Environmental & Social Information • Jan 14, 2025
Environmental & Social Information
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| 1. Introduction | |
|---|---|
| 1.1 Yapı Kredi at a glance | 1 |
| 1.2 Sustainability at Yapı Kredi | 2 |
| 2. Yapı Kredi's Sustainable Finance Framework | |
| 2.1 Rationale for Sustainable Financing | 7 |
| 2.2 Basis of this Framework | 7 |
| 2.3 Use of Proceeds | 9 |
| 2.4 Project Evaluation and Selection | 23 |
| 2.5 Management of Proceeds | 24 |
| 2.6 Reporting | 25 |
| 2.7 External Review | 28 |
Yapı ve Kredi Bankası A.Ş. (hereinafter referred to as "Yapı Kredi" or the "Bank"), established in 1944 as Türkiye's first retail focused private bank with a nationwide presence, is the 3rd largest private bank in Türkiye with total assets worth TRY 2.1 trillion as of the first quarter of 2024. Yapı Kredi has a strong shareholding structure which ensures sustainable and profitable growth. Yapı Kredi's 20.22% of the shares are directly owned by Koç Holding A.Ş. and 40.95% of the Bank's shares are owned by Koç Financial Services ("KFS"), which is 100% owned by Koç Group. 38.83% is publicly traded on Borsa Istanbul.
Yapı Kredi has always played a pioneering role in the banking sector and has been sustainably strengthening its market positioning through a customer-centric approach and focus on innovation. Targeting to constantly increase its contribution to the financing of the Turkish economy with its customer-centric approach, Yapı Kredi provides service to its customers with 15,421 employees and 781 branches covering all regions of Türkiye. Total cash and non-cash loans of the Bank increased by 65% compared to first quarter of 2023 and exceeded TRY 1.5 trillion as of the first three months of 2024.
Yapı Kredi is active in retail banking (comprising of card payment systems, individual banking, business banking, private banking and wealth management) as well as corporate, commercial banking and SME banking. The Bank's operations are supported by domestic subsidiaries engaged in asset management, investing, leasing and factoring as well as international banking subsidiaries in Nederland and Azerbaijan.
Yapı Kredi aims to ensure long-term sustainable growth and value creation for all stakeholders, and become the first choice of customers and employees. Yapı Kredi's strategy is being a customer centric commercial bank driven by cutting edge technology and committed workforce, delivering responsible growth. In its activities, Yapı Kredi espouses a corporate governance concept built on integrity, responsibility and accountability, and operates on its nine values: sustainability, customer centricity, being united, competitiveness, target orientation, resilience, agility, innovation, and productivity.
Yapı Kredi embraces a responsible growth approach in its operations, which aims to increase positive impacts on all its stakeholders and create value for all segments of its operations. The Bank's main approach to sustainability is based on creating long-term value for its stakeholders by adopting a sensitive attitude toward social and environmental issues while ensuring economic development and growth. Sustainability lies at the heart of the Bank's business culture and philosophy. Given the critical role of the finance sector for finding solutions for the global environmental and social issues, Yapı Kredi effectively manages the environmental and social impacts arising from its own operations and lending activities.
Yapı Kredi believes sustainable economic development cannot be achieved without environmental and social development. Guided by the United Nations ("UN") Sustainable Development Goals ("SDGs"), the Bank seeks to provide innovative financial services and products to solve environmental and social challenges. Since 2017, the Bank has been a member of the UN Environment Programme Finance Initiative ("UNEP FI"), and is a founding signatory of the UN Principles for Responsible Banking ("UN PRB").
In its sustainability management, Yapı Kredi considers the expectations of all of its internal and external stakeholders. The Bank addresses its environmental, social and economic ("ESG") impacts on the entire value chain via an integrated management system. Based on this understanding, ESG factors, which enable the Bank's financial and non-financial performance to be monitored in an integrated manner, are regularly monitored through key performance indicators and shared with stakeholders through transparent and effective communication channels.
Yapı Kredi Sustainability Committee (the "Commitee") is responsible to create Yapı Kredi's sustainability strategy and policies in economic, social and environmental areas, integrate this strategy and these policies into Bank operations, and monitor its sustainability performance. Representing various management units, the Committee is chaired by the Independent Board Member. Meeting quarterly to monitor and guide developments in sustainability, the Committee periodically reports to the Executive Committee and to the Board of Directors every year.
In line with the sustainability strategy defined by the Yapı Kredi Sustainability Committee, Yapı Kredi addresses sustainability initiatives under four main pillars which are: climate crisis and environment, sustainable finance, risk management and corporate governance, and human and society.
Yapı Kredi is committed to becoming carbon neutral Bank by 2050. In July 2021, the Bank joined the Business Ambition for 1.5 °C platform of the Science Based Targets Initiative ("SBTi") and pledged to set emissions reduction targets that will limit global warming to 1.5°C. The Bank also joined the Net Zero Banking Alliance ("NZBA") in 2023.
In addition, Yapı Kredi, which has been a supporter of Task Force on limate-Related Financial Disclosures ("TCFD") since 2021, carries out studies in line with TCFD recommendations.
Yapı Kredi believes that diversifying and expanding sustainable finance products is among the most important factors in the transition to a low carbon economy. In this context, Yapı Kredi works to increase the number of sustainable finance products for its customers in retail, SME, commercial and corporate segments. The Bank aims to increase the share of these products in the loan portfolio. Another aim of the Bank is to contribute to the capacity building of its customers on sustainable finance products, thus supporting the financing of transformation. In this context, it aims to create a sustainability ecosystem in parallel with the needs of society and its customers. Thus, while working for a sustainable world as an institution, the Bank will transform its stakeholders into active players in the long term.
