sustainability in garanti bbva sustainable products
TRANSCRIPT
Sustainability in
Garanti BBVA
Sustainable Products
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Main Focus Areas
CLIMATE CHANGE INCLUSIVE GROWTH
Helping our customers change their behavior and move towards a greener future
Here are our three business initiatives where we aim to increase the investments needed to manage the climate change challenge:
- Energy efficiency (technology that reduces energy consumption per unit of product)
- Circular Economy (recycling, new materials, responsible use of natural resources, etc.)
- Reducing carbon emissions(renewable energy sources and other clean energy sources, electric vehicles)
Promoting economic growth that leaves no one behind and creates opportunities for all
Here are our three business initiatives where we aim to build inclusive infrastructures and increase the investments needed to support inclusive economic development:
- Providing financial services in line with the needs of society with digital solutions without banking services
- Financing inclusive infrastructures with a focus on essential services and safe, affordable and sustainable transport systems.
- Supporting entrepreneurs
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BBVA Group 2025 PledgeThe BBVA Group has committed to provide EUR 200 billion in financing to combat climate change and support sustainable development by 2025. (2021)
Climate Change
Support for SDGs
Inclusive GrowthAs of 31 March
2021, 59 billionEUR financing was
provided within the scope of this
target.
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Transitionto Low Carbon Economy
Sustainable FinanceE&S Risk Management
Prioritizing renewable energyprojects and ve putting a shadowprice on carbon
Reducing defrostretation
Creating Green Office Standards
Managing water-related risks
Environmental and SocialImpact Assessment Model
Sectoral Principles
Environmental and SocialLoan Policies
Decarbonizationof thePortfolio
Brain storming about thesectoral needs
Creating awareness andincreasing capacity
Innovative financingmechanisms such as; GreenLoan, Sustainability-linkedLoan etc.
Climate Change Action Plan
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Sustainable FinanceADAPTATION TO INTERNATIONAL RULES
EU Green Deal, Taxonomyand Green Bond Principles
ICMA Green, Social andSustainability-linked Bond Principles
LMA Green andSustainability-linked LoanPrinciples
QuickLook-Garanti BBVA Sustainable Finance Solutions6
Environmental Social Governance
Renewable Energy Financing
Rooftop Solar Product for Retail and Commercial
Building Insulation Product for Retail
Green Auto Loan
Green Mortgage
Climate Index
Shopping Loan for Energy Efficiency
Green mode (Upcoming)
SDGs Impact Analysis Tool for Enterprises (Upcoming)
Women EntrepreneursProgram (since 2006)
Gender Loan (First in theWorld in 2019 and in 2020)
Financial Health Advisory
Disabled- Friendly Banking
NET Savings Account & Inclusion Products
Cardless Transactions through ATMs
A BoD member is leadingperiodically held theResponsible Banking & Sustainable FinanceCommittee
Integrated Annual Report (since 2017)
Included in 11 Sustainability Indices in 2020
28 Participation in sustainability relatedinitiatives and memberships
Strategic Priorities in 12 Workstreams
Green / Sustainability Linked Loans (ESG)
Green / Sustainability Linked Bonds (ESG)
3 ESG Related Funds (ESG)
ESG-linked SyndicationLoan (World’s First)
Green IPO (ESG) (World’s First)
First of a kind Green / Sustainable Supply Chain Finance –(upcoming)
Hybrid
EPC Contracto
r
Garanti BBVA
Mobile
RooftopSolar
POS machine
Individuals
ROOFTOP SOLAR - INDIVIDUAL
Innovative Products - Example
Market makerin SF
43 Existing SF Solutions
Allows customers to receive an easy & fast financing for their rooftop solar investments through Shopping Loan Mechanism
We developed an innovative financing mechanism to promote rooftop solar installations
Mobilized 3.6 bnTL to pledge by June 21 YTD
51 bnTL contribution to SF as of Dec’20
Landmark Deals - Examples
TL 151,200,000
May, 2020
USD 700,000,000
ESG-linked Syndicated Loan
May, 2020
Auditor Coordinator
EUR 650,000,000
Sustainability-linked Loan
Sept, 2020
Rating Agency
TL 811,018,951
Green IPO
Apr, 2021
Rating Agency
Bookrunner
Gender Loan
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DetailedLook-Garanti BBVA Sustainable Finance Products
We have been offering since 2017.
We make it available for residences in buildings with B and higher Energy Performance Certificates or international green building certificates such as LEED, BREEAM.
As of the end of 2020, the total disbursement was 520 million TL.
We have been offering since 2017.
We use it for hybrid and electric vehicles.
As of the end of 2020, the total disbursement was 34.7 million TL.
