Sector policies and guidelines

Certain industries are particularly sensitive from a social or environmental perspective (including impacts on the climate). To assess potential transactions with clients or prospects in these industries, we have defined specific policies and guidelines that are globally applicable, taking account of standards developed by international organizations such as the United Nations, the World Bank or the International Finance Corporation (IFC). These policies and guidelines cover the sectors oil and gas, mining, power generation, and forestry and agribusiness, which includes pulp and paper, as well as palm oil production. They address a range of topics such as: compliance with industry-specific, internationally recognized standards on the environment and human rights; measures to assess and reduce the environmental impact of operations, including on the climate and on biodiversity and ecosystems; the protection of the health and safety of company employees, contractors and surrounding communities; and respect for the human rights of the local population, with particular attention on project-­related impacts on indigenous peoples (see pages 74-75).

Our risk management framework incorporates an assessment of whether a transaction or client relationship under review is in line with our sector policies and relevant industry standards and good practice. The sector policies and guidelines also form an important component of our Group-wide Climate Risk Strategy program.

Our policies and guidelines describe business activities and operations that Credit Suisse will not finance. Following our announcement in 2019 that we would no longer provide any form of financing specifically related to the development of new coal-fired power plants, we announced a number of new restrictions in 2020. In particular, they included:

• No lending or capital markets underwriting to any company deriving more than 25% of its revenue from thermal coal extraction¹
• No lending or capital markets underwriting to any company deriving more than 25% of its revenues from coal power²
• No financing related to offshore and onshore oil and gas projects in the Arctic region

¹ Direct lending; Unless such transaction is to help the company specifically transition and the use of proceeds is tied to such transition strategies aligned with the Paris Agreement; for greater certainty, these exclusions do not apply to metallurgical coal

² Direct lending; Unless the company can demonstrate decreasing share of coal in generation portfolio consistent with our Energy Transition Framework or such transaction is to help the company specifically transition and the use of proceeds is tied to such transition strategies (and will continue our policy of not financing the development of new coal-fired power plants)

As a result of the latest financing restrictions, Credit Suisse declined to participate in a number of transactions, including a bond issuance for a large thermal coal mining and power generation company, a bond refinancing for a mid-sized power generation company, a bond issuance for an electricity producer, and a buy-side mandate for an energy company with thermal coal mining activities.

Unrelated to the newly introduced fossil fuel financing restrictions, but in connection with our enhanced sustainability and climate commitments, we also rejected transactions related to a new oil pipeline, the renewal of a revolving credit facility for a pipeline operator, a loan for trading with coal, and three transactions related to oil from areas with high biodiversity.

Our sector policies and guidelines are subject to a bi-annual review and update process to take account of the latest developments and new challenges in the relevant areas. In step with the stated sustainability ambitions of Credit Suisse, we expect to introduce further restrictions over time.

In the context of sustainability risk management, Credit Suisse has applied the Equator Principles (EP) since 2003. This framework for the management of environmental and social risks, which is now in its fourth iteration (EP 4), is based on standards defined by the IFC and is applied by around 110 financial institutions for specific types of finance for industrial and infrastructure projects.

Recognizing the importance of environmental sustainability and sustainable land use, we are also a member of the Roundtable on Sustainable Palm Oil (RSPO) in the “Banks and Investors” sector. The RSPO is the leading certification standard for palm oil and promotes the cultivation and use of sustainable palm oil products through global standards and the engagement of stakeholder groups throughout the supply chain. Consequently, our Forestry and Agribusiness Policy includes requirements regarding RSPO membership and RSPO certification that we expect our clients to observe.

In 2020, Credit Suisse signed the Poseidon Principles. This global framework for responsible ship finance promotes the integration of climate considerations into lending decisions with the aim of enhancing the role of maritime finance in addressing global environmental issues and advancing the decarbonization of the international shipping sector. We participate in a number of sustainability networks and initiatives worldwide.