Turkey – SBFN Tool

SBFN Member Since:

2013

Member Organisations

Banking Regulation and Supervision Agency of Turkey (BRSA)

Download Country Progress Report

2019 Comparison

2021 Comparison

Progress Against sub Pillars

Framework Documents

Country	Policies/ Principles/ Guidelines	Year	Issuer
Turkey	Sustainability Guidelines for the Banking Sector – Updated 2021	2021	The Banks Association of Turkey
Turkey	Guidance on Loan Origination and Monitoring Processes	2021	The Banks Association of Turkey
Turkey	Framework for Compliance with Sustainability Principles	2020	Capital Market Board
Turkey	Sustainability Guidelines for the Banking Sector	2014	The Banks Association of Turkey

Pillar 1 - ESG Integration - Strategic Alignment

National Framework

P 1.1 – Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for integrating the consideration of environmental, social, and governance (ESG) risks and performance?

Yes

Source Reference Detail

In 2014 the Banks Association of Turkey published “Sustainability Guidelines for Turkish Banking Sector” on voluntary basis, which call for implementation of the basic elements of the Equator Principles. In March 2021 the Guidelines were updated. In October 2020 Capital Markets Board issued the “Sustainability Principles Compliance Framework” for publicly traded firms, as an annex to the Corporate Governance Communique. The framework which is voluntary and based on the “comply or explain” approach applies to 12 (publicy traded) out of 54 banks.

Source Reference Document

Sustainability Guidelines for the Banking Sector (Banks Association of Turkey, 2021) Sustainability Principles Compliance Framework (Capital Markets Board, 2020) Environmental and Social Sustainability in Turkish Banking Sector” December 2018 (Unpublished survey by BRSA)

Source Reference Description

–

P 1.2 – Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance or other non-lending FIs that sets out expectations for integrating the consideration of environmental, social, and governance (ESG) risks and performance?

Yes

Source Reference Detail

In October 2020 Capital Markets Board issued the “Sustainability Principles Compliance Framework” for publicly traded firms, as an annex to the Corporate Governance Communique. The framework which is voluntary and based on the “comply or explain” approach applies to, beside 12 banks, 6 insurance companies, 3 factoring companies, 4 financial leasing companies, 5 brokerage houses, 33 real estate investment trusts, 9 securities investment trusts and 6 venture-capital trusts.

Source Reference Document

Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

–

Pillar 1 - ESG Integration - Strategic Alignment

Alignment with International Goals & Standards

P 1.3 – Does the Framework make reference to international sustainable development frameworks or goals?

Yes

Source Reference Detail

Sustainability Guidelines for Turkish Banking Sector (BAT, 2021) Principle 2 make a direct reference to Sustainable Development Goals. Furthermore, the Guidelines advise banks to communicate with, become member of or adopt international initiatives and standards such as UNEP-FI, UN Global Compact, World Business Council for Sustainable Development, the Equator Principles, UN PRI, GRI, IIRC, CDP, Communication on Progress and UN Universal Declaration of Human Rights. – Sustainability Principles Compliance Framework (CMB, 2020) requires firms to explain which sustainability practices of the firm can be related to (which) UN 2030 Sustainable Development Goals. Framework advises firms to determine its short and long term environmental targets based on the recommendations of UN Climate Change Conference of the Parties. Framework also asks firms to establish human rights and employee rights policy in which firm makes full commitment to comply with UN Universal Declaration of Human Rights and ILO standards, and to declare disclosure standards they adopted (CDP, GRI, IIRC, SASB, TCFD) and international organizations or principles they signed in (EP, UNEP-FI, UNGC, UNPRI, ICMA).

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 27 – 31 Principle 2 Sustainability Guidelines for the Banking Sector (Banks Association of Turkey, 2021Page 2 – 5 Compliance Framework (CMB, 2020): https://spk.gov.tr/Sayfa/Dosya/1332 (Pages: 2, 3, 4, 5)

P 1.4 – Does the Framework make reference to established international ESG risk management standards and principles for FIs??

