Sustainability in Finance Financing Sustainability Practices and Examples

Sustainability in Finance & Financing Sustainability: Practices and Examples from Turkey Hülya Kurt ESCARUS 2016 UNEP FI Global Roundtable October 26, 2016

AGENDA • Need for Sustainability in the Finance Sector • Sustainability Practices in the Turkish Finance Sector • TSKB and Escarus at a Glance: Our Solutions

Need for Sustainability in the Finance Sector

Sustainability Practices in the Turkish Finance Sector What were the Needs? Guidance for the Sector Turkish banks needed to understand sustainability and its adaptation to the financial sector and what the international developments entailed for them. Tools Local FIs needed tools to help them easily integrate and process ES risks in their processes. Technical Know-How and Capacity Building In order to reach a certain level of awareness and capability in the sector, sectoral guidance alone was not enough. FIs needed guidance specific for their institutions in order to increase internal capacity and to do this, transfer know-how. Even though the above conditions are from the Turkish case, they are generic challenges/ problems faced in numerous countries worldwide and can be taken as a best-practice example.

TSKB and Escarus at a Glance

TSKB’s Sustainability Journey 2015 GRI G 4 Sustainability Report Global Compact 4. COP Report BIST Sustainability Index 2013 GRI A+ Sustainability Report Global Compact 3. COP Report 2009 UNEP FI GRI Corporate Stakeholder cevreciyiz. TV 1980 Environmental Factor in Credit Evaluation Process 2007 ISO 14001 Certificate 2008 Carbon Neutral 2005 Environmental Management System 2011 Global Compact 1. COP Report Escarus founded 2010 GRI Approved Sustainability Report CDP UN Global Compact Commitment 2014 Sustainability Committee 2012 First Turkish Bank with successful ISO 14064 Greenhouse Gas Emissions Audit Global Compact 2. COP Report Sustainability Management System 2016 GRI G 4 5 th Sustainability Report Green Bonds

TSKB and Escarus at a Glance TSKB Escarus Establishment 1950 2011 Vision To be the pioneering bank in Turkey’s sustainable development To be the pioneering consulting company in Turkey’s sustainable development by sharing TSKB’s technical know-how along with global perspective Strategy Based on its mission and vision, It is the pioneer bank in sustainability banking practices in Turkey. Originated from TSKB’s Technical Services/ Engineering Departments, Escarus uses global specialists expert in their fields in addition to its own experienced team. Escarus - TSKB Sürdürülebilirlik Danışmanlığı A. Ş. Environment / Energy Sustainability Carbon US Founded Escarus as a part of its mission to help support Turkey’s sustainable development.

Escarus Service Mix • • Risk & Opportunity Analysis Business Strategy Development Sustainability Management System Environmental Management System • • SUSTAINABILITY STRATEGY & GOVERNANCE CONSULTANCY RESEARCH REPORTING TRAINING TOOLS • • Sectoral Reports Sustainability Report GRI Certified Training Partner Sustainability Softwares Operational Efficiency Consultancy Monitoring & Assesment SUSTAINABLE OPERATIONAL ORGANIZATION CONSULTANCY CLIMATE CHANGE ADAPTATION AND MITIGATION • • • Climate Change Innovative Finance Models Investor ESG Assesment Sıfır Karbon- Zero Carbon Enerjimetre- Energy meter

Escarus Services: Our Solutions Actions Taken – What did Escarus do? Sustainability Guideline for the Banking Sector, The Banks Association of Turkey* Guidance for the Sector: Trainings for Capacity Building Sustainability Strategy and Governance Consultancy: Developing Technical Know-How Enviromental and Social Management Systems Sustainability Management Systems Technical-Environmental and Social Risk Assessment Tools: ERET Sıfır Karbon Metre

Sustainability Strategy and Governance Consultancy ENVIRONMENTAL AND SOCAL MANAGEMENT SYSTEM (ESMS) An Environmental and Social Management System (ESMS) states a company’s commitment to environmental and social management, explains its procedures for identifying, assessing and managing environmental and social risk of operations, defines the decision-making process, describes the roles, responsibilities and capacity needs of staff for doing so and states the documentation and recordkeeping requirements. For financial institutions, ESMS also provides guidance on how to screen transactions, categorize transactions based on their environmental and social risk, conduct environmental and social due diligence and monitor the client’s/investee’s environmental and social performance. Risk Categorization Model ESMS Gap Analysis ESMS System Design ESMS Policies & Exclusion List System Documentation + Roles & Responsibilities Trainings

Sustainability Strategy and Governance Consultancy SUSTAINABILITY MANAGEMENT SYSTEM A Sustainability Management System (SMS) provides a systematic way to review and improve operations for better environmental, social and economic performance. For financial institutions, just like ESMS, SMS provides guidance on how to screen transactions, categorize transactions based on their environmental and social risk, conduct environmental and social due diligence and monitor the client’s/investee’s environmental and social performance. Sustainability Reporting (GRI) Sustainability Gap Analysis Sustainability Strategies & Road Map Sustainability Policies & Performance Indicators System Documentation + Roles & Responsibilities Sustainability Trainings & Capacity Building

Sustainable Operational Organization Consultancy TECHNICAL – ENVIRONMENTAL AND SOCIAL RISK ASSESSMENT Escarus provides Technical and/or Environmental & Social Due Diligence + Monitoring services for Lenders/ Buyers. Definition of liabilities and risks prior to financing is essential. Technical Risk Assessment Due Diligence Environmental and Social Risk Assessment Monitoring

Escarus Tools Environmental and Social Risk Evaluation Tool ü It is an environmental risk evaluation model which questions the projects based on specific subjects and assigns an environmental risk factor based on the results. In the case of a high environmental risk factor, a management plan is prepared in cooperation with the client on how to reduce the impacts and to trace them. Enerji Metre (Energy Meter) ü It is a tool for users to see the energy consumption per unit and methods for energy savings. Sıfır Karbon (Zero Carbon) Principles ü “Sıfır. Karbon Principles” are a part of certification system developed by Escarus. Sıfır. Karbon Principles aim to be a broad and comprehensive tool for the companies and the organizations to analyze and report of greenhouse gas emissions at the transition period of low-carbon economy. By using Sıfır. Karbon services, companies can manage their process all the way through being a carbon -neutral entity and share their carbon reducing pledge with the public.

Training SELECTED TRAININGS E- Training Material for the Banks Association of Turkey: Sustainable Banking and Environmental and Social Risk Assessment in Banking Sector • • • Environment and Sustainability International Initiatives National and International Environmental Legislationı Environmental and Social Risk managemet for Financial Institutions Monitoring and Reporting GRI G 4 Training Escarus became a GRI Certified Training Partner in Turkey in June 2016 to conduct GRI G 4 Trainings. Escarus A member of Integrated Reporting Turkey Network (ERTA).

THANK YOU İş ve Pazarlama Planı 29 Şubat 2012 ISTANBUL www. escarus. com