credit-suisse Environmental Report 1997/1998 Unabridged version

NOVEMBER 1998 CREDIT GROUP SUISSE ENVIRONMENTAL REPORT 1997/98 Unabridged version 7.12.1998 http://www.csg.ch/ecoreport98

CONTENTS ALL THE TOPICS COVERED IN OUR REPORT FOREWORD Page 3 PORTRAIT OF CREDIT SUISSE GROUP 4 Bank in transition 4 Credit Suisse Group and the environment 5 System limit of this report 5 Key figures 5 ENVIRONMENTAL MANAGEMENT 6 Environmental policy 7 Planning 10 Implementation 13 Milestones 14 Monitoring 16 Benefits 17 Communication 18 Future and trends 19 PRODUCT ECOLOGY 20 Environmental risks are business risks 21 Environmental risks associated with the granting of loans and with real estate business 22 Environmental risks relating to project financing 23 Environmental risks in relation to third-party liability and property insurance and real estate business 23 Risk management in the environmental sector environmental liability 25 Environmental aspects of investment business 26 Eco Efficiency 26 Fellowship Trust 28 Sustainable Performance Group goes public 29 Niche products in the environmental sector 30 WinCAT catastrophe bond (Cat bond) 30 Energy contracting 30 Recycling of car components at Winterthur 31 Future and trends 32 Annex: Flow chart for checking credit risks 33 OPERATIONAL ECOLOGY 34 Ecology reflected by the reorientation 34 Environmental performance evaluation of Credit Suisse Group (Switzerland) 1996/97 36 Overview of our analyses 37 Future and trends 38 Key environmental figures significance of comparisons 38 COMMUNICATIONS 40 External communications and commitments 40 Sponsorship and contributions 40 Internal communications 41 Our environmental standpoint 42 Our most important affiliations 42 Publications and literature 43 GLOSSARY 44 LINKS TO ENVIRONMENT-RELATED INTERNET PAGES 46 INFORMATION AND CONTACTS 47 Environmental Report 1997/98 Credit Suisse Group Page 2

FOREWORD CONTINUING COMMITMENT TO ENVIRONMENTAL PROTECTION Dear Reader, In our second environmental report, we provide our staff, customers and shareholders, as well as ecologically-oriented investors and interested members of the public, with information on our commitment to the environment. In April 1997 we were awarded the ISO 14001 environmental certificate for our Environmental Management System at our Swiss bank sites. As the first Swiss bank and the first major bank anywhere in the world to receive environmental certification we know that this distinction is helping to strengthen our good reputation among our stakeholders. CSG is one of the first financial service providers to have committed itself to comprehensive environmental protection and we want to continue to play a pioneering role in the future. Our aim is to find ways of integrating environmental considerations into our banking and insurance business. Having already achieved a good number of successes in the field of operational ecology, we shall increasingly be turning our attention to product ecology and the new risks and opportunities that exist in the field of climate change. We want to utilise the major growth potential that exists in the field of ecologically-oriented asset management. The very good performance of our two environmental funds Eco Efficiency and Fellowship Trust shows that we are on the right track in this respect. A special challenge that we need to address is the evaluation of ecological risks in the context of project financing. As regards expanding our Environmental Management System and introducing new cost-cut- Our strengths, weaknesses ting measures, we shall increasingly focus on our major sites outside Switzerland as well. Ex- and near-term objectives perience has shown that efficient use of energy and materials can also result in lower costs. To give you a quick overview, a text A process of transformation is taking place not just within Credit Suisse Group (CSG), but box in the margin of each chapter throughout the whole media landscape. We have therefore decided to break new ground with will provide a brief summary of our our environmental report: in addition to this electronic version of the unabridged text, we are strengths, weaknesses and near- also publishing a 12-page summary in English, French, German and Italian. As well as saving term objectives in the area in ques- paper, this approach also ensures that you always have access to our most up-to-date infor- tion. mation. Environmental protection is an ongoing process. This report tells you about our successes to date and our ambitious targets. We would like to thank everyone who has helped produce this environmental report. We would also be interested to hear your views and constructive criti- cisms; we look forward to your feedback. Lukas Mühlemann Peter Lienhart Chief Executive Officer of Member of the CS Executive Board Credit Suisse Group Environmental Officer of CSG Environmental Report 1997/98 Credit Suisse Group Page 3

PORTRAIT CREDIT SUISSE GROUP Credit Suisse Group (CSG) is a global financial services company offering a comprehensive range of banking and insurance products. Represented on all continents and in all major financial centres, it comprises four banking business units and one insurance business unit, each of which is geared to specific customer groups and markets: Credit Suisse (CS) Corporate and individual customer banking in Switzerland Credit Suisse Private Banking (CSPB) Services for Swiss and international private investors Credit Suisse First Boston (CSFB) Global investment banking Credit Suisse Asset Management (CSAM) Services for institutional investors worldwide Winterthur Insurance Global insurance business Bank in transition Since it published its first environmental report in 1996, Credit Suisse Group has undergone a fundamental change. On 1 January 1997, CS Holding, as it was then known - and which consisted 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 environmental impact of the restructuring revealed that in the medium term the quantitatively measurable impact was roughly equivalent to that of one week of normal banking operations. Credit Suisse Group merged with Winterthur Insurance in the autumn of 1997, although Winterthur remains an operationally independent insurance company. In the context of the restructuring process, various operations with an environmental impact were outsourced to external contractors subject to agreements laying down ecological con- straints; these operations include, in particular, building management and storage and distribution in the material management sector. CSG organisation chart: position as at 1 January 1998. Insurance sites abroad only include national and company head offices Environmental Report 1997/98 Credit Suisse Group Page 4

PORTRAIT OUR KEY FIGURES Credit Suisse Group and the environment About 20 years ago, an Environmental Management System (EMS) was set up in the various companies comprising what is today Credit Suisse Group. As part of the reorientation of the Group, it was decided to use the EMS of Credit Suisse the most sophisticated in the Group at the time for the entire CSG. The Environmental Management System of the Swiss banking sites is certified to ISO 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 environmental risks when granting credit or insurance cover. Increasingly, major earnings potential and 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 including Winterthur. The environmental performance evaluation referred to in the operational ecology section covers CSGs banking sites in Switzerland and does not include Winterthur (reference date 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 m Annual 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 Environmental Report 1997/98 Credit Suisse Group Page 5

ENVIRONMENTAL MANAGEMENT CERTIFIED TO ISO 1400 In April 1997, Credit Suisse Group became the first Swiss bank and the first major bank anywhere in the world to be awarded the ISO standard 14001 environmental certificate. The certification process provides independent confirmation of the fact that the Environmental Management System complies with this standard and that ongoing improvement in environmental performance has been provided for. This was also confirmed by the first control audit conducted in June 1998. Our EMS will be steadily expanded and extended along the lines of a modular system. The environmental certificate paves the way for our inclusion in portfolios of environmentally-oriented investors. Along with cost-savings and risk reductions, this represents the added value which we have created for our shareholders by taking account of environmental considerations. The signing of the UNEP statements on the environment for both financial institutions and the insurance industry confirms this stance. The main aims of environmental management An Environmental Management System (EMS) conforming to ISO 14001 is designed to achieve the following objectives: Compliance with all relevant environmental laws and regulations n Commitment to the steady improvement of corporate environmental performance through n the formulation and implementation of defined objectives Steady improvement of corporate environmental performance of CSG Environmental Report 1997/98 Credit Suisse Group Page 6

ENVIRONMENTAL MANAGEMENT BASIC FEATURES OF OUR ENVIRONMENTAL POLICY The EMS is a feedback loop designed to achieve ongoing improvement. The various phases of the loop can be subdivided into environmental policy, planning, implementation, monitoring (certification, internal audits and review by senior management), as shown in the diagram on page 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 priority assigned to environmental protection within CSG, as well as representing a commitment to environmental protection vis-à-vis personnel, customers (private and corporate alike) and other stakeholders. Some of the important functions required of environmental policy are: To underline the importance that CSG attaches to environmental protection n Commitment to observe relevant environmental legislation n For further information on UNEP, Commitment to continuous improvement of environmental performance n see links on page 46 To take account of the demands of internal and external stakeholders n Environmental policy based on the UNEP statements for financial service providers In signing the UNEP statements for financial institutions and the insurance industry, CSG has committed itself to the systematic incorporation of environmental considerations into all areas of its business activities. In 1992, the then Credit Suisse became the first signatory of the UNEP Statement by Financial Institutions and in 1995, Winterthur signed the UNEP Statement by the Insurance Industry. The signatories (110 Strengths banks + 70 insurers by May 1998) endorse the principles laid down in the two statements and strive to promote environmental interests and sustainable development in their business ISO 14001 certification of all CSGs n policies and operations. Swiss banking sites since April 1997 Environmental policy extended to n Review of environmental policy In the autumn of 1998, our environmental policy was Winterthur updated and approved by the Chief Executive Officer of CSG. Key changes are the inclusion of Winterthur and the commitment to remaining environmentally certifiable. Maintenance of Outsourcing: ecological targets n conformity with environmental legislation was included as an explicit goal. agreed The environmental policy will be reviewed every three years, at the latest in the autumn of 2001. Weaknesses The text of the environmental policy is reproduced on the following two pages. Systematic environmental manage- n ment so far only introduced in Swit- zerland Organisational structures and pro- n cedures in environmental management still tied strongly to specific individuals Next steps / objectives Maintenance of eligibility for certifica- n tion Extension of Environmental Manage- n ment System to sites outside Switzer- land and subsidiaries Environmental Report 1997/98 Credit Suisse Group Page 7