Yes

Source Reference Detail

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 44 – 45

Pillar 1 - ESG Integration - Strategic Alignment

Alignment with national goals & strategies

P 1.5 – Does the Framework make reference to specific national development objectives, plans, policies, goals, or targets?

Yes

Source Reference Detail

Sustainability Guidelines for the Banking Sector (Banks Association of Turkey, 2021), Principle 3 makes reference to the Turkey’s INDC, National Climate Change Strategy and Action Plan, National Energy Efficiency Action Plan (2017-2023) (Pages: 32-33)

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 32 – 33 Principle 3

P 1.6 – Does any cooperation exist between agencies or between the regulator and industry association with respect to policy design and/or implementation related to ESG integration?

Source Reference Detail

–

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–

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–

P 1.7 – Does any inter-agency data sharing currently exist related to ESG integration by FIs?

Source Reference Detail

–

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–

Source Reference Description

–

Pillar 1 - ESG Integration - Regulatory and Industry Association Actions

Overall Approach & Strategy

P 1.8 – Does the Framework provide guidance on the role of the regulator or industry association with regard to assessing and managing ESG risk and performance in the financial sector?

Source Reference Detail

–

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–

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–

P 1.9 – Has the regulator or industry association undertaken market assessment to identify systemic ESG risks through analysis of the portfolios of supervised entities/members and published the results?

Source Reference Detail

–

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–

Source Reference Description

–

Pillar 1 - ESG Integration - Regulatory and Industry Association Actions

Technical Guidance

P 1.10 – Does the Framework provide technical guidance or tools to support implementation of ESG risk and performance management by the financial sector?

Yes

Source Reference Detail

Principle 1 (Assessment and Management of Environmental and Social Risks Arising From Banking Activities) of “Sustainability Guidelines for Turkish Banking Sector (BAT, 2021)” explains briefly the basic elements of ESG risk management. These elements include analyzing risks arising from borrower itself and project, basic requirements and document types to be checked, main asessment aspects (and respective references), risk categorization (A, B+, B-, C) and actions to be taken at minimum for each risk category, integration of action plans and monitoring plans with the loan agreement, and field visits. – Principle 7 (Stakeholder Engagement and Communication) – Principle 9 (Capacity Improvement) sets forth the basic elements of capacity improvement such as improving internal and external capacity, awareness development activities, training, measurement and feedback. – Principle 10 (Monitoring and Reporting)

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 20-26

Pillar 1 - ESG Integration - Regulatory and Industry Association Actions

Supervisory Activities & incentives

P 1.11 – Is the implementation of the Framework regularly monitored and/or information regularly collected from FIs by the regulator and/or industry association?

Source Reference Detail

–

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–

Source Reference Description

–

P 1.12 – Does the regulator or industry association provide any financial or non-financial incentives for FIs to manage ESG performance as part of the Framework?

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–

Source Reference Document

–

Source Reference Description

–

P 1.13 – Does the regulator or industry association apply any disincentives/penalties for non-compliance by FIs in terms of expectations from the regulator and/or industry association related to ESG risk management as part of the Framework?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 1 - ESG Integration - Regulatory and Industry Association Actions

Tracking & Aggregated Disclosure

P 1.14 – Has the regulator or industry association established a data collection approach and database to track or regularly publish data related to ESG integration by FIs as part of the Framework?

Source Reference Detail

“Sustainability Guidelines for Turkish Banking Sector” (BAT, 2021) do not mention clearly approvement of an ESRM and/or ESG integration strategy by FI’s board of directors (or highest governing body). However the Guidelines advise banks to internalize the environmental and social risk assessment process by incorporating it into their lending policies. – “Sustainability Principles Compliance Framework” (Capital Markets Board), on the other hand, asks board of directors of publicly-traded firms (including banks) to establish ESG priorities, risks and opportunities, and related ESG policies. Accordingly, board of directors are supposed to set internal directives and procedures by taking decisions.

