Environmental and Social Risk Management in Lending

Environmental and social risks created by loans extended are carefully monitored at İşbank.

Guided by a responsible banking approach, İşbank is one of the first signatories of the Global Compact Turkey Declaration on Sustainable Finance which guarantees assessment of environmental and social risks in credit processes.

Potential environmental and social risks of all new investment projects with a total investment amount of more than USD 10 million are evaluated through the Environmental and Social Risk Evaluation Tool (ERET).

By establishing the "customer" and "project" risk categories of such investment loans through this model, a roadmap is created for the limitation or removal of the possible negative environmental and social impacts of the investment. Investment projects with ERET are evaluated within the framework of a total of 26 different criteria including the use of natural resources, solid waste, air, soil and water quality, noise, dust, occupational health safety, community health safety, involuntary resettlement and stakeholder engagement, etc.

As a result of the evaluation, the projects are classified into four categories according to their risk levels: high (Category A), medium high (Category B +), medium (Category B-), low (Category C). Investments under evaluation are assessed with reference to national legislation and international best practices such as International Finance Corporation Performance Standards (IFC PSs), European Bank for Reconstruction and Development’s Performance Requirements (EBRD PRs), Equator Principles (EPs); and an and a Project Environmental and Social Evaluation Certificate is prepared for every individual investment.. In all projects, "Public Participation Meetings" are organized as a minimum within the scope of local EIA, and additional stakeholder communication meetings are held and corporate social responsibility efforts are carried out in all financing in accordance with international standards.

The Bank requires investing companies to make commitments, as exemplified below, in line with assessments specific to projects, in order to eliminate/ mitigate or compensate any environmental and social adverse impacts of such projects it financially supports:

Forestation to reduce and offset carbon emissions, use of indigenous species suited to the area in these efforts, relocation of trees to spots matching with the project site as closely as possible, and conservation of endemic species,
Taking measures required to preserve biodiversity in specific and protected areas,
Prioritizing the purchases of lands through agreements, preparing resettlement plans and/or a plan for restructuring means of living in projects involving forced physical or economic relocation as part of expropriation,
Developing social responsibility projects which are countervailing for locals within the sphere of influence of the project and aiming to create new income sources, giving priority to locals when meeting labor force and purchasing requirements of the investment,
Taking into consideration the opinions of employees, locals and other stakeholders on the project as part of investments, and creating a “Stakeholder Engagement Plan” by building internal and external complaint mechanisms to address their inconvenience,
Taking additional measures in environmental and social management plans with additional studies including Cumulative Impact Analysis, Ecological Impact Assessment, etc.
Ensuring compliance of the investor with Occupational Health and Safety (OHS) legislation in both its current operations and investment operations, increasing occupational health and safety practices, and developing emergency action plans.

The compliance of these commitments by investing companies is also guaranteed through loan agreements and monitored as part of financing process. Through management of social risks which may be encountered in this scope, social impact is controlled as well.

One of the impacts of financed projects is the case of forced relocation. In some projects, financial hardships may arise as a result of people’s exposure to forced relocation or relocation of their workplace due to expropriation or consolidation of lands. Among these type of projects, in those which are subject of financing up to international standards, people and groups affected by the project are identified with “Relocation Plan” and plans for “Restructuring Means of Living” .Then plans are implemented to eliminate any adverse effects.

In 2020, a total of 627 employees working both in branches and different HQ functions, attended several training programs and conferences on E&S. “Diversity and Inclusion” module was embedded to career training programs and 236 employees completed this module. In addition, 263 employees attended “ISO 14001 Environmental Management System” training. Within the scope of Management and Leadership Development Programs, 739 people participated in the conferences on "Being a Woman in Professional Life", "Creating an Egalitarian Language" and "Patriarchal Errors" were held.


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