ENVIRONMENTAL MANAGEMENT OUR ENVIRONMENTAL POLICY 1. Corporate leadership and management We are actively committed to environ- Environmental mission mental protection. Our commitment stems from the belief that our future depends on the statement / objectives conservation of natural resources. We support efforts to protect the envi- We strive to be among the most progressive companies in terms of environmental manage- ronment and ease pressure on natural ment and we maintain an environmental management system in compliance with the relevant resources. By acting in an environmen- standards. We always seek to use the most ecologically sound technology wherever this is tally responsible fashion we wish to economically viable. We are committed to satisfying the regional, national and international contribute to sustainability and there- environmental standards applicable to our business operations and services and our commit- fore create added value for our comments under the UNEP and ICC Declarations. We use a systematic eco-monitoring strategy pany, our customers and the environ- to manage, evaluate and document the progress of our work. ment. 2. Human resources work and organisation All employees of our bank are responsible for protection of the environment in their particular area of activity. They are supported by internal or external experts. We take measures to ensure that staff recognise their ecological responsibility and act accordingly; activities which have an impact on the environment should also be assessed from the ecological point of view. 3. Communications and marketing Our bank is an environmentally conscious company. We therefore conduct an open dialogue both inside the company and outside. Our environmental data are accessible. We co-operate actively with external environmental organisations. Meeting our ecological responsibilities forms part of our strategy to secure long-term earnings and sustainable corporate development. 4. Banking and insurance products We aim to include environmental considerations in existing and new products and services in order to avoid ecological risks. We take account of such risks in evaluating lending and insurance transactions and provide support for our clients in dealing with risks and claims. Moreover, we aim to identify and avoid risks likely to harm the reputation of our institute. We are open to the development of new banking and insurance instruments for assessing ecological opportunities and risks and support research in this area. We promote efforts to demonstrate environmental costs and benefits and to evaluate ecological aspects in stockmarket analysis, both through our own developments and through active co-operation in research groups. Environmental Report 1997/98 Credit Suisse Group Page 8

ENVIRONMENTAL MANAGEMENT OUR ENVIRONMENTAL POLICY 5. Production and operations We ensure our high environmental and safety standards by continuously improving our environmental performance. Both in back- office operations and in the production process, we are committed to ensuring that our services are performed in the safest and most environmentally friendly manner possible. We closely involve our procurement, management and logistics partners. We place particular 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 consumption, emissions, waste and environmental risks, we are paving the way for continuous improvements. We take measures to prevent environmentally harmful accidents and to contain the potential repercussions. 6. Infrastructure and facilities All available environmental data on design, materials, operational matters and energy consumption are taken into account in the planning and construction of new premises and facilities. We involve our contractors and suppliers in our efforts to protect the environment in order to ensure that they apply our environmental standards and codes of practice. In this context, we request information on potentially harmful building materials and other substances and on the impact of products supplied to us. 7. Implementation of the environmental policy To implement the environmental policy, we continue to pursue our internal corporate process aimed at promoting environmentally conscious behaviour at all levels. We attach great importance to the environmental policy being taken into account in all environmentally relevant decisions. Lukas Mühlemann Peter Lienhart Chief Executive Officer of Member of the Executive Board Credit Suisse Credit Suisse Group Environment Officer of Credit Suisse Group The current environmental policy was approved on 27 November 1998. It will be reviewed at least every three years and adapted where necessary. Environmental Report 1997/98 Credit Suisse Group Page 9

ENVIRONMENTAL MANAGEMENT PLANNING 2 Planning Dealing with the restructuring process and corresponding system changes The operations of a global financial services group involve a wide range of environmental considerations. CSGs ever stronger and more global network is making the environmental sphere more complex. Piecemeal approaches to improving environmental performance are no longer 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 and system changes. Outsourcing measures are attributable to CSGs concentration on its core business. However, the reorientation is also of environmental relevance. The following important services have been outsourced: Services Contractor Building management MIB AG n Decentralised IT systems IT Services n Catering Amongst others SV-Service n (CSGs biggest catering contractor) Storage and distribution of office supplies, Mühlebach AG Logistic n 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 and agreements were concluded which commit the contractors MIB AG, IT Services, SV-Service and Mühlebach AG Logistic to continuous improvement of their environmental performance and to compliance with CSGs strict environmental standards. Among other things, these contractors are required to endorse CSGs environmental policy and energy guidelines and to establish their own environmental management system. Open communication and co-operation on environmental issues plays an important part in this. Whenever any service was contracted out, an important objective was to enable CSG to influence environmentally-relevant decisions taken by the contractors concerned. The environmental standard of the outsourced services was to be maintained or improved. Through its contracts and agreements, CSG is still able to exert influence over environmental matters and its business partners benefit from CSGs experience of environmental management. Reform of environmental organisation of CSG Within CSG, environmental activities are co-ordinated by the environmental management unit. Focal points include maintaining an Environmental Management System eligible for certification through the use of environmental controlling and environmental performance evaluations and internal and external communication by means of environmental reports and the drafting of statements. Specific technical responsibility and the implementation of environmental measures are largely matters for the various line and specialist units; a number of full-time specialists are employed both in the Environmental Risk Unit in the Credit Management area of Credit Suisse and in Winterthurs environmental unit for third-party liability risk. CSG also has its own specialist units for energy/building ecology, safety, operational ecology and ergonomics. In addition, in the fields of cleaning/waste disposal and catering, among other sectors, we can count on the specialists of the partner firms mentioned above. In a number of areas with an environmental impact, we can also turn to specific contact persons responsible for environmental issues. Environmental Report 1997/98 Credit Suisse Group Page 10

ENVIRONMENTAL MANAGEMENT PLANNING In the field of environmental investment, which is of increasing interest and at the same time complex, CSG can rely on close co-operation with the Zurich-based company Sustainable Asset Management AG. The whole environmental sector is controlled by the Environmental Executive Board, which handles strategic and business policy tasks. Chaired by CSGs Environmental Officer, the Environmental Executive Board includes representatives from all business units and from the Environmental Management unit. Shift in important environmental aspects For a long time, environmental protection was only regulated by laws and binding technical provisions. This meant that companies activities were confined to eliminating and alleviating environmental effects after the event. Ac- cordingly, environmental measures were mainly aimed at areas of operational ecology such as saving energy or reducing waste. To promote sustainable development, the approach should be targeted at the causes of the environmental effects. As a result of the growing environmental awareness of stakeholders (investors, shareholders, NGOs), the focus is now also on the indirect environmental impact of products. However, if environmental issues are to be given the consideration they deserve, comprehensive environmental management is essential. Thus, over the past few years, the main focus of environmental concern among providers of financial services has shifted to ecological risks, particularly in the third-party liability and property insurance business and in the credit sector. The more recent widening of this focus to include product ecology has also affected the investment sector, encouraging the emergence of niche products. This has been reinforced by increased communication with our stakeholders 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, operational ecology and communications targets. In each case, the concrete targets are listed in the insets enumerating strengths, weaknesses and near-term objectives. Environmental Report 1997/98 Credit Suisse Group Page 11

ENVIRONMENTAL MANAGEMENT PLANNING Operative areas and partners of Credit Suisse Group The chart below shows: in which business unit the co-ordination unit for the whole group is situated n which environmentally-relevant specialist or line units with specialist responsibilty exist in n the different business units and who they work for in addition which partners and contractors with a high level of environmental relevance have their own n environmental units and which business unit is responsible for this third-party-relationship Environmental Report 1997/98 Credit Suisse Group Page 12

ENVIRONMENTAL MANAGEMENT IMPLEMENTATION 3 Implementation Putting environmental policy into practice In implementing environmental management measures, CSG intends to adhere to the environmental policy obligations it has assumed. Components of the implementation phase include: Environmental controlling n Environmental standards n Training of personnel n Environmental report n Implementing environmental policy is the task of the Environmental Management unit of CSG. CSGs Environmental Management System is modular in structure. For a number of years, CSGs environmental commitment has been pursued in accordance with ISO standards. In the following, we enumerate the principal milestones in this process. To highlight the implementation of our environmental policy more effectively, we have assigned the individual milestones to the components of environmental policy. Environmental controlling As an important process in our Environmental Management System, environmental controlling involves systematically planning, recording, controlling and monitoring CSGs impact on the environment. With a view to fulfilling our environmental targets, over 100 measures have been defined for 1997/98. In addition, environmental controlling has been extended to include product ecology. Environmental standards We depend on the active support of our staff to ensure that CSG continues to improve its environmental performance. Since 1995, environmental standards have been distributed to provide staff with guidance on their environmental conduct both at work and in their private lives. Since autumn 1998, the new updated edition of practical tips 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 environmental matters by means of blocks of lectures on the environment as part of apprentice training, 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 product ecology, the Environmental Risk unit provides credit specialists with special training in identifying environmental opportunities and risks. Environmental report This second environmental report follows on from our first publication (1995/96 environmental report). In the current edition, the product ecology chapter forms 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 Report 1997/98 Credit Suisse Group Page 13