∫ The Bank has received SBTi verification for its emission reduction targets set for its operations and loan portfolio
∫ The Bank were listed in the Bloomberg GEI once again after being listed for the first time in 2021, thanks to a performance that exceeded sectoral, international and country-wide standards
∫ The Bank implemented the Sustainable Preference Program (Step), which aims to raise awareness among its customers, encourage them towards nature-friendly solutions and reduce carbon emissions
∫ The Bank upgraded its MSCI ESG rating by three levels from BB to AA class of "Leaders", making the Bank the only financial institution in Türkiye to have received an AA rating
∫ The Bank was ranked among the CDP 2022 Climate Change Program Leaders of Türkiye
∫ The Bank was listed in "The Sustainability Yearbook 2022" issued under the scope of S&P Global's Corporate Sustainability Assessment
∫ The Bank calculated emissions arising from its investment and lending portfolio based on the PCAF (Partnership for Carbon Accounting Financials) methodology for the first time
∫ The Bank became one of the supporters of the Task Force on Climate-Related Financial Disclosures (TCFD)
∫ The Bank joined the Science Based Targets Initiative to become the first Turkish company to commit to reducing its emissions in line with the requirements of "Business Ambition for 1.5°C"
∫ The Bank declared that it will no longer finance new coal-fired power plants and new coal mining projects
∫ The Bank launched its electric/hybrid vehicle loan program
∫ The Bank became one of the five companies from Türkiye included in the 2021 Bloomberg GEI
∫ The Bank signed its first sustainability-linked syndicated loan facility
∫ The Bank launched its nature-friendly mortgage
∫ The Bank was ranked among the CDP 2020 Water Security Program Leaders of Türkiye
∫ The Bank expanded the scope of the ISO 14064-1 certificate to cover all its premises and subsidiaries, including the branches
∫ The Bank became the first financial institution to comply with the ISO 14046 Direct Water Footprint Standard in Türkiye
∫ The Bank became one of the founding signatories of the Principles for Responsible Banking (PRB) of the UNEP FI
∫ The Bank included the projects worth over USD 10 million with financial consultancy services in its "Assessment of Environmental and Social Risks in Lending Activities" procedure
∫ The Bank ranked among the Leaders of Türkiye in the CDP Water Security Program in 2019, with the highest ranking in the Turkish financial sector
∫ The Bank published its first report under the Carbon Disclosure Project (CDP) Water Security Program
∫ The Bank was included in the FTSE4Good Emerging Index
∫ The Bank became a founding signatory of the Global Compact Türkiye's Declaration on Sustainable Finance
∫ The Bank established its Environmental Management System (EMS) by receiving ISO 14001 certification
∫ The Bank published its first Sustainability Report in compliance with the GRI standards
∫ An independent audit was performed for the first time on selected indicators of the Sustainability Report
∫The Bank was included in the Borsa Istanbul (BIST) Sustainability Index
∫ The Bank established its Sustainability Committee in charge of integrating sustainability practices into its business processes and monitoring sustainability performance
Yapı Kredi believes that sustainable financing instruments are an effective tool to channel investments to projects that have demonstrated climate and social benefits and thereby contribute to the achievement of the SDGs set out by the United Nations1. By issuing sustainable financing instruments, Yapı Kredi intends to align its funding strategy with its mission, sustainability strategy and targets.
Yapı Kredi has established this Sustainable Finance Framework (the "Framework") under which it intends to issue green, blue, social and sustainability financial instruments, which may include bonds (including private placements), commercial paper, loans, promissory notes, trade finance2 instruments, customer deposits and any other related sustainable finance liabilities (together "Sustainable Finance Eligible Instruments"), to finance and/or refinance green, blue, social and sustainability activities (as defined in this framework) with a positive environmental and/or social benefit.
The Sustainable Finance Eligible Instruments that can be issued under this Framework are defined below:
2 Trade finance includes cash facilities and contingent (non-cash) facilities, including but not limited to loans, forfaiting, documentary collections, letters of credit, letters of guarantees, and/ or promissory notes.
1 To be found here.
Green Eligible Instruments where an amount equal to the net proceeds will be used to finance and/or refinance activities in line with the Green Eligibility Criteria and as defined exclusively in the Use of Proceeds section
Blue Eligible Instruments where an amount equal to the net proceeds will be used to finance and/or refinance activities in line with the Blue (subset of Green) Eligibility Criteria and as defined exclusively in the Use of Proceeds section
Social Eligible Instruments where an amount equal to the net proceeds will be used to finance and/or refinance activities in line with the Social Eligibility Criteria and as defined exclusively in the Use of Proceeds section
Sustainability Eligible Instruments where an amount equal to the net proceeds will be used to finance and/or refinance a mix of activities in line with the Green and Social Eligibility Criteria as defined in the Use of Proceeds section
This Framework is based on the International Capital Markets Association ("ICMA") Green Bond Principles ("GBP") 2021 version (with June 2022 Appendix I)3, Social Bond Principles ("SBP") 2023 version4 , Sustainability Bond Guidelines ("SBG") 2021 version5 and Loan Market Association ("LMA") Green Loan Principles ("GLP") 2023 version6 and Social Loan Principles ("SLP") 2023 version7. In addition to these principles, Yapı Kredi intends to align with the IFC Guidelines for Blue Finance.8 These are sets of voluntary guidelines that recommend transparency and disclosure and promote integrity in the development of sustainable finance instruments. Any future changes in the standards mentioned above may be implemented in future versions of this Framework.
The Yapı Kredi's Framework is intended to align with four core components:
For each Sustainable Finance Eligible Instrument issued, Yapı Kredi asserts that it will adopt (i) Use of Proceeds (ii) Process for Project Evaluation and Selection (iii) Management of Proceeds and (iv) Reporting, as set out in this Framework. The Yapı Kredi's Framework also follows the recommendations of the Green and Social Bond Principles regarding External Review.
Principles and the Green Loan Principles". According to the ICMA Green Bond Principles & the ICMA Bonds to Finance the Sustainable Blue Economy: A Practitioner's Guide, ICMA recognises that various transactions have been endorsed as "Blue
Financing", "Blue Bonds" or a similar terminology with the aim of highlighting the importance of the sustainable use of maritime resources and of the promotion of related sustainable economic activities (such as projects/activities under "Terrestrial and aquatic biodiversity conservation" and "Environmentally sustainable management of living natural resources
and land use" categories of this Framework). As long as they align with the four core components of the GBP, these "Blue" instruments can be recognised as Green Bonds.
