Environmental & Social Information • Sep 3, 2024
Environmental & Social Information
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Sustainalytics is of the opinion that the İşbank Sustainable Finance Framework is credible and impactful and aligns with the Sustainability Bond Guidelines 2021, Green Bond Principles 2021, Social Bond Principles 2021, and Green Loan Principles 2021. This assessment is based on the following:
The eligible categories for the use of proceeds – Renewable Energy, Energy Efficiency, Eco-efficient and/or Circular Economy Adapted Products, Production Technologies and Processes, Green Buildings, Clean Transportation, Pollution Prevention and Control, Environmentally Sustainable Management of Living Natural Resources and Land Use, Sustainable Water, Wastewater Management and Climate Adaptation, Terrestrial and Aquatic Biodiversity Conservation, Access to Essential Services, and Employment Generation Including Through the Potential Effect of SME Financing – are aligned with those recognized by both the Green Bond Principles, Social Bond Principles and Green Loan Principles. Sustainalytics considers that investments in the eligible categories will lead to positive environmental or social impacts and advance the UN Sustainable Development Goals, specifically SDG 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, and 15.
İşbank's internal process in evaluating and selecting projects is managed by the Sustainable Finance Working Group (the "SFWG"). The SFWG consists of representatives of various departments, including Investor Relations and Sustainability Division, responsible for İşbank's sustainability oversight. This is in line with market practice. In addition, the Bank's responsible finance approach is applicable to all allocation decisions under the Framework and is viewed as adequate risk management systems. Sustainalytics considers this to be in line with market practice.
İşbank's processes for management of proceeds is overseen by the Financial Institutions Division. İşbank will allocate to a portfolio of loans and ensure that the Sustainable Loan Portfolio is adjusted periodically in order to match the amount of net proceeds of outstanding loans and/or bonds issued under the Framework. Pending allocation, proceeds may be temporarily invested in cash and/or cash equivalent, and/or liquid marketable instruments. Sustainalytics considers this to be in line with market practice.
İşbank intends to report on allocation of proceeds on its website, on an annual basis, until full allocation. İşbank will also report on the relevant environmental and social impacts of the projects, where feasible. A detailed list of impact metrics can be found in Appendix 4. Sustainalytics views İşbank's allocation and impact reporting as aligned with market practice.
Date August 03, 2021 Issuer Location İstanbul, Turkey
| Introduction 2 | |
|---|---|
| Sustainalytics' Opinion 3 | |
| Appendices 15 |
For inquiries, contact the Sustainable Finance Solutions project team:
Project Manager [email protected] (+31) 20 205 0082
Charles Cassaz (Amsterdam) Project Support
Rashmi John (Mumbai) Project Support
Darshna Jha (Mumbai) Project Support
Enrico Tessadro (Amsterdam) Client Relations [email protected] (+44) 20 3880 0193
Türkiye İş Bankası A.Ş. ("İşbank", the "Bank, or the "Issuer") is the largest private bank by assets in Turkey, with its history dating back to 1924. İşbank operates over 1,200 branches and serves approximately 15 million customers across its corporate, commercial, SME, retail and private banking segments.
İşbank has developed the İşbank Sustainable Finance Framework (the "Framework") under which it intends to issue green, social and sustainability finance instruments (bonds, loans or other debt-like instruments) and use the proceeds to finance and/or refinance, in whole or in part, existing and/or future projects that are expected to advance the shift to a low-carbon economy and generate positive social impacts in Turkey. The Framework defines eligibility criteria in twelve areas:
İşbank engaged Sustainalytics to review the İşbank Sustainable Finance Framework, dated August 2021, and provide a Second-Party Opinion on the Framework's environmental and social credentials and its alignment with the Sustainability Bond Guidelines 2021 (SBG), 1 Green Bond Principles 2021 (GBP), 2 Social Bond Principles 2021 (SBP), 3 and Green Loan Principles 2021 (GLP). 4 This Framework has been published in a separate document. 5
Sustainalytics' Second-Party Opinion reflects Sustainalytics' independent6 opinion on the alignment of the reviewed Framework with the current market standards and the extent to which the eligible project categories are credible and impactful.
As part of the Second-Party Opinion, Sustainalytics assessed the following:
For the use of proceeds assessment, Sustainalytics relied on its internal taxonomy, version 1.9.1, which is informed by market practice and Sustainalytics' expertise as an ESG research provider.
1 The Sustainability Bond Guidelines are administered by the International Capital Market Association and are available at
https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Sustainability-Bond-Guidelines-June-2021-100621.pdf
2 The Green Bond Principles are administered by the International Capital Market Association and are available at
https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Green-Bond-Principles-June-2021-100621.pdf
3 The Social Bond Principles are administered by the International Capital Market Association and are available at
https://www.icmagroup.org/assets/documents/Sustainable-finance/2021-updates/Social-Bond-Principles-June-2021-100621.pdf
4 The Green Loan Principles are administrated by the Loan Market Association, Asia Pacific Loan Market Association and Loan Syndications & Trading
Association are available at https://www.lma.eu.com/application/files/9716/1304/3740/Green\_Loan\_Principles\_Feb2021\_V04.pdf
5 The İşbank Sustainable Finance Framework is available on Türkiye İş Bankası A.Ş.'s website at: https://www.isbank.com.tr/en/about-us/sustainabilityframeworks-and-reports
6 When operating multiple lines of business that serve a variety of client types, objective research is a cornerstone of Sustainalytics and ensuring analyst independence is paramount to producing objective, actionable research. Sustainalytics has therefore put in place a robust conflict management framework that specifically addresses the need for analyst independence, consistency of process, structural separation of commercial and research (and engagement) teams, data protection and systems separation. Last but not the least, analyst compensation is not directly tied to specific commercial outcomes. One of Sustainalytics' hallmarks is integrity, another is transparency.
As part of this engagement, Sustainalytics held conversations with various members of İşbank's management team to understand the sustainability impact of their business processes and planned use of proceeds, as well as management of proceeds and reporting aspects of the Framework. İşbank representatives have confirmed (1) they understand it is the sole responsibility of İşbank to ensure that the information provided is complete, accurate or up to date; (2) that they have provided Sustainalytics with all relevant information and (3) that any provided material information has been duly disclosed in a timely manner. Sustainalytics also reviewed relevant public documents and non-public information.
This document contains Sustainalytics' opinion of the Framework and should be read in conjunction with that Framework.
Any update of the present Second-Party Opinion will be conducted according to the agreed engagement conditions between Sustainalytics and İşbank.
Sustainalytics' Second-Party Opinion, while reflecting on the alignment of the Framework with market standards, is no guarantee of alignment nor warrants any alignment with future versions of relevant market standards. Furthermore, Sustainalytics' Second-Party Opinion addresses the anticipated impacts of eligible projects expected to be financed with bond/loan proceeds but does not measure the actual impact. The measurement and reporting of the impact achieved through projects financed under the Framework is the responsibility of the Framework owner.
In addition, the Second-Party Opinion opines on the potential allocation of proceeds but does not guarantee the realised allocation of the bond/loan proceeds towards eligible activities.
No information provided by Sustainalytics under the present Second-Party Opinion shall be considered as being a statement, representation, warrant or argument, either in favour or against, the truthfulness, reliability or completeness of any facts or statements and related surrounding circumstances that İşbank has made available to Sustainalytics for the purpose of this Second-Party Opinion.
Sustainalytics is of the opinion that the İşbank Sustainable Finance Framework is credible, impactful and aligns with the four core components of the SBG, GBP, SBP, and GLP. Sustainalytics highlights the following elements of İşbank's Sustainable Finance Framework:
The Renewable Energy category includes loans to wind, solar, geothermal, biomass energy, including related equipment, development, manufacturing, construction, operation and maintenance.