Source Reference Document

–

Source Reference Description

–

Pillar 1 - ESG Integration - Expectations of FI Actions

Strategy & Governance

P 1.15 – Does the Framework require/ask the FI’s board of directors (or highest governing body) to approve an ESRM and/or ESG integration strategy, and to supervise its implementation?

Yes

Source Reference Detail

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 20(2) Section A. General Principles Subsection A1. Strategy, Policy and Targets

Pillar 1 - ESG Integration - Expectations of FI Actions

Organizational Structure & Capacity Building

P 1.16 – Does the Framework require/ask FIs to allocate resources/budget commensurate with portfolio ESG risks and define roles and responsibilities for ESG integration within the organization?

Yes

Source Reference Detail

“Sustainability Guidelines for Turkish Banking Sector” (BAT, 2021) do not clearly ask FIs to allocate resources/budget commensurate with portfolio ESG risks. On the other hand, the guidelines (Principle 5) ask FIs to define roles and responsibilities for ESG integration within the organization. For example, banks should clearly define the roles and responsibilities of those at the bank who are involved in the implementation of Corporate Human Rights and Employee Rights Policy. According to Principle 8 (Corporate Governance), duties and responsibilities related to the fulfillment of the targets should be determined so as to encompass all activities and they should be assigned to specific personnel. In a similar manner, “Sustainability Principles Compliance Framework” (Capital Markets Board) states that firms should clearly define the roles and responsibilities of those at the firm who are involved in the implementation of Corporate Human Rights and Employee Rights Policy. They should also announce the highest level official in charge of environment and climate change, related committees, and their duties.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Pages 37, 47(2) Section B Environmental Principles Section C. Social Principles Subsection C1. Human Rights and Employee Rights

P 1.17 – Does the Framework require/ask FIs to develop and maintain the ESG expertise and capacity of staff commensurate with portfolio ESG risks through regular training and learning?

Yes

Source Reference Detail

According to the Principle 9 (Corporate Capacity Improvement); the fulfillment of sustainable banking principles will require information and training that goes beyond the basic awareness. Such training should be designed and detailed on the basis of the duties and responsibilities of those involved in it. Training should be provided in such a way as to be compatible with the responsibilities incumbent upon all employees. In the conduct of in-house training on these issues, the highest priority should be given to environmental and social impact assessment (ESIA) and risk management. It is essential that all personnel-including sales and marketing staff-be given training about the ESIA model that the bank has adopted.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 17 Principle 9 Corporate Capacity ImprovementPage 49 – 51

P 1.18 – Does the Framework require/ask FIs to create incentives for managers to reduce the ESG risk-level of the portfolio over a specified timeframe?

Yes

Source Reference Detail

Principle 8 (Corporate Governance) of “Sustainability Guidelines for Turkish Banking Sector” states that priority should be given to setting sustainable-banking targets and to identifying performance indicators and encouraging reporting on this matter. The benchmark indicators according to which target fulfillment is to be measured should be identified. The association of such criteria with the performance of those responsible for target fulfillment is important from the standpoint of executive support. Banks are therefore advised to plan these functions accordingly. – Principle 10 (Monitoring and Reporting) states that banks should identify the key performance indicators (KPI), and where possible, should also demonstrate the indicators’ applicability by associating them with their employees’ own performance. – Sustainability Principles Compliance Framework (Capital Markets Board) also states that firms shall disclose incentives which they provide for management of environmental issues including achievement of targets.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 46-48, 52(2) Section B Environmental Principles

Pillar 1 - ESG Integration - Expectations of FI Actions

Policies & Procedures

P 1.19 – Does the Framework require/ask FIs to develop policies and procedures to identify, classify, measure, monitor, and manage ESG risks and performance throughout the financing cycle at the client level and/or the transaction/project level?

