Approach & Reporting Challenges & responses
Credit Suisse was faced with numerous challenges in 2018.
Challenge: The Paris Agreement is considered a milestone in the global effort to mitigate the effects of climate change. It aims to limit the rise in global temperature to well below 2° Celsius above pre-industrial levels and has put in place a structure through which countries have committed to implement transition plans to lower their respective greenhouse gas emissions. Since the agreement entered into force in 2016, climate change has continued to be an important issue in both the public and private sectors. How is Credit Suisse addressing the challenge of climate change?
Response: At Credit Suisse, we believe that our role as a financial intermediary is to act as a reliable partner in the transition to a world that is less dependent on fossil fuels and to a low-carbon and climate-resilient economy. In addition to operating on a greenhouse gas neutral basis at all our locations around the globe since 2010, we have continuously strengthened our activities in the area of green finance.
Our principles and our approach to climate protection are set out in our Statement on Climate Change, and they are also reflected in our Group-wide, standardized Reputational Risk Review Process. Within that process, we evaluate factors such as a company’s greenhouse gas footprint or its energy efficiency targets, while some of our policies and guidelines require clients to have a plan in place to deal with climate change risks. Furthermore, our sector policies and guidelines include restrictions on the financing of new mining projects to extract thermal coal and of new coal-fired power plants.
In 2018, we established a climate change program with the overall goal of addressing the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD). In that context, we have worked to formalize climate-related governance and definitions in our key policies and risk taxonomy and to define the principles for climate risk strategy and management. We expect our TCFD adoption efforts to provide us with further guidance for the transition to a world that progressively minimizes its dependency on fossil fuels. Moreover, we are working with other banks to develop methodologies for the alignment of credit portfolios with the Paris Agreement.
Challenge: The definitive Basel III regulations were finalized in December 2017. The Basel Committee on Banking Supervision foresees their entry into force in 2022, with transitional periods for certain sectors. The consistent implementation of the agreed standard across different jurisdictions will be crucial to achieve the objective of the capital reforms and to ensure a level playing field. What steps did Credit Suisse take to help tackle this challenge?
Response: In 2018, Credit Suisse – together with other relevant stakeholders – launched a constructive high level dialogue with Swiss regulators and policymakers regarding the implementation of the new Basel III standard in Switzerland. As part of these efforts, Credit Suisse has actively contributed to the development of the implementation process in Switzerland. One of the priorities discussed so far is the objective of harmonized implementation with other comparable financial centers, from both a content and timing perspective. With regard to the implementation in other jurisdictions, Credit Suisse has – together with key policymakers – strongly emphasized the importance of a harmonized implementation approach and level playing field. Through trade associations and direct contacts, Credit Suisse has made the case against the fragmentation of global standards, including by means of a high-level conference in Brussels with key officials that included fact-based reports and analysis on the risks and costs of such an approach.
Challenge: 2018 marked the 70th anniversary of the Universal Declaration of Human Rights that was adopted by the United Nations in 1948. An important point of reference in this area is the UN Guiding Principles on Business and Human Rights, which marked a milestone in the clarification of corporate responsibility for human rights when they were introduced in 2011. What is Credit Suisse’s approach to potential human rights issues in its business activities and client relationships?
Response: We strive to assume our responsibilities in the area of human rights in accordance with the International Bill of Human Rights. We are a member of the UN Global Compact, and we actively participate in the Thun Group that focuses on the integration of the UN Guiding Principles on Business and Human Rights into the policies and practices of banking institutions. Our Statement on Human Rights describes the basis of our responsibility to respect human rights and the approaches, processes and tools we use to address this responsibility. Equally, we expect our business partners to recognize and uphold human rights, as stated in our Supplier Code of Conduct.