In addition, İşbank intends to finance and/or refinance expenditures related to the construction, renovation, upgrade, and refurbishment of electrical grids dedicated to connecting renewable power plants to the national grid, which is in line with market practice.
7 While noting the variety of definitions and applications of "smart grid" technology, Sustainalytics views positively investments that are designed to improve grid efficiency and encourages İşbank to select projects that are clearly anticipated to deliver tangible efficiency improvements.
8 EPRD is the EU's Energy Performance of Buildings Directive, which has been implemented by many countries in the form of EPCs.
9 BEP-TR: http://www.bep.gov.tr/BEPTRWEB/istatistikler.aspx#.Xc7trdpYbop
10 The BEP-TR scheme has been in force since 2011. Refer to https://www.aa.com.tr/tr/ekonomi/binalar-icin-enerji-kimlik-belgesi-aliminda-sonviraj/ 1546712#
11 Republic of Turkey/Legislation Information System, "Regulation on the Principles and Application of Organic Farming", at: https://www.mevzuat.gov.tr/mevzuat?MevzuatNo=14217&MevzuatTur=7&MevzuatTertip=5
management facilities, 12 sewage treatment facilities, expenditures to increase water-use efficiency, recycling, and reuse, and flood control and disaster contingency systems and relevant infrastructure, such as early warning systems to reduce the risk of flood. Sustainalytics considers these activities, broadly, to be aligned with market practice. In addition, Sustainalytics recognizes the potential environmental and social benefits of expenditures related to flood and disaster control infrastructure and encourages the Bank to conduct adequate climate change vulnerability assessments and develop necessary adaption plans prior to implementing such projects.
12 Projects related to wastewater management facilities directly associated with fossil fuel operations would not be eligible.
13 Mucilage formation in the Sea of Marmara is primarily due to the release of sewage and wastewater in the sea without treatment, and removal of the mucilage without addressing the root cause of the issue does not offer a permanent solution. Nevertheless removal, when done in an environmentally cautious manner, has the potential to restore ecosystems and prevent further degradation or die-off of other marine species.
14 The Framework defines SMEs as companies with fewer than 250 employees and turnover or total assets below TL125 million, which is in line with Turkey's legislation for SMEs. OECD iLibrary, SME Policy Index: Western Balkans and Turkey 2019 - Chapter 19. Turkey: Small Business Act profile:
https://www.oecd-ilibrary.org/sites/f565e33c-en/index.html?itemId=/content/component/f565e33c-en&mimeType=text/html
15 Areas/cities in Turkey that have income lower than the country's GDP average
Sustainalytics has determined that the İşbank Sustainable Finance Framework aligns with the four core components of the GBP, SBP, SBG, and GLP. For detailed information please refer to Appendix 4: Sustainability Bond/ Sustainability Bond Programme External Review Form.
16 İşbank's Exclusion List can be found in its Environmental and Social Impact Policy of İşbank: https://www.isbank.com.tr/en/aboutus/Documents/sustainability/environment-and-social-impact-policy.pdf
17 This applies to all aspects of the supply chain, including extraction, production, refining, transmission and distribution, of nuclear power generation and fossil fuels.
İşbank has incorporated environmental and social sustainability considerations into its business operations through the establishment of the İşbank Banking Model, which focuses on creating shareable and sustainable value for all of its stakeholders. 18 Through this responsible banking approach, İşbank has been developing products, services, and solutions in several areas such as (i) financing renewable energy projects (ii) strengthening women entrepreneurs, SMEs and agriculture sector, and (iii) managing environmental and social risks. 18 The Bank has demonstrated a commitment to create positive social and environmental impact from its core business through the following efforts:
Within its Sustainability Policy, İşbank adopted sustainability principles, such as monitoring and managing the environmental and social impacts of the business, contributing to resilience against climate change through responsible banking, and creating a work environment where social justice and working rights are respected and improved continuously, amongst others. These principles will help facilitate the transition to a low-carbon and sustainable economy while minimizing the negative environmental and social impacts of the business. Additionally, the Bank has adopted medium and long-term sustainability strategies and discloses its progress with its stakeholders. In 2020, İşbank established a Sustainability Committee to oversee sustainability related issues, under the oversight of the Board of Directors. 18 Employees are responsible for internalizing and applying sustainability related policies and objectives. The implementation's key performance indicators are monitored through regular audits and evaluated by top management during management review processes. 19
İşbank provides disclosure on the progress of its environmental financing efforts. For 2021 and beyond, the Bank aimed to provide financial support to all renewable energy projects, especially Wind Energy Power Plants (WPP) and Solar Power Plants (SPP) projects. In 2020, İşbank provided financings to 45 renewable energy projects with a total installed capacity of 1,950 MW.18 Additionally, the amount of clean energy generated by the projects financed by the Bank was 6,370 TWh in the last 3 years.18 The Bank launched a commercial loan product called "Solar Loan by İşbank", which intended for financing unlicensed solar energy plants20 to be installed on the roofs of industrial facilities for self-consumption. In addition, İşbank offers its customers Energy Efficiency Loan, Unlicenced Electricity Generation Loan, Environment-friendly Mortgage, Green Car Loan, Green Office Premises Loan, Maximum TEMA Card, Environmental Variable Fund, and Renewable Energy Mix Fund as part of its portfolio of products contributing to green economy. In 2020, İşbank financed the largest sustainability-linked loan deal in Turkey as part of a consortium of seven banks, where a total amount of EUR 650 million credit was extended to Enerjisa Uretim, a leading power generation company in Turkey.21 As part of the agreement, commitments were made to significantly increase the share of renewable energy and to attain the best international standards in gender equality.21 Moreover, İşbank has set partnerships with International Financial Institutions (IFIs) for financing renewable energy and energy efficiency projects. Since 2008, İşbank has been procuring medium/long term financing from various IFIs including KfW, EIB, EBRD, Proparco, DFC and IFC to provide financing to women entrepreneurs, SMEs, agricultural businesses, businesses located in priority development areas, energy efficiency and renewable energy projects, amongst others.18 İşbank's efforts to carry its SME financing effectively relates to its collaborations with various SME development institutions, such as KOSGEB (Small and Medium Enterprises Development Organization). Moreover, to address financing requirements of SMEs and women entrepreneurs, the Bank has dedicated loan products such as (i) Support Loan for Small-Sized Businesses, and (ii) Women Entrepreneur Loan with favorable interest rates. As part of these efforts, total lending to SMEs provided by the Bank was EUR 11.03 billion in 2020. Upon the emergence of the pandemic, the Bank launched economic relief packages concurrently with the public banks. With the Solidarity and Support Packages, the Bank extended its support particularly to small business and SMEs impacted by the pandemic.18
In terms of the environmental targets for its internal operations, the Bank has developed an emission reduction strategy, and aimed to reduce Scope 1 and Scope 2 emissions by 38% by 2025, 65% by 2030, and zero by 2035.18
18 İşbank, "İşbank 2020 Integrated Report", at:
https://www.isbank.com.tr/contentmanagement/IsbankSurdurulebilirlikEN/pdf/2020IntegratedReport.pdf
19 İşbank, "İşbank Sustainability Policy", at: https://www.isbank.com.tr/en/about-us/Documents/sustainability/sustainability-policy.pdf
20 As per the new Regulation on Unlicensed Electricity Production Generation and the Presidential Decree Number 1044 dated 10 May 2019, is to bring in small-sized plants into the economy by allowing them to generate energy for mainly self-consumption purposes, without the need to obtain a license or establish a company.