Yes

Source Reference Detail

Principle 1 (Assessment and Management of Environmental and Social Risks Arising From Banking Activities) of the “Sustainability Guidelines for Turkish Banking Sector” (BAT, 2021) addresses environmental and social risk management related to lending activities, and calls for taking into account sustainability parameters in other banking products and services. – Sustainability Principles Compliance Framework (Capital Markets Board) asks firms to declare programs or procedures through which they prevent or minimize the potential negative impacts of products and/or services delivered.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 20 – 25, Principle 1, Page 46 Principle 8, Page 52 Principle 10(2) Section B Environmental Principles

P 1.20 – Does the Framework require/ask FIs to undertake a regular review and monitoring of ESG risk exposure at aggregate portfolio level?

Source Reference Detail

–

Source Reference Document

–

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–

P 1.21 – Does the Framework require/ask FIs to establish and maintain an external inquiry/complaints/grievance mechanism for interested and affected stakeholders in relation to ESG practices?

Yes

Source Reference Detail

Principle 7 (Stakeholder Engagement and Communication) states that in order to facilitate stakeholder engagement, clear and transparent communication channels should be identified and stakeholders should be made aware of them. Suggestions, observations, complaints, and criticisms received from stakeholders should be duly considered by appropriate bank personnel in the regular conduct of internal processes; stakeholders should also be provided with feedback about the results. Moreover, the Guidelines make reference to “Complaints Mechanism Principles, Terms ofReference and Rules of Procedure” by European Investment Bank, as a good practice.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 43 – 44

Pillar 1 - ESG Integration - Expectations of FI Actions

Tracking, Reporting & Disclosure

P 1.22 – Does the Framework require/ask FIs to report ESG risks and performance to the regulator or industry association?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

P 1.23 – Does the Framework require/ask FIs to report on ESG integration publicly?

Yes

Source Reference Detail

Principle 10 (Monitoring and Reporting) states that It is expected that banks will keep all of their stakeholders informed about their sustainability activities through communication carried out at regular intervals. Banks should report their sustainability activities to their internal and external stakeholders regularly and periodically. In all reporting to external stakeholders, preference should be given to compliance with internationally accepted standards (GRI, IIRC, COP). Banks may also structure their sustainability reporting as an element of their annual reports.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 56

P 1.24 – Does the Framework require/ask FIs to track credit risk (e.g. loan defaults) and/or financial returns in relation to ESG risk level?

Yes

Source Reference Detail

Although the framework does not explicitly require/ask FIs to track credit risk (e.g. loan defaults) and/or financial returns in relation to ESG risk level, project/customer/loan level economic&social risk assessment practices (in Principle 1) inherently involve the assessment of the link between credit risk/financial return and ESG risk level. Principle 10 (Monitoring and Reporting) states that reporting content may include, among others, detailed up-to-date status on the Environmental and Social Management System applied in credit processes. Page 56 provides detailed up-to-date status on the environmental and social management system applied in credit processes.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 20 – 24, 56

Pillar 2 - Climate Risk Management - Strategic Alignment

National Framework

P 2.25 – Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for integrating the consideration and management of climate risks and their impact in the national economy?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) Principle 1: Assessment and Management of the Environmental and Social Risks Arising from Banking Activities and Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION. These sections form the basis of the climate risk management approach for climate-related physical and transition risks and TCFD disclosure (including Principle 10 Monitoring and Reporting which references the CDP and GRI).

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

Principle 1, Principle 3

P 2.26 – Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance or other non-lending FIs that sets out expectations for integrating the consideration and management of climate risks and their impact in the national economy?

Yes

Source Reference Detail

The Sustainability Principles Compliance Framework asks publicly traded firms to declare their strategy and actions for the climate crisis as well as their policies, practices, action plans, systems for direct operations, and throughout the value chain. The Sustainability Principles Compliance Framework (CMB) also references the TCFD, and it is cross-incorporated with the Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR as part of Principle 8. The Borsa Istanbul is a member of the UNSSE and the Sustainability Directory for Companies incorporates climate risk reporting and references the TCFD.

Source Reference Document

Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

Pillar 2 - Climate Risk Management - Strategic Alignment

Alignment with International Goals & Standards

P 2.27 – Does the Framework make reference to international agreements or frameworks to address climate?

