Case study: How İşbank 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.

İşbank actively interacts with a diverse array of stakeholders, including clients, employees, investors, and the broader community. As part of its commitment to sustainability, the bank conducts a materiality analysis by engaging both internal and external stakeholders to identify its sustainability priorities. This process is aligned with the AA1000 Stakeholder Engagement Standard.

Stakeholder groups involved in this process encompass employees, customers, investors, non-governmental organizations, industry associations, international bodies, financial institutions, subsidiaries, business partners, public authorities, suppliers, and academic institutions. Feedback is collected through online surveys, allowing the bank to understand stakeholder perspectives on key issues and their expectations regarding its sustainability initiatives.

The materiality analysis is reviewed annually and updated as needed. In establishing material issues, İşbank adheres to the European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG), IFRS S1 (General Requirements for Disclosure of Sustainability-Related Financial Information) issued by the International Sustainability Standards Board (ISSB), and the Global Reporting Initiative (GRI) Standards.

The bank adopts a “double materiality” approach, which considers both how issues may impact business strategies and their financial and non-financial consequences. Each material issue is assessed for its potential financial and reputational risks to the bank, as well as its effect on relevant stakeholders.

For a detailed list of İşbank’s material issues, please refer to the “Prioritization Process at İşbank” section in the bank’s 2024 Integrated Annual Report.

Furthermore, İşbank actively supports numerous sustainability initiatives and maintains memberships in various organizations. The bank is part of the Global Compact Turkey Sustainable Banking and Finance Working Group, which aims to promote sustainability within Turkey’s financial sector and encourage private sector investment towards achieving the Sustainable Development Goals. A comprehensive list of the initiatives supported by the bank can be found in the “Supported Initiatives” section of its 2024 Integrated Annual Report.

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

In its 2024 PRB Responsible Banking Progress Statement İşbank reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Adhering to the principle of providing responsible, transparent, and easily understandable banking services at all times, İşbank is dedicated to strengthening financial inclusivity by providing accessible services to everyone, anytime, through its extensive physical service network and digital channels. The bank seeks to deliver an exceptional customer experience across all touchpoints, serving clients in personal, commercial, corporate, and private banking segments. İşbank has developed policies and procedures to make sure it serves its customers responsibly and fairly, as outlined in its Ethical Principles and Code of Conduct.

In alignment with its strategic priorities and its commitment to achieving net-zero emissions by 2050, İşbank actively supports its clients’ green transition. İşbank’s transition strategy does not necessarily mean phasing out, but supporting clients in their transition to a carbon neutral economy and managing climate risks. While for the coal sector phase-out plans are on the agenda, for other high emitting sectors İşbank will be working on plans to encourage its customers to transition to low-carbon economy, by focusing its 2030 and interim targets on carbon-intensive sectors.

As part of its decarbonization initiatives, İşbank undertook a systematic process of identifying and assessing the key levers for each carbon intensive sector. Evaluating each lever with precision is key for formulating a realistic and impactful decarbonization strategy. This process enables İşbank to comprehend the scale and timing of its new investments, thereby crafting a transition plan aligned with the realities of its stakeholders, broader ecosystem, and available technologies.

With this understanding, İşbank has developed sector specific decarbonization strategies for each high-emitting sector in its portfolio. The key steps in the bank’s approach to developing its transition plan are:

• Baselining sector specific carbon emissions
• Identifying key levers for effective client engagement
• Conducting impact modelling and feasibility assessments
• Target setting
• Developing detailed sector specific action plans

By diligently following these steps, İşbank aims to not only fulfill its commitment to NZBA but also to engage its clients in the process, to ensure it is continuing to address their most pressing needs. This approach demonstrates the bank’s commitment to contributing to the global efforts to combat climate change.

İşbank’s transition pathway represents a strategic response to a pressing environmental challenge, highlighting its role as a responsible and forward-thinking financial institution. The bank has published a preliminary transition plan that outlines its approach to the transition by establishing sector-specific emission baselines, setting reduction targets, and developing actionable strategies while actively engaging with its customers. This initial plan serves as both a roadmap for reducing İşbank’s carbon footprint and a client engagement tool, aligning with the bank’s commitment to the NZBA to achieve net-zero emissions by 2050. İşbank plans to disclose its comprehensive transition strategy in the near future.