Mondaq, "Turkey Adopts New Regulation On Unlicensed Electricity Production In The Electricity Market", (2019), at: https://www.mondaq.com/turkey/oilgas-electricity/818764/turkey-adopts-new-regulation-on-unlicensed-electricity-production-in-the-electricity-market
21 PR Newswire, "Enerjisa Uretim signs the largest Sustainability-linked Loan Deal in Turkey", at: https://www.prnewswire.com/news-releases/enerjisauretim-signs-the-largest-sustainability-linked-loan-deal-in-turkey-301134647.html
Sustainalytics is of the opinion that İşbank's Framework is aligned with the Bank's overall sustainability strategy and initiatives and will further the Bank's action on supporting its financing of investments in the transition to a low-carbon and inclusive economy. Sustainalytics notes that the Bank has not established publicly available quantitative, time-bound targets for future sustainable financing and encourages the establishment of such targets.
While Sustainalytics recognizes that the net proceeds from the instruments issued under the Framework will be directed towards eligible projects that are expected to have positive environmental and social impact, Sustainalytics is aware that such eligible projects could also lead to negative environmental and social outcomes. Some key environmental and social risks associated with the eligible projects, could include occupational health and safety, community relations, biodiversity and ecological risks related to the construction, renovation, expansion and reconstruction of large-scale infrastructure and land use change. Sustainalytics highlights the following risk mitigation processes of İşbank:
22 İşbank, "İşbank Environmental and Social Impact Policy", at: https://www.isbank.com.tr/en/about-us/Documents/sustainability/environment-andsocial-impact-policy.pdf
23 İşbank, "İşbank 2019 Integrated Report", at: https://www.isbank.com.tr/contentmanagement/IsbankSurdurulebilirlikEN/pdf/2019IntegratedReport.pdf
24 İşbank, "Occupational Health and Safety Policy", at: https://www.isbank.com.tr/en/about-us/Documents/sustainability/OHS-Policy.pdf
Based on these policies, standards and assessments, Sustainalytics is of the opinion that İşbank is well positioned to identify, manage and mitigate environmental and social risks commonly associated with the eligible projects.
All twelve use of proceeds categories are aligned with those recognized by GBP, SBP, SBG, and GLP. Sustainalytics has focused on three below where the impact is specifically relevant in the local context.
According to the World Bank, Turkey has experienced steady economic and social growth in the recent decades with the annual GDP growth rate averaging nearly 5.5% from 2010 to 2020. 25 Public expenditures on primary, secondary and tertiary educational institutions in the country increased by 24% (as % of GDP) between 2010 and 2016.26 Despite increases in overall spending, access to education in Turkey remains low compared to other OECD countries. In 2018, 17% of youth were out of school at the upper secondary level, almost double than the OECD average of 7.65%.27 Additionally, there is significant difference in resource allocations between public and private institutions. Expenditure per student on private educational institutions is higher than on public institutions in Turkey, where total expenditure on public institutions amounts to USD 4,732 per student, compared to USD 15,180 on private ones.28 Moreover, the education system has been adversely affected by wide gaps in the quality of education among schools.29 In the 2015 Programme for International Student Assessment (PISA) results, Turkey ranked second to last among OECD countries with 31.2% of the tested students underperforming in mathematics, sciences and reading while OECD average for the same indicator was 13%. 30 In the 2018 PISA results, 17.1% of the tested students underperformed in mathematics, sciences, and reading in Turkey, while the OECD average for the same indicator was 13.4%. Sustainalytics recognizes that increased funding for Access to Essential Services including public education infrastructure would help close the gap in the quality of, and access to, free or subsidized education.
In the early 2000s, Turkey underwent major health reforms, and with the support of the World Bank Group, introduced universal health coverage, which is commonly referred to as the Universal Health Insurance system (UHI).31 Under UHI, residents who are registered with the Social Security Institution (SGK) can receive medical treatment free of charge from hospitals that have a contract with the SGK. However, data from 2019 suggests that around 7.3% of Turkey's population still faces the unmet medical needs due to reasons such as long waiting lists, distance and/or transportation problems, amongst others.32
In addition, the Covid-19 pandemic has exposed numerous inadequacies of existing healthcare infrastructure. Turkey's healthcare infrastructure has been underfunded for several years. With spending only 4.3% of the GDP on health expenditure, Turkey has the lowest expenditure on health among the OECD countries.33 The country also lags in hospital beds per person, where only three beds are available per 1,000 inhabitants. 34 Turkey's underfunded healthcare infrastructure led to several constraints during the pandemic and had to respond to a rapid increase in demand for personal protective equipment, sampling and laboratory materials, and other medical supplies.35 By financing prevention, pharmaceuticals, medical supplies, and equipment, İşbank can help Turkey increase its capacity and access to affordable healthcare in disasters and pandemic response.
31 World Bank Group, "Universal Health Coverage for Inclusive and Sustainable Development- Country Summary Report for Turkey", (2014), at : https://documents1.worldbank.org/curated/en/883571468172768922/pdf/912210WP0UHC0C0Box385329B00PUBLIC0.pdf
explained/index.php?title=Unmet\_health\_care\_needs\_statistics
25 World Bank Data, "GDP growth (annual %) – Turkey", (2021), at: https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=TR 26 OECD, "Educational At A Glance 2019-Turkey", (2019), at: https://www.oecd.org/education/education-at-a-glance/EAG2019\_CN\_TUR.pdf 27 OECD, "Education at a Glance 2020- OECD Indicators", (2020), at: https://www.oecd-ilibrary.org/docserver/69096873-
en.pdf?expires=1623306980&id=id&accname=guest&checksum=F3C185C53A8EE25E30E4C029EF171A2A
28 OECD, "Educational At A Glance 2020-Turkey", (2020), at: https://www.oecd-ilibrary.org/education/education-at-a-glance-2020_1701b91een;jsessionid=KVK8XMQv6GGY0LLtY4UFxcMz.ip-10-240-5-89
29 OECD, "Economic Policy Reforms Going For Growth 2018", (2018) at: http://www.oecd.org/economy/growth/TUR.pdf
30 OECD, "PISA 2015- Results in Focus", (2018), at: https://stats.oecd.org/index.aspx?queryid=30183#
32 EuroStat, "Unmet health care needs statistics", (2021), at: https://ec.europa.eu/eurostat/statistics-
33 OECD Stat, "Health expenditure and financing", (2019), at: https://stats.oecd.org/index.aspx?queryid=30183
34 OECD data, "Hospital beds", (2019), at: https://data.oecd.org/healtheqt/hospital-beds.htm
35 WHO, "WHO reinforces COVID-19 response efforts in Turkey: millions of protective items distributed", (2020), at: https://www.euro.who.int/en/healthtopics/health-emergencies/coronavirus-covid-19/news/news/2020/6/who-reinforces-covid-19-response-efforts-in-turkey-millions-of-protective-itemsdistributed
Considering the above, Sustainalytics is of the opinion that İşbank financing for improvements in public healthcare services, including hospitals, clinics, and health care centers, will provide a meaningful contribution to Turkey's healthcare system by helping serve populations with unmet needs.