Yes

Source Reference Detail

Source Reference Document

Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

P 2.28 – Does the Framework recognize or align with established regional or international good practice for climate risk management and disclosure by FIs?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION references Paris Agreement, Turkey’s the TCFD (pages 32-34). – “Sustainability Principles Compliance Framework” (CMB, 2020) making reference to Task Force on Climate-related Financial Disclosures (TCFD) asks firms to declare disclosure standards they adopted.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 32 – 34 Principle 3, page 44- 45(2) Page 5 Principle C

Pillar 2 - Climate Risk Management - Strategic Alignment

Alignment with National Goals & Strategies

P 2.29 – Has the regulator or industry association aligned the Framework with national goals to address climate change in line with the country’s Nationally Determined Contributions (NDCs) to the Paris Agreement?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION references Paris Agreement, Turkey’s indicative NDC, (pages 32-34), and expect banks to support climate change finance in accordance with existing national strategies and action plans including National Climate Change Strategy and Action Plan, National Energy Efficiency Action Plan (2017-2023).

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Principle 3

P 2.30 – Does any cooperation exist between agencies, or between government and industry association, with respect to policy design or implementation related to climate risk management?

Source Reference Detail

–

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–

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–

P 2.31 – Does any inter-agency data sharing currently exist related to climate risk management by FIs?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 2 - Climate Risk Management - Regulatory and Industry Association Actions

Overall Approach & Strategy

P 2.32 – Has the regulator or industry association undertaken research on historical impacts to the economy and financial sector from climate change, and/or future expected impacts resulting from physical and transition climate risks?

Source Reference Detail

–

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–

Source Reference Description

–

P 2.33 -Does the Framework identify key sources of GHG emissions – such as in particular sectors – as priorities in the proactive management of climate risks by the financial sector?

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–

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–

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–

P 2.34 – Does the Framework incorporate the conservation/restoration of natural carbon sinks (such as oceans, forests, mangroves, grasslands, and soils) as an important part of reducing climate change risks? (e.g., through guidelines, scenario analysis, targets, or incentives for FIs)

Source Reference Detail

–

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–

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–

P 2.35 – Has the regulator or industry association developed an internal strategy to address climate risk, and/or embedded climate risk management into its governance, organizational structures, and budget as part of the Framework?

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–

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–

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–

P 2.36 – Has the regulator or industry association undertaken any activities to expand and deepen analytical understanding of national and/or cross-border physical and transition climate risks, and to raise awareness as to how these risks may transmit to, and impact, the financial sector?

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–

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–

Source Reference Description

–

Pillar 2 - Climate Risk Management - Regulatory and Industry Association Actions

Technical Guidance

P 2.37 – Has the regulator or industry association developed risk assessment approaches, methodologies, or tools to understand and assess the financial sector’s exposure to climate risk as part of the Framework?

Source Reference Detail

–

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–

Source Reference Description

–

Pillar 2 - Climate Risk Management - Regulatory and Industry Association Actions

Supervisory Activities & Incentives

P 2.38 – As part of the Framework, has the regulator clarified supervisory expectations with regard to climate risk management by FIs, including consideration of international good practices?

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–

Source Reference Document

–

Source Reference Description

–

P 2.39 – Has the regulator started to explicitly embed climate-related risk in supervisory activities and review processes as part of the Framework?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

P 2.40 – Has the regulator started to explicitly embed climate-related risk in supervisory activities and review processes as part of the Framework?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION references the TCFD (pages 32-34), in addition to the Principle 7: Corporate Governance and disclosure to Capital Markets Boards, as well as Principle 10 Monitoring and Reporting.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page 32 – 34 Principle 3, Principle 7, Principle 10(2) Page 2

P 2.41 – Has the regulator started to explicitly embed climate-related risk in supervisory activities and review processes as part of the Framework?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 2 - Climate Risk Management - Regulatory and Industry Association Actions