ENVIRONMENTAL MANAGEMENT MILESTONES ON THE WAY TO IMPLEMENTATION Year Milestones Aspect of environmental policy Implementation of environ. policy Banking and insurance products Communications and marketing Infrastructure and facilities Production and operations HR and organisation Management 1976-79 Planning and construction of the Uetlihof in Zurich: pioneering decisions in # ## terms of thermal insulation, environmentally-friendly construction, furniture, and eco-planting of buildings and environs; repositioning of train and tram stops 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 competitions and janitor training. By 1989, specific heat consumption per m² had been cut by 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 principles # Introduction of investment fund oriented towards environmental technology 1991 Formation of Credit Suisse & Environment Working Group, chaired by a # # # member of the Executive Board, underscores importance of environmental protection for Credit Suisse A further indication of the continuous improvement of environmental performance is the assignment of the individual milestones to the seven aspects of the environmental policy (see pages 8 and 9). The steadily increasing environmental commitment is also apparent from the growing number of crosses in the right-hand columns. This shows that we are actually implementing our environmental policy. Environmental Report 1997/98 Credit Suisse Group Page 14

ENVIRONMENTAL MANAGEMENT MILESTONES ON THE WAY TO IMPLEMENTATION Year Milestones Aspect of environmental policy Implementation of environ. policy Banking and insurance products Communications and marketing Infrastructure and facilities Production and operations HR and organisation Management 1992 Credit Suisse signs the International Chamber of Commerce Charter for long-term # ## # sustainable development (ICC Charter) and the UNEP Statement by Banks on the Environment and Sustainable Development First directive issued on lending business: environmental risks in lending # # ## 1993 Credit Suisse is awarded the City of Zurichs Green Prize for the nature- # # ## compatible design of roofs, facades and environs at its Uetlihof site # # ## 1994 Establishment of Environmental Risk unit at Credit Suisse # # ## ## Establishment of Environmental unit at Winterthur # # # ## 1995 Environmental performance evaluations in Zurich and Geneva Executive Board approves environmental policy, energy guidelines and environ- # # ## ## # mental standards Signing of UNEP Statement by the Insurance Sector on the Environment and # ## # # Sustainable Development # # ## ## # 1996 Credit Suisse implements environmental controlling concept # # ## ## # Credit Suisse publishes 1995/96 environmental report 1997 Credit Suisse Group (banking sites in Switzerland) becomes the first major bank # # ## ## # to obtain ISO 14001 certification, documenting the introduction and application of an Environmental Management System conforming to the ISO 14001 standard. # ## # Repositioning of the Eco Efficiency environmental fund Contracts 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 passed # # # # Uetlihof receives award from Foundation for Nature and the Economy (Stiftung Natur und Wirtschaft) # # # ## # Revised environmental standards sent to all bank personnel of CSG Switzerland # # ## ## # Revision of environmental policy and environmental organisation # # ## ## # Credit Suisse publishes 1997/98 environmental report Environmental Report 1997/98 Credit Suisse Group Page 15

ENVIRONMENTAL MANAGEMENT MONITORING 4 Monitoring Our motivation in seeking certification An external inspection enhances the credibility of our Environmental Management System and gives CSG the confirmation that it is operating a functioning EMS. We see this as having the following advantages for us: 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 n of financial services. Presentation of CSG as a company that is aware of its responsibilities gains credibility in n the eyes of the public and CSG personnel More detailed first-hand knowledge of the facts when performing credit analysis of certi- n fied corporate customers. The Executive Board of CSG has evidence to show that its own Environmental Manage- n ment System is performing effectively and efficiently. SGS-ICS [Société Générale de Surveillance International Certification Services AG], a sub- sidiary of SGS, the worlds biggest testing, inspection and quality assurance organisation, was commissioned to carry out the inspection. Internal audits Over 25 sector-specific checklists were prepared for internal audits. In individual cases, external specialists were also brought in to carry out checks. Remedial measures are integrated in environmental controlling. Certification process The certification audit took place in April 1997. The focus was on the practical implementation of the environmental commitment on the part of the line organisation. The auditors questioned 50 key environmentally-relevant personnel at head office in Zurich (from environmental risk, personnel, training, communication, construction & real estate, computer centres, evaluation, procurement, maintenance and disposal of computer equipment, building management, waste disposal, transport/travel service, material purchas- ing and catering), in four regions (Geneva-Lancy, Berne-Murifeld, Basel and St. Gallen) and in certain branches (Uster and Wädenswil). The audit report produced by the certifying company (SGS-ICS) confirms the success of CSGs environmental management. As well as bearing out the evidence of steady improvement, 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 Report 1997/98 Credit Suisse Group Page 16

ENVIRONMENTAL MANAGEMENT BENEFITS 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 Inclusion of CSG registered shares in environmentally-oriented portfolios n Competitive advantages Environmental performance is relevant as an additional indicator of successful n (commercial) corporate management and therefore shareholder value Cost savings Enhancement of environmentally-significant resource efficiency n Reduction in environmental impact and in costs caused by waste and emissions n Support in cost and revenue-oriented management of real estate portfolio n Recognition of potential for optimisation (e.g. videoconferencing instead n of air travel) Compliance with environmental legislation Systematic testing and monitoring procedures n Assurance of compliance with current and foreseeable environmental n legislation (legal compliance) Risk avoidance and reduction Systematic recording of all environmental risks associated with CSGs business n activities Increasing the awareness of staff and training them in relation to high-risk n activities Credibility through external assessment External assessment of CSGs Environmental Management System enhances n credibility Synergies External communication facilitated n Integration of EMS into higher-ranking management system promotes integration n of measures where crucial business processes are planned and controlled Environmental Report 1997/98 Credit Suisse Group Page 17

ENVIRONMENTAL MANAGEMENT COMMUNICATIONS Internal communications supported by the Intranet CSG sets great store by internal communication. In addition to conventional channels such as the staff magazine and local notices, the Intranet is also becoming very important. Both the Environmental Manage- ment sector and various environmentally-oriented specialist units have their own homepages providing access to their services, missions, general information, checklists, publications, links to other important homepages, a glossary and contact addresses. Dialogue with our business partners CSGs own experience with environmental management makes it more competent in assessing the problems and implications of certification for other companies. Ideas and experience gained from its own Environmental Management System are passed on to interested, innovative companies. This exchange is targeted primarily at smaller and medium-sized companies. Publication series: Credit Suisse Orientierung 106: issue 106 of this series of publica- n tions portrays comprehensive bases for establishing integrated management systems. This issue of the guide is primarily intended to assist small and medium-sized enterprises to establish their own management systems. It lists all necessary information on ISO standard models and total quality management, as well as specific instructions on how to establish a quality, environmental and occupational safety system. Customer events: CSG is eager to encourage its customers to embrace environmental n protection. For example, in December 1997 it organised a customer event in Berne on the topic of environmental management systems. Over fifty small and medium-sized companies were invited and provided with information on the various aspects of environmental management systems and ISO 14001. Environmental Report 1997/98 Credit Suisse Group Page 18

ENVIRONMENTAL MANAGEMENT FUTURE AND TRENDS Future and trends Validated environmental performance evaluations and certificated environmental management systems are increasingly important in assessing whether a company is best-in-class. Accord- ingly, central importance is attached to questions from environmentally-oriented investors concerning the introduction of environmental management systems and their possible certification, as well as management involvement and endorsement and questions concerning product ecology. The following aspects will become increasingly important: Highlighting the benefits of an EMS n Social compatibility international standards are emerging in relation to this n issue (e.g. SA 8000). CSG is seeking to address this consideration through the introduction of integrated health management (comprehensive occupational medicine, health promotion, welfare counselling and ergonomics). David Nelson, President and CEO, EnviroSearch International, Salt Lake City, USA: Sophisticated companies are now adopting environmental management systems as a crucial business management tool. Such companies understand the increasing pressure of regulatory regimes, international environmental agreements and treaties, shareholder demand, environmental organisations as well as public demand, requirements of development agencies, and new international environmental management standards such as ISO 14000. The companies who understand this increasingly diverse agenda and genuinely respond to these forces with sound management practices will benefit economically, so- cially and ethically. Environmental Report 1997/98 Credit Suisse Group Page 19

PRODUCT ECOLOGY ENVIRONMENTAL ASPECTS OF SERVICES AND PRODUCTS In the field of environmental policy, we have committed ourselves to gradually incorporating the environment factor into new and existing services and products. The main focus of our efforts in the field of product ecology is on risk management both in the context of granting credit and of providing third-party liability insurance cover. We see earnings 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 the form of higher valuations. The growing number of environmentally-oriented investors bears witness to this. Ecology in the products sector Strengths CSGs environmental activities in the products sector can be classified into credit business, Risk management in the context of n insurance business, investment business and new financial products (see table below). At the granting credits and of third-party same time, the classification may vary depending on how the area is viewed. For example, liability and property insurance the product WinCAT could be regarded as coming under the heading of investment business Two powerful special funds: Eco Effi- n rather than that of niche products. Moreover, the distinction between environmental risks and ciency (Lux) and Fellowship Trust investment business will inevitably be blurred since environmental risks are incontestably also (UK) playing an increasingly important role in this area of business. Open for innovative, environmentally- n oriented products, such as WinCAT and energy contracting Weaknesses Sector Business unit Product/Service Chapter Training and support material in in- n vestment business still too piecemeal Review of environmental risks and Lending business CS Credit checking and 1 Environmental risks n n real estate valuation opportunities in project financing so far not adequately systematised Energy contracting 3 Niche products n CSFB Project financing operations 1 Environmental risks n Next steps / objectives Insurance Winterthur Risk examination 1 Environmental risks n Greater sensitisation and information n WinCAT 3 Niche products n concerning products with an environ- EnviroWin 1 Environmental risks n mental impact Recycling of car components 3 Niche products n Structured procedure for assessing n environmental risks and opportunities Investment CSAM, CSPB, CS Eco Efficiency (Lux) 2 Investment business n in project financing business CSAM Fellowship Trust (UK) 2 Investment business n CSFB Listing of SPG shares 2 Investment business n Winterthur Unit-linked life policy 2 Investment business n of CS Life (see Eco Eff.) New financial CSFB Marketable 4 Future/trends n products emission certificates Financing of environmentally- 4 Future/trends n oriented products Environmental Report 1997/98 Credit Suisse Group Page 20

