Case study: How Akbank works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

Guided by its vision of “Being the Leading Bank Carrying Turkey to the Future,” Akbank is committed to advancing the Sustainable Development Goals by incorporating feedback from its stakeholders. In light of evolving standards and international trends, Akbank reassessed its priority issues for 2023 through stakeholder surveys and departmental interviews. For its Double Materiality Assessment, conducted for the first time that year, Akbank sought input from:

• International Financial Institutions
• Investors
• Employees
• Customers
• Non-Governmental Organizations

In determining its priority issues, Akbank considered the survey results reflecting stakeholder opinions, the latest developments in sustainability reporting standards, global trends, the Bank’s long-term vision, examples of best practices, and the priority issues identified by the Sustainability Accounting Standards Board (SASB) Financial Services for the Commercial Banking sector. Akbank assessed the significance of these issues based on their potential impacts, taking into account their magnitude, scope, and manageability. Additionally, Akbank evaluated the financial risks associated with these priority issues, listing the actions the Bank has undertaken to mitigate these risks in consultation with the relevant department managers.

As a key stakeholder in the Climate Finance Accelerator (CFA) Program, which aims to bolster Turkey’s efforts against climate change and was initiated by the UK Government, Akbank has been actively engaged in the program since 2021. Akbank is enhancing its role in the program by evaluating the requirements for supporting the viability of selected projects in the investment decisions made by both local and international financiers. In 2023, the program featured projects focused on circular economy and sustainable production, including waste recovery, advanced recycling, and 100% recyclable product production, as well as initiatives related to sustainability in agriculture, climate resilience, renewable energy storage, and decarbonization. Additionally, capacity-building support was provided to selected projects to promote gender equality and societal inclusion, alongside the development of financial models and effective promotion of materials.

Akbank has actively participated in the Turkish Bankers Association’s Sustainability Working Group, as well as the Green Asset Ratio Working and Sub-Working Groups, which were established to develop criteria for calculating the green asset ratio. This ratio serves as a key performance indicator aimed at enhancing the accuracy and transparency of sustainability data, thereby making sustainability performance more comparable within the banking sector.

As a result of this collaborative effort, the Banking Regulation and Supervision Agency (BRSA) has prepared a Draft Regulation on the Green Asset Ratio, marking the initial step towards measuring banks’ contributions to environmentally sustainable economic activities. In line with this Draft Regulation, Akbank has initiated efforts to classify its assets as eligible and compliant, and is now monitoring them in a digital environment. Additionally, for loans classified as green or social under the Akbank Sustainable Financing Framework, Akbank also implements the Do No Significant Harm (DNSH) and Minimum Safeguard (MS) criteria as outlined in the Akbank Environmental and Social Risk Framework.

Beyond financial solutions for its business partners, Akbank collaborates with various stakeholders who are experts in their fields to offer climate solutions, promote the green transformation of sectors, and focus on societal benefits. Since 2021, Akbank has connected customers looking to invest in solar energy for self-consumption with expert EPC companies. In 2023, Akbank provided a digital tool to help a limited number of commercial customers in specific sectors calculate their carbon footprint and ESG score, free of charge. Akbank also offers digital and financial solutions that facilitate the transformation of a sustainable agricultural supply chain for its partners in select sectors. Furthermore, Akbank has organized workshops to raise awareness among its customers regarding the Carbon Border Adjustment Mechanism (CBAM).

How did Akbank work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 PRB Reporting and Self-Assessment Template Akbank reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

In response to sustainability trends, Akbank is continually enhancing its sustainable financing practices in alignment with the expectations of international financial institutions, investors, and the current market. In 2021, Akbank launched its Sustainable Finance Framework, and in 2023, it updated it with additional thematic areas focused on green, blue, and social initiatives, becoming the first in Turkey to do so. Akbank’s revised framework now includes new areas such as climate change adaptation, green hydrogen, hybrid maritime vehicles, and investments aimed at revitalizing earthquake-prone regions. With this updated framework, Akbank applies green and social criteria to categorize projects eligible for sustainable financing, ensuring compliance with international standards. Akbank issues bonds that adhere to the ICMA (International Capital Market Association) Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines. Furthermore, Akbank offers green and social loans in accordance with the LMA (Loan Market Association) Green Loan Principles and Social Loan Principles. Akbank’s framework complies with the ICMA Harmonized Impact Analysis Criteria and the IFC’s (International Finance Corporation) Blue Finance Guide. Any loans issued under Akbank’s policy are submitted for approval to the Credit Committee or the Credit Allocation Unit, as authorized by its Board of Management.

