Sustainable Finance

As a member of Ziraat Finance Group, the Bank aims to protect the environment while supporting economic development and to create value for all its stakeholders: customers, employees, shareholders, and society as a whole. Recognizing that the financial products and services offered in line with the principles of participation banking have an impact on the environment and society, the Bank attaches great importance to the management of environmental and social impacts arising from its financing activities.
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Ziraat Katılım’s sustainable finance approach is aligned with Türkiye’s national goals, in particular the country’s 2053 Net Zero goal and the Green Deal Action Plan. In order to support impact and faith-based investments, the Bank continues to develop and integrate environment- and social-themed retail and commercial products into its sustainable finance endeavors in line with best practices and evolving standards.

Ziraat Katılım Sustainable Sukuk Framework

Ziraat Katılım, which has incorporated ESG into its financing strategy, regards the existence and effectiveness of the sustainable sukuk market, whose use is becoming widespread on a global scale, as an important initiative. Sustainable sukuk aligns perfectly with Ziraat Katılım’s current sustainability vision, ongoing environmentally friendly and social equity-driven practices, and its corporate commitment to contributing to the UN SDGs.
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Ziraat Katılım released the Sustainable Sukuk Framework in the first quarter of 2024. The Bank intends to use all of the proceeds generated by its sustainable sukuk issuances to finance and refinance environmentally friendly and socially responsible projects that align with the eligibility criteria outlined in the subject sukuk framework.
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While establishing its sustainable finance framework, Ziraat Katılım aims to provide more financial support to environmental and social projects, as well as to measure the impact of projects. Under the sustainable sukuk framework, it aims to provide resources for projects that contribute to environmental projects such as renewable energy projects, green buildings, energy efficiency, clean transportation, and sustainable water and wastewater management, as well as projects that are intended to have an impact on social areas such as job creation, access to basic services, socioeconomic progress and empowerment, affordable housing and food security.
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In this context, the Bank has established the sustainable sukuk framework by identifying the following in order to measure the impact of the financing products it has developed;

• The usage areas and purposes of environmentally and socially appropriate credit products,

• Criteria for projects to be disbursed according to IICMA and LMA standards,

• Contribution of products to the SDGs,

• Impact metrics.

Ziraat Katılım has developed the Sustainable Sukuk Framework by analyzing the Paris Climate Agreement, the EU Green Deal, and Türkiye’s Green Deal Action Plan.

The targeted projects outlined in the framework were determined in alignment with the International Capital Markets Association (ICMA) Green Bond Principles (GBP), Social Bond Principles (SBP), Sustainability Bond Guidelines (SBG), and LMA Green Loan Principles (GLP), LMA Social Loan Principles (SLP) standards.To access the Sustainable Sukuk Framework, please click.
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Ziraat Katılım monitors ESG trends and evaluates climate-related risks that may affect the credit risk profile at the portfolio level. Environmental and social risks are taken into account in projects with an investment amount of USD 20 million or more. The Bank has prepared internal regulations to integrate processes that will enable monitoring and additional actions to be taken on a project and sector-specific basis for projects identified as having high and medium risk scores as a result of environmental and social impact analysis into the credit processes. Projects assessed as having low risk are recorded and no additional process is applied.

Environmental and Social Risk Assessment (ESRA) System

Ziraat Katılım is confident that the ESRA system will enhance the intellectual capital and knowledge that the Bank is developing in the fields of sustainability and ESG, while also making valuable contributions to the project assessment process. ESRA will additionally enhance ESG awareness in companies by providing them with resources.
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In the upcoming period, the Bank will closely monitor any changes in external conditions in order to ensure that the ESRA remains up-to-date and will incorporate the weights of high-risk issues into the calculation process, considering the evolving risks and integrating them into the model.
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ESRA aims to minimize the adverse impacts that can arise from environmental and social risks. It aims to assess opportunities and risks while maximizing positive impacts on both nature and society.
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The resource allocation actions within the participation banking scope identify the sector’s most intense leverage effect and the broadest sustainability impact it produces. The Bank has conducted a comprehensive study on environmental and social risk management and has released the Environmental and Social Risk Management Policy in Financing Activities as a result of this process.

Ziraat Katılım does not finance resource requests within the scope of the List of Non-Financed Activities, the annex of the subject Policy, under any circumstances. The Bank’s assessment criteria in the environmental and social context are outlined in the Environmental and Social Risk Management Policy in Financing Activities.
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The Bank also encourages its customers to ensure occupational health and safety, protect public health and welfare, foster social development, preserve the natural environment and biodiversity, etc.
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With ESRA, it is envisaged that projects that are candidates for resource use will be examined under 2 main headings and according to 10 criteria.
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Ziraat Katılım is committed to generating value in line with the principle of responsible income generation for both the Bank and its stakeholders through ESRA.New investment projects or project financing requests exceeding the investment threshold, for which financing was requested in 2024, were assessed for their potential environmental and social impacts. The scores of the assessed requests are categorized as High (A), Medium (B), and Low (C) risk.
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In 2024, the environmental and social impact analysis of 8 projects was conducted as part of the ESRA application developed in line with our Policy on the Management of Environmental and Social Impacts in Financing Activities. There were no projects rejected due to the list of Non-Financed Activities or due to their risk category.