Green Mortgage
Green Auto Loan
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Garanti BBVA Sustainable Finance Products cont’dExisting Green Only Products
Retail Roof SPP
Easy and fast Roof SPP loan with Shopping Loan
Individuals EPC Contractor
Garanti BBVAMobile
Roof SPP
Roof SPP Loan in 5 min
POS machine
Non-Garanti BBVA customers will also be able to use digital on-boarding.
Building InsulationProduct
POS machine
Individuals Garanti BBVAMobile
Insulatedbuilding
Easy and fast buildinginsulation with Shopping Loan
Insulation Loan in 5 min
Non-Garanti BBVA customers will also be able to use digital on-boarding.
Insulationfirm
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Garanti BBVA Sustainable Finance Products cont’d
Sustainability Funds
To the stocks included in the BIST Sustainability Index and the participation shares of the exchange traded funds established to follow the BIST Sustainability Index; A Sustainability Equity Fund that accounts for at least 80% of the portfolio
The purpose of the fund; mainly by including the partnership shares in the BIST Sustainability Index in the fund portfolio; Investing in companies of a certain size in Turkey and gaining capital gains
Current fund size TL 3.8 million
At least 80% and continuously; Garanti BBVA has developed a fund that invests in capital market instruments of domestic and foreign companies operating as producers, developers, distributors and/or founders of clean, renewable and/or alternative energy.
Fund, with the theme of Clean Energy; aims to support investments in companies operating in these types of energy, which are at a very limited level compared to fossil fuels that are harmful to the environment and whose importance is increasing day by day, and to offer reasonable returns to investors who enter the fund with the investments made.
Current fund size TL 106 million
In this fund, which will mainly include foreign assets, at least 80% of the total value of the fund will consist of companies with high performance in ESG issues.
It is invested in funds investing in capital market instruments issued by companies within the scope of the 'BIST Sustainability Index', exchange traded funds based on this index or other mutual funds with the theme of 'Sustainability'.
If abroad, it is invested in the shares of foreign exchange traded funds based on ESG, Sustainability and/or SRI (Socially Responsible Investment) themed indexes created by S&P or MSCI.
Current fund size TL 153,000
Sustainability Equity Fund Clean Energy Mixed Fund ESG Sustainability Fund Basket
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Content to reduce carbon footprint
Orientation to green products
Forwarding to Digital Banking (Digital approval/instruction, e-receipt/receipt, digital numbering instead of g-matic…)
Data will be included:
Bill payments (water, natural gas, electricity)
Credit cart payments
Mobile app usage
Demonstrating the contribution it will make to the nature and its budget with the actions it takes/will take (TL savings, CO2 emission reduction…)
Automatic updates
Product/campaign withadvantages
An infrastructure where we will inform customers about their environmental footprints and share suggestions to reduce this through Garanti BBVA Mobile.
Environmental impacts will be calculated on invoices with automatic payment orders and credit card expenditures.
Garanti BBVA Sustainable Finance Products cont’d
New Sustainability Products (Green Only)
Green Mode
Carbon FootprintCalculation
Advice & Action Motivating
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Garanti BBVA Sustainable Finance Products cont’d
Green Only New Sustainability Products
White goods made from recycled materials
White goods manufactured or refurbished using recycled materials
Through shopping loan and Bonus Credit Card
Energy efficiency products
Equipment Purchases
Investments to replace existing equipment
Energy Efficient white goods
Purchases of white goods with energy class A and above
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Garanti BBVA Sustainable Finance Products cont’d
Green Only Existing Products
Corporate Roof SPP
Energy efficiency product in industry
Mini YEKA loans
SME and CorporateCustomers
SPP Firms(Approved by Garanti
BBVA)
Garanti BBVA Turnkey Roof SPP installation
List of companies to be approved by PF Energy Team Fast and easy SPP loan process for SME and Commercial customers50% advance, 50% post installation
One week
Only Green New Products
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Garanti BBVA Sustainable Finance Products cont’d
Renewable Energy Financing
USD 244 million for Solar Power Plant (SPP) Projects 326 MW total installed capacity*
As of 31.12.2020* When fully engaged
100% RE financing on new Project Finance
loans since 2014
5.6 billion USD RE financing amount
provided to date
7.2 million tCO2e Total amount of avoided emissions in 2020
Market Leader with 24.7% market share in
RES financing
Green Only Existing Products
USD 2.66 billion for Wind Power Plant (WPP) Projects 2,553 MW current installed capacity 2,796 MW total installed
capacity*
US$ 263 million for Geothermal Power Plant (GPP) Projects 337 MW total installed capacity*
USD 57 million for Biomass Power Plant Projects 58 MW total installed capacity*
USD 2.42 billion for Hydroelectric Power Plant (HEPP) ProjectsTotal installed power of 3,014 MW fully operational
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Garanti BBVA Sustainable Finance Products cont’d
Green Only Existing Products
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Sustainable Debt
New Sustainability Products
ESG-linked Syndication Loan
KPIs recommended by various banks
Disbursement target in Sustainable Finance
Sustainable Number of Products Target
Sustainable Number of Products Target
Target for water consumption
Digital transformation and customerexperience: NET Promoter Score target
Sustainable Bonds
To the contents of the new Second Party Opinion Report:
10 new green category,
5 new social category,
Opinion in line with the BBVA SDG Bond Framework and ICMA Green and Social Bond Principles will be given by VigeoEiris
We are expanding the scope of our Second Party Opinion Report for our Green and sustainable Bond issuances in 2021 and beyond
Garanti BBVA Sustainable Finance Products cont’d
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Garanti BBVA Climate Index
Companies with a CDP Climate Change score of B- and above were included in the index.