3 To be found https://www.icmagroup.org/green-social-and-sustainability-bonds/green-bond-principles-gbp/. 4 To be found https://www.icmagroup.org/green-social-and-sustainability-bonds/social-bond-principles-sbp/. 5 To be found https://www.icmagroup.org/green-social-and-sustainability-bonds/sustainability-bond-guidelines-sbg/. 6 To be found https://www.lma.eu.com/download?p=658001719-7226 7 To be found https://www.lma.eu.com/download?p=754773928-7229
8 The IFC Guidelines for Blue Finance aim to provide a list of eligible use of proceeds to support private investments aligned with the GBP and GLP. See "Guidelines Blue Finance: Guidance for financing the Blue Economy, building on the Green Bond
This Framework may, from time to time, be updated, for instance to reflect evolving market standards (e.g. the Green Bond Principles), regulations and/or Yapı Kredi's strategy. It is Yapı Kredi's ambition that any future version of this Framework will include transparency and reporting disclosures that will be aligned with best market practice. For the avoidance of doubt, any future changes to the eligibility criteria may not apply to sustainable finance instruments issued under previous versions of the framework.
Yapı Kredi, in accordance with the Green and Social Bond and Loan Principles, will allocate an amount equal to the net proceeds of the Sustainable Finance Eligible Instruments to an eligible loan portfolio of new and existing green, blue and social loans (each an "Eligible Loan" and altogether "Eligible Loan Portfolio"). The Eligible Loans are to be funded in whole or in part by an allocation of an amount equal to the proceeds from the Sustainable Finance Eligible Instruments.
Eligible Loans that are refinanced up to 36 months prior to the issuance of the Sustainable Finance Eligible Instruments will apply.
To avoid double counting of eligible projects and/or uses (as defined under Use of Proceeds), these will not be funded by other Sustainable Finance Eligible Instruments unless Yapı Kredi can demonstrate that:
i. Distinct portions of the eligible projects and/or uses are being funded by different Sustainable Finance Eligible Instruments, or
ii. The existing green/social/sustainable finance instrument is being refinanced via another Sustainable Finance Eligible Instrument under this framework.
When the eligible projects and/or activities are subject to partnerships or joint ventures or co-financed with any other parties, Yapi Kredi will only consider their share of investment in those eligible Use of Proceeds. Yapi Kredi will not consider a portion of any eligible projects and/or activities which has been financed and/or refinanced by any other stakeholder.
Under this Framework, General Corporate Purposes loans qualify when they are provided to companies with over 90% of revenues derived from green or social activities outlined in the eligibility criteria below, and any revenues of such company derived from fossil fuel must be less than 5%. In any scenario the loans provided by Yapi Kredi under this Framework to such company should be applied to their green, blue and/or social portion of activities only.
Eligible Loans may be financed directly by Yapı Kredi or indirectly via its 100% wholly owned subsidiaries.
For the avoidance of doubt, any future change to the Framework may not necessarily apply to sustainable finance instruments previously issued under this framework.
| ICMA/LMA Green and/or Blue Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria |
|---|---|
| Renewable Energy | Financing or refinancing the acquisition, procurement, development, construction, operation, transmission, repair, maintenance or con- nection of new and/or existing renewable energy plants and trans- mission of energy from such renewable sources: |
| ∫ Solar Power: Solar photovoltaic ("PV"), Concentrated solar power ("CSP") and solar thermal power plants9 ∫ Wind Power: On and off-shore power plants ∫ Hydro Power: Hydropower plants10 ∫ Geothermal Power: Geothermal power plants11 ∫ Electricity generation from biogas and/or biomass and/or biofuel12 ∫ Biofuel production13 ∫ Green Hydrogen: Storage and refuelling infrastructure and fuel |
|
| production by electrolysis that is 100% powered by renewable energy sources ∫ Transmission systems: Development of new, or improvement of existing, transmissions systems (or other infrastructure) to facilitate the integration of electricity from renewable energy sources into the grid |
|
| ∫ Construction, renovation and refurbishment of electricity grids that transmit electricity generated by renewable power plants to the national grid ∫ Investments enhancing energy efficiency in respect of the distribution and transmission of electricity ∫ Smart grids, storage facilities, metering systems that serve to increase the share of renewable energy in total energy consumption |
9 Over 85% of electricity generated from CSP (Concentrated Solar Power) should be derived from solar energy sources.
10 Eligible hydropower projects are limited to those that i) the electricity generation facility is a run of river plant and does not have an artificial reservoir; or ii) those that are below 25MW with either a) Life cycle emissions of less than 100gCO2e/kWh, or b). Power density greater than 5W/m2. This criteria are in line with the EU Taxonomy technical screening criteria for electricity generation from hydropower (for avoidance of doubt the Framework does not claim alignment with EU Taxonomy).
11 With life cycle emissions of less than 100gCO2e/kWh.
12 With life cycle GHG emission intensity below 100gCo2e/kWh, or there is life-cycle emission reduction of 80% GHG emissions reduction compared to fossil fuels, and derived from sustainable feedstock (e.g. agricultural resides or forestry residues) or waste sources that do not compete with food sources or deplete existing terrestrial carbon pools. Feedstock can include forest (certified to Forestry Stewardship Council (FSC), Programme for the Endorsement of Forest Certified (PEFC), Sustainable Biomass Program (SBP), or Roundtable on Sustainable Biomaterials). For biofuel processing, biofuel blending facilities (mixing with fossil fuels) is excluded. Energy crops, non-waste feedstock and feedstock which deplete carbon pools are excluded. Peat and 10% or more feedstock from uncertified sources is excluded. Palm oil that is not RSPO-certified is excluded. For the production of electricity from landfills and/or mixed residual waste, the following criteria will apply: (i) if from municipal solid waste, the majority of recyclables (especially plastics) are segregated before energy conversion; (ii) landfill gas capture for flaring will be excluded; (iii) plastics, rubber, tire-derived fuels (TDF) will be excluded as feedstock.