Turkey has one of the largest regional disparities among OECD countries in terms of unemployment rate and economic development.36 In Turkey, the top 20% of richest regions have a more than three times of GDP per capita compared with the bottom 20% of the poorest regions.37 Similarly, unemployment rates varied significantly across regions, with the top 20% performing regions averaging 9.2% while the bottom 20% regions averaging 21.7% as of 2019.37 However, in Turkey, SMEs are the backbone of the economy and provide significant contributions to regional development, social cohesion, and reducing regional inequalities. As SMEs account for 99.8% of the number of enterprises in Turkey and generate 73.9% of national employment, facilitating the growth of SMEs is a central need to create employments in Turkey. 38
SMEs play a vital part of Turkey's economy, and yet they are an underserved segment of the market and face difficulties in accessing finance. 39 Moreover, SMEs are substantially impacted by the Covid-19 pandemic, with 80% of SMEs suffering substantial negative impacts such as temporary suspension of activities and a decline in revenues, and 71% identify financial support necessary for business continuity.40 Upon the emergence of the pandemic, the Government of Turkey announced an Economic Stability Shield package in March 2020. As part of the Economic Stability Shield stimulus package, the Credit Guarantee Fund limit has been doubled to TL 50 billion and expanded to SMEs providing financial support in need of additional liquidity. 41
In Turkey, women-owned SMEs face greater difficulty in accessing capital and are less likely to receive the full amount of financing that men do. A study shows that only 47% of women-owned SME applications are granted a loan, where the loan amount is 7.5% lower compared to loans men receive. 42,43 According to the IFC, empowering more Turkish women-owned SMEs and increasing financial access will unleash significant growth potential and can bring positive benefits for other underserved groups by facilitating employment.44
Based on this context, Sustainalytics is of the opinion that İşbank's financing to SMEs operating in underdeveloped regions and owned or led by women or vulnerable groups (such as youth), will reduce regional disparities, and bring positive social impacts by increasing employment generation, providing access to finance, supporting female entrepreneurship, and ensuring business continuity for SMEs affected by natural or health disasters, including Covid-19.
In the past two decades, Turkey's rapid economic and population growth have strongly driven up its energy demand. Between 2005 and 2018, the final energy consumption in Turkey increased by 58%.45 Fossil fuels continue to have a major share in Turkey's energy mix, accounting for 83% of the total energy supply.46 Considering its heavy dependence on fossil fuel-based sources, Turkey has prioritized the diversification of its energy mix and security of energy supply under its energy strategy. Since 2010, renewable energy has received strong growth, almost doubled the electricity generation from renewable sources.47 However,
36 OECD, "Job Strategy- Turkey", (2018), at: https://www.oecd.org/turkey/jobs-strategy-TURKEY-EN.pdf
37 OECD, "Regions and Cities at a Glance 2020 – Turkey", (2020), at: https://www.oecd.org/cfe/Turkey-Regions-and-Cities-2020.pdf 38 European Commission, "2019 SBA Fact Sheet. Turkey", (2019), at: https://ec.europa.eu/neighbourhood-enlargement/sites/near/files/sba-fs-2019\_turkey.pdf
39 IFC, "IFC Supports SMEs in Turkey During the COVID-19 Slowdown", (2020), at: https://pressroom.ifc.org/all/pages/PressDetail.aspx?ID=17783 40 UNDP, "Four in every five SMEs substantially impacted by COVID-19 crisis!", (2020), at:
42 World Bank, "Is your bank officer gender-biased? The case of SME lending in Turkey", (2020), at: https://blogs.worldbank.org/allaboutfinance/yourbank-officer-gender-biased-case-sme-lending-turkey
43 World Bank, "Gender Bias in SME Lending Experimental Evidence from Turkey", (2019), at:
http://documents1.worldbank.org/curated/en/244611577766368167/pdf/Gender-Bias-in-SME-Lending-Experimental-Evidence-from-Turkey.pdff 44 IFC, "New Financing Tools Empower Turkey's Women Entrepreneurs", News, (2020), at:
https://www.ifc.org/wps/wcm/connect/news\_ext\_content/ifc\_external\_corporate\_site/news+and+events/news/impact-stories/turkey-womenentrepreneurs
45 IEA, "Key Energy Statistics", (2018), at: https://www.iea.org/countries/turkey
46 IEA, "Energy supply- Total energy supply (TES) by source, Turkey 1990-2019", at: https://www.iea.org/data-and-statistics/data-
browser?country=TURKEY&fuel=Energy%20supply&indicator=TPESbySource
47 IEA, " Energy supply- Electricity generation by source, Turkey 1990-2019", at: https://www.iea.org/data-and-statistics/databrowser?country=TURKEY&fuel=Energy%20supply&indicator=ElecGenByFuel
renewable energy still accounts for only 17% of the total energy supply, highlighting the considerable scope for Turkey to target more ambitious growth in renewables.46 The government set a goal to increase the share of renewable energy sources in total electricity generation to 30% by 2023.48 To support the execution of these goals, the Turkish government has mandated a series of national climate-related strategies, including the National Energy Efficiency Action Plan (NEEAP) 2017-2023, which draws upon the National Climate Change Strategy of 2010- 2023 and the Energy Efficiency Strategy of 2012-2023.
Under NEEAP, the government intends to increase energy efficiency and reduce GHG emissions across various sectors. Specifically, the strategy set the goal of reducing Turkey's primary energy consumption by 14% by 2023 as compared to a 2017 baseline.49 In order to reach this goal, NEEAP outlines 55 actions defined in various categories, including buildings and services, and transport. In Turkey, the building and the transport sector cumulatively account for 60% of the total final energy consumption and nearly one-third of the total CO2 emissions.50,51 Turkey's building sector has witnessed rapid growth and transformation, indicating an opportunity to constructing new energy-efficient buildings, along with improving existing structures. In this context, the government established the Energy Efficiency Strategy in 2017. The strategy defines actions to "introduce maximum energy requirements for buildings and limits for maximum emissions" and sets a goal to transform at least one-fourth of the building stock in 2010 to sustainable buildings by 2023. 52 İşbank intends to allocate a portion of its net proceeds to new and/or existing buildings which are/will be certified with recognized third-party standards, such as LEED, or BREEAM. In addition, regarding Turkey's efforts towards transportation, the government has set the Transport and Communications Strategy Goals. Under these goals, Turkey aims to increase the share of railroad transport in freight transport beyond 15% and in passenger transport beyond 10%, thereby reducing road transport's share in freight to under 60% and passenger under 72% by the end of 2023.49 Thus, Sustainalytics is of the opinion that İşbank's intent to invest in rail transport for passengers and goods aligns well with Turkey's climate-related goals in the context of decreasing road transportation through an increase in the availability of railroad transport.
In conclusion, Sustainalytics is of the opinion that İşbank's use of proceeds for renewable energy, energy efficiency, green buildings and clean transportation will create positive environmental benefits and contribute to Turkey 's national climate-related goals.