The index will be updated once a year.The liquidity rule is applied in the selection process.
Stocks with an average daily trading volume of 10 million TL or more in the last 1-year period are included.
Index calculations are made by BIST. Current index value: 975,46
We will be able to develop index-based funds and differentiated products.We will be able to get license fees from companies that want to use the index to develop products.
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Green IPO
It is the first ever green public offering by a green company.
The portfolio to be used in the public offering must comply with the green taxonomy and the positive effect of the portfolio must be confirmed.
The firm received a sustainability rating audit from the international rating agency Vigeo Eiris for the public offering process.
Also added that it has made commitments on environmental and social issues in the prospectus, which is the official document submitted to the CMB in addition to its sustainability rating.
Environmental and
Social Risk
Assessment
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Environmental and Social Loan Policies
ESLP is the first step of the process to be implemented to determine the environmental and social impacts of loans.
Within the scope of the policy, the principles in the three main sections listed below are applied.
Control of Unfunded Activities and Customers
Activities prohibited and restricted by national legislation and international conventions to which Turkey is a party are not financed.
Non-Financial Performance andIdentification of PotentialRisks
In order to eliminate, reduce and manage the Environmental & Social risks of projects with a certain financial limit and feature,
Environmental and Social Risk Assessment Process
OHS Risk Assessment System and
Deforestation Impact Management Process
A detailed evaluation of the projects for which credit will be provided is carried out.
Non-Financial PerformanceManagement
Garanti BBVA's General Loan Agreements and Banking Service Agreements contain commitment clauses on Environmental and Social issues.
Additional commitments related to Environmental, Social, OHS and Afforestation, which are deemed necessary as a result of detailed evaluation, are included in the loan agreement.
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Garanti BBVA Environmental and Social Impact Assessment Process-1
1 2 3 4 5Project Finance Corporate Loans used for a
specific Project or Investment
Bridge Loans Consultancy Refinancing and Purchase Loans used for a specific
Project or Investment
All project financeloans
The majority of the loan should be related to the project in which the borrower has effective operational control.
The total amount of the loan and Garanti BBVA participation (before the syndication sale) is at least USD 50 million and above.
The loan term is a minimum of two years.
The lender anticipates that the main source of repayment of the loan is mainly derived from the project.
Bridge loans with a loan maturity of less than 2 years that are planned to be refinanced by Project Finance or Project-related Corporate Loans
Consultancyservices regardingProject Finance transactions
Projects that meet the following three criteria:
The related Project has been financed in accordance with the Equator Principles framework.
There was no significant change in the scale or scope of the project. The project is not yet completed at the stage of signing the loan agreement.
It applies to the five main financial transactions described below.
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Garanti BBVA Environmental and Social Impact Assessment Process-2 Loan Demand
Environmental & Social Loan
Policies
Not in line with
Policies
(REFUSAL)
Equator Principles financial limit & ESIAM
Sectoral PrinciplesNot in line with
Principles
(REFUSAL)
Project Categorization
(A / B / C)
Environmental & Social Impact Assessment Model
(ESIAM)
Final Action Note 1:
Appointment of Independent
Advisor
(Environmental & Social Action
Plan+ Periodic monitoring)
Final Action Note 2:
Optional Action-Appointment
of Independent Advisor(Environmental & Social Action Plan+
Periodic monitoring)
Final Action Note 3:
No actions required
Loan Committee
RE- ASSESSMENT APPROVAL REFUSAL
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Garanti BBVA Environmental and Social ImpactAssessment Process-3
The ESIAM Model was established in 2012. In the model, question sets were prepared for 19 different sectors*.The model consists of 3 stages:
1. Defining project category
(A, B, or C)
2. Answering the question sets and determining the risk level
(R1, R2, R3 or R4)
3. Determination of Final Action Rating by category and risk level
(1, 2 or 3)
*Industries: HEPP, TES, WPP, GPP, SPP, Cement-Glass-Ceramic, Petrochemical, Chemistry, Machinery-Metallurgy, Agri-Food, Textile-Leather, Paper, Waste Evaluation, Mining, Petroleum-Natural Gas, Infrastructure, EIH, Housing -Shopping Mall, Tourism
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ESIAP MODEL
1 Deciding on projectcategory
2 Determination of risk levels
3 Determining the Final Action Grade
An independent consultant is appointed. E&S DD Report is requested.