PRODUCT ECOLOGY INNOVATIONS Innovations in product ecology since the last environmental report Since the publication of the last environmental report (1996), our bank has witnessed a number of innovations. In 1997, the Environmental Technology equity fund introduced in 1990 was aligned on the concept of eco-efficiency and repositioned. More and more environmentally-oriented funds are emerging around the world (a volume of around 1 billion Swiss francs was invested in environmentally-oriented funds and investment foundations in Switzerland in 1998; this is equivalent to roughly half a percent of the total fund capital. In the United States, every tenth dollar is currently invested according to at least one 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 environmentally-oriented investors shows that its environmental performance is gaining recognition. In the 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 putting Example illustrating their profitability or value at risk. For a company and its insurer or lending bank, it is therefore environmental risks important to be familiar with the facts and to respond to environmental risks as appropriately as possible. This not only enables the environmental impact to be reduced but also avoids A discarded cigarette causes a major costly remediation measures, depreciations and write-offs. Moreover, this area of activity also fire in the warehouse of a chemical opens up attractive commercial opportunities such as technical assistance in tackling con- factory. Because the warehouse floor taminated site remediation and the financing of such measures. is not sealed in accordance with regulations, toxic liquids seep into the soil while the fire is being extinguished. Environmental risks are business risks Environmental risks stem from a variety of After the fire, the site, which previ- causes. The cost of cleaning up a contaminated site can be enough to bankrupt a company. ously had an estimated value of So-called liability risks arise where the bank takes over the ownership of real estate, e.g. in 15 million Swiss francs, is only worth the context of bankruptcy proceedings. In Switzerland, if the bank owns the land, it is obliged 5 million Swiss francs. to pay for the clean-up. If the operating risk had been estab- Commercial risks relating to environmental factors arise where real estate or plant facilities lished by our specialist Environmental plummet in value as a result of environmental pollution or degradation. The causes could, for Risk unit when the loan was granted, example, lie in the incorrect storage of hazardous substances, an incident or a shift in public the company would have been alerted opinion or legal requirements. Risks to a companys reputation, or risks arising from its links to the shortcomings in the warehouse. with an associated entity (i.e. where the banks reputation is compromised by its connections This could have prevented the liquids with a business partner responsible for environmental damage or through its representation from escaping and the resulting drop on the board of such a company) are currently becoming increasingly important. in the sites value. 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) Environmental Report 1997/98 Credit Suisse Group Page 21

PRODUCT ECOLOGY ENVIRONMENTAL RISKS A Environmental risks associated with the granting of loans and with real estate business Credit Suisse only conducts business with corporate customers in Switzerland. Since 1992, it has been systematically analysing all loan applications (whether for new loans, extensions of existing loans, or increases in limits) for environmental risks. Here, Credit Suisse is also meeting an obligation assumed when it signed the UNEP statement. The procedure for examining credit risks can be found in the Annex on page 33. Environmental hazards inherited from the past can be an important factor not only in the field of loans but also in the valuation of real estate forming part of real estate funds. If there are any signs of danger, credit specialists enter into discussions with the customer to try to establish what environmental risks exist, what their extent is and whether they can be covered by insurance. To arrive at an assessment, our credit specialists consult both internal working instruments and the official land registry of sites where a contamination is suspected. The former identify vulnerable sectors and indicate which environmental risks in particular need to be taken into account. Where necessary, the specialist Environmental Risk unit assists our credit specialists in their evaluation and in recommending measures. In addition to this support function, the activities of Credit Suisses specialist Environmental Risk unit also include holding numerous internal and external training events. In recent years, the specialist unit has become more important. Consideration of environmental risks has come to form an integral part of any credit check. In this way, we also create added value for many of our customers: in the context of the background documentation and information required for credit checks, environmental issues are systematically reviewed in order to pinpoint environmental risks at an early stage. If a problem arises, the bank is available to the customer as a competent partner with contacts with specialists and the authorities. Facilitation of environmental assessment in the business sector Our own experience in environmental management puts us in a better position to assess the significance of a customers certification. Lending banks or insurers are concerned first and fore- most with environmental aspects that can become credit or insurance risks, with the market opportunities created representing an additional secondary interest. At present, however, the significance of certified EMS systems is difficult to assess in terms of the impact of environmental management on the balance sheet and earnings situation. For example, the fact that a company holds a certificate does not give any indication of its environmental performance. Furthermore, issues relating to the choice of site and process, liability risks, the extent of insurance cover, safety at work and contaminated sites are not primary considerations in certification. Nonetheless, from the banks vantage point, a customer with an EMS certificate does have a number of advantages: The environmentally-relevant information has been obtained and the environmental aware- n ness of the companys management has greater credibility Use of innovative and progressive management instruments n Particularly in environmentally-vulnerable industries, in which environmental risks account n for a large proportion of financial risks, a bank knows that the company is meeting its environmental responsibilities, is aware of its risks and intends to deal with them on a professional basis. Environmental Report 1997/98 Credit Suisse Group Page 22

PRODUCT ECOLOGY ENVIRONMENTAL RISKS However, for the lending bank the decisive factor is always the overall perspective in terms of risks and opportunities. After all, when granting a loan, it is not so much the borrower that is assessed, but the loan and its general conditions. Certification makes it easier for the bank to examine environmental risks relating to the customer since specific environmentally-relevant information, validated by the certification, is already available and the persons responsible for environmental matters are named. However, certification does not replace verification. Even where a certificate is held, Credit Suisse always 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 affects Credit Suisse First Boston in its role as a financing partner. In most cases the financing is undertaken with other banks acting jointly with the World Bank; in examining the risks, their environmental standards are applied accordingly. For CSG, the assessment of the borrowers quality continues to play a central part in the financing of projects. However, environmental considerations can affect that quality. CSG realises that environmental risks are becoming increasingly important in assessing credit quality. Such risks may have a legal or a political basis: 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 n significant adverse impact on project earnings, real estate values, the project timetable and the lenders equity. The following instruments are used to avoid such risks, depending on the project: due diligence checks, enquiries to clarify the legal context and insurance cover. In international business Credit Suisse First Boston consults external specialists, where necessary, 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 very specific risks in the future. C Environmental risks in third-party liability and property insurance and in relation to real estate business The environmental issue affects virtually the entire range of insurance products offered by Winterthur. Thus, cover components in which environmental factors play a part are to be found in the comprehensive motor vehicle insurance sector (e.g. hail damage), in the building or 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 damage to property and for damage prevention costs resulting from environmental degradation) and in compulsory liability insurance for subsidiaries (exclusion of losses resulting from environmental degradation). Natural disasters and global climate change Winterthur is expecting the property insurance sector to be particularly severely affected by global climate changes. It is therefore recording its risk exposure in this area on a targeted basis by calculating claims forecasts for various disaster scenarios on the basis of portfolio analyses. Winterthur uses the results of such studies to review and adjust its underwriting policy. Environmental Report 1997/98 Credit Suisse Group Page 23

PRODUCT ECOLOGY ENVIRONMENTAL RISKS One of Winterthurs main interests lies in overcoming the consequences of natural disasters from a technical underwriting point of view. However, it would also like to gain a better understanding of the climatic context and of the repercussions of human activities on the climate. In this context, Winterthur is not only interested in current environmental factors, but also attempts, on the basis of the data collected and with the aid of models, to anticipate what 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 economic toll. For example, the property damage caused by the Kobe earthquake in Japan is estimated at USD 100 billion. Losses totalling around USD 2.5 billion were insured. As an insurance company with global operations, Winterthur bears a proportion of such losses. The cost of the losses in each case depends on the value of the property insured (i.e. risks) in the area affected. Event Date Country Loss in USD bn 24.8.92 USA 15.5 Hurricane Andrew n 7.1.94 USA 12.5 Northridge earthquake n 27.9.91 Japan 5.2 Typhoon Mireille n 25.1.90 Europe 4.6 Winter gale Daria n 5.9.89 USA 4.1 Hurricane Hugo n 25.2.90 Europe 3.2 Winter gale Vivian n 17.1.95 Japan 2.5 Kobe earthquake n 4.10.95 USA 2.1 Hurricane Opal n 10.3.93 USA 1.8 Winter gale Fridolin n 20.10.91 USA 1.7 Oakland forest fire n 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 and infrastructure 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 concerned. We can expect any shift in climate zone boundaries to increase the climate strain on some of these structures and reduce it on others. Overall, there are likely to be more cases in which structures are subjected to greater strain; this will mean an increase in the number of claims, which will in turn increase the claims burden on insurers. Efforts by the insurance industry to raise public awareness and highlight the possible connections represents an initial step towards avoiding future problems. In addition to publications on this subject, the presentation of initiatives and policy documents at international conferences on the environment and climate change (as held in Kyoto or Geneva) represents a contribution on the part of the insurance industry to making the (adverse) effects of human activity on the environment less ecologically damaging in the future. Environmental Report 1997/98 Credit Suisse Group Page 24

