Sustainable finance is rapidly gaining traction in the Turkish banking sector, with Akbank, Isbank, Vakifbank and Ziraat Bank all issuing ESG-labelled bonds in the year to the end of March.
The pioneer in the segment, however, and the winner of this year’s award for CEE’s best bank for sustainable finance is TSKB.
The Turkish privately owned development bank – which gets the majority of its funding from international financial institutions and development finance institutions – began adding environmental factors to its credit appraisal process and providing green loans as early as the 1980s.
Since then, TSKB has integrated the concept of sustainability into all its banking services. Three-quarters of its loan portfolio is linked to ESG, with themes including energy and resource efficiency, women’s employment and equal opportunity, renewable energy, regional development, sustainable agriculture, sustainable tourism and social infrastructure.
As a result TSKB was ideally placed to help Turkish entities affected by the pandemic. The bank signed a $200 million loan agreement with the Asian Infrastructure Investment Bank in July 2020 to support the working capital and liquidity needs of companies in Turkey’s infrastructure and manufacturing sectors.
TSKB has also been at the forefront of sustainability impact measurement and reporting. The bank has had a sophisticated sustainability management system in place to measure its direct and indirect impacts for more than 15 years. It has evaluated the environmental and social impact of all its investment projects using its in-house environmental and social risk evaluation tool since 2007. This year, working capital loans also became subject to the same assessment.
In another first for Turkey and for the wider CEE region, TSKB last year became the first bank to measure the impact of each of its loans on the UN Sustainable Development Goals (SDGs). As of March this year, nearly 90% of the bank’s portfolio is SDG-linked.
Since 2018, all of these metrics have been brought together in TSKB’s integrated annual report. The reports are prepared in compliance with the recommended frameworks of the International Integrated Reporting Council and Global Reporting Initiative and are subject to assurance audit for financial and non-financial data.
On the financing side, TSKB has been a regular in the ESG-labelled bond market since 2016, when it issued the first green bond from the whole central and eastern Europe, Middle East and Africa region. Most recently, the bank issued its third sustainable bond in January, attracting more than six times oversubscription for the $350 million deal.
TSKB has also published allocation and impact reports for its green and sustainable bond issues since 2017.
This sustainability leadership has been driven from the top of the organization. TSKB’s sustainability committee, which oversees ESG policies, practices and performances, consists of three board members, chief executive Ece Boru and two executive vice presidents.
