To mitigate climate change risks through investments in renewable energy and clean transportation in Türkiye.
The proposed project entails AIIB investing in a 10-year sustainability Tier 2 notes to be issued by Akbank. The use of proceeds from AIIB investment will be used to finance eligible sub-projects in renewable energy and clean transportation sectors.
Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including Environmental and Social Exclusion List (ESEL) and Environmental and Social Standards (ESSs), will apply to this Project. The Project has been placed in Category FI, because the financing structure involves the on-lending of the proceeds of the bond issued by Akbank, whereby the Bank delegates to Akbank the decision-making on the use of AIIB’s funds insofar the subprojects meet the agreed conditions. AIIB will not finance thermal coal mining, coal-fired power and heating plants or projects that are functionally related to coal. Activities included in AIIB’s ESEL will not be eligible for financing. In addition, all category A activities and subprojects that will cause involuntary land acquisition or resettlement will also be excluded.
Environmental and Social Instruments. ES instruments will be (i) Akbank’s ESMS together with the Project Operations Manual (POM) which is aligned with AIIB’s ESP and complemented by (ii) Akbank’s Sustainable Finance Framework (SFF) aligned with ICMA Green and Social Bond Principles 2018, Loan Market Association’s Green Loan Principles 2020 .
Environmental and Social Aspects. The current pipeline in Türkiye includes subprojects in renewable energy (such as wind, solar, and biomass), as well as potential subprojects related to the electrification of vehicle fleets. Impacts on communities’ health and safety, biodiversity, sensitive habitats and employment working conditions are potential ES risks associated with these subprojects. Every subproject will be screened to identify the risks and following the assessment, appropriate mitigation measures will be adopted. Regarding any potential solar power subprojects, Akbank will review potential supply chain issues related to labor and working conditions, require appropriate mitigating measures and seek AIIB’s advice if required. Enhanced ESMS includes supply chain requirements which will advise all suppliers and contractors of the subprojects on the importance of implementing appropriate management measures to identify and address issues related to labor and working conditions and health and safety matters. For the ongoing subprojects, Akbank has also reviewed supply chain aspects, and this will continue as part of ongoing implementation and monitoring. In addition to the potential EV subprojects to be financed by the Project, an ES risk assessment of proposed sub-loans will be undertaken with respect to charging, fire safety, battery life-cycle management and disposal.
Stakeholder Engagement and Information Disclosure. For all Higher Risk selected Category B subprojects, Akbank will continue to be required to disclose annual E&S documentation covering the preceding 12 months, unless such disclosure is subject to host country regulatory requirements, market sensitivities, or sponsor consent. Akbank maintains on its website a summary of its ESMS its annual ESG reports, and the relevant E&S policies. In addition, as required under its Sustainable Finance Framework, Akbank will publish an annual allocation and impact report for this Project. Furthermore public consultation was conducted for the current sub-projects.
Project Grievance Redress Mechanism (GRM). Akbank has disclosed its External Communications Mechanism (ECM), which will be enhanced as the project-level Grievance Redress Mechanism (GRM) to meet AIIB’s ESP requirements. The ECM will be made available to all stakeholders in an appropriate manner and Akbank’s website will provide information timely in local language on AIIB’s Project-Affected People’s Mechanism (PPM). Under its ESMS, Akbank requires the subprojects to establish GRMs, which should be accessible, include provisions for anonymity, and hold no risk of retaliation, to receive and facilitate resolution of the concerns and complaints of people who believe they may be or have been adversely impacted by the Project. Provision will also be made to inform Project-affected people and Project contracted workers of their availability, including Akbank’s ECM and AIIB’s PPM.
Monitoring and Supervision Arrangements. Akbank is required to maintain a comprehensive database comprising all relevant ES information and report to AIIB a summary of the ES aspects and an overview of the ES performance of the Project’s portfolio every six months and on an agreed template. AIIB will conduct post-reviews of the selection and implementation of subprojects as part of its regular supervision.