PRODUCT ECOLOGY RISK MANAGEMENT IN THE ENVIRONMENTAL SECTOR Risk management in the environmental sector environmental liability The environmental aspects of the insurance products referred to above and of other insurance products not only compel Winterthur to pay close attention to natural events and environmental risks, but also to advise its customers before and above all after they take out their policies. When calling on customers, (environmental) engineers discuss a wide range of environmental 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 as the partner of private individuals, trade and industry. Accordingly, in risk-prone, environmentally-sensitive areas, e.g. risks affecting landfill sites, Winterthur attempts to find solutions that go beyond classic insurance cover (risk transfer). Since 1994, Winterthur has had access to the Environmental Unit (part of Winterthur Risk Engineering since 1 January 1998), a unit involved in a wide range of tasks relating to product development, underwriting support in connection with environmental risks and the development of tools for assessing such risks. The unit also advises the claims departments in the event of new or serious forms of environmental damage. In addition, it assists the business units in providing training on environmental issues and conducts PR work in the form of lectures and publications. However, apart from the Environmental Unit, Winterthur also has other 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 opening remarks. As explained above, the insurance industry has already been taking the subject of environmental liability seriously for many years. Winterthur has risen to the challenge and, in this actuarially-sensitive area, has devised a solution - the EnviroWin concept - that gives the customer insurance cover over and above the standard market coverage while keeping Winterthurs risk at a reasonable level. One of the key features of this environmental liability product is insurance cover for environmental damage resulting from normal operations which could not have been foreseen given current state-of-the-art in technology and science. Such cover is only provided if the customer takes the necessary preventive safety measures. Instruments for assessing and evaluating environmental risks form the second key feature of the concept. Among these instruments, which have been developed by Winterthur itself, the EnviroWin Index takes pride of place. Using this index, the customer is given an initial environmental risk rating based on sector-specific risk characteristics. If the index indicates heightened risks, a risk dialogue is initiated. On a confidential basis, engineers and scien- tists from Winterthur analyse and evaluate environmentally-relevant information which the customer furnishes by completing a questionnaire. Where appropriate, an inspection is carried out on site. In the course of this risk dialogue, Winterthur also proposes measures to improve the situation and indicates how such measures would affect premiums. Environmental Report 1997/98 Credit Suisse Group Page 25

PRODUCT ECOLOGY ENVIRONMENTAL 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 funds performance lagged behind the stock market average owing to a variety of factors Which customers does the (mainly one-sided concentration on environmental technology, recession and a weaker Eco Efficiency Fund appeal to? dollar). Investors who are convinced that n In the spring of 1997, a new fund management reviewed the investment concept and reposi- eco-efficient companies will have a tioned the equity fund under the name Credit Suisse Equity Fund (Lux) Eco Efficiency. future strategic advantage. Clients who would like to invest in a n Aim of the fund The fund offers investors an environmentally-compatible investment in- globally diversified equity fund that strument geared to sustainability, combined with attractive long-term earnings. The fund in- mainly gives consideration to eco- vests in the shares of companies whose value-added processes and range of products and efficient blue chips. Also included are services are already optimised in terms of integrating ecological and social criteria alongside small to medium-sized companies economic considerations. By gearing their operations to sustainability, they are able to reduce that are outstanding for their ecologi- their risks and translate opportunities into market successes at an early stage. cally innovative services, products or new technologies and exhibit above- average growth potential. Rating system The fund invests worldwide in leading-edge and pioneering companies that are successfully implementing the concept of eco-efficiency. The leaders include companies 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 of environmentally innovative services, products or new technologies and with above-average growth potential. Sustainable Asset Management (SAM) AG, Zurich, seeks out eco-efficient companies on the basis of a rating system which it has developed itself and which includes ecological and social components (SAM Sustainability Rating). With an international network, SAM boasts one of Europes most experienced research teams. Eco-efficiency gives companies throughout the world competitive advantages, and in the longer term this will be reflected in their share price. Various studies show that companies Credit Suisse Asset Management that take account of eco-efficiency are also more innovative than their competitors in other posts outstanding performance areas. Competitive advantages correlate positively with eco-efficiency in a variety of ways. For the third time in a row, in 1997 Standard & Poors Micropal judged Credit Suisse Asset Management to be Stock selection The stocks proposed by SAM undergo final selection taking account of the Best Management Group i.e. the the usual fund principles at Credit Suisse Asset Management (CSAM) in a multistage proc- no. 1 fund management company in the ess. In this way, CSAM invests worldwide in listed companies in all sectors that stand out by category of major Swiss asset managers. virtue 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. Environmental Report 1997/98 Credit Suisse Group Page 26

PRODUCT ECOLOGY ECO EFFICIENCY Promotion Ecologically-aware policyholders can also factor environmental considerations into their life insurance policies. Winterthur offers the fund-linked life insurance policy CS Life. 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 SAM support CS and CSFB in selling the fund. Performance The yield outlook is highly promising: since the funds repositioning, it has posted 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 be found on the links page in the Appendix. Services performed by SAM AG Management of individual mandates n for institutional investors on the basis of sustainability criteria Individual advice and assistance for n private customers on the basis of sustainability criteria Portfolio analyses and screenings n (for further information, see links on page 46) Environmental Report 1997/98 Credit Suisse Group Page 27

PRODUCT ECOLOGY FELLOWSHIP TRUST Fellowship Trust In the UK and the USA, ethically/environmentally-oriented funds have been established for some time. In the Credit Suisse Fellowship Trust Fund of Credit Suisse Asset Management Funds (UK) Limited, CSG has a fund which has won several awards on the strength of such criteria. The Fellowship Trust, which is only available in the UK, is a country-specific fund that has 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 social issues, while avoiding companies involved in activities that have a negative impact on health, the environment or human dignity (e.g. arms, pornography, tobacco, pesticides). Performance The Fellowship Trust comprises a total volume of over 200 million Swiss francs (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 the Criteria for stock selection past five years it has ranked 18th (out of 125 funds). Its success shows that ethically/environ- Positive criteria mentally-oriented funds are meeting a market need. Companies with good environmental n Up-to-date information can be accessed online by following the website link on page 46. track records Companies that make a positive so- n cial contribution (mainly in relation to their employees and their local area) Companies that engage in energy n conservation, waste reduction through recycling and efficient waste management Companies that offer alternatives to n products tested on animals Exclusion criteria Companies involved in the sale or n manufacture of arms and manufacturers of goods or services for military use Companies that have attracted ad- n verse attention as a result of environmental pollution in the past Companies known to be distributing n pesticides in the UK that contain substances banned in other countries. Tobacco producers or companies that n derive over 10% of their reported annual turnover from the sale of tobacco products Companies that make profits from n gambling Companies that print, publish or dis- n tribute pornography Manufacturers of alcoholic beverages n or companies that derive over 10% of their reported annual turnover from the sale of such beverages Environmental Report 1997/98 Credit Suisse Group Page 28

PRODUCT ECOLOGY INVESTMENT IN SUSTAINABILITY Sustainable Performance Group goes public SPG shares were floated on the stock market by Credit Suisse First Boston in the summer of 1997. SPG is an investment company listed on the Swiss Exchange. It successfully invests in companies whose products and services generate economic, environmental and social benefits and in doing so achieve competitive advantages. This is the core concept of sustainability. Credit Suisse First Boston is consulted for financial analysis. SPGs aim and investment strategy: Bruno Letsch, Head of Investment Center Europe, Swiss Re: Investment in 20 to 25 companies with pioneering and leading-edge credentials in the n field of sustainability. The portfolio is broadly diversified in terms of sectors, countries and We firmly believe that companies man- currencies. aged on a sustainable basis are attractive investments. Investment at an early stage in innovative pioneering companies offering new system so- n lutions and operating in sectors that benefit from the growth of lasting megatrends in such areas as mobility, energy or nutrition. Investment in leading-edge companies that integrate sustainability into their strategies to n a high degree and in doing so achieve sustainable competitive advantages. Risk-optimised weighting of pioneering and leading-edge companies with a view to n achieving a balanced ratio of opportunities to risks in the portfolio. Performance In addition to its printed quarterly report, SPG also publishes information on its own homepage (see Internet links on page 46). For current prices, please see the website links on page 46. Environmental Report 1997/98 Credit Suisse Group Page 29

PRODUCT ECOLOGY NICHE 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 risks on a broader basis. An example of such a product is Winterthurs Cat Bond, launched with great 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 damage is on a scale serious enough for Winterthur to receive more than 6,000 claims for damaged vehicles. To compensate for this risk, in years with less hail damage, investors receive a coupon 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 the risk of natural disasters bears no relation to other financial market risks, there is only a slight danger of simultaneously sustaining losses both on the traditional markets and on the catastrophe bonds. By including catastrophe bonds in a portfolio, the degree of risk can be reduced without any change in the anticipated overall yield. In this way, Winterthur, Switzerlands biggest motor insurer, and Credit Suisse First Boston, the innovative investment bank lead-managing the issue, have familiarised a wider Swiss public with the securitisation of insurance risks (i.e. the practice of passing on such risks to investors in the form of a marketable security) for the first time. By incorporating environmental factors into financial market products, this bond creates new opportunities for customers and financial institutions alike. For up-to-date information on WinCAT, access the link given on page 46. Energy contracting This financing and operating model involves commissioning a specialist outside firm to supply energy and maintain facilities. Instead of buying oil, gas and electricity, the energy user purchases heat, refrigeration, light or steam in other words energy services. This enables companies to avoid expensive investments, for example in modern heating systems, while on the supply side economies of scale and technical expertise can be systematically exploited to supply heat on an energy- and cost-efficient basis. In the context of the Swiss Federal Governments Energy 2000 investment programme, Credit Suisse offers contract-leasing models. For larger investments, we also examine project financing solutions. Environmental Report 1997/98 Credit Suisse Group Page 30