The Sustainable Development Goals (SDGs) were set in September 2015 by the United Nations General Assembly and form an agenda for achieving sustainable development by the year 2030. The bond(s) issued under the İşbank Sustainable Finance Framework advances the following SDGs and targets:
| Use of Proceeds Category |
SDG | SDG target |
|---|---|---|
| Renewable Energy Energy Efficiency |
7. Affordable and Clean Energy |
7.2 By 2030, increase substantially the share of renewable energy in the global energy mix. 7.3 By 2030, double the global rate of improvement in energy efficiency. |
| Eco-efficient and/or Circular Economy Adapted Products, Production Technologies and Processes |
12. Responsible Consumption and Production |
12.4 By 2020, achieve the environmentally sound management of chemicals and all wastes throughout their life cycle, in accordance with agreed international frameworks, and significantly reduce their release to air, water and soil in order to minimize their adverse impacts on human health and the environment. |
| Pollution Prevention and Control |
12.5 By 2030, substantially reduce waste generation through prevention, reduction, recycling and reuse. |
48 IEA, "National Energy Efficiency Action Plan", (2020), at: https://www.iea.org/policies/7964-national-energy-efficiency-action-plan-2017-2023
49 IEA, " Turkey 2021 Energy Policy review", (2021), at: https://iea.blob.core.windows.net/assets/cc499a7b-b72a-466c-88de-
d792a9daff44/Turkey\_2021\_Energy\_Policy\_Review.pdf
50 IEA, " Energy consumption- Total final consumption (TFC) by sector, Turkey 1990-2018", at: https://www.iea.org/data-and-statistics/databrowser?country=TURKEY&fuel=Energy%20consumption&indicator=TFCShareBySector
51 IEA, " Energy consumption- CO2 emissions by sector, Turkey 1990-2018", at: https://www.iea.org/data-and-statistics/data-
| Green Buildings | 9. Industry, Innovation and Infrastructure |
9.1 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. |
|---|---|---|
| Clean Transportation | 11. Sustainable Cities and Communities |
11.2 By 2030, provide access to safe, affordable, accessible and sustainable transport systems for all, improving road safety, notably by expanding public transport, with special attention to the needs of those in vulnerable situations, women, children, persons with disabilities and older persons. |
| Environmentally Sustainable Management of Living Natural Resources and Land Use |
15. Life on Land | 15.A Mobilize and significantly increase financial resources from all sources to conserve and sustainably use biodiversity and ecosystems. |
| Sustainable Water and Wastewater Management and Climate Adaptation |
6. Clean Water and Sanitation |
6.3 By 2030, improve water quality by reducing pollution, eliminating dumping and minimizing release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally. |
| 11. Sustainable Cities and Communities |
6.4 By 2030, substantially increase water-use efficiency across all sectors and ensure sustainable withdrawals and supply of freshwater to address water scarcity and substantially reduce the number of people suffering from water scarcity. |
|
| 11.5 By 2030, significantly reduce the number of deaths and the number of people affected and substantially decrease the direct economic losses relative to global gross domestic product caused by disasters, including water-related disasters, with a focus on protecting the poor and people in vulnerable situations. |
||
| Terrestrial and Aquatic Biodiversity Conservation |
6. Clean Water and Sanitation |
6.6 By 2020, protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and lakes. |
| 14. Life Below Water | 14.2 By 2020, sustainably manage and protect marine and coastal ecosystems to avoid significant adverse impacts, including by strengthening their resilience, and take action for their restoration in order to achieve healthy and productive oceans. |
|
| Access to Essential Services |
3. Good Health and Wellbeing 4. Quality Education |
3.8 Achieve universal health coverage, including financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all. |
| 4.3 By 2030, ensure equal access for all women and men to affordable and quality technical, vocational and tertiary education, including university. 4.4 By 2030, substantially increase the number of youth and adults who have relevant skills, including technical and vocational skills, for employment, decent jobs and entrepreneurship. |
||
|---|---|---|
| Employment Generation Including Through the Potential Effect of SME Financing |
8. Decent Work and Economic Growth 10. Reduced Inequalities |
8.3 Promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity and innovation, and encourage the formalization and growth of micro-, small- and medium-sized enterprises, including through access to financial services. |
| 8.5 By 2030, achieve full and productive employment and decent work for all women and men, including for young people and persons with disabilities, and equal pay for work of equal value. |
||
| 10.2 By 2030, empower and promote the social, economic and political inclusion of all, irrespective of age, sex, disability, race, ethnicity, origin, religion or economic or other status. |
||
İşbank has developed the İşbank Sustainable Finance Framework under which intends to issue green, social and sustainability bonds and loans, using the proceeds to finance eligible project categories: (i) Renewable Energy, (ii) Energy Efficiency, (iii) Eco-efficient and/or Circular Economy Adapted Products, Production Technologies and Processes, (iv) Green Buildings, (v) Clean Transportation, (vi) Pollution Prevention and Control, (vii) Environmentally Sustainable Management of Living Natural Resources and Land Use, (viii) Sustainable Water and Wastewater Management and Climate Adaptation, (ix) Terrestrial and Aquatic Biodiversity Conservation, (x) Access to Essential Services, and (xi) Employment Generation Including Through the Potential Effect of SME Financing. Sustainalytics considers that the projects funded by the sustainability bond proceeds has the potential to facilitate the transition to a low-carbon economy and advance socioeconomic development in Turkey.
The İşbank Sustainable Finance Framework outlines a process by which proceeds will be tracked, allocated, and managed, and commitments have been made for reporting on the allocation and impact of the use of proceeds. Furthermore, Sustainalytics believes that the İşbank's Sustainable Finance Framework is aligned with the overall sustainability strategy of the Bank and that the use of proceeds categories will contribute to the advancement of the UN Sustainable Development Goals 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, and 15. Additionally, Sustainalytics is of the opinion that İşbank has adequate measures to identify, manage and mitigate environmental and social risks commonly associated with the eligible projects funded by the use of proceeds.
Based on the above, Sustainalytics is confident that İşbank is well-positioned to issue green, social and sustainability bonds and loans and that the Framework is robust, transparent, and in alignment with the four core components of the Green Bond Principles 2021, Social Bond Principles 2021, Sustainability Bond Guidelines 2021 and Green Loan Principles 2021.
| BREEAM 53 | LEED54 | DGNB55 | CEDBIK56 | BEP-TR57, 58 |
|
|---|---|---|---|---|---|
| Background | BREEAM (Building Research Establishment Environmental Assessment Method) was first published by the Building Research Establishment (BRE) in 1990. Based in the UK. Used for new, refurbished and extension of existing buildings. |
Leadership in Energy and Environmental Design (LEED) is a US Certification System for residential and commercial buildings used worldwide. LEED was developed by the non-profit U.S. Green Building Council (USGBC). |
The German Green Building Certification or DGNB was developed in 2007 by the non-profit German Sustainable Building Council in partnership with the German Federal Ministry of Transport, Building, and Urban Affairs in order to actively encourage sustainable building. |
CEDBIK (Turkish Green Building Council) is a rating system for residential and commercial buildings that is used in Turkey. |
Building Energy Performance of Turkey (BEP-TR) Certification is a building energy performance calculation methodology that focuses on district heating and/or renewable energy for buildings above a certain threshold. BEP TR was developed in alignment with Turkey's regulations and based on the EU's Energy Performance of Buildings Directive (EPBD). |
| Certification levels |
Pass Good Very Good Excellent Outstanding |
Certified Silver Gold Platinum |
Bronze Silver Gold Platinum |
Certified Good Very Good Excellent |
A B C D |
| Areas of Assessment |
Energy Land Use and Ecology Pollution Transport Materials Water Waste Health and Wellbeing Innovation |
Energy and atmosphere Sustainable Sites Location and Transportation Materials and resources Water efficiency Indoor environmental quality Innovation in Design Regional Priority |
