Sustainable and Green Finance Journey of Turkey

Hülya Kurt

Escarus - TSKB Sustainability Consultancy

June 2017

CONTENTS

TSKB and Escarus at a Glance

Sustainability and Green Finance Journey of Turkey

Renewable Energy in Turkey

Energy Efficiency in Turkey

Sustainable Finance in Turkey

TSKB and Escarus at a Glance

TSKB

1950

Establishment

Escarus

To be the pioneering bank in Turkey’s sustainable development

Vision

Based on its mission and vision, It is the pioneer bank in sustainability banking practices in Turkey.

Founded Escarus as a part of its mission to help support Turkey’s sustainable development.

Strategy

2011

Establishment

To be the pioneering consulting company in Turkey’ssustainable development by sharing TSKB’s technical know-how along with global perspective

Vision

Originated from TSKB’s Technical Services/ Engineering Departments, Escarus uses global specialists expert in their fields in addition to its own experienced team.Escarus - TSKB Sürdürülebilirlik Danışmanlığı A.Ş.

Environment / EnergySustainabilityCarbonUS

Strategy

Escarus Services

MANAGEMENT SYSTEMS

• Sustainability Management System

(Integrated System)

• Environmental & Social

Management System

OPERATIONAL SUSTAINABILITY

CONSULTANCY

• Operational Efficiency - Monitoring

& Assessment

• Technical and Environmental &

Social Risk Assessment

• Innovation Operations Analysis

RESEARCH- REPORTING -

TRAINING

• Sectoral Research Reports

• Sustainability Reporting/

Integrated Reporting

• Trainings

CLIMATE CHANGE

• GHG Emissions Inventory

Reporting

• Innovative Finance Models

• Technical Assistance for GHG

Monitoring Strategy

SUSTAINABILITY STRATEGY

• Risk & Opportunity Analysis

• Business Strategy Development

• Market Strategy Development

• Innovation Strategy Development

SUSTAINABILITY MODELS &

TOOLS

• Zero Carbon

• Energy meter

• ERET- Environmental & Social Risk

Evaluation Tool

1 4

5

6

2

3

Sustainability and Green Finance Journey of Turkey

2004-2005RenewableEnergyInvestments

2005Environmental Management System

2007EnergyEfficiency Law

2008Carbon Neutral

2009UNEP FI

2010GRI SustainabilityReportCDP ReportUN Global Compact Commitment

2011Escarus founded

2012Sustainability Management System

2014Sustainability Committee

2017Integrated Report

2005RenewableEnergy Law

2007ISO 14001 Certificate

2015TSKB in BIST Sust Index

2016Green Bond Issued

TSKB & Escarus

Turkey

New Concern: Lack of E&S Risk Management

2012Energy EfficiencyStrategy Plan

2014BIST Sust Index

2009Turkish BankingAssociationSustainabilityWorking Group

Renewable Energy Financing Energy Efficiency Financing Resource Efficiency Financing

2004-2005-- 2009-- 2012--

TSKB’s Green Financing Journey

2013Turkish Banking AssociationSustainability Guidelines

Renewable Energy in Turkey

Energy Efficiency in Turkey

Why EE is important for Turkey?

• Energy intensive and growing economy – EE practices are crucial

• Import dependent for energy – 75% of energy demand was met by imports in 2014 –

cost 55 billion USD, equal to 7% of GDP

• Energy consumption/unit GDP is %38 higher than OECD countries, %80 higher

than some EU countries.

• Energy consumption per capita is 36% higher than OECD average: Energy

consumption expected to rise as income rises

EE financing

• Current financing focuses heavily on private sector investments

• There is serious need for EE financing in public sector and public buildings

• 175.286 public buildings in Turkey, energy savings potential 32%

( estimated 121-537 million USD savings )

• The best applicable model for public EE financing is being discussed

Energy Efficiency in Turkey

Challenges

• Need for incentives and tax discounts that encourage EE investments

• Need for technical capacity in local commercial banks, high potential for

alternative financial products on EE

• Need for regulational improvement for companies not complying with

industrial energy audits

• No database for sectoral energy consumption data and best practice

examples challenges monitoring and measuring

• Limited incentive and public campaign announcements to increase

awareness on energy efficiency

• Space for development for special programs on EE especially in energy

intensive industry

Sustainable Finance in Turkey

Costs from Environmental &

Social Risks

Direct Liability of Banks

Banks’ Reputation and Risk Flow

Adaptation to Changing

Legislation and Client Expectations

Promoting Sustainability across

Sectors – Shifting the Market

IFIs are leading the sector,

development and

commercial banks follow

2 outcomes of promoting sust finance:

• (+) new era of financing sustainability

• (-) new risks to take into consideration

TSKB’s RE &EE Portfolio

RE Finance in TSKB

Started in 2002

Today: 227 RE Project,

5373 MW installed capacity

92 Hydro 3.784 MW

24 Wind 1.068 MW

7 Geo 314 MW

7 Biomass 106 MW

97 Solar 101 MW75% 69% 51% 46% 46%

3%

9% 14% 16%

18% 22%34% 32% 36%

7% 7% 6% 6%6%

2013 2014 2015 2016 1Q2017

TSKB Renewable Energy Portfolio

Hydro Geothermal Wind Biofuel Solar

75 Projects

Cement

Other

Chemistry and Plastics

Iron&Steel

Automotive

TSKB Energy

Efficiency Portfolio

47 Projects

Construction

Other

Chemistry and Plastics

Iron&Steel

Automotive

TSKB Resource

Efficiency Portfolio

4.6 billion

kcal/year

energy

savings

1.47 billion

kcal/year

energy

savings

Escarus Services

Capacity Building :

Trainings and Insights

E&S Risk Assessment Tools

Carbon Footprint Tools

Guidance &

Sustainability StrategyDevelopment:

Sustainability Strategy Services

Management System Services

Research & Reporting

GHG Monitoring Services

Technical Expertise andKnow-How:

Sustainable Finance Product Development

Technical/Environmental DueDiligence

Operational EfficiencyServices

Green Bond Due DiligenceServices

THANK YOU