An independent consultant is appointed. E&S DD Report is requested.(optional).
No action is taken.
Garanti BBVA Environmental and Social Impact Assessment Process-3
As Garanti BBVA, we will zero our coal risk until 2040, at the latest, in line with the following actions, with our goal of combating climate change and transitioning to a low-carbon economy.
• The new coal plant will not be financed.
• The new coal mine will not be financed.
• There will be no increase in the limit for coal.
• By 2040 at the latest, all coal exposures, including PF loans, will be closed. (Except NPL.)
Garanti BBVA’s
Pioneering Works
We are the only bank to receive an invitation from Turkey to write the UNEP FI Principles for Responsible Banking.
BSCD Turkey Chairman of the Board
We are a member of the UNGC Turkey Board of Directors
Sustainable Finance Working Group co-chair
We pioneered the creation of the Declaration on Sustainable Finance
Main Sponsor for CDP TurkeyThe first and only member from Turkey to the NBZA
8 signatories from Turkey representing approximately 40% of the asset size
The only bank and the first signatory from Turkey invited to
write the Principles200 signatories worldwide 8 signatories
from Turkey
UNEP FI Principles for ResponsibleBanking
Declaration on Sustainable Finance
We are members of 27 platforms working on sustainability issues.
The first and only member of Net Zero Banking Alliance from TurkeyEngagement Platforms
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Garanti BBVA’s CommitmentsNET ZERO BANKING ALLIANCE
NZBA commitments:
Align their portfolios with a net zero emissions path by 2050
Setting 2030 and 2050 targets with interim targets to be set every 5 years from 2030 within 18 monthsFocus the initial 2030 targets on carbon-intensive sectors where the bank can have the most significant impact
Coal, oil and gas, transportation, etc. Setting sector-level targets for all or most carbon-intensive sectors, such as
Engaging customers for their own transition and decarbonisation, and fostering the transition to a net zero economy
Reporting on an annual basis, emissions in line with best practices and progress against transition strategy and climate-related sectoral policies
Adopting a carbon offset approach
Garanti BBVA has become the first and only Turkish signatory to the United Nations Net Zero Banking Association, which brings together 53 banks from 27 countries that have committed to aligning their lending and investment portfolios with net zero emissions by 2050!
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Garanti BBVA Commitments cont’d
SCIENCE BASED TARGETS & BUSINESS AMBITION FOR 1.5°C Science Based Targets; CDP is a joint venture of the UN Global Compact (UNGC), the World Resources Institute (WRI) and WWF.
The initiative provides a step-by-step guide to the implementation of the objectives. First, businesses are asked to sign a commitment letter stating their commitment to setting a science-based goal.
Companies then have 24 months to fully develop the target. After a goal has been developed, the 'Target Submission Form' should be submitted. This form then verifies whether the target has been formally approved or requires additional work.
In June 2016, we uploaded our letter of commitment to SBTi, which is working to set scientific emission reduction targets in line with the 1.5°C target of the Paris Agreement.
At the beginning of 2021, we announced our absolute emission reduction target in line with the 1.5 degree target within the scope of the Science-Based Targets methodology. We have committed to reduce Scope 1 and Scope 2 emissions by 29% by 2025 and by 71% by 2035.
In 2020, we reduced the emissions caused by our operations by 75% and purchased carbon credits for our remaining emissions, and we achieved our 2035 target as carbon neutral 15 years ago. Now we are working towards more ambitious goals.
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PACTA Metodolojisi
Sector PriorityOil&Natural Gas
CoalEnergy
AutomotiveIron and
SteelCement
R CodePython Code
Katowice Banks: BBVA, Standard Chartered, ING, Societe Generale, BNP Paribas
We will align our loan portfolio with the Paris Climate Agreement
IFRS9 2DII
Sustainability
Indices
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Sustainability Indices
As Garanti BBVA, we are included in 11 Sustainability Indices.
We are the only company from Turkey that has been in place for 6 consecutive years
We are the only bank in Turkey
We are the only company from Turkey to be included in the index for 5 consecutive years.
We are the only bank in Turkey