13 With life-cycle emissions reduction of at least 65% lower than fossil fuel baseline.
| ICMA/LMA Green and/or Blue Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria |
|---|---|
| Commercial or Residential Green Buildings | |
| Green Buildings | Financing or refinancing new and/or existing commercial and/or residential buildings that meet one of the following criteria: |
| ∫ Commercial or residential green buildings belonging to top 15% most energy efficient buildings in Türkiye |
|
| ∫ Buildings rated "B" or above in terms of energy performance in the local context, as determined via Energy Performance Certificate ("BEP-TR") issued in accordance with the Turkish regulation and/or via Turkish Building Code |
|
| ∫ Buildings classified as Nearly Zero Energy Building ("NSEB")14 ∫ Buildings that meet at least any of the following external certifications for green buildings: |
|
| ∫ LEED ("Gold" or above) ∫ BREEAM ("Very Good" or above) ∫ DGNB (Gold or above) ∫ HQE (Excellent or above) ∫ EDGE (Certified, Advanced, Zero carbon) ∫ B.E.S.T (by ÇEDBİK) Green Building certification ("Very Good" or above) ∫ Yes-TR ("Çok İyi" or above) ∫ Refurbished commercial and residential building energy efficiency projects that reduce energy consumption by at least 30% |
14 NSEB buildings must meet the following criteria: i. Energy performance class B or better on the Energy Performance Certificate and ii. The primary energy requirmeent of the building is supplied with at least 5% renewable energy until 01/01/2025 and at least 10% thereafter.
| ICMA/LMA Green and/or Blue Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria |
|---|---|
| Clean Transportation | Projects related to zero emissions vehicles and associated infrastructure for personal, public and freight transportation including high speed trains meeting the following criteria: |
| ∫ Rail transportation: meeting the zero direct (tailpipe) CO2 emissions level (passenger and freight) |
|
| ∫ Road transportation: for passenger vehicles meeting the 50gCO2e/pkm emissions level until 31 December 2025 and 0gCO2e/pkm after or meeting the zero direct (tailpipe) CO2 emissions level; for freight vehicles meeting the 25gCO2e/t-km emissions level until 31 December 2025 and 0gCO2e/t-km after or meeting the zero direct (tailpipe) CO2 emissions level |
|
| ∫ Development, operation and upgrade of electric powered rail transport for both passengers and goods |
|
| ∫ Fully electric vehicles and projects supporting the deployment of electric vehicles charging infrastructure |
|
| ∫ Green Hydrogen vehicles | |
| ∫ Construction of bicycle paths | |
| ∫ Design and manufacturing of components dedicated to clean transport, such as Electric vehicles, EV batteries and directly associated components, Green Hydrogen vehicles' associated components, Hybrid vehicles' associated components, charging units |
|
| ∫ Hybrid electric vehicles and vessels with direct emissions below the threshold of 50gCO2e/pkm for passenger vehicles until 31 December 2025 and 0gCO2e/km after or meeting the zero direct (tailpipe) CO2 emissions level; |
|
| ∫ Infrastructure related to zero direct (tailpipe) CO2 emissions vehicles including, but not limited to, EV charging stations, hydrogen fuelling stations and infrastructure dedicated to nonmotorized mobility e.g. cycle paths |
|
| Exclusions: | |
| ∫ Infrastructure and projects dedicated to the transport or storage of fossil fuels |
| ICMA/LMA Green and/or Blue Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria |
|---|---|
| Energy Efficiency | Financing or refinancing projects for enhancing energy efficiency: ∫ Refurbishment, rehabilitation and/or renovation investments, which improve the efficiency of energy consumption by at least 20% and/or reduce greenhouse gas emissions by at least 20% ∫ Installation, maintenance, or repair of specific energy efficiency equipment such as energy efficient windows, Heating, Ventilation, and Air Conditioning ("HVAC") systems, LED lights etc. which are rated in the highest two classes of the applicable national energy efficiency labelling system in Türkiye15 and/or eligible products under the EBRD green technology selector16. For household appliances financed via the EBRD green technology selector, these will also need to be rated in the highest two classes of the applicable national energy efficiency labelling system in Türkiye17 ∫ Installation, maintenance and repair of instruments and devices for measuring, regulation and controlling energy performance such as smart meters Green Steel: Manufacturing of steel using Green Hydrogen (as defined in this Framework). Electric Arc Furnace (EAF) facilities only Exclusions: ∫ Any projects that relate to fossil fuel extraction, production, refining and operation; and projects that will result in lock in of fossil fuel technologies ∫ Any projects in hard-to-abate and carbon intensive sectors |
15 The Turkish National Labelling Framework, to be found here.
16 https://techselector.com/ts-en/.
17 The Turkish National Labelling Framework, to be found here.
Environmentally sustainable management of living natural resources and land use
Eligibility Criteria
Financing or refinancing projects for environmentally responsible agriculture, land restoration, forest management and urban greening:
∫ Forestry activities with certifications, sustainable forest management and land restoration:
∫ Activities to develop parks and green areas that use tree species well adapted to site conditions and have a sustainable management plan in place, such as FSC, PEFC etc.
∫ Fishery & Aquaculture: environmentally sustainable fishery and aquaculture with one of the following certifications:
∫ Certified agricultural practices under sustainable agriculture certification schemes nationally or internationally recognised, including Organic agriculture (e.g. Roundtable on Sustainable Palm Oil ("RSPO"), PEFC, Rainforest Alliance, UTZ, ProTerra, Roundtable on Sustainable Biomaterials ("RSB"), International Sustainability & Carbon Certification ("ISCC"))
∫ Sustainable agriculture activities such as restoration of degrade pasture, soil recovery, use of organic fertilizer, crop rotation etc., provided such financing will not be related to contamination or negative environmental externality from the borrower's own activity
Exclusions:
Terrestrial and aquatic biodiversity conservation (including the protection of coastal, marine and watershed environments)
Protect terrestrial and aquatic biodiversity: conservation including the protection of coastal, marine, watershed environments and other aquatic ecosystems. Eligible activities include:
18 Eligible afforestation and reforestation activities are those that use tree species well adapted to site conditions and have a sustainable management plan in place, such as FSC ,PEFC, Rainforest Alliance.
