Case study: How Garanti BBVA 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.

Garanti BBVA incorporates the concerns of its stakeholders—including customers, employees, shareholders and investors, suppliers, regulators, and society at large—into its business and activities. Key issues addressed include social and environmental challenges, diversity, fiscal responsibility, human rights, and the prevention of corruption and unlawful behavior. The Bank engages in dialogue with both internal and external stakeholders through various channels, using their feedback to identify priority issues.

The Bank is actively involved in numerous initiatives, collaborating closely with all stakeholders in these efforts. These initiatives focus on several key areas:

• Universal Frameworks of Reference: Garanti BBVA and the BBVA Group were founding members and advocates of the UNEP FI Principles of Responsible Banking. In 2023, Garanti BBVA joined the central group tasked with formulating the 2030 strategy for the UNEP FI Responsible Banking Principles.
• Alignment with the Paris Agreement: Garanti BBVA is a member of the Net Zero Banking Alliance promoted by UNEP FI, as well as the Science Based Target Initiative.
• Market Standards: The Bank promotes the Equator Principles, the Green Bond Principles from ICMA, the Social Bond Principles, the Green Loan Principles from LMA, and other industry-established standards, including the EU Taxonomy.
• Transparency: Garanti BBVA publishes a summary index based on TCFD recommendations and a GRI standards content index for impact materiality reporting in its integrated annual reports.
• Financial Regulation: The Bank actively participates in various consultations and initiatives with regulatory and supervisory bodies, such as the Turkish Banks Association, to advance sustainable finance regulations.

For over a decade, Garanti BBVA has engaged in various supranational initiatives. In addition to its commitment to the United Nations Global Compact and its role as a signatory to the United Nations Environment Programme Finance Initiative (UNEP FI), the Bank has participated in 30 initiatives and contributed to 45 working groups since 2012. This includes involvement in the United Nations NetZero Banking Alliance (NZBA), the Responsible Banking Principles Working Group, Global Compact Türkiye, SKD Türkiye (Business World and Sustainable Development Association), the Banks Association of Türkiye (TBB), the Role of the Financial Sector in Sustainable Growth Working Group and the Environment and Climate Change Working Group of the Turkish Industrialists’ and Businessmen’s Association (TÜSİAD). The Bank maintains close collaboration with all key stakeholders, including industry representatives, regulators, investors, and civil society organizations.

Notable initiatives in 2023 included:

• Participation by the Sustainability and Sustainable Finance teams in the United Nations 28th Conference of the Parties to Climate Change (COP28). They engaged in discussions on topics such as investment in green growth within developing economies, managing physical and transitional climate risks in banking, and the role of artificial intelligence and hydrogen. They assessed the impact of new technologies on sustainable practices in agriculture, supply chains, and industry. Türkiye’s energy transformation plan was showcased at the Türkiye pavilion, emphasizing the need for innovation and reform within the industry, alongside specific financing for TÜSİAD’s Border Carbon Regulation Mechanism. Additionally, Garanti BBVA’s sustainability and finance teams attended the United Nations Climate Change Conference (COP27) in November, engaging with various stakeholders at conferences and panels, as well as one-on-one meetings.
• The “Sustainable Future in Export” events organized by Garanti BBVA, initiated in 2022 to support companies exporting to the European Union in aligning with the European Green Deal and fostering sustainable investments, were held in Gaziantep and Bursa in 2023, successfully attracting over 180 participants and reaching more corporate clients.
• Garanti BBVA also contributes to the Banks Association of Türkiye (TBB) Sustainability Working Group, which aims to inform banks on sustainability-related matters. The Bank’s efforts included input into the “Draft Communiqué on Green Asset Ratio” published by the BRSA as part of the group’s initiatives. The sustainability experts at the Bank remain actively involved in developing methodologies for assessing transition risks going forward.

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

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

For several years, sustainability has been one of Garanti BBVA’s six strategic priorities, and the bank is committed to embedding it into all aspects of its operations with its stakeholders. Additionally, the bank’s sustainability strategy is in alignment with the overarching framework of the BBVA Group.