Tracking & Aggregated Disclosure

P 2.42 – Does the regulator or industry association regularly collect and/or report market-level and/or FI-level data on climate-related financial sector risks as part of the Framework?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

Pillar 2 - Climate Risk Management - Expectations of FI Actions

Strategy & Governance

P 2.43 – Does the Framework require/ask FIs to establish a strategy for climate risk management with responsibility at the board of director level (or highest governing body)?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) references ESG and climate risk strategy and governance as part of Principle 1: Assessment and Management of the Environmental and Social Risks Arising from Banking Activities and Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION, Principle 8: Corporate Governance and Principle 9 Corporate Capacity Improvement. Sustainability Principles Compliance Framework (CMB)Section A. General Principles Subsection A1. Strategy, Policy and Targets.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Principles 1, 3, 8, 9 www.tbb.org.tr/sustainability/index.html(2) Subsection A1

Pillar 2 - Climate Risk Management - Expectations of FI Actions

Organizational Structure & Capacity Building

P 2.44 – Does the Framework require/ask FIs to define the roles and responsibilities and related capacities of the FI’s senior management and operational staff in identifying, assessing, and managing climate-related financial risks and opportunities?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) references ESG and climate risk organizational strcuture and governance as part of Principle 1: Assessment and Management of the Environmental and Social Risks Arising from Banking Activities and Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION, Principle 8: Corporate Governance and Principle 9 Corporate Capacity Improvement. Sustainability Principles Compliance Framework (Capital Markets Board): https://spk.gov.tr/Sayfa/Dosya/1332 Section B. Environmental Principles.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Principles 1, 3, 8, 9 www.tbb.org.tr/sustainability/index.html(2) Section B

Pillar 2 - Climate Risk Management - Expectations of FI Actions

Policies & Procedures

P 2.45 – Does the Framework require/ask FIs to expand existing risk management processes to identify, measure, monitor, and manage/mitigate financial risks from climate change?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) references ESG and climate risk management (policies and procedures) as part of Principle 1: Assessment and Management of the Environmental and Social Risks Arising from Banking Activities (“Banks should internalize the issue by incorporating the environmental and social risk assessment process into their credit policy and credit assessment processes.”)(Pages 20 – 25) and Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION (pages 11, 33, 34).

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Sustainability Principles Compliance Framework (CMB, 2020)

Source Reference Description

(1) Page: 20-25, 33-34 -(2) Section B. Environmental Principles

Pillar 2 - Climate Risk Management - Regulatory and Industry Association Actions

Tracking, reporting & disclosure

P 2.46 – Does the Framework require/ask FIs to report on their overall approaches to climate risk management in line with international good practices (e.g., TCFD), or establish a timeline by which FIs should begin to align their reporting with such practices?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) references monitoring and reporting as part of Principle 10: Monitoring and Reporting, and refers to standards such as GRI, Carbon Disclosure Project (CDP), and Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION includes alignment with TCFD.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

P 2.47 – Does the Framework require/ask FIs to identify, measure, and report on exposure to sectors which are vulnerable to transition risk and physical risk?

Yes

Source Reference Detail

Banks Association of Turkey Sustainability Guidelines FOR THE BANKING SECTOR (2021) references practices related to exposure assessment for climate-related physical and transition risk in Principle 3: CLIMATE CHANGE MANAGEMENT AND CLIMATE CHANGE ADAPTATION include assessing and integrating climate change-related physical and transitional risks into risk management processes and declare/report identified risks. (Pages 32- 34).

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Page 33 – 34 Principle 3

P 2.48 – Does the Framework require/ask FIs to adopt and report on performance targets to reduce portfolio greenhouse gas (GHG) emissions on a regular basis?

Yes

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

P 2.49 – Does the Framework require/ask FIs to adopt and report on performance targets to reduce exposure to climate change risks at the portfolio level on a regular basis?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 3 - Financing Sustainability - Strategic Alignment

National Framework

P 3.50 – Has the regulator or industry association published a national framework (“Framework”) for the banking sector that sets out expectations for integrating the consideration of instruments, goals, and standards for financing sustainability, including requirements for ensuring credibility and managing and measuring resulting impacts in the national economy?