Environment Economic Sociocultural and functional aspects Technology Processes Site |
Energy Efficiency Water Efficiency Land use Health and Comfort Materials and Resources Life on Property Operation and Maintenance Innovation |
Outdoor climatic conditions of a building's location Minimum energy performance (MEPs) of retrofits for existing buildings |
| Requirements | Prerequisites depending on the levels of certification |
Prerequisites independent of level of |
Percentage-based performance index |
Prerequisites (independent of level of certification) + additive |
BEP-TR calculates the |
53 BREEAM, Building Research Establishment LTD; https://breeam.com/
58International Partnership for Energy Efficiency Cooperation, Building Code Implementation – Country Summary: http://www.gbpn.org/sites/default/files/Turkey_Country%20Summary_0.pdf
| ding | Code | Implementation | |
|---|---|---|---|
| ------ | ------ | ---------------- | -- |
54 USGBC, LEED: www.usgbc.org/LEED
55 DGNB GmbH, "DGNB", at: http://www.dgnb-system.de/en/
56 Cedbik: https://cedbik.org/
57 BEP, Energy Performance of Buildings: http://www.bep.gov.tr/default.aspx
| and credits with associated points This number of points is then weighted by item59 and gives a BREEAM level of certification, which is based on the overall score obtained (expressed as a percentage). Majority of BREEAM issues are flexible, meaning that the client can choose which to comply with to build their BREEAM performance score. BREAAM has two stages/ audit reports: a 'BREEAM Design Stage' and a 'Post Construction Stage', with different assessment criteria. |
certification, and credits with associated points. These points are then added together to obtain the LEED level of certification There are several different rating systems within LEED. Each rating system is designed to apply to a specific sector (e.g. New Construction, Major Renovation, Core and Shell Development, Schools-/Retail- /Healthcare New Construction and Major Renovations, Existing Buildings: Operation and Maintenance). |
The total performance index (expressed as a percentage) is calculated by adding the six key areas of assessment. The environmental, economic, socio cultural and functional aspects and technical quality each account for 22.5% of the total, process accounts for 10% and the site quality is given a separate grade. |
Credits with associated points. |
maximum energy needed for heating, cooling hot water, ventilation and illumination of new existing buildings using an hourly calculation. Building Energy Performance Certificates (EPCs) are granted under the "Regulation on Energy Performance in Buildings". An EPC will not be granted to buildings with less than a C rating. |
|
|---|---|---|---|---|---|
| Performance display |
N/A | ||||
| Accreditation | BREEAM International Assessor BREEAM AP BREEAM In Use Assessor |
LEED AP BD+C LEED AP O+M |
DNGB Certification body |
Aligned with EU EPRD |
|
| Qualitative considerations |
Used in more than 70 countries: Good adaptation to the local normative context. Predominant environmental focus. BREEAM certification is less strict (fewer minimum thresholds) than LEED certifications. |
Widely recognised internationally, and strong assurance of overall quality. |
DGNB certification is based on current European Union Standards. |
There has been one CEDBIK-certified project in Turkey since CEDBIK's launch in 2016.60 |
The application of BEP-TR is mandatory for all new buildings in Turkey except for industrial buildings, temporary buildings (used for less than 2 years), buildings with a total useful floor area of less than 50m2, greenhouses, workshops, and |
59 BREEAM weighting: Management 12%, Health and wellbeing 15%, Energy 19%, Transport 8%, Water 6%, Materials 12.5%, Waste 7.5%, Land Use and ecology 10%, Pollution 10% and Innovation 10%. One point scored in the Energy item is therefore worth twice as much in the overall score as one point scored in the Pollution item
60 DergiPark, Credit Success Rates of Certified Green Buildings in Turkey: https://dergipark.org.tr/en/download/article-file/683057
| stand-alone buildings with no heating or |
||
|---|---|---|
| cooling requirements. |
| Programme for the Endorsement of Forest Certification (PEFC)61 |
Forest Stewardship Council (FSC)62 | |
|---|---|---|
| Background | Founded in 1999, the Programme for the Endorsement of Forest Certification (PEFC) is a non-profit organization that promotes sustainable forest management through independent third-party certification, this includes assessments, endorsements and recognition of national forest certification systems. PEFC was created in response to the specific requirements of small- and family forest owners as an international umbrella organization. |
The Forest Stewardship (FSC) is a non profit organization established in 1993 that aims to promote sustainable forest management practice by evaluating forest management planning and practices independently against FSC's standards. |
| Basic Principles | Maintenance and appropriate ● enhancement of forest resources and their contribution to the global carbon cycle Maintenance and enhancement of ● forest ecosystem health and vitality ● Maintenance and encouragement of productive functions of forests (wood and no-wood) ● Maintenance, conservation and appropriate enhancement of biological diversity in forest ecosystems ● Maintenance and appropriate enhancement of protective functions in forest management (notably soil and water) Maintenance of socioeconomic ● functions and conditions Compliance with legal requirements ● |
Compliance with laws and FSC ● principles Tenure and use rights and ● responsibilities Indigenous peoples' rights ● Community relations and workers' ● rights ● Benefits from the forests Environmental impact ● Management plans ● Monitoring and assessment ● Special sites – high conservation ● value forests (HCVF) Plantations ● |
| Types of standards/benchmarks |
Sustainable Forest Management ● benchmark – international requirements for sustainable forest management. National forest management standards must meet these requirements in order to obtain PEFC endorsement ● Group Forest Management Certification – outlines the requirements for national forest certification systems who have group forest management certification Standard Setting – covers the ● processes that must be adhered to during the development, review and |
Forest Management certification (for ● single/multiple applicant(s) – industrial or private forest owners, forest license holders, community forests, and government-managed forests) ● Small and Low Intensity Management Forests (SLIMFs) program (for small forests and forests that are managed at low intensity would be eligible) Chain of Custody (CoC) certification ● (for supply chain companies' planning, practices and products – all |
61 PEFC, Standards and Implementation: https://www.pefc.org/standards-implementation
62 Forest Stewardship Council, FSC Principles and Criteria for Forest Stewardship: https://ca.fsc.org/preview.principles-criteria-v5.a-1112.pdf
| revision of national forest management standards Chain of Custody – outlines the ● conditions for obtaining CoC certification for forest-based products PEFC logo Usage Rules – outlines the ● requirements entities must abide by when using the PEFC logo Endorsement of National Systems – ● outlines the process that national systems must go through to achieve PEFC endorsement |
operations that want to produce or make claims related to FSC-certified products must possess this certificate) ● Controlled Wood verification (for assurance that 100% virgin fiber mixed with FSC-certified and recycled fiber originates from a verified and approved source) |
|
|---|---|---|
| Governance | PEFC's governance structure is formed by the General Assembly (GA) which is the highest authority and decision-making body. It is made up of all PEFC members, including national and international stakeholders. In general, PEFC's governance structure is more representative of industry and government stakeholders than of social or environmental groups. Members vote on key decisions including endorsements, international standards, new members, statutes and budgets. All national members have between one and seven votes, depending on membership fees, while international stakeholder members have one vote each. |
The General Assembly is comprised of all FSC members and constitutes the highest decision-making body. Members can apply to join one of three chambers – environmental, social, or economic – that are further divided into northern and southern sub-chambers. Each chamber maintains 33.3% of the weight in votes, and votes are weighted so that the North and South hold an equal portion of authority in each chamber, to ensure influence is shared equitably between interest groups and countries with different levels of economic development. |
| Scope | Multi-stakeholder participation is required in the governance of national schemes as well as in the standard-setting process. Standards and normative documents are reviewed periodically at intervals that do not exceed five years. The PEFC Standard Setting standard is based on ISO/IEC Code for good practice for standardization (Guide 59)63 and the ISEAL Code of Good Practice for Setting Social and Environmental Standards. |