19 Environmentally friendly /green star/ eco tourism as defined by the Ministry of Tourism and Culture: https://www.resmigazete.gov.tr/eskiler/2017/06/20170619-8.htm
Sustainable water and wastewater management Financing or refinancing projects for development, construction, operation and maintenance of sustainable water and waste-water management projects and facilities: ∫ Wastewater collection, treatment, re-use and recycling ∫ Projects that protect water security, water quality, water pollution preventions ∫ Water desalination projects, based on reverse osmosis technology and with carbon intensity of less than 100gCO2e/kWh over the asset life ∫ Sustainable urban drainage systems Exclusions: ∫ Wastewater from fossil fuel operations ∫ Landscaping projects that use i) invasive species or ii) vdrought-tolerant species as a result of modified genetics ∫ Projects with equipment and/or methods that are dependent on fossil fuels ∫ Projects with systems and measures to provide water for fossil fuel operations, fracking, nuclear and mining ∫ The expenditures will exclude business-as-usual renovation and retrofits of the drainage systems ∫ Improvements in appliances and equipment primarily using fossil fuel are excluded, to avoid lock-in of fossil fuel consumption ∫ Projects in hard-to-abate sectors Financing or refinancing projects for development, construction, operation and maintenance of sustainable waste management and recycling projects, activities and operations: ∫ Waste reduction, waste recycling and waste-to-energy20 . This includes the development, operation and upgrade of recy cling plants and recycling activities such as for metals, plastic21 and paper ∫ Monitoring and measuring systems aiming to reduce water, soil or air pollution (so long as they do not directly rely on fossil fuels)22 ∫ If vehicles are financed within this category (for example for collection, processing etc) such vehicles shall also follow the eligibility criteria within the Clean Transportation criteria ∫ For recycling of waste from electrical and electronic equipment, a robust management process shall be established to mitigate Pollution prevention and control
20 Construction, operation and maintenance of waste-to-energy facilities for the generation of electricity and/or heat subject to lifecycle GHG emission of the energy produced being below 100gCO2e/kWh. In accordance with the national waste management hierarchy.
the risks associated with this activity
21 Chemical recycling of plastic is excluded.
22 Excludes: (i) components/system that directly rely on fossil fuels or create "lock-in" investments (extending the life of fossil fuel usage); (ii) pollution prevention projects related to fossil fuel production (such as produced water from fracking); and (iii; prevention of pollution that results directly from technologies that are inherently reliant on fossil fuels as an energy source.
| ICMA/LMA Green and/or Blue Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria |
|---|---|
| Eco-efficient and/or circular economy adapted products, production technologies and processes |
Financing or refinancing projects for resource use efficiency and circular and/or recyclable products and processes: ∫ Projects that increase the recyclability/reusability of products23 ∫ Projects related to usage of waste and recycled materials in production for industries23 Exclusions: ∫ Chemical recycling of plastics |
23 For production of plastics, the following criteria will apply: (i) min 90% input is recycled or bio-based (bio-based materials will be sustainably sourced, demonstrated though certifications such as Forest Stewardship Council (FSC); Bonsucro; International Sustainability and Carbon Certification (ISCC Plus); Roundtable of Sustainable Biomaterials (RSB); and Round Table on Responsible Soy (RTRS)) ; and (ii) min 90% not intended for single use; and (iii) all products are recyclable. For the production of aluminium-based end-products i) 90% or more of the input is scrap/recycled aluminium or ii) 75-90% of the input is scrap/recycled aluminium and the remaining (primary) aluminium has a carbon intensity < 2.5 tCO2e/t.
Financing or re-financing of projects related to:
| ICMA/LMA Social Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria | Social benefit(s) |
Target groups |
|
|---|---|---|---|---|
| Access to Essential Services | Healthcare | Construction, development, operation, renovation and/or maintenance of facilities, services, systems or equipment for public, subsidized, private subsidized24 and/or nonprofit healthcare. Provision and development of emergency medical response service, disease control services, medical supplies, and vaccines to prevent the spread of infectious diseases or health disasters |
∫ Increase access to quality, timely and accessible healthcare ∫ Increase availability of quality medical equipment to healthcare facilities and individuals |
∫ General public ∫ Individuals with specific physical and/or mental conditions ∫ Elderly people ∫ Vulnerable or disadvantaged populations |
24 Private healthcare financed in this category will be limited to public-private partnership (PPP) programme, which are subsidized by the government and covered by the public health insurance.
| ICMA/LMA Social Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria | Social benefit(s) |
Target groups |
|
|---|---|---|---|---|
| Education | Construction, development, operation, renovation and/or maintenance of facilities, services, systems or equipment for public and government subsidized education |
∫ Increase access to quality and accessible education and vocational training |
∫ Youth and general public including people from low-income families and/or from disadvantaged |
|
| Access to Essential Services | Student housing (open to all students or especially targeting students from disadvantaged backgrounds, lower income families) |
backgrounds | ||
| Projects relating to the physical or mental development of young generation including supporting amateur sport clubs, youth projects, youth camps, where priority is given to disadvantaged groups (children and youth from lower income level, people with disabilities) |
| ICMA/LMA Social Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria | Social benefit(s) |
Target groups |
|
|---|---|---|---|---|
| Access to Essential Services | Disaster & Emergency relief following natural disasters or during health pandemics |
Reconstruction of basic infrastructure (e.g. housing, electricity transmission network, water distribution network)25 Financial support for retail and commercial activities disrupted by the disaster (excluding large corporates) Financial support or programs to support persons who are unemployed because of the disaster Temporary housing and financial support for persons who are displaced because of the disaster Reconstruction of public schools and universities |
∫ Develop quality, reliable, sustainable and resilient infrastructure, including regional and transborder infrastructure, to support economic development and human well-being, with a focus on affordable and equitable access for all |
∫ General public impacted by the disaster |
| For avoidance of doubt Exclusion list activities continue to apply in this category |
||||
| Affordable Basic Infrastructure | Water and sanitation | Projects providing or increasing water accessibility, basic sanitation and related treatment facilities to areas of lower socioeconomic development than average, if such areas have lack of access to water. Desalination plants are excluded |
∫ Increase access to basic infrastructure ∫ Increases access to energy |
∫ People living in lower socioeconomically developed areas26, low-income families and/or from disadvantaged backgrounds |
| Telecommunications | Projects targeting deployment, extension/ improvement of telecommunications and broadband (fixed or mobile) connectivity services in unconnected areas27 or areas of lower socioeconomic development than average. |
|||
| Telecommunications | Construction/maintenance/ installation of transportation infrastructure in lower socioeconomically developed areas, to improve connectivity and develop community transportation; excluding major roads or highways |
25 Excludes construction of fossil fuel power plants and any transmissions and distribution systems that are a dedicated connection to fossil fuel power plants.