Yes

Source Reference Detail

Sustainability Guidelines for the Banking Sector (Banks Association of Turkey, 2021) Principle 2 (Supporting Sustainable Development Goals) emphasized the importance of banking activities and practices supporting Sustainable Development Goals from the responsible banking perspective. Furthermore, Principle 3 (Struggling Climate Change and Adaptation) recommends banks to support climate change financing in parallel with the related national strategies and action plans. www.tbb.org.tr/sustainability/index.html (Page: 27, 33)

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

Source Reference Description

Principle 2, 3

P 3.51 – Has the relevant regulator or industry association published a Framework for capital markets, investment, insurance or other non-lending FIs that sets out expectations for integrating the consideration of instruments, goals, and standards for financing sustainability, including requirements for ensuring credibility and managing and measuring resulting impacts in the national economy

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 3 - Financing Sustainability - Strategic Alignment

Alignment with International Goals & Standards

P 3.52 – Has the regulator or industry association developed a strategy, regulations, or set of frameworks for stimulating the allocation of capital to sustainable assets, projects, and related sectors in line with global goals, such as the Sustainable Development Goals (SDGs)?

Yes

Source Reference Detail

Towards the Sustainable Development Goals 7, 11 and 13; in January 2019, BRSA raised the loan-to-value (LTV) ratio for housing loans extended to housings with good energy performance. In this context, LTV ratio was increased from 80% to 90% and 85% for housings with class A and class B energy performance certificate, respectively. The preferential LTV was expected to incentivize energy efficient house sales – and sustainable house lending.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021) Regulation on Loan Transactions of Banks

Source Reference Description

(1) Article 12/A – Paragraph 1(2) Page 27 – 31 Principle 2

P 3.53 – Does the Framework recognize and/or align with existing standards, voluntary principles, or market good practices related to sustainable finance instruments?

Source Reference Detail

–

Source Reference Document

–

Source Reference Description

–

Pillar 3 - Financing Sustainability - Regulatory and Industry Association Actions

Alignment with national goals & strategies

P 3.54 – Does the Framework enable the achievement of stated national objectives by guiding capital to sectors, assets, and projects that have environmental and social benefits in line with national sustainable development priorities, strategies, targets, and the size of sustainable investment needs, and taking into account the local barriers to scaling-up sustainable finance?

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P 3.55 – Does the Framework enable the achievement of stated national objectives by guiding capital to sectors, assets, and projects that have environmental and social benefits in line with national sustainable development priorities, strategies, targets, and the size of sustainable investment needs, and taking into account the local barriers to scaling-up sustainable finance?

Yes

Source Reference Detail

Although Principle 7 basically concerns stakeholder involvement and communication, it implicitly calls for cooperation between the related parties.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

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Page 44 Principle 7

P 3.56 – Does any inter-agency data sharing currently exist related to stimulating and monitoring sustainable finance flows?

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Pillar 3 - Financing Sustainability - Strategic Alignment

Overall Approach & Strategy

P 3.57 – Does the Framework require/ask the regulator or industry association to establish mechanisms to identify and encourage the allocation of capital to sustainable sectors, assets, and projects?

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Pillar 3 - Financing Sustainability - Regulatory and Industry Association Actions

Technical Guidance

P 3.58 – Does the Framework require/ask the regulator or industry association to establish mechanisms to identify and encourage the allocation of capital to sustainable sectors, assets, and projects?

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P 3.59 – Does the Framework provide guidelines for extending green, social or sustainability-focused loans (excluding bonds)?

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P 3.60 – Does the Framework provide guidelines for issuance of green, social or sustainability bonds?

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P 3.61 – Does the Framework require/ask for external party verification to ensure the credibility of sustainability instruments?