FSC is a global, multi-stakeholder owned system. All FSC standards and policies are set by a consultative process. There is an FSC Global standard and for certain countries FSC National standards. Economic, social, and environmental interests have equal weight in the standard setting process. FSC follows the ISEAL Code of Good Practice for Setting Social and Environmental Standards. |
| Chain-of-Custody | ● Quality or environmental management systems (ISO 9001:2008 or ISO 14001:2004 respectively) may be used to implement the minimum requirements for chain-of-custody management systems required by PEFC ● Only accredited certification bodies can undertake certification ● CoC requirements include specifications for physical separation of wood and percentage-based methods for products with mixed content. ● The CoC standard includes specifications for tracking and collecting and maintaining documentation about the origin of the materials ● The CoC standard includes specifications for the physical separation of certified and non-certified wood |
● The Chain-of-Custody (CoC) standard is evaluated by a third-party body that is accredited by FSC and compliant with international standards ● CoC standard includes procedures for tracking wood origin ● CoC standard includes specifications for the physical separation of certified and non-certified wood, and for the percentage of mixed content (certified and non-certified) of products ● CoC certificates state the geographical location of the producer and the standards against which the process was evaluated. Certificates also state the starting and finishing point of the CoC |
| ● The CoC standard includes |
||
|---|---|---|
| specifications about procedures for | ||
| dealing with complains related to | ||
| participant's chain of custody | ||
| Non-certified wood sources |
The PEFC's Due Diligence System requires participants to establish systems to |
FSC's Controlled Wood Standard establishes requirements to participants |
| minimize the risk of sourcing raw materials | to establish supply-chain control systems, | |
| from: | and documentation to avoid sourcing | |
| materials from controversial sources, | ||
| a. forest management activities that |
including: | |
| do not comply with local, national or | ||
| international laws related to: | a. Illegally harvested wood, |
|
| - operations and harvesting, |
including wood that is harvested | |
| including land use | without legal authorization, from | |
| conversion, | protected areas, without | |
| - management of areas with |
payment of appropriate taxes | |
| designated high | and fees, using fraudulent | |
| environmental and cultural | papers and mechanisms, in | |
| values, | violation of CITES requirements, | |
| - protected and endangered |
and others, b. Wood harvested in violation of |
|
| species, including CITES | traditional and civil rights, | |
| species, | c. Wood harvested in forests where |
|
| - health and labour issues, |
high conservation values are | |
| - indigenous peoples' |
threatened by management | |
| property, tenure and use rights, |
activities, | |
| - payment of royalties and |
d. Wood harvested in forests being |
|
| taxes. | converted from forests and other | |
| b. genetically modified organisms, |
wooded ecosystems to | |
| c. forest conversion, including |
plantations or non-forest uses, | |
| conversion of primary forests to | e. Wood from management units in |
|
| forest plantations. | which genetically modified trees are planted. |
|
| Accreditation/verification | Accreditation is carried out by an | FSC-accredited Certification Bodies (CB) |
| accreditation body (AB). In the same way | conduct an initial assessment, upon | |
| that a certification body checks that a | successful completion companies are | |
| company meets the PEFC standard, the | granted a 5-year certificate. Companies | |
| accreditation body checks that a certification | must undergo an annual audit and a | |
| body meets specific PEFC and ISO | reassessment audit every 5 years. | |
| requirements. Through the accreditation | Certification Bodies undergo annual | |
| process, PEFC has assurance that | audits from Accreditation Services | |
| certification bodies are independent and impartial, that they follow PEFC certification |
International (ASI) to ensure conformance with ISO standard requirements. |
|
| procedures. | ||
| PEFC does not have their own accreditation | ||
| body. Like with the majority of ISO based | ||
| certifications, PEFC relies on national ABs | ||
| under the umbrella of the International | ||
| Accreditation Forum (IAF). National ABs | ||
| need to be a member of the IAF, which | ||
| means they must follow IAF's rules and regulations. |
||
| Qualitative considerations | Sustainalytics views both FSC and PEFC as being robust, credible standards that are | |
| based on comprehensive principles and criteria that are aligned with ISO. Both schemes | ||
| have received praise for their contribution to sustainable forest management practices64 | ||
| and both have also faced criticism from civil society actors.65,66 In certain instances, these |
64 FESPA, FSC, PEFC and ISO 38200: https://www.fespa.com/en/news-media/blog/fsc-pefc-and-iso-38200
65 Yale Environment 360, Greenwashed Timber: How Sustainable Forest Certification Has Failed: https://e360.yale.edu/features/greenwashed-timberhow-sustainable-forest-certification-has-failed
66 EIA, PEFC: A Fig Leaf for Stolen Timber: https://eia-global.org/blog-posts/PEFC-fig-leaf-for-stolen-timber
| standards go above and beyond national regulation and are capable of providing a high level of assurance that sustainable forest management practices are in place. However, in other cases, the standards are similar or equal to national legislation and provide little additional assurance. Ultimately, the level of assurance that can be provided by either scheme is contingent upon several factors including the certification bodies conducting audits, national regulations and local context. |
|
|---|---|
| -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| Aquaculture Stewardship Council67 | Best Aquaculture Practices68 | |
|---|---|---|
| Background | The Aquaculture Stewardship Council (ASC) is an independent, international NGO that manages the ASC certification and labelling program for responsible aquaculture. |
The BAP certification is administered by the Global Aquaculture Alliance (GAA), a non-profit organization focused on advocacy, the education and leadership of on responsible aquaculture matters. |
| Clear positive impact |
Promoting sustainable aquaculture practices. | Promoting sustainable aquaculture practices. |
| Minimum standards |
Quantitative and qualitative thresholds which are designed to be measurable, metric- and performance-based. Certification may be granted with a "variance" to certain requirements of the standard. This variance is designed to allow the standard to adapt to local conditions but has been criticized for weakening the standard and overriding the consultations involved in the standard-setting process. |
The BAP assessment has mandatory minimums, but also includes indicators which allow the proponent to define individual targets. As the certification process is fishery specific, the standard may be more robust for some species. For example, the Monterey Bay Aquarium's Seafood Watch programme recommends BAP as a reputable label for freshwater fish, mussels, and shrimp, but not salmon, scallops, or clams. 69 |
| Scope of certification or programme |
ASC encompasses nine farm standards, covering 15 fish species as well as the harvest of seaweed. These farm standards lay out minimum requirements regarding both environmental and social performance. Additionally, a Chain of Custody Standard is mandatory for all supply chain actors in order to ensure traceability. |
Different certifications are available for different parts of the supply chain: farms, processing plants, hatcheries, feed mills. In practice, that means that a processing plant that does not necessarily source all of its fish from certified farms can still be certified (a star rating display on the label provides this information). Within each fishery-specific standard there are requirements and recommendations which apply to social, environmental, animal health & welfare, and food safety issues. |
| Verification of standards and risk mitigation |
Third-party conformity assessment bodies (CABs), certified by Accreditation Service International (ASI) carry out assessments in line with the ASC standard and ISO 17065. Major non-compliances must be remedied within three months. |
Third-party certification bodies such as Global Trust, Bureau Veritas, Control Union, Lloyd's Register, NSF, SGS assess compliance against the standard. Non-compliance precludes recertification until the violation is remedied. |