As Akbank supports the economic development of its lending customers, it also assesses the environmental and social risks associated with their commercial activities, working collaboratively to improve their environmental and social performance over time. Akbank’s Environmental and Social Risk Framework, published in 2022, is designed to proactively evaluate and manage the environmental and social risks linked to the activities financed by the bank. This framework aims to align with environmental and social principles and criteria, ensuring compliance with national legislation, international agreements to which Turkey is a signatory, and best practices established by international organizations.

Akbank implements an Environmental and Social Management System (ESMS) along with an Environmental and Social Impact Assessment (ESIA) system to identify and effectively manage environmental and social risks and opportunities that may arise from its financing activities. The ESMS serves as a fundamental process for managing environmental and social risks within Akbank’s credit processes and is applied to all clients with whom Akbank establishes a credit relationship, barring exceptions outlined in the relevant scope section of Akbank’s Framework. Furthermore, specific high-risk projects detailed in the Framework (the ‘Category A Project List’), as well as all project finance loans in sectors known for significant environmental and social risks, and new investment loan requests exceeding 10 million US dollars, undergo a more thorough review under the ESIA system.

Akbank’s specialized technical team provides allocation teams and the Credit Committee with insights into the environmental and social risks associated with transactions subject to the ESIA, along with recommendations for necessary measures. Akbank’s policies are reviewed annually and require approval from its Board of Management, ensuring they adapt to evolving needs and comply with current national and international standards. Akbank conducts comprehensive reviews of all project finance loans within the Environmental and Social Impact Assessment system, collaborating with independent consultants based on project risk assessments. Akbank’s decisions consider impacts related to employment conditions, resource management, pollution control, expropriation, public health and safety, biodiversity, and cultural heritage. Akbank ensures compliance with internationally recognized frameworks, including the UN Universal Declaration of Human Rights and International Labor Organization (ILO) conventions, which define standards in areas such as child labor, collective bargaining, unionization, forced labor, equal opportunity, and worker rights as recognized by Turkey. For activities deemed prohibited under these frameworks, Akbank pledges not to finance the proposed project without conducting further environmental and social assessments.

In 2023, Akbank continued to enhance its sustainable financing initiatives by introducing its Sustainable Deposit product, providing its customers with a sustainable cash management solution, alongside its digital sustainability services, all contributing to Akbank’s 16 sustainable financing lending products. Akbank supported its clients in their transition to a low-carbon economy with products such as its Renewable Energy Credit, Low Carbon Economy Transition Credit, and Roof GES Investment Credit. Akbank’s Low Carbon Economy Transition Loan product is tailored for its Corporate, Commercial, and SME segments, with efforts made to cater to all segments through Akbank’s Roof GES loan offering.

To facilitate its customers’ investments in environmental, social, and governance (ESG) projects, Akbank provides a range of investment options, including investment funds, bonds, and stocks, tailored to different asset and risk preferences. At the beginning of 2021, Akbank introduced “Investments of the Future,” managed by Ak Portföy Investment Funds, focusing on themes such as Alternative Energy, Health, and Domestic and Foreign High Technology. This initiative allows savers to invest in the future of the world, Turkey, and Turkey’s economy. In 2022, Akbank expanded its fund portfolio by adding Electric and Autonomous Vehicle Technologies and Agriculture and Food Technologies funds, further enhancing its diversity. Additionally, Akbank received ESG ratings from Refinitiv and MSCI for these four sustainability-themed funds, making them the first of their kind in Türkiye. To complement these offerings, Akbank launched the Sustainable Equity Pension Investment Fund, managed by Ak Portföy, which enables savers to invest in shares of companies committed to sustainability. Moving forward, Akbank aims to continue enhancing the sustainability assessments conducted by independent organizations for its investment funds.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

FBRH Principles for Responsible Banking (PRB) Assurance:

First class PRB assurance services: The result of solid, hands-on ESG/ Sustainability experience

• • • FBRH is a GRI Certified Training Partner (Global), IEMA Training Centre and a member of CPD.
    • FBRH builds trust. Over 200 reviews from top professionals from around the world demonstrate our ability to build strong, trusting business relationships.
    • FBRH possesses a unique skill set that combines ESG/sustainability certified training, experience in advisory services and report preparation, and ESG/sustainability report assurance.

The combination of all the above empowers FBRH to provide first class Principles for Responsible Banking (PRB) assurance services.

References:

This case study is based on published information by Akbank, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.akbankinvestorrelations.com/en/images/pdf/2023-unep-fi-principles-for-responsible-banking-report.pdf

Note to Akbank: With each case study we send out an email requesting a comment on this case study. If you have not received such an email please contact us.