The bank promotes green and sustainable development by financing projects related to renewable energy, energy efficiency, and resource conservation, supporting the shift toward a net-zero carbon economy. İşbank also enhances financial inclusion through its extensive physical branch network and digital channels, ensuring accessible services for all. Achieving net-zero emissions requires collaborative efforts with İşbank’s clients and cannot be accomplished by the bank alone. It involves developing innovative products and services that facilitate and support the green transformation of its portfolio. In this context, İşbank not only provides financing solutions but also strives to raise awareness about the importance of transitioning to a low-carbon economy. For example, in 2024, İşbank accelerated the digital and green transformation of SMEs—the backbone of the economy—through the ‘Twin Transformation Journey of 100 SMEs’ project, implemented in partnership with MEXT Technology Centre. This initiative focuses on reducing costs, increasing efficiency, enabling green investment, and helping SMEs adapt to decarbonization and environmentally friendly production regulations introduced by new trade rules through digital transformation.

As a key trading partner of the European Union, the Carbon Border Adjustment Mechanism (CBAM) poses a potential risk for İşbank’s clients exporting to the EU. While this mechanism may lead to increased economic costs for Turkish exporters, particularly SMEs that are less equipped to handle significant changes, İşbank views it as an opportunity to support the green transition. To this end, the bank is conducting advisory meetings with exporting clients to enhance their understanding of the upcoming challenges and opportunities associated with the CBAM. Additionally, İşbank provides guidance on how clients can adapt to low-carbon incentives and aligns its product offerings to meet their diverse needs.

In terms of financial solutions, İşbank supports its clients’ green transformation through a broad range of products. The bank fosters sustainability investments by offering both financial and non-financial solutions, helping clients maintain their market presence within the EU and stay ahead of the Green Deal-driven transformation. İşbank operates a comprehensive sustainable finance model that covers the entire process—from sourcing resources and developing sustainability-focused products to facilitating green transformation.

Moreover, İşbank provides free digital sustainability solutions to SME customers to lower the costs associated with green initiatives. These solutions enable SMEs to access services such as carbon footprint measurement, real-time energy consumption monitoring, and non-financial support for investments aligned with sustainability objectives. The bank aims to assist SMEs in complying with new environmentally friendly production regulations, reducing costs, and enhancing efficiency during their transition to a green economy.

İşbank is also a leader in financing renewable energy projects in Turkey. Since 2015, all new project financing for electricity generation investments has been directed exclusively toward renewable energy initiatives. Emphasizing the environmental, social, and economic impacts of its lending activities, İşbank actively supports its clients’ adoption of green and sustainable practices. For any new investment project financed by İşbank with an investment amount exceeding USD 10 million, a comprehensive evaluation of environmental and social risks and impacts is conducted. Projects within this threshold are subject to environmental and social risk assessments, with a risk score assigned based on the evaluation results. If a project is deemed high risk, an environmental and social action plan is developed in collaboration with the client to mitigate or eliminate identified impacts. The progress of these measures is monitored by independent consultants when necessary.

Additionally, İşbank has established a process to evaluate the environmental and social risks within its commercial loan portfolio. This involves a set of questions, mainly derived from the “Environmental and Social Question Set,” designed to help companies identify potential environmental and social risks and enhance their awareness and resilience concerning these risks. This process is regularly reviewed and updated to address emerging needs. Currently, İşbank is working on implementing an Environmental & Social (E&S) due diligence process for its commercial loan portfolio, which is not yet covered by the existing E&S Risk Assessment Tool. The goal is to assess customers’ Environmental, Social, and Governance (ESG) maturity, as well as their awareness and resilience to climate-related risks, through questionnaires that include both E&S and climate-focused questions. Once fully deployed and integrated into the bank’s IT systems, this new approach will incorporate E&S risk assessments into the client onboarding process across all banking levels, enhancing the bank’s understanding of climate-related issues and facilitating climate risk evaluations during client onboarding.

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 İşbank, 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.isbank.com.tr/bankamizi-taniyin/Documents/yatirimci-iliskileri/raporlarimiz/prb/PRB2024.pdf

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