67 Aquaculture Stewardship Council, at: https://www.asc-aqua.org/what-we-do/our-standards/farm-standards/.
68 Best Aquaculture Practices, at: https://www.bapcertification.org/About
69 Monterey Bay Aquarium Seafood Watch, at: https://www.seafoodwatch.org/seafood-recommendations/eco-certification.
| Third party expertise and multi stakeholder process |
Developed in line with United Nation's Food and Agriculture Organization) UN FAO) and International Labour Organization (ILO) principles. Managed in accordance with the International |
The standard is managed by an oversight committee, which takes development input from a technical committee as well as public comments. Aligned with Global Food Safety Initiative (GFSI), Global Social Compliance |
|---|---|---|
| Social and Environmental Accreditation and Labelling (ISEAL) Codes of Good Practice. |
Programme (GSCP) and Global Sustainable Seafood Initiative (GSSI). |
|
| Performanc e display |
||
| Qualitative consideratio |
Widely recognized and modelled on the successful MSC certification. |
Widely recognized within the industry. |
| ns | As the certification process is fishery | |
| Some criticism has been focused on the ability to certify with a "variance", in which certain aspects of the standard can be interpreted or |
specific, the standard may be more robust for some species than for others. |
|
| waived during the audit procedure. | While a reputable certification overall, the standard does not fully mitigate all the |
|
| While a reputable certification overall, the | risks associated with aquaculture. | |
| standard does not fully mitigate all the risks | GSSI's recognition shows that the two-star | |
| associated with aquaculture. | Best Aquaculture Practices Certification, | |
| for their Salmon Farms, and Finfish and Crustacean Farms standards, is in |
||
| alignment with all applicable Essential | ||
| Components of the GSSI Global | ||
| Benchmark Tool. The Tool is underpinned | ||
| by the FAO Technical Guidelines on Aquaculture Certification and consists of |
||
| performance areas related to scheme | ||
| governance, operational management | ||
| (including chain of custody) and applied | ||
| aquaculture farm audit standards. |
| Issuer name: | Türkiye İş Bankası A.Ş. |
|---|---|
| Sustainability Bond ISIN or Issuer Sustainability Bond Framework Name, if applicable: |
İşbank Sustainable Finance Framework |
| Review provider's name: | Sustainalytics |
| Completion date of this form: | August 3, 2021 |
The following may be used or adapted, where appropriate, to summarise the scope of the review. The review assessed the following elements and confirmed their alignment with the GBP and SBP:
| ☒ | Use of Proceeds | ☒ | Process for Project Evaluation and Selection |
|
|---|---|---|---|---|
| ☒ | Management of Proceeds | ☒ | Reporting | |
| ROLE(S) OF REVIEW PROVIDER | ||||
| ☒ | Consultancy (incl. 2nd opinion) | ☐ | Certification | |
| ☐ | Verification | ☐ | Rating |
☐ Other (please specify):
Note: In case of multiple reviews / different providers, please provide separate forms for each review.
Please refer to Evaluation Summary above.
Reviewers are encouraged to provide the information below to the extent possible and use the comment section to explain the scope of their review.
Overall comment on section (if applicable):
The eligible categories for the use of proceeds Renewable Energy, Energy Efficiency, Eco-efficient and/or Circular Economy Adapted Products, Production Technologies and Processes, Green Buildings, Clean Transportation, Pollution Prevention and Control, Environmentally Sustainable Management of Living Natural Resources and Land Use, Sustainable Water and Wastewater Management and Climate Adaptation, Terrestrial and Aquatic Biodiversity Conservation, Access to Essential Services, and Employment Generation Including Through the Potential Effect of SME Financing are aligned with those recognized by both the Green Bond Principles, Social Bond Principles, and Green Loan Principles. Sustainalytics considers that investments in the eligible categories will lead to positive environmental or social impacts and advance the UN Sustainable Development Goals, specifically SDG 3, 4, 6, 7, 8, 9, 10, 11, 12, 14, and 15.
Use of proceeds categories as per GBP:
☒ Renewable energy ☒ Energy efficiency
☒ Pollution prevention and control ☒ Environmentally sustainable management of living natural resources and land use
| ☒ | Terrestrial and aquatic biodiversity conservation |
☒ | Clean transportation | ||||
|---|---|---|---|---|---|---|---|
| ☒ | Sustainable water and wastewater management |
☐ | Climate change adaptation | ||||
| ☒ | Eco-efficient and/or circular economy adapted products, production technologies and processes |
☒ | Green buildings | ||||
| ☐ | Unknown at issuance but currently expected to conform with GBP categories, or other eligible areas not yet stated in GBPs |
☐ | Other (please specify): | ||||
| If applicable please specify the environmental taxonomy, if other than GBPs: | |||||||
| Use of proceeds categories as per SBP: | |||||||
| ☐ | Affordable basic infrastructure | ☒ | Access to essential services | ||||
| ☐ | Affordable housing | ☒ | Employment generation (through SME financing and microfinance) |
☐ Food security ☐ Socioeconomic advancement and empowerment
☐ Unknown at issuance but currently expected to conform with SBP categories, or other eligible areas not yet stated in SBP ☐ Other (please specify):
If applicable please specify the social taxonomy, if other than SBP:
Overall comment on section (if applicable):
İşbank's internal process in evaluating and selecting projects is managed by the Sustainable Finance Working Group (the "SFWG"). The SFWG consists of representatives of various departments, including Investor Relations and Sustainability Division, responsible for İşbank's sustainability oversight. This is in line with market practice. In addition, the Bank's responsible finance approach is applicable to all allocation decisions under the Framework and is viewed as adequate risk management systems. Sustainalytics considers this to be in line with market practice.
☐ Summary criteria for project evaluation and selection publicly available ☐ Other (please specify):
İşbank's processes for management of proceeds is overseen by Financial Institutions Division. İşbank intends to fully allocate net proceeds within three years of issuance and may also use proceeds to refinance loans up to three years preceding the issuance. The Bank will monitor the Sustainable Loan Portfolio and make periodic adjustments as needed in order to ensure that the net proceeds of the outstanding loans and/or bonds issued under the Framework matches the total allocation. Pending allocation, the proceeds may be temporarily invested in cash and/or cash equivalent, and/or liquid marketable instruments. This is in line with market practice.
Overall comment on section (if applicable):
İşbank intends to annually report, on its website, the allocation and impact of the loans and/or bonds until full allocation. Allocation reporting may include, to the extent feasible, the total amount of proceeds allocated to eligible loans, the number of eligible loans, the balance of unallocated proceeds and the portion of new financing and refinancing. In addition, İşbank intends to report on relevant qualitative and quantitative indicators where feasible and has provided indicative metrics in the Framework. Sustainalytics views İşbank's allocation and impact reporting as aligned with market practice
| Use of proceeds reporting: | ||||||
|---|---|---|---|---|---|---|
| ☐ | Project-by-project | ☒ | On a project portfolio basis | |||
| ☐ | Linkage to individual bond(s) | ☐ | Other (please specify): | |||
| Information reported: | ||||||
| ☒ | Allocated amounts | Sustainability Bond financed share of ☐ total investment |
||||
| ☒ | Other (please specify): Number of eligible loans, Percentage of new financing and refinancing |
|||||
| Frequency: | ||||||
| ☒ | Annual | Semi-annual ☐ |
||||
| ☐ | Other (please specify): | |||||
| Impact reporting: | ||||||
| Project-by-project ☐ |
☒ | On a project portfolio basis | ||||
| ☐ | Linkage to individual bond(s) | ☐ | Other (please specify): | |||
| Information reported (expected or ex-post): | ||||||
| ☒ | GHG Emissions / Savings | ☒ | Energy Savings | |||
| ☒ | Decrease in water use | ☒ | Number of beneficiaries | |||
| ☒ | Target populations | ☒ | Other ESG indicators (please specify): Expected annual renewable energy generation, Storage capacity, Distribution capacity, Annual savings of relevant resources, Annual savings of relevant resources, Number of electric/low carbon vehicles, Number of passengers, Number of km of new electric train/electric bus lines created/maintained, Type and |
annual amount of recycled waste. Energy generation, Amount and type of pollutant treated per year, Organic farming certification scheme, Sustainable agriculture land area, Land restored, Annual amount of wastewater treated, reduced or avoided, Liters of clean water
Maintenance/safeguarding/increase
provided,
of protected area
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