PRODUCT ECOLOGY NICHE PRODUCTS IN THE ENVIRONMENTAL SECTOR Recycling of car components at Winterthur As Switzerlands biggest motor insurer, Winterthur has addressed the question of what to do with the hundreds of vehicles written off as a result of accidents because they are either beyond 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 recycling company Auto-Bestandteile-Wiederverwertungs AG (ABW) in Grolley (Canton of Fribourg) as an 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 that cannot be used, such as fluids, oils and acids are siphoned off and disposed of in an environmentally-compatible manner or sent for reprocessing. The recyclable components are tested original parts and do not impair the safety of the vehicles they are used in. By fitting used parts, vehicle owners can be offered repairs identical in quality to repairs carried out using new parts, but at substantially lower cost. Environmental Report 1997/98 Credit Suisse Group Page 31

PRODUCT ECOLOGY FUTURE AND TRENDS 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 that entitle their holders to emit set quantities of pollutants into the environment over a given period of time. They are sold (or issued) to individual companies by the government or an independent national or international authority and can subsequently be traded. Depending on the reduction target for the economy as a whole, the authority in question can influence the quantity of emission certificates through purchases. Accordingly, providers of financial services 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 by high 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 environmental agreements (Convention on Climate Change, Biodiversity Convention). For financial service providers, this means growing opportunities to participate in the financing of environmental projects or projects of benefit to the environment in close co-operation with multilateral banks. CSG wants to tap into the opportunities in these business areas. Electronic banking saves paper Credit Suisse is Switzerlands leading provider of electronic banking services (exchange of data by telephone, the Internet, phone banking etc.). As such, it is playing a pioneering role in showing how banking transactions can be performed more efficiently but with a mini- mum of paper by using new media. Since mid-1998, around 500,000 transactions per month have been dealt with via the Internet. Similarly, over 15% of Credit Suisses securities trading orders are issued electronically. Environmental Report 1997/98 Credit Suisse Group Page 32

PRODUCT ECOLOGY ANNEX: FLOW CHART FOR CHECKING CREDIT RISKS Environmental Report 1997/98 Credit Suisse Group Page 33

OPERATIONAL ECOLOGY REFLECTED BY THE REORIENTATION Our company has stepped up its efforts in operational ecology even during the restructuring of CSG.Our extended 1996/97 environmental performance evaluation for Credit Suisse Group (Switzerland) shows a welcome 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 the next important steps must be to ensure that the environmental targets set for our contractual partners are adhered to and implemented. What is operational ecology? Operational ecology is concerned with the environmental impact of a companys business operations. In the case of a financial service provider such as CSG, the main focus is on high energy and paper consumption. The aim of our endeavours in respect of operational ecology is to minimise the consumption of resources through appropriate savings measures. This will enable us to substantially reduce our financial expenditure as well as our impact on the environment. For example, in 1996 the use of videoconferencing as an alternative to business flights saved around one million air kilometres and resulted in savings of around CHF 750,000; there is still potential for further savings. As a management, control and monitoring instrument, operational ecology uses what is known as environmental controlling. On the basis of the findings that emerge from the environmental performance evaluations, environmental objectives are defined and their implementation is ensured. In this way, environmental controlling plays a central part in the environmental management system. Ecology reflected by the reorganisation Since the publication of our last environmental report in 1996, CSG has undergone several major changes of significant environmental relevance. Following the reorientation of our banking business on 1 January 1997, August 1997 saw CSG merge with Winterthur. This in- Strengths creased the size of our workforce and real estate holdings both within Switzerland and in particular abroad. Expansion of the environmental per- n formance evaluation in terms of breadth and depth: extension of the Environmental performance evaluation of the reorientation process A separate system and improvement of method environmental performance evaluation was prepared on the environmental repercussions of Reduction in paper consumption the reorientation of our banking business. In the process, we were able to calculate the n medium-term expenditure incurred. The expenditure was roughly equivalent to 1% of the annual environmental impact generated by CSG. The restructuring process had less impact on Weaknesses the environment than one week of ordinary banking operations. At this point in time, any Increased consumption of heat and statement about the long-term impact of the restructuring process would be premature. n electricity The increase in changes of responsibilities and personnel, together with changes in the Reorientation made data collection branch network, have made it more difficult both to co-ordinate environmental management n and comparison more difficult and to collect environmental data. Next steps / objectives Environmental controlling to be in- n creasingly geared to energy saving measures Improved data management n Environmental Report 1997/98 Credit Suisse Group Page 34

OPERATIONAL ECOLOGY CO-OPERATION WITH OUR PARTNERS Outsourcing of the building service In the context of the restructuring process, a number of ecologically significant technical functions were contracted out to external firms. Thus, from January 1998, our contractual partner Merkur Immobilien Bewirtschaftungs AG (MIB AG) took over our building management operations, an area which we had previously handled ourselves in Switzerland. To guarantee monitoring and control of operational ecology in the future, CSG needs to be able to rely on the co-operation of the building management company. Under its contract, MIB AG has undertaken to steadily reduce energy consumption levels and to actively co-operate in the implementation of the environmental targets through systematic environmental controlling, as well as by other means. MIB AG has therefore contractually undertaken to comply with CSGs strict environmental standards. These include the endorsement of our environmental policy and energy guidelines, the gradual establishment of MIB AGs own certifiable Environmental Management System and open communication and co-operation on environmental issues. A further focal point is the training of relevant personnel in environmentally-compatible behaviour. Since the summer of 1998, MIB AG has also been servicing properties occupied by Winterthur in Switzerland. This means that the same environmental requirements apply as for the properties of the banking business units. IT Services takes over computer systems In 1997, IT Services, which belongs to CSG, took over the management of our decentralised computer systems which consist of around 43,000 computers, 15,000 printers and 1,400 networks in Switzerland alone. As well as being responsible for installation and maintenance, IT Services also sees to the evaluation and disposal of equipment. To ensure that sound environmental procedures are followed IT Services, like MIB AG, is required to adhere to strict standards and liaise regularly with our specialist environmental units. Environmentally-aware catering partners CSGs staff restaurants in Switzerland are operated 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 increasingly gives preference to seasonal Swiss produce obtained from monitored organic sources. As Switzerlands biggest industrial caterer, it operates its own progressive Environmental Man- agement System and maintains close contact with CSGs environmental specialists. 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. 2004 Heat 10% reduction to 80 kWh/m² p.a. 3% from renewable energy sources 2004 Water 15% reduction to 460 litres/m² p.a. 2004 Traffic Consumption of less than 14 litres/100 km for goods vehicles Consumption of less than 7 litres/100 km for passenger vehicles 2004 Paper 15% reduction 2004 60% recycled grade 2004 proportion of chlorine-bleached grade <5% 2004 15% recycling rate for copier paper 2004 * based on our energy guidelines, which are to be reviewed in 1999 and adapted as necessary Environmental Report 1997/98 Credit Suisse Group Page 35

OPERATIONAL ECOLOGY EXTENDED ENVIRONMENTAL PERFORMANCE EVALUATION Environmental targets for storage and distribution Since 1997, Mühlebach AG Logistic has been in charge of the storage and distribution of CSGs printed matter, office supplies and advertising materials throughout Switzerland. The use of environmentally-sound storage and transport facilities forms part of the contractual obligation, as does a packaging strategy based on reusable containers and the systematic separation of waste. Drivers are sent on regular training courses to ensure that their driving techniques are optimised for fuel economy. For further information, see links on page 46 Environmental performance evaluation of Credit Suisse Group (Switzerland) 1996/97 Corporate environmental performance evaluations are management tools that quantify the companys own impact on the environment. They cover all environmentally-relevant flows of materials and energy entering or leaving the company over a given period. The following details are taken from our report on the 1996/97 environmental performance evaluation. Extended system limit Our first environmental performance evaluation in 1994 covered a total of 30 Credit Suisse (CS) buildings in Zurich and Geneva (8,000 staff, 400,000 m² of energy reference area). They accounted for 60% of the energy reference area of the then Credit Suisse (parent company). The second (1997/98) environmental performance evaluation of Credit Suisse Group Switzerland, covers the whole of CSG in Switzerland, with the exception of Winterthur (reference date 1.1.1997). This system covers around 470 sites with an 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 fire extinguishing and cooling agents (halon and freons) at all our fixed installations brought to light an accumulation of freon losses. Remedial measures have been initiated. Environmental scarcity method For our evaluation we used the environmental scarcity method (EIP methodology) according to Braunschweig and Müller-Wenk. When collecting the data, an improvement in data quality was found to be both necessary and possible 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 environmental performance evaluation, direct comparisons between the 1994 and 1996 performance evaluations are not always appropriate. Nonetheless, certain trends are emerging. As a result of the expansion of our business activities and the increasing penetration of technology into new areas, there was an increase in the consumption of electricity, heat and water in absolute terms. The reduction in paper consumption is mainly attributable to steps taken to encourage the use of electronic media. The lions share of CSGs direct environmental impact still stems from the provision and consumption of electricity and heat. Accordingly, our medium-term priorities in the field of operational ecology focus on reducing these energy flows. Environmental Report 1997/98 Credit Suisse Group Page 36

