UBS Case Final

UBS & Climate Change – Warming Up to Global Action?

• Sharad Chopra - 11• Ashish Khurana - 37• Saran Markan - 39• Anuj Patni - 45

Summary of the case

Corporate Responsibility at UBS

• Signed Bank Declaration of UN Environment Program• Committed to work In Environment responsible manner• Values

CR beyond profits and legal requirements Expand their contribution towards public good

Contd.

• Annual cash donation of CHS 50 million for educational & environmental projects.

• In 2004 conducted research to monitor ranking of social responsible investments.

Monitoring CR at UBS

• Setting up special CR committee

Taking inputs from various business and functions Identify gaps between expectations of society and

services provided. Suggesting appropriate measures to fill gaps. Taking decision how UBS could meet expectation of

stakeholders in future.

Sources of emission at UBS

• Electricity : 31% of electricity used in office produced from fossil fuel.

• Business Travel: 3 lac flights travel annually

Steps to prevent emission

• Replaced travel with video-conferencing2005 UBS held 2000 video-conference47% yoy increase in number of conferenceLimit the consumption of electricity

• 41% energy saving by Improved cooling, heating and lightning system.

• Purchased levy free electricity in London.

Environmental statistics

2003 2004 20050

20000

40000

60000

80000

100000

120000

Co2 Emmision tonnes/FTETotal Waste Kg/FTETotal Business travel Pkm/FTETotal Indirect energy kWh/FTETotal Direct Energy kWh/FTE

Financial and Environmental Statistics for UBS

Key Financial Figures and RatiosFigure 31/12/2009 31/12/2008 31/12/2007 31/12/2006 31/12/2005

Total Operating Income (CHF Million)

22601 796 31721 47484 40470

US$78,631m

US$88,571m

US$87,601m

Net Profit (CHF Million) (2125) (20,724) (4,708) 12,020 14,193US$6694m US$6498m US$20,455m

Balance Sheet size (CHF Million)

1,340,538 2,014,815 2,274,891 2,348,733 2,001,099

No. of employees 65,233 76,200 (31/3/2009)

- - -

289,485 312,866

Basic EPS (CHF) (0.75) (7.63) (2.4) 5.15 5.93

ROE to UBS Shareholders

(7.8) (58.7) (10.5) 23.8 34.0

Return on average assets (0.1) (0.9) (0.2) 0.5 0.7

Numbers highlighted in red color indicate the corresponding figure for HSBC

1CHF = 0.94 US$

Corporate Responsibility at UBS

Key Issues addressed under CR at UBS

Fight against money laundering, corruption and terrorist financing

Executing the environmental program

Implementing the human rights statement

Undertaking community investment

activities

CR Governance Process

Code of Business Conduct and Ethics

• UBS’s commitment to environment Provide clients with a range of financial products and

services that address environmental challenges Identify and manage environmental risks Continuing to improve environmental performance

and resource efficiency• Policy is implemented through a global environmental

management system certified according to ISO 14001

CO2 strategy and emission reduction

• In Feb 2006, the Group Executive Board decided to set CO2 reduction target to 40% of 2004 levels to be achieved by 2012

• Strategy Adopting in-house energy efficient measures Increasing the proportion of renewable energy Offsetting and neutralizing emissions

Greenhouse Gas Footprint

Environmental Indicators

Indicator Unit 2009 2008 2007

Direct and intermediate energy

GWh UBS 957 1,016 981

HSBC 1,812 1,884 1,832

Business travel

Million Pkh

UBS 560 886 12,685

HSBC 872 1,132 1,227

Paper consumption

Tonnes UBS 10,349 14,403 15,593

HSBC n.a. n.a. n.a.

Waste Tonnes UBS 21,183 25,644 24,589

HSBC 62,000 81,000 64,000

Water consumption

Million m3

UBS 2.55 2.42 2.19

HSBC 4.47 4.72 4.63

GHG footprint Tonnes UBS 249,101 264,197 281,705

HSBC 991,000 954,000 953,000

Environmental Indicators / employee

Indicator Unit 2009 2008 2007

Direct and intermediate energy

kWh/FTE UBS 11,986 11,792 11,942

HSBC 6,593 6,310 6,134

Business travel

Pkh/FTE UBS 7,016 10,281 12,685

HSBC 3,175 3,791 4,107

Paper consumption

kg/FTE UBS 130 167 190

HSBC n.a. n.a. n.a.

