT SUISSE GROUP, Zurich, 1998

n Ökobilanz 1994 SKA Zürich, CREDIT SUISSE, Zurich, 1995n Ecobilan 1994 CS Genève, CREDIT SUISSE, Geneva, 1995

n Our Guiding Principles on Energy Use, CREDIT SUISSE, Zurich, 1995n Energieleitbild, CREDIT SUISSE, Zurich, 1995n Charte énergétique du Groupe CS, Geneva, 1995n Direttive energetiche del Gruppo CS, Zurich, 1995

Literature

n Bewertung in Ökobilanzen mit der Methode der ökologischen Knappheit � Ökofaktoren1997 (�Evaluation in eco performances using the environmental scarcity method�; notavailable in English); BUWAL-Schriftenreihe Umwelt Nr. 297, Berne 1998

n Association for Environmental Management in Banks, Saving Banks and Insurance Com-panies (Verein für Umweltmanagement in Banken, Sparkassen und Versicherungen e.V.[VfU]), Environmental Reporting of Financial Service Providers. A guide to content, struc-ture and performance ratios of environmental reports for banks and savings banks,Augsburg and Bonn, 1996


GLOSSARYDEFINITION AND EXPLANATION OF TERMS

Compliance with environmental law

Adherence to relevant environmental laws and regulations.

Convertible bond

A bond which can be converted into a fixed number of equity securities within a specifiedperiod of time at a specific price.

Coupon

Entitlement to annual interest on bonds.

Due diligence

Examination of risks of environmental liability and/or environmental compliance in the contextof the purchase or sale of a new company or of parts of a company. An examination of duediligence also encompasses essential measures to reduce environmental risks or to containthem at a low level.

Eco-efficiency

We define eco-efficiency as the systematic focus on a mode of production that avoids deplet-ing resources and reduces environmental impact as far as possible. Criteria for identifyingeco-efficient companies include:n Energy-intensive and material-intensive nature of processes, emissionsn Recyclabilityn Product service lifen Use of renewable energy sourcesEco-efficiency is a measure of a company�s environmental as well as its economic impact.The aim of environmentally-compatible economic behaviour must be to maximise commercialadded value while minimising the environmental impact.

Emission certificates

Negotiable certificates which grant the owner the right to release a specific quantity of pollut-ants into the environment. If the amount of pollutants emitted exceeds the amount specified,additional certificates must be bought on the market.

Energy reference area (ERA)

The area of a property which is heated or cooled. Corresponds to 85% of the gross floor areaexcluding lift shafts, basement areas, etc.


Environmental controlling

Environmental controlling is a key component of the environmental management system. Itincludes collecting data, preparing and implementing measures and achieving objectives.

Environmental performance evaluation

Corporate environmental performance evaluations are management instruments that quantifythe environmental impact generated by a company. They cover all environmentally-relevantflows of materials and energy entering or leaving the company over a given period. Throughenvironmental controlling, the environmental performance evaluation helps to identify poten-tial for improvement and cut costs.

ICC Charter

Declaration of sustainability of the International Chamber of Commerce in Paris

ISO 14001

The International Organization for Standardization (ISO) is a global organisation of nationalstandards institutions. ISO standards can be described as globally recognised standards forvoluntary self-monitoring. The ISO 14000ff standards series shows companies how to imple-ment an Environmental Management System and seeks �to provide organisations with thecomponents of an effective Environmental Management System which can be combined withother management requirements to help such organisations achieve both ecological and eco-nomic objectives� (cf. ISO DIN EN 14001, 1996). Further information on ISO 14001 can beobtained using the website links on page 46.

MIB AG

Merkur Immobilien Bewirtschaftungs AG, building management contractor engaged by CSG.

Sustainability

Sustainability characterises processes that maintain or enhance business value creation with-out jeopardising economic, ecological or social systems in the longer term. Sustainability is aforward-looking concept, in which consumer aspirations for a better quality of life are satis-fied without depleting resources.

UNEP

United Nations Environment Programme. For link to UNEP homepage, see page 46.

GLOSSARYDEFINITION AND EXPLANATION OF TERMS


LINKSTO ENVIRONMENT-RELATED INTERNET PAGES

Environmental Performance Evaluation Credit Suisse Group (Switzerland) 1996/97

Environmental Performance Evaluation: http://www.csg.ch/eco_performance_97

Information on Credit Suisse Equity Fund (Lux) Eco Efficiency

http://www.csam.com/funds.html

Information on the performance of the fund can be found at:

http://www.finanzplatz.ch orhttp://www.swissquote.ch

Information on the Fellowship Trust of Credit Suisse Asset Management Funds (UK):

http://www.csamfunds.co.uk

Homepage of Winterthur Insurance

http://www.winterthur.com

Information on ISO 14001

The structure of the series of standards is given on the ISO homepage http://www.iso.ch.Lists of certified companies can be found at http://www.iso14001.com orhttp://www.unisg.ch/~iwoe/index.html

UNEP homepage

http://www.unep.ch

Homepage of Sustainable Asset Management AG

http://www.samswiss.ch

http://www.credit-suisse.com/eco_performance_97

http://www.csam.com

http://www.finanzplatz.ch

http://www.swissquote.ch

http://www.csamfunds.co.uk

http://www.winterthur.com

http://www.iso.ch

http://www.ISO14001.com

http://www.unisg.ch

http://www.unep.ch

http://www.samswiss.ch


INFORMATIONCONTACTS

For further information and to order additional copies:

Credit SuisseEnvironmental Management, CCUP.O. Box 100CH-8070 ZurichTel. ++ 41 -(0)1-333 73 33Fax ++ 41 -(0)1-333 76 33e-mail: [email protected]: http://www.csg.ch/ecoreport98

Project team

Otti Bisang, Patrik Burri, Thomas Frei, Nick Marolf, Bernd Schanzenbächer(Environmental Management)With the invaluable support of all our environmentally-relevant departments.

CC

UE

11.9

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Validation by SGS-ICS AG

�We have verified the correctness of thestatements in the 1998 environmentalreport of Credit Suisse Group and,where necessary, have requested thatproof be presented.We hereby confirm that the report hasbeen prepared with the necessary care,that its contents are correct, that it de-scribes the essential aspects of the Envi-ronmental Management System atCredit Suisse Group and that it reflectsthe Group�s actual practices and proce-dures.�Elvira Bieri and Dr Franz HeinzerZurich, 19 October 1998

Less waste, more information: if you print this report out, we would be grateful if you couldpass it on to others or circulate it within your office. You are welcome to copy or quote fromthis report: we would appreciate notification or a specimen copy of your article.For reasons of convenience (faster downloading), we have not incorporated graphics in thisreport.

http://www.credit-suisse.com/ecoreport98