OPERATIONAL ECOLOGY PAPER CONSUMPTION REDUCED Overview of our analyses Electricity consumption rising on account of increased use of technology In 1996, our electricity consumption continued to rise in absolute terms, reaching 155 million kWh. 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 memory requirements: between 1980 and 1996, memory capacity at our computer centres expanded 270-fold. Heat: networked systems cut costs In 1996, our banks heat consumption totalled 116 million kWh. The slight increase is attributable to an expansion of floorspace occupied as a result of the merger with Swiss Volksbank and Neue Argauer Bank. As our floorspace expanded more than our heat consumption, our specific consumption rate fell by one third to 97 kWh/m². The use of networked heating systems is enabling us to achieve significant annual savings in Credit Suisses Uetlihof: the quantities of oil and gas we consume. As well as cutting emissions of air pollutants, this Nature reserve of the Swiss also reduces our expenditure on heating and air conditioning systems. The installation of a business world combined heat and power plant in the Uetlihof Centre in Zurich has enabled us to achieve In June 1998, the Foundation for Nature annual savings of CHF 600,000. and Business (Stiftung Natur und Wirt- schaft) awarded Credit Suisses Uetlihof Three quarters of travel above the clouds In 1996, we calculated the amount of centre in Zurich the title of Nature re- business travel generated by all our Swiss sites for the first time. The total came to just under serve of the Swiss business world in 35 million km per year, or 1,700 km per employee. Air travel alone accounted for more than recognition of the natural vegetation 75% of the total. Our flights departing from Switzerland gave rise to emissions of 5,100 cover adorning its roofs and facades and tonnes of carbon dioxide (CO2), one of the atmospheric pollutants implicated in the green- the landscaping of its grounds. Designed house effect. The use of videoconferencing facilities enabled us to save around one million to approximate natural conditions as air kilometres, as well as costs totalling CHF 750,000. closely as possible, the landscaping of the total of 77,000m² of green areas The reorientation of our bank resulted in the relocation of several thousand jobs. We there- features a small lake, several ponds and fore decided not to attempt to update our analysis of commuter traffic. Our 1994 study wildflower meadows. In designing the showed that our employees commute 47 million km per year, with public transport account- interior courtyards, roofs and environs, ing for 30 million km of the total. care was taken to encourage the ecological coexistence of humans and indig- Paper consumption cut by 10% In 1996, our paper consumption came to just under enous fauna and flora. Numerous native 5,000 tonnes, which is equivalent to a 10% reduction compared with 1995. This fall is attrib- species of birds can be observed at the utable to the major expansion of electronic access to internal lists and documents (internal Uetlihof site. Twelve colonies of bees bank lists and continuous stationery account for over half our total paper consumption). While also find abundant sources of food substituting electronic access for paper is reducing our paper consumption, it is leading to a among the profusion of flowering plants. further increase in the amount of electricity we consume. Several sheep graze on the meadows, eliminating the need for mowing. The Uetlihof site was awarded the City of Waste: more transparency needed For the first time, total quantities of rubbish, paper Zurichs Green Prize back in 1993. and cardboard were calculated for all CSG buildings in Switzerland. In 1996, our sites generated a total of around 6,000 tonnes of waste, or roughly 290 kg per employee. The slight Further information can be found in the increase is partly attributable to the restructuring; branch closures involved disposing of ex- brochure, Semi-natural landscaping tensive stocks of materials. the Uetlihof administrative centre, Zurich. 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 we will be addressing this in co-operation with MIB AG. Environmental Report 1997/98 Credit Suisse Group Page 37

OPERATIONAL ECOLOGY OUR MEASURES AND OBJECTIVES Future and trends The co-ordination and responsibilities of the two operational ecology programmes run by Credit Suisse and Winterthur will be aligned on the new organisation. By sharing common logistics platforms, we aim to exploit as many synergies as possible. So far, no operational ecology organisation has been established for the many sites outside Switzerland, most of which are small. In the longer term, in addition to the Swiss system, we also aim to include sites outside Switzerland that are relevant in terms of operational ecology. This plan affects mainly Winterthur, which employs more personnel abroad than within Switzerland. Reducing consumption of resources Our environmental aims envisage reducing our consumption of energy and resources for materials and services. We give preference to the use of durable, upgradable materials and products and aim to increase recycling of the items used. To this end, when procuring materials, we not only examine their environmental compatibility but also, increasingly, the manufacturers ecological commitment. Key environmental figures significance of comparisons Differences in data quality From one bank to the next, key environmental figures differ greatly and exhibit considerable inconsistencies in terms of standards. The fact that comparisons of key data do not take account of important background information on the bank concerned means there is room for improvement in terms of the significance of comparisons with existing key figures. Such background information includes types of business activity, levels of computerisation, sizes of computer centres and types of buildings. This was the conclusion that emerged from a comparison of the first set of key environmental data on 16 banks in the German-speaking countries reported on the basis of the VfU standard (VfU = the Association for Environmental Management in Banks, Savings Banks and In- surance Companies). The figures were compared in a diploma dissertation written by Thomas Frei in 1997 at the Institute of Business Administration of the Swiss Federal Institute of Tech- nology (ETH) in Zurich. Key environmental figures for Credit Suisse Group (Switzerland) in 1996, based on the VfU standard emp. = employees Environmental Report 1997/98 Credit Suisse Group Page 38

OPERATIONAL ECOLOGY INTERPRETATION OF KEY ENVIRONMENTAL FIGURES VfU defines key figures for operational ecology The VfU has published guidelines on environmental reporting. In 1996, a working group agreed on a selection of 11 key figures relating to operational ecology which express the environmental performance of financial service providers. These key figures defined by the VfU relate solely to the field of operational ecology. Key figures relating to product ecology (lending and investment business) or management have not yet been defined. Meanwhile, a number of banks in German-speaking countries have applied the VfU standard and collected corresponding environmental data in accordance with the VfU guidelines. Interpretation of key figures The study showed that comparisons of key figures with those of other financial institutions (e.g. in terms of paper consumption) only revealed indicative information and trends. This indicative information enables the plausibility of the key figures to be verified. Such comparisons allow banks to assess whether their 350 key figures are within a reasonable range. The following example of paper consumption illustrates these possibili- 300 ties. 260 kg/emp. The chart opposite shows, for example, that CSG con- 250 sumes paper on roughly the same scale as other big Difference 130 kg/emp. banks. All the smaller and medium-sized banks and sav- 200 ings banks surveyed show a far smaller relative paper consumption per employee (on average 130 kg/em- 150 ployee). All banks within this group consume paper on the 130 kg/emp. same scale. One conclusion is that such comparisons are 100 only meaningful among banks of similar size and with similar business operations. It is difficult to apply such comparisons to the specialist banks since their business 50 activities can differ widely. The nature of the business activity engaged in is therefore a very important factor. The 0 A B C D E F G H I CSG J K L M N key figures are not suitable as a basis for statements such CH Specialist banks Smaller and medium-sized banks and savings banks in Germany Medium-sized banks and big banks in Switzerland as this bank is better than the others. The study has brought to light several deficiencies in key environmental figures: Insufficient information on the origin of the key figures (understanding of system not uni- n versally guaranteed) Cause and effect not apparent n Widely differing quality of data from one bank to the next n Choice of reference value not ideal (among other things, very susceptible to system n changes) When considering key figures, these shortcomings should be taken into account and appropriate improvements aimed for. Moreover, key figures alone cannot completely cover the complex decisions in the field of environmental management. The quality of environmental management depends on making appropriate use of all management instruments. Environmental Report 1997/98 Credit Suisse Group Page 39

COMMUNICATIONS GREATER USE OF ELECTRONIC MEDIA Through direct contact with our internal and external partners, Credit Suisse Group strengthens environmental awareness. Through an exchange of experience and data, we also support the environmental 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 on the Internet. External communications and commitments CSG is actively involved in numerous national and international bodies concerned with environmental protection, including the United Nations Environment Programme (UNEP) and the Swiss Bankers Associations Working Group on the Environment. We organise events and lectures on environmentally-relevant topics such as environmental management and credit risks 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 in printed form. In contact with scientific bodies and environmental organisations CSG sup- ports scientific research by offering placements for practical work experience and for students studying for diplomas or doctorates and by giving free access to its data. We value our links with environmental organisations and other interest groups. Sponsorship and contributions CSG does not regard its social and environmental commitment as sponsorship in the sense of Strengths a marketing instrument but as a core component of its corporate culture. Our active involvement in environmental causes is not normally accompanied by explicit PR activities. Use of the Internet for our internal and n external communications Where CSG sponsors a project, it makes available its environmental expertise and facilitates environmentally-compatible measures. Examples include the Swiss Bankers Association and Positive media response to our envi- n UNEP checklists on environmental management in banks or the partial reimbursement of ronmental activities travelling expenses incurred by persons travelling to the Swiss orienteering championships by Active involvement in environmental n public transport. bodies Weaknesses Environmental awareness still insuffi- n cient in certain areas Next steps / objectives Strengthen communication by use of n electronic media Formulate and implement training n concept Environmental Report 1997/98 Credit Suisse Group Page 40