Waste kg/FTE UBS 265 298 299

HSBC 90 270 110

Water consumption

m3/FTE UBS 31.9 28.1 26.7

HSBC 16.3 15.8 15.5

CO2 footprint t/FTE UBS 3.12 3.07 3.43

HSBC 3.42 3.05 3.02

UBS’ Strategies for environment protection• Energy consumption

Tighter building controls Data center and work station efficiencies Reduced occupancy

• Business Travel Difficult market conditions; cost cutting Investment in video conferencing High speed rail for short haul travel in Europe Carbon offsetting by projects in Brazil, India, China,

Turkey

Strategies contd…

• Paper and Waste Significantly lower publication volumes Success of e-documents Double sided printing Use of Forest Stewardship Council certified paper

A few achievements

• UBS is an Index component of the DJSI world and FTSE4Good indices

• 1999- First bank to obtain the ISO14001 certification• May 2009 – UBS Tower Chicago awarded Energy Star

Award by the US EPA

Indian Banks and the Environment

Banking on the Low Carbon Indian Economy• National Action Plan on Climate Change (NAPCC)

aims to enable the country adapt to climate change and enhances the ecological sustainability of India’s development path.

• The World Bank estimates : cost of mitigation in developing countries ranges from US$140 billion to US$175 billion (annually ) until 2030.

Source: CLIMATE CHANGE AND FINANCE IN INDIA : BANKING ON THE LOW CARBON INDIAN ECONOMY MAY 2010, A study by The Climate Group, Indian Banks’ Association and PRICEWATERHOUSECOOPERS

Banking on the Low Carbon Indian EconomyIndia ’s National Action Plan on climate change proposes eight national missions :• Solar• Enhanced Energy Efficiency • Sustainable Habitat• Water • Sustaining the Himalayan Ecosystem • Green India • Sustainable Agriculture • Strategic Knowledge for Climate Change


Banking on the Low Carbon Indian Economy• IndusInd Bank : launches solar-powered ATMs• State Bank of India : Green Banking Policy• HSBC Global Research, Climate Change : investigates

the likely risks and opportunities of climate change for the financial markets and HSBC‘s business units.

• SBI Green Home Loans : giving incentives to customers who choose green projects, i.e. those projects which reduce carbon emissions and promote renewable energy.


Banking on the Low Carbon Indian EconomyManaging Carbon Emissions : Survey Results

• The majority of the participating banks have already initiated measures to calculate energy consumption and carbon footprints.

• External energy audits have enabled banks to make cost savings due to reduction in the consumption of energy.

• All of the banks indicated that the issue of climate change and sustainability was important to the organization.


Banking on the Low Carbon Indian EconomyInternal Communications And Employee Engagement• Five of the eight banks have initiated employee engagement

programs that tackle climate change. • Banks indicate that integrating sustainable development into

the organization’s policies and management approach• Employee engagement initiatives :

Information on climate change provided on an internal intranet site;

Creating performance objectives for the organization and individuals;

Designating certain employees as ‘Climate Champions’.


Banking on the Low Carbon Indian EconomyEnablers for Climate Change Activities

The top internal factors which drive climate change activity within an organization were: • economic benefits and profitability, • board influence and • marketing benefits (i.e. enhancement of brand and

reputation).


Initiatives by Private and Public Sector Banks

Initiatives by Axis Bank

• Axis Bank Foundation – estd. 2006 registered as a public trust

• Go Green Initiative – using IT • Donation of 1% of net profit to Axis Bank Foundation• This is the maximum permissible by RBI

Initiatives by Axis Bank

‘Using IT to Go Green’

• Disposing IT assets in an eco-friendly way• Recycling wherever possible• Going for virtualization - sending password-protected e-

statements to registered customers to reduce the use of paper

• Investing in less power-consuming equipment• Moving to LCD monitors from traditional CRT monitors

Axis Bank Foundation

Role1. Financial Inclusion – ‘Axis Bank targets 12,000 villages for

financial inclusion’ ET 2nd July 2010

2. Literacy campaigns to impart financial awareness

3. Healthcare, vocational training

4. Community development programmes like afforestation and rain-water harvesting

Initiatives by ICICI Bank

• ICICI Bank Foundation’s activities are in• Primary health• Elementary education• Access to finance• Civil society• Environmental sustainability

• Clean technology initiatives• Go green

ICICI Bank

Clean technology initiatives

• Efforts to attract and channel private financing into cleaner technologies

• To create public-private partnerships to mitigate greenhouse gas emissions through energy efficiency

ICICI Bank

Go Green Initiatives

• Reducing energy and paper consumption - encouraging paperless transactions and communication