26 Lower socioeconomically developed areas are areas which have lower gross domestic products than average Turkish gross domestic products. Gross domestic product by province statistics.
20
is published by TURKSTAT. Refer to https://data.tuik.gov.tr/Bulten/Index?p=Il-Bazinda-Gayrisafi-
Yurt-Ici-Hasila-2022-45867
27 Eligible areas include those that don't have mobile broadband 3G or above.
| ICMA/LMA Social Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria | Social benefit(s) |
Target groups |
|
|---|---|---|---|---|
| Affordable Basic Infrastructure | Energy Accessibility | Projects that finance energy accessibility through electricity distribution and Transmission infrastructure28 (including generated from non-renewable sources) in regions of lower socioeconomic development26 than average, if such areas have lack of access to electricity and transmission of electricity in regions where there is no electricity Subsidy program for electricity consumption in less socioeconomically developed areas |
||
| Food Security | Access to food | Food security and livelihood programs ensuring access to food and the protection of livelihoods during and immedi- ately after an emergency Projects related to physical, social, and economic access to sufficient, safe, nutritious food, adequate food and meeting nutrition needs29 |
∫ Increase essential access to food |
∫ General public impacted by the disaster ∫ People living in lower socioeconomically developed areas |
| Employment Generation, and Programs designed to prevent and/or alleviate unemployment stemming from socioeconomic crises, including through the potential effect of MSME financing |
Providing financing or refinanc- ing to MSMEs30. To be eligible for this category, any one of the following criteria should be met: ∫ MSMEs where at least 51% of shares are owned by women or where the company has at least 20% women's ownership with women occupying at least one managerial role, or where the overall operational manage- ment responsibility is held by one or more females, or MSMEs with majority of the board represented by women, or MSMEs where more than 50% of employees are women. ∫ MSMEs located in cities with lower income than the average GDP ∫ MSMEs owned by migrants and/or displaced persons ∫ MSMEs affected by natural disasters ∫ New enterprises with less than 5 years of activity Young entrepreneurs – owner- ship of 51% or businesses where 51% majority of manage- ment is under the age of 35 |
∫ Employment generation and retention ∫ Reduction of social and economic inequalities |
∫ MSMEs in socioeconomically disadvantaged areas ∫ MSMEs with woman representation ∫ Starter MSME businesses / young entrepreneurs |
28 Such infrastructure will not be connected to fossil fuel power plants.
29 Only companies that exclusively produce organic certified products/services that are accredited by IFOAM and that use organic fertilizers and pesticides will be eligible.
21
30 Micro, small and medium enterprises (MSME) as defined in the Official Gazette (Mevzuat Bilgi Sistemi).
| ICMA/LMA Social Eligible Category and Contribution to UN SDG(s) |
Eligibility Criteria | Social benefit(s) |
Target groups |
|---|---|---|---|
| Affordable housing | Providing social housing to disadvantaged groups "My First Home loan package" designed for families who do not have a home with interest rate way below standard mortgage loans and maturity of up to 15 years instead of 10 years in standard mortgage loans Social housing mortgages to disadvantaged groups and to social housing organizations. Social housing eligibility requirements are set by the Turkish government31 and can include criteria such as income level and number of family members |
∫ Ensure access for all to adequate, safe and affordable housing and basic services and upgrade slums |
∫ General public including people from low-income families (definition as per TOKI) |
31 TOKİ > Housing Programs (toki.gov.tr)
The net proceeds of the Sustainable Finance Eligible Instruments will be allocated to the Eligible Loans that will be reviewed, selected and approved by the Sustainable Finance Working Group. As an integral body of the Yapı Kredi's Sustainability Committee, the Sustainable Finance Working Group is comprised of representatives from the Treasury Department, the Corporate Communications Department-Sustainability Division, the Corporate Banking, the Commercial & SME Banking Management, the Investor Relations Department, the Retail Banking and the Credits Department. Reviewed and selected assets are required to comply with the Yapı Kredi's Green and/or Social Eligibility Criteria as defined in section 2.3 ("Use of Proceeds") of this Framework.
The Sustainable Finance Working group monitors the Eligible Loan Portfolio after each reporting period and is also responsible for:
Yapı Kredi endeavours to ensure that all selected Eligible Loans comply with the official standards and national regulations on a best-efforts basis. It is part of the general transaction process to ensure that all selected loans comply with minimum environmental and social requirements based on Yapı Kredi's internal policy framework. The establishment and careful implementation of Yapı Kredi's sustainable lending policies and guidelines helps mitigate any environmental and social risk potentially associated with the Eligible Loans.
Loans allocated under this Framework will not be knowingly used to finance/refinance the activities listed in Yapı Kredi's Environmental and Social Exclusion List32.
32 Yapi Kredi's Exclusion List can be found in its Environmental and Social Policy, see here.
Yapı Kredi is committed to develop products and services that are both environmentally friendly while creating sustainable value for the community in which it operates. Projects to be financed by Yapı Kredi are obliged to comply with legal requirements as well as environmental and social standards beyond the requirements determined by the Bank's policies. For this purpose, the Environmental and Social Risk Assessment System, which was configured in 2016, was put into practice in 2017.
Within the scope of the Bank's current business processes, all credit requests, regardless of limit, are subject to the Environmental and Social Policy33 that forms a part of the Sustainability Management System, in addition to being checked for compliance with the Bank's Credit Policies. All credit requests are assessed against the Exclusion List included in the Environmental and Social Policy. Under no circumstances shall Yapı Kredi grant loans for activities included in the Exclusion List.