Credit Suisse’s most direct link to human rights issues is in our working relationship with our employees, and this is consequently the area in which we believe we can exercise the greatest influence. In addition, the provision of certain financial services may be linked to negative human rights impacts. While companies operating in sensitive sectors frequently play a key economic role in the global supply of energy and commodities and as an employer, the activities of these companies can, in some cases, have a significant impact on local or indigenous communities. In that context, the rights of indigenous communities may not be sufficiently protected by a state’s laws and practices. We apply particular scrutiny when there is credible evidence that the proceeds of a transaction are used for activities which may negatively impact an area used or traditionally claimed by local or indigenous communities.
Using our Reputational Risk Review Process, we perform detailed reviews of business activities and transactions that are sensitive from a human rights perspective. We apply our internal sector-specific policies that include aspects such as the protection of the health and safety of company employees and surrounding communities as well as a commitment to respect the human rights of local populations. Furthermore, to take account of differing viewpoints, we engage in an ongoing dialogue with NGOs and other key stakeholders. For example, our participation in the Advisory Group to the OECD Responsible Business Conduct in the Financial Sector project contributes to the development of best practices for human rights and environmental due diligence.
Challenge: There is a clear need to access new sources of energy, raw materials, and clean technologies to make more balanced and sustainable use of the world’s natural resources. Investments that support environmentally sustainable development – a sector known as green finance – are thus growing in importance and scale. How does Credit Suisse contribute to green finance?
Response: Our green finance solutions cover a wide range of asset classes designed to positively impact the transition to a low-carbon and climate-resilient economy, drawing upon the expertise of various specialist departments across our divisions. Our offering in the area of wealth management, for example, comprises a number of funds focused on sustainability, green bond investments and sustainable real estate as well as products and services in conservation finance. In investment banking, we provide advice for buyside and sellside clients in mergers and acquisitions, project and corporate finance, as well as debt and equity underwriting of public offerings and private placements. Credit Suisse actively supports clean and renewable energy businesses and, until the end of 2018, had been involved in over 110 transactions in this field with a value of more than USD 94 billion since 2010. Furthermore, we supported clients on a number of green bond issuances in 2018. In our Global Markets division, Credit Suisse’s HOLT team is working on incorporating data on carbon emissions into its equity research platform, with the aim of allowing investors to assess carbon intensity and carbon-adjusted returns in conjunction with operating performance. Furthermore, Credit Suisse Global Real Estate takes account of sustainability criteria in the management and development of the properties within our various real estate products. Finally, Credit Suisse Energy Infrastructure Partners, an investment manager specialized in investments in the European energy sector, focuses on direct investments in the capital-intensive elements of the value chain, such as energy transmission, generation, storage and efficiency.
Challenge: The coming decade is expected to see a wealth transfer of around USD 30 trillion, with millennials set to inherit a large portion of this amount. This next generation of investors has been found to assign greater importance to the alignment of their investment portfolio with their personal values and ESG considerations. How is Credit Suisse addressing this shift of focus?
Response: At Credit Suisse, we want to be close to our current and future clients and fulfill their needs. According to our research, more than 9 in 10 millennials state that social impact is key to their investment decisions. We therefore offer a broad range of products and services that give our clients the option to align their investments with their values. We strive to consistently expand our offering in this space and find ways to strengthen the infrastructure of the market for sustainable and impact investment products and services. As an example of our efforts to create new products and services that aim to help younger investors reach this goal, we partnered with PG Impact Investments in 2018 to launch an offering that aims to improve the lives of underserved individuals by addressing societal challenges while generating financial returns, with a global strategy that focuses on emerging markets in particular. In Asia, our partnership with RobecoSAM saw the launch of the RobecoSAM Smart Mobility Strategy, which focuses on the electric vehicles value chain. Furthermore, we hosted our first impact roundtable on marine conservation and partnered with the One Young World Summit, where young leaders meet to develop solutions to the world’s most pressing issues.
Challenge: How does Credit Suisse help to tackle social challenges such as youth unemployment?