• Green products and services - ICICI Bank offers discounts in processing fees for customers opting for energy-efficient vehicles

• Processing fees are reduced for those who purchase homes in ‘Leadership in Energy and Environmental Design’ certified buildings

ICICI Bank

Go Green Initiatives

• Engaging in educating employees and customers - ‘Chlorophyll’ is ICICI Bank’s monthly internal newsletter launched in September 2009 - updates on global environmental developments and tips to help employees contribute towards environmental conservation

• Using CFL lighting and regulating AC temperatures across all offices and branches

HSBC

Environment – Direct Impact Reduction

• Non–polluting Green Diesel generator sets with a sound proof acoustic enclosure installed

• Capacitor banks in few premises which is helping bank to reduce energy consumption and protect the equipment life

• Initiated rain water harvesting in office premises in Kolkata

• Vermiculture garden for kitchen waste established at HSBC Mumbai office in India

• Bio Gas Fuel plant and bio diesel for generators successfully installed at HSBC Group Company at Pune in India

HSBC contd

Ecosystem Conservation

• Conservation of Olive Ridley Turtles in the coastal areas of Orissa

• Conservation of the endangered Dugong (Sea cow) in the Andaman and Nicobar Islands in partnership with Reef Watch

• Founding partner for Mangrove Wetland Centre, Mumbai in partnership with the Conservation Action Trust

HSBC contd

Climate Change

• Launch of Earth Sciences Forum in partnership with Ministry of Science and Technology and Ministry of Earth Sciences, Government of India to find solutions to climate change• setup a climate change leadership council,• conduct climate change awareness workshops for

industries, • climate change outreach and communication to

sensitize public and youth

HSBC contd

Climate Change

• Launch of the HSBC Climate Partnership in collaboration with WWF, The Climate Group, Earthwatch Institute and Smithsonian Tropical Research Institute – saving the dolphins of the Ganges

• HSBC Global Environment Efficiency Programme, a five–year programme aimed to reduce the Group's impact on the environment through a series of initiatives, including the introduction of renewable energy technology, water and waste reduction programmes and employee engagement

Punjab National Bank

• Strict adherence to RBI guidelines & Pollution Control Board for managing the social and environmental impact of financing projects

• Restrict financing to industries producing Ozone depleting substances

• Provide finance to renewable energy projects• Training to employees about how to reduce ‘carbon

footprint’ and advise them to buy competitively priced energy and transport services

PNB cont

• The use of technology, such as e-mail and electronic payments, across the Bank has significantly reduced paper usage. During the last one year, 2000 new e-mail IDs have been created. The storage space and attachment size of mail box have been increased to 50 MB from 10 MB and 4 MB from 1 MB, respectively

• Take significant steps towards recycling of materials. As per the prevailing practice, the waste material collected from the office buildings is given to the maintenance contractors or scrap dealers for further disposal or recycling

SBI Bank Go Green Initiatives

Clean Energy Generation Production of electricity for captive use at Panapatti village Tamil

Nadu in collaboration with Suzlon energy. Electricity will be generated by wind energy and installation of 10

windmill to generate a capacity of over 15 MW extending to 20 MW next year.

Electricity produced will be used by SBI banks in Gujarat, Tamil Nadu and Maharashtra.

Each windmill cost 10 cr. Cost recovered in 4 years and no operational cost thereafter.

Green Channel Counter Opened at Chennai branch to make paperless deposit, withdrawal

and remittances. Customer need not fill any sort of form and all work will be done electronically.

Contd.

Efficient use of natural resources At new locations such as Pune, Hyderabad and Jaipur Employees are given training for efficient use of electricity. Installation of Efficient lighting system, energy savers and water

waste management.

Mooting Carbon footprint Concession rate of finance to environmental friendly projects. Launched carbon credit plus product for financing carbon credit

receivables. Effort to measure and earn 27000 tonnes of carbon credit and

bring down carbon footprint by producing 15MW of clean energy.

The Way Ahead

• Adoption of Equator Principles by Indian Banks• “EPFIs will not provide loans to projects where the

borrower will not or is unable to comply with our respective social and environmental policies and procedures that implement the Equator Principles”

• Example - In 2003, HSBC adopted the Equator Principles, a set of voluntary guidelines that help financial institutions assess and monitor the environmental and social impacts of large projects

References

• UBS Annual Report 2009• HSBC Annual Report 2009• Axis Bank Annual Report 2010• ICICI Bank Annual Report 2010• Climate change and finance in India : banking on the low

carbon Indian economy - May 2010-Indian banks’ association and PWC

Thank You

UBS Case Final

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