The Assessment of Environmental and Social Risks in Lending Activities procedure involves determining the risk category of the project in question, and developing action and monitoring plans accordingly. The assessment follows the Yapı Kredi Environmental and Social Risk Assessment ("ESRA") Model. The model has been established based on local legislation as well as the Environmental and Social Performance Standards of the International Finance Corporation ("IFC"). Corporate and Commercial Credits Management is the main responsible party in risk assessment and categorization efforts.
Results from implementation of the Environmental and Social Risk Assessment Model are reported on a semiannual basis. Reporting results are disclosed one month following the end of the relevant year. Implementation results are presented to the Sustainability Committee at the annual Sustainability Management System Evaluation Meeting.
The net proceeds of the Sustainable Finance Eligible Instruments will be managed by Yapı Kredi's Treasury and Sales Departments in a portfolio-based approach.
33 Policy can be found here.
Yapı Kredi intends to allocate the proceeds from the Sustainable Finance Eligible Instruments to a portfolio of assets that meet the use of proceeds eligibility criteria in section 2.3 ("Use of Proceeds) and are in accordance with the evaluation and selection process presented in section 2.4 ("Project Evaluation and Selection").
Loans that are eligible to receive financing under Yapı Kredi's Framework will be tagged within Yapı Kredi's credit monitoring system. Allocation status of the Sustainable Finance Eligible Instruments will be monitored annually to be utilised towards Eligible Loans approved by the Sustainable Finance Working Group.
Yapı Kredi intends to fully allocate the net proceeds of the Sustainable Finance Eligible Instruments within 36 months after the issuance date of the Sustainable Finance Eligible Instruments.
Yapı Kredi will strive to achieve a level of allocation for the Eligible Loan Portfolio that will, over time, match or exceed the balance of the net proceeds from its outstanding Sustainable Finance Eligible Instruments. Eligible Loans will be added to or removed or replaced from the Eligible Loan Portfolio to the extent required.
Unallocated proceeds will be invested in short-term money market products in cash and/or cash equivalents, or in other liquid marketable instruments.
Yapı Kredi will make and keep readily available reporting on the allocation of an amount equal to the net proceeds to the Eligible Loan Portfolio and wherever feasible reporting on the impact of the Eligible Loan Portfolio, at least at the category level, to be renewed annually until full allocation. Yapı Kredi intends to provide aggregated reporting for all Sustainable Finance Eligible Instruments outstanding. Such information will made public on Yapı Kredi's website.
Yapı Kredi will align, on a best effort basis, the impact reporting with the portfolio approach described in "Handbook – Harmonized Framework for Impact Reporting (June 2023)34".
34 To be found Impact Reporting » ICMA (icmagroup.org).
The allocation report shall provide indicators such as:
Depending on the availability of the suitable data, Impact Reporting may include key performance indicators outlined below, although this list is not exhaustive:
| Eligible Sustainable Finance Project Categories |
Impact Reporting Metrics |
|---|---|
| Green and/or Blue Project Categories | |
| Renewable Energy | ∫ Capacity of renewable energy plant(s) constructed or rehabilitated in MW ∫ Estimated annual GHG emissions reduced/avoided in tonnes of CO2 equivalent ∫ Expected annual renewable energy generation in MWh/GWh (electricity) and GJ/TJ (other energy) |
| Green Buildings | ∫ Level of certification by property ∫ Estimated annual GHG emissions reduced/avoided in tonnes of CO2 equivalent |
| Clean Transportation | ∫ Estimated annual GHG emissions reduced/avoided in tonnes of CO2 equivalent |
| Energy Efficiency | ∫ Annual energy savings in MWh (electricity) and GJ/TJ (other energy savings) ∫ Estimated annual GHG emissions reduced/avoided in tonnes of CO2 equivalent |
| Sustainable water and wastewater management |
∫ Amount of water (m3) treated, re-used/recycled, desalinated, wastewater collected, saved (as applicable) |
| Eligible Sustainable Finance Project Categories |
Impact Reporting Metrics | |
|---|---|---|
| Green and/or Blue Project Categories | ||
| Pollution prevention and control | ∫ Amount of pollution/waste prevented/recycled (as applicable) |
|
| Eco-efficient and/or circular economy adapted products, production technologies and processes |
∫ Amount of certified product, relevant certifications (as applicable) |
|
| Environmentally sustainable management of living natural resources and land |
∫ Forest area protected (in hectares or similar); Net carbon sequestration in tonnes annually (where available) ∫ Relevant certifications where applicable, e.g. forest /fishery certification scheme |
|
| Terrestrial and aquatic biodiversity conservation (including the protection of coastal, marine and watershed environments) Climate Change Adaptation |
∫ Living natural resources, land and biodiversity: Length of coastal/terrestial area (in km2); type of biodiversity conserved and/or protected (if available); qualitative improvements (where available); number of projects; species, flora, fauna restored/protected |
|
| ∫ Type and number of relevant projects and infrastructure financed ∫ Number of beneficiaries/business/areas benefited ∫ Climate related disasters avoided or reduced |
||
| Social Project Categories | ||
| Healthcare | ∫ Number of facilities and/or programs financed ∫ Number of beneficiaries |
|
| Access to Essential | Education | ∫ Number of beneficiaries |
| Services | Disaster & Emergency relief following natural disasters or during health pandemics |
∫ Loan amounts provided; type of projects/infrastructure financed; ∫ Number of beneficiaries, jobs created (if any) |
| Affordable basic Infrastructure |
Energy Accessibility | ∫ Loan amounts and number of beneficiaries provided with energy/electricity infrastructure |
| Water access | ∫ Loan amounts, type of projects and number of beneficiaries provided with clean, adequate water and sanitation |
| Social Project Categories | ||
|---|---|---|
| Affordable basic Infrastructure |
Transportation | ∫ Loan amounts, type of projects and number of beneficiaries provided with basic transportation infrastructure |
| Telecommunications | ∫ Loan amounts, type of projects and number of beneficiaries provided with basic telecommunication infrastructure |
|
| Food security, Access to food | ∫ Number of beneficiaries provided with safe, healthy, nutritious food |
|
| Eligible Sustainable Finance Project Categories |
Impact Reporting Metrics | |
| Employment Generation, and Programs designed to prevent and/or alleviate unemployment stemming from socioeconomic crises, including through the potential effect of MSME financing |
∫ Number of target group-owned MSMEs financed ∫ Number of MSMEs financed that are located in cities with an income below average GDP ∫ Number of MSMEs financed that are affected by natural disasters or health disasters ∫ Number of jobs created (reported where available) |
|
| Affordable housing | ∫ Number of individuals/families benefiting from the projects; amounts of relevant loans |
Sustainalytics reviewed the alignment of Yapı Kredi's Sustainable Finance Framework with the ICMA's 2021 Green Bond Principles, Social Bond Principles, Sustainability Bond Guidelines, 2022 IFC Guidelines for Blue Finance; and the LMA's 2023 Green Loan Principles and Social Loan Principles. Sustainalytics provided a Second Party Opinion ("SPO"). This Framework and the Second Party Opinion are publicly available on Yapı Kredi's website.