COMMUNICATION FOSTERING ENVIRONMENTAL AWARENESS Were backing wind power In the context of its support for environmentally-friendly technologies, Winterthur provides support for Juvent SA. With its modern wind-power plant on 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 powerful wind turbines with a maximum output of 600 kilowatts (kW) each, the plant generates an annual total of around 1.8 million kilowatt hours (kWh) of electricity under average wind conditions. This output is sufficient to meet the annual needs of around 600 households. As the suppliers first major customer, Winterthur has committed itself to consuming 200,000 kWh per year over the next ten years at an additional cost of CHF 30,000 per annum and to using 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. We are 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 high level of environmental awareness. Our ecological aims can only be implemented and achieved 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 the subject of the environment. In our efforts, we encourage the individuals we are addressing to act in an environmentally-aware manner in their private lives as well. Environmental Circle The steadily growing Environmental Circle, a forum for staff interested in environmental issues, makes a key contribution toward achieving this aim. Its members, who now number 1,300, receive information on environmental tips and issues from the environmental management unit; events are also organised from time to time. Our aim in setting up this informal network is to anchor environmental awareness on as broad a basis as possible. We also provide information in the form of articles in various staff magazines and external trade 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 handy bookmark to all personnel. Further training We attach importance to training our personnel in environmentally-sound behaviour. To date, training events have been staged covering the areas of building and materials management, catering and transport. New graduate recruits are provided with information explaining the impact of our business activities on the environment and are given tips on sound environmental conduct in the workplace. We also train our loan specialists to identify environmental risks. We will be expanding our training strategy in order to strengthen our in-house training. Environmental Report 1997/98 Credit Suisse Group Page 41

COMMUNICATION OUR ENVIRONMENTAL STANDPOINT Our environmental standpoint CSG maintains contacts with authorities and associations. This enables us to introduce aspects which are important for the financial sector into new standards at an early stage, as well as 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 in their impact on foreign trade and government quotas, reasonable and amenable to planning. Discriminating evaluation of environmental initiatives On the basis of such considerations, we are in favour of Switzerlands proposed CO2 law in the framework of the environmental tax reform. This incentive tax is emission-related and encourages the use of environmentally-sound production methods. However, we reject the solar energy initiative and the energy/environment initiative on the grounds that both involve resource taxes that put up the cost 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 government quotas or of redistribution. As a major electricity consumer, CSG is in favour of the opening of the Swiss electricity market envisaged in the Swiss electricity market law. This liberalisation will lead to a reduction in subsidies 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 renewable forms of energy will become more competitive. We are in favour of using emission certificates as an efficient market-economic instrument of environmental policy. The introduction of such certificates should be amenable to 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 (neutrality in terms of impact on government quotas). Our most important affiliations National affiliations Swiss Bankers Association Working Group on Banks and the Environment n Energy 2000 (energy saving programme of the Swiss Federal Government) n FHE (Fachgesellschaft für Haustechnik und Energie im Bauwesen association for building technology and n energy in the construction sector) IPB (Interessengemeinschaft privater professioneller Bauherren association of private professional n builders; publishes regular recommendations for environmentally friendly building) öbu (Schweizerische Vereinigung für ökologisch bewusste Unternehmensführung Swiss association for n environmentally-aware corporate management) SIA (Schweizerische Ingenieur- und Architektenverein Swiss Society of Engineers and Architects) n Energy Model Zurich n International affiliations UNEP (United Nations Environment Programme) n Association for Environmental Management in Banks, Savings Banks and Insurance Companies n (VfU Verein für Umweltmanagement in Banken, Sparkassen und Versicherungen e.V.) ICC (International Chamber of Commerce) n Environmental Report 1997/98 Credit Suisse Group Page 42

COMMUNICATIONS PUBLICATIONS AND LITERATURE Publications (see also page 46) Environmental Report 1997/98, CREDIT SUISSE GROUP, Zurich,1998 n Umweltbericht 1997/98, CREDIT SUISSE GROUP, Zurich,1998 n Rapport Environnemental 1997/98, CREDIT SUISSE GROUP, Zurich,1998 n Rapporto Ambientale 1997/98, CREDIT SUISSE GROUP, Zurich,1998 n Environmental Report 1995/96 (four-page summary), CREDIT SUISSE, Zurich, 1996 n Umweltbericht 1995/96 Schweizerische Kreditanstalt, CREDIT SUISSE, Zurich, 1996 n Rapport Environnemental 1995/96, CREDIT SUISSE, Zurich, 1996 n Eco Performance Switzerland 1996/97, CREDIT SUISSE GROUP, Zurich, 1998 n Ökobilanz Schweiz 1996/97, CREDIT SUISSE GROUP, Zurich ,1998 n Écobilan Suisse 1996/97, CREDIT SUISSE GROUP, Zurich, 1998 n Ecobilancio Svizzera 1996/97, CREDIT SUISSE GROUP, Zurich, 1998 n Ökobilanz 1994 SKA Zürich, CREDIT SUISSE, Zurich, 1995 n Ecobilan 1994 CS Genève, CREDIT SUISSE, Geneva, 1995 n Our Guiding Principles on Energy Use, CREDIT SUISSE, Zurich, 1995 n Energieleitbild, CREDIT SUISSE, Zurich, 1995 n Charte énergétique du Groupe CS, Geneva, 1995 n Direttive energetiche del Gruppo CS, Zurich, 1995 n Literature Bewertung in Ökobilanzen mit der Methode der ökologischen Knappheit Ökofaktoren n 1997 (Evaluation in eco performances using the environmental scarcity method; not available in English); BUWAL-Schriftenreihe Umwelt Nr. 297, Berne 1998 Association for Environmental Management in Banks, Saving Banks and Insurance Com- n panies (Verein für Umweltmanagement in Banken, Sparkassen und Versicherungen e.V. [VfU]), Environmental Reporting of Financial Service Providers. A guide to content, structure and performance ratios of environmental reports for banks and savings banks, Augsburg and Bonn, 1996 Environmental Report 1997/98 Credit Suisse Group Page 43

GLOSSARY DEFINITION 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 specified period 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 context of the purchase or sale of a new company or of parts of a company. An examination of due diligence also encompasses essential measures to reduce environmental risks or to contain them at a low level. Eco-efficiency We define eco-efficiency as the systematic focus on a mode of production that avoids depleting resources and reduces environmental impact as far as possible. Criteria for identifying eco-efficient companies include: Energy-intensive and material-intensive nature of processes, emissions n Recyclability n Product service life n Use of renewable energy sources n Eco-efficiency is a measure of a companys environmental as well as its economic impact. The aim of environmentally-compatible economic behaviour must be to maximise commercial added value while minimising the environmental impact. Emission certificates Negotiable certificates which grant the owner the right to release a specific quantity of pollutants 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 area excluding lift shafts, basement areas, etc. Environmental Report 1997/98 Credit Suisse Group Page 44

GLOSSARY DEFINITION AND EXPLANATION OF TERMS Environmental controlling Environmental controlling is a key component of the environmental management system. It includes collecting data, preparing and implementing measures and achieving objectives. Environmental performance evaluation Corporate environmental performance evaluations are management instruments that quantify the environmental impact generated by a company. They cover all environmentally-relevant flows of materials and energy entering or leaving the company over a given period. Through environmental controlling, the environmental performance evaluation helps to identify potential 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 national standards institutions. ISO standards can be described as globally recognised standards for voluntary self-monitoring. The ISO 14000ff standards series shows companies how to implement an Environmental Management System and seeks to provide organisations with the components of an effective Environmental Management System which can be combined with other management requirements to help such organisations achieve both ecological and economic objectives (cf. ISO DIN EN 14001, 1996). Further information on ISO 14001 can be obtained 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 without jeopardising economic, ecological or social systems in the longer term. Sustainability is a forward-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. Environmental Report 1997/98 Credit Suisse Group Page 45

LINKS TO 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 or http://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 or http://www.unisg.ch/~iwoe/index.html UNEP homepage http://www.unep.ch Homepage of Sustainable Asset Management AG http://www.samswiss.ch Environmental Report 1997/98 Credit Suisse Group Page 46

INFORMATION CONTACTS For further information and to order additional copies: Credit Suisse Environmental Management, CCU P.O. Box 100 CH-8070 Zurich Tel. ++ 41 -(0)1-333 73 33 Fax ++ 41 -(0)1-333 76 33 e-mail: csg.eco@csg.ch Homepage: 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. Less waste, more information: if you print this report out, we would be grateful if you could pass it on to others or circulate it within your office. You are welcome to copy or quote from this report: we would appreciate notification or a specimen copy of your article. For reasons of convenience (faster downloading), we have not incorporated graphics in this report. Validation by SGS-ICS AG We have verified the correctness of the statements in the 1998 environmental report of Credit Suisse Group and, where necessary, have requested that proof be presented. We hereby confirm that the report has been prepared with the necessary care, that its contents are correct, that it de- scribes the essential aspects of the Envi- ronmental Management System at Credit Suisse Group and that it reflects the Groups actual practices and procedures. Elvira Bieri and Dr Franz Heinzer Zurich, 19 October 1998 CCUE 11.98 Environmental Report 1997/98 Credit Suisse Group Page 47

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