Response: Credit Suisse is a financial partner of the umbrella association Check Your Chance, which we launched in 2015 together with the SVC Foundation for Entrepreneurship and six Swiss non-profit organizations. Check Your Chance, which is also supported by the Swiss State Secretariat for Economic Affairs (SECO), is continuing the successful work of Credit Suisse’s Youth Unemployment Initiative and is an important partner for our bank in the area of youth development.
In 2018, Check Your Chance welcomed two new members and now represents a total of 13 non-profit organizations. During the year, they provided assistance to around 3,100 young adults who were unable to find first-time employment after completing an apprenticeship or finishing a degree or who had not yet obtained initial professional training. Check Your Chance intervenes at an early stage to offer them targeted support – including providing advice on choosing a career or completing job applications. In this way, the association can help young people to avoid the financial and social challenges of long-term unemployment. Check Your Chance also offers 0800 GO4JOB, the first national helpline for young people who are finding it difficult to enter the world of work. Parents, teachers and other individuals who want to help these young people can also obtain support from 0800 GO4JOB / 0800 464 562.
More information is available at: check-your-chance.ch
Challenge: How does Credit Suisse ensure that its social commitments reflect evolving social needs and changes within the financial services industry?
Response: In our rapidly changing society and industry, we not only adapt to evolving requirements but also aim to play an active role in shaping them at an operational level and through specific programs. For example, this means identifying trends and concerns at an early stage, designing our programs accordingly and fostering thought leadership on key topics such as financial expertise.
In 2018, we completed a thought leadership research project as part of our Financial Education for Girls program in order to better understand and articulate the contribution that financial education makes to girls’ economic empowerment and how to design more effective training programs. The project included a global review of the impact that financial education has on girls’ economic empowerment, and was accompanied by four country case studies that helped us to understand and address how to be fully effective in empowering girls economically in different contexts. Our findings also allowed us to further strengthen our programs and to advance knowledge-sharing in this area. Together with the Asian Development Bank, we published the research report "Inclusive Business Financing" that examines opportunities to finance sustainable companies in developing countries and emerging markets. By establishing local value chains, inclusive businesses in these countries can help to create long-term solutions to a series of interrelated problems such as poverty and a lack of financial inclusion.
At an operational level, we expanded the regional Corporate Citizenship team in the US in 2018 to our location in Raleigh, North Carolina, in order to better support its work. Since November 2018, we have offered our employees in Switzerland the opportunity to support charities and launch their own fundraising campaigns through the crowdfunding platform Copalana – Credit Suisse’s new employee-designed portal to collect donations.
Challenge: Ensuring continuous commitment and engagement of the workforce throughout the restructuring phase.
Response: We continued our effort within each division and function to lead an ongoing dialogue with our employees, focused on our strategy, the Conduct and Ethics Standards and the way we interact with internal and external stakeholders. In addition, we evolved our survey effort to regularly measure employee engagement, resulting in an encouraging engagement score of 90% positive responses in 2018.
Challenge: The preservation of the world’s natural habitats is a vital challenge. The UN Sustainable Development Goal 15 ("life on land") aims to protect, restore and promote the sustainable use of terrestrial ecosystems, while SDG 14 ("life below water") focuses on conserving and sustainably using the oceans, seas and marine resources. How does Credit Suisse contribute to the achievement of these goals?
Response: Credit Suisse addresses the issues of environmental sustainability and sustainable land use in a variety of ways. In order to consider biodiversity related aspects in our risk management processes, we have incorporated this topic into our sector-specific policies and guidelines. Our policy requirements for the forestry and agribusiness industry are aligned with relevant sustainability initiatives such as the Roundtable on Sustainable Palm Oil (RSPO) – of which we are a member – and the Forest Stewardship Council (FSC). To promote good forestry and agribusiness practices and to discourage net forest conversion, our policies also include restrictions of financing activities related to High Conservation Value Forests as well as provisions for the particular scrutiny of peatland operations and the prohibition of financial services for operations in protected areas such as UNESCO World Heritage sites. We continue to engage with key stakeholders on defining ways for the financial industry to contribute to preserving biodiversity and the world’s natural habitats.