Yapı Kredi may request on an annual basis, starting one year after issuance and until full allocation, a limited assurance report of the allocation of the Sustainable Finance Eligible Instrument proceeds to the Eligible Loan Portfolio, provided by a qualified external party.
THIS DOCUMENT IS INTENDED TO PROVIDE NON-EXHAUSTIVE, GENERAL INFORMATION AND IS SUBJECT TO CHANGE WITHOUT NOTICE. THIS DOCUMENT MAY CONTAIN OR INCORPORATE BY REFERENCE PUBLIC INFORMATION NOT SEPARATELY REVIEWED, APPROVED OR ENDORSED BY YAPI KREDİ AND ACCORDINGLY, NO REPRESENTATION, WARRANTY OR UNDERTAKING, EXPRESS OR IMPLIED, IS MADE AND NO RESPONSIBILITY OR LIABILITY IS ACCEPTED BY YAPI KREDİ AS TO THE FAIRNESS, ACCURACY, REASONABLENESS OR COMPLETENESS OF SUCH INFORMATION.
THIS DOCUMENT MAY CONTAIN STATEMENTS ABOUT FUTURE EVENTS AND EXPECTATIONS THAT ARE FORWARD-LOOKING STATEMENTS. NONE OF THE FUTURE PROJECTIONS, EXPECTATIONS, ESTIMATES OR PROSPECTS IN THIS DOCUMENT SHOULD BE TAKEN AS FORECASTS OR PROMISES, NOR SHOULD THEY BE TAKEN AS IMPLYING ANY INDICATION, ASSURANCE OR GUARANTEE THAT THE ASSUMPTIONS ON WHICH SUCH FUTURE PROJECTIONS, EXPECTATIONS, ESTIMATES OR PROSPECTS HAVE BEEN PREPARED ARE CORRECT OR EXHAUSTIVE OR, IN THE CASE OF THE ASSUMPTIONS, FULLY STATED IN THE DOCUMENT. YAPI KREDİ HAS AND UNDERTAKES NO OBLIGATION TO UPDATE, MODIFY OR AMEND THIS DOCUMENT, THE STATEMENTS CONTAINED HEREIN TO REFLECT ACTUAL CHANGES IN ASSUMPTIONS OR CHANGES IN FACTORS AFFECTING THESE STATEMENTS OR TO OTHERWISE NOTIFY ANY ADDRESSEE IF ANY INFORMATION, OPINION, PROJECTION, FORECAST OR ESTIMATE SET FORTH HEREIN CHANGES OR SUBSEQUENTLY BECOMES INACCURATE.
THIS DOCUMENT IS NOT INTENDED TO BE AND SHOULD NOT BE CONSTRUED AS PROVIDING LEGAL OR FINANCIAL ADVICE. IT DOES NOT CONSTITUTE AN OFFER OR INVITATION TO SELL OR ANY SOLICITATION OF ANY OFFER TO SUBSCRIBE FOR OR PURCHASE OR A RECOMMENDATION REGARDING ANY SECURITIES, NOTHING CONTAINED HEREIN SHALL FORM THE BASIS OF ANY CONTRACT OR COMMITMENT WHATSOEVER AND IT HAS NOT BEEN APPROVED BY ANY SECURITY REGULATORY AUTHORITY.
NO REPRESENTATION IS MADE AS TO THE SUITABILITY OF ANY BONDS TO FULFIL ENVIRONMENTAL AND SUSTAINABILITY CRITERIA REQUIRED BY PROSPECTIVE INVESTORS. EACH POTENTIAL PURCHASER OF BONDS SHOULD DETERMINE FOR ITSELF THE RELEVANCE OF THE INFORMATION CONTAINED OR REFERRED TO IN THIS FRAMEWORK OR THE RELEVANT BOND DOCUMENTATION FOR SUCH BONDS REGARDING THE USE OF PROCEEDS AND ITS PURCHASE OF BONDS SHOULD BE BASED UPON SUCH INVESTIGATION AS IT DEEMS NECESSARY.
THE DISTRIBUTION OF THIS DOCUMENT AND OF THE INFORMATION IT CONTAINS MAY BE SUBJECT OF LEGAL RESTRICTIONS IN SOME COUNTRIES. PERSONS WHO MIGHT COME INTO POSSESSION OF IT MUST INQUIRE AS TO THE EXISTENCE OF SUCH RESTRICTIONS AND COMPLY WITH THEM.
THE INFORMATION IN THIS DOCUMENT HAS NOT BEEN INDEPENDENTLY VERIFIED. THE ADDRESSEE IS SOLELY LIABLE FOR ANY USE OF THE INFORMATION CONTAINED HEREIN AND YAPI KREDI SHALL NOT BE HELD RESPONSIBLE FOR ANY DAMAGES, DIRECT, INDIRECT OR OTHERWISE, ARISING FROM THE USE OF THIS DOCUMENT BY THE ADDRESSEE.
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