• In 2022, the BBVA Group’s Board approved an updated General Sustainability Policy aimed at supporting clients in their transition to sustainable business models, focusing on climate change, natural capital, and inclusive growth. Garanti BBVA is currently reviewing its own policy to ensure alignment and broaden its scope.
• The bank has a sustainable product framework for its Corporate and Investment Banking (CIB) activities, a framework for issuing bonds linked to the Sustainable Development Goals (SDGs) and a strong commitment to human rights, consistent with the Group’s framework.
• The BBVA Group’s Environmental and Social Framework has been adjusted to incorporate stricter measures that respond to the evolving social and environmental conditions in Türkiye. This framework sets lending prohibitions at the project level and includes client-level monitoring plans.
• The Group also has an internal Sustainable Finance Standard, which draws inspiration from the European taxonomy and market best practices. Garanti BBVA adheres to all sustainable finance standards mandated by the BBVA Group and provides monthly and annual reports on its sustainable finance metrics, with specific thresholds applicable at the country level.
• In 2023, both the BBVA Group and Garanti BBVA established internal processes to address greenwashing, aiming to monitor and mitigate risks associated with public perceptions of sustainability.

These policies and frameworks apply to all customer segments and operational areas.

Garanti BBVA collaborates with its clients to enhance sustainable business practices in the economy through the green and social products and services it offers. Here’s how the integration of Environmental, Social, and Governance (ESG) aspects occurs in client relationships:

ESG Support for Wholesale Clients (Corporates and Large Enterprises) and Companies
At the wholesale level, Garanti BBVA provides a range of sustainable financing solutions, from specific use-of-proceeds products to sustainability-linked loans. ESG risks associated with clients are evaluated using sector-specific questionnaires with input from data providers. For clients in high-intensity, hard-to-abate sectors where climate transition risks are prominent, the bank assesses each client’s transition ambitions and updates those assessments annually using real data, such as emissions intensity and Science-Based Targets Initiative (SBTi) and/or Net-Zero aligned reduction targets. The assessments are specialized by sector and aimed at guiding clients in defining strategies that align with the Paris Agreement objectives and advance the United Nations 2030 Sustainable Development Agenda, while also offering sustainable financing solutions (both debt and equity) to support their decarbonization efforts.

Furthermore, all customers can access information and a catalogue of sustainable products on the Garanti BBVA website. The bank provides detailed information about these products, sustainability advice, and insights into their environmental impacts through its carbon footprint calculator and sector impact analysis tool, launched in 2022.

ESG Support for Retail Clients
Garanti BBVA assists its retail clients in integrating ESG practices through one-on-one meetings, public events, consulting partnerships with technology and consulting firms, and other advisory services. This advice is delivered through both digital channels and the bank’s branch network, creating a comprehensive service model that includes raising awareness, project design, and sponsorships for NGOs involved in community and public investments.

The bank’s managers, mobile banking service catalog, and corporate website offer an extensive range of sustainable investment and financing products, including several sustainable investment funds for retail investors.

Retail customers can access loans aimed at sustainable mobility, energy-efficient housing, green mortgages, rooftop PV loans, and more. In 2022, the bank launched a partnership with the Turkish Standards Institute (TSE) to enable its retail clients to receive consultancy services regarding the EU’s Carbon Border Adjustment Mechanism (CBAM). Another key focus area for Garanti BBVA is Inclusive Growth, where the bank offers tailored products and mentorship programs for vulnerable populations, particularly women-owned businesses and micro-SMEs. The bank’s support program for women entrepreneurs has been operational since 2006.

Garanti BBVA makes sustainability information accessible to clients through its corporate website and various digital platforms. The corporate website features news and articles, while the transactional banking website and mobile app provide details on the bank’s sustainable products, enabling clients to view and contract them. The Garanti BBVA mobile banking app also offers a feature for clients to calculate their carbon emissions based on their automatic payment data. Additionally, the app provides insights into greenhouse gas emissions, water consumption, and tips for reducing carbon footprints, such as choosing low-carbon transport options, using energy-efficient electronics, minimizing unnecessary packaging, and increasing recycling.

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.

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References:

This case study is based on published information by Garanti BBVA, 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.garantibbvainvestorrelations.com/en/images/pdf/GBFR23_ENG_App6.pdf

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