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Pillar 3 - Financing Sustainability - Regulatory and Industry Association Actions -

Supervisory activities & incentives

P 3.62 – Does the regulator or industry association monitor information reported by FIs related to green/social/sustainability investment, lending, and other instruments to prevent greenwashing and social-washing?

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P 3.63 – Are there any financial or non-financial incentives for FIs to develop and grow green, social, or sustainability finance instruments?

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Pillar 3 - Financing Sustainability - Regulatory and Industry Association Actions -

Tracking & Aggregated Disclosure

P 3.64 – Does the regulator or industry association collect and/or publish data from FIs or other sources about allocation of capital to green/social/sustainability assets, projects, or sectors?

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Pillar 3 - Financing Sustainability - Expectations of FI Actions

Strategy & Governance

P 3.65 – Does the Framework require/ask FIs to establish a strategy, governance, or high-level targets, including at the Board of Directors level, for capital allocation to sustainable assets, projects, or sectors?

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Pillar 3 - Financing Sustainability - Expectations of FI Actions

Organizational Structure & Capacity Building

P 3.66 – Does the Framework require/ask FIs to define internal staff roles and responsibilities to encourage finance flows to green, social, and/or sustainability-focused investments?

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P 3.67 – Does the Framework require/ask FIs to develop and maintain internal staff capacity on green, social, or sustainability products through regular training and learning?

Yes

Source Reference Detail

Sustainability Guidelines for the Banking Sector 2021, Principle 9, page 51, training subject include “sustainable products and services”.

Source Reference Document

Sustainability Guidelines for the Banking Sector (BAT, 2021)

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Page 51 Principle 9

Pillar 3 - Financing Sustainability - Expectations of FI Actions

Policies & Procedures

P 3.68 – Does the Framework require/ask FIs to put in place policies and procedures for defining, issuing, managing proceeds, tracking performance, and reporting on green, social or sustainability-focused products?

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P 3.69 – Does the Framework require/ask FIs to appoint an independent external reviewer to confirm that the FI’s internal framework meets the requirements of the recognized national framework and regulations, or aligns to international standards?

Yes

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Sustainability Guidelines for the Banking Sector 2021, Principle 8 (Corporate Governance) recommends that the corporate governance performance is reviewed by independent institutions

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Page 47 Principle 8

P 3.70 – Does the Framework require/ask that FIs create incentives for managers to increase sustainable loans or investments in the portfolio?

Yes

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Sustainability Guidelines for the Banking Sector (BAT, 2021)

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Pae 52 Principle 10

Pillar 3 - Financing Sustainability - Expectations of FI Actions

Tracking, reporting & disclosure

P 3.71 – Does the Framework require/ask FIs to publish annual updates on the performance and impacts of the sustainability instruments in compliance with relevant national and/or international standards?

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P 3.72 – Does the Framework require/ask FIs to obtain and disclose independent review of metrics reported annually in relation to the social and environmental outcomes and impacts achieved through the sustainability instruments?

Yes

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Sustainability Guidelines for the Banking Sector 2021, Principle 10 (Monitoring and Reporting) recommends that the source data of the sustainability reports is verified by independent third parties in order to confirm its reliability. It is essential that reports on sustainability are made publicly accessible to all stakeholders

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P 3.73 – Does the Framework require/ask FIs to obtain and disclose independent review of metrics reported annually in relation to the social and environmental outcomes and impacts achieved through the sustainability instruments?

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P 3.74 – Does the Framework require/ask FIs to report to the regulator(s) or industry association(s) on green, social, and/or sustainability bonds or other positive impact investments?

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P 3.75 – Does the Framework require/ask FIs to report publicly on their green, social and sustainability-focused finance activities and positive outcomes or impacts (i.e. not only to the regulator or shareholders)?

Yes

Source Reference Detail

According to the Sustainability Guidelines for the Banking Sector 2021, Principle 10 (Monitoring and Reporting), it is essential that reports on sustainability are made publicly accessible to all stakeholders

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Sustainability Guidelines for the Banking Sector (BAT, 2021)

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Page 56 Principle 10

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