To support the Türkiye’s climate mitigation efforts through the provision of long-term finance to support the leasing of renewable energy generation, energy storage, energy efficiency, and clean mobility equipment across various eligible sectors.
A term loan facility to Yapı Kredi Finansal Kiralama A.O. (Yapi Kredi Leasing, YKL or the “Borrower”) in the amount of USD50 million to support the leasing of equipment for eligible uses and economic activities. Eligible sectors under this loan will primarily include clean energy (i.e., renewable energy such as solar and wind, battery energy storage systems, energy-efficient equipment), and transportation (electric, hydrogen, and plug-hybrid vehicles). The proposed loan is also part of a larger parallel USD365 million package coordinated by the International Finance Corporation (IFC) that includes other development finance institutions (DFIs) that will lend alongside AIIB.
Eligible beneficiaries will include corporations, commercial enterprises, special-purpose entities, and small- and medium-sized enterprises (SMEs). The project responds to a growing demand for long-term financing in the Turkish market through leasing services. The sub-loans or sub-leases under the project will be made in TRY, USD, or EUR currency, as per the beneficiaries' demand and within parameters agreed between AIIB and the Borrower.
YKL is the leading leasing company in Türkiye by lease receivables (over 16% of market share by value) and a subsidiary of Yapi ve Kredi Bankasi A.S. (Yapi Kredi Bank, or YKB), Türkiye’s fourth-largest private bank, a domestic systemically-important financial institution, and a member of the Koç Group, Türkiye’s largest industrial conglomerate.
Applicable Policy and Categorization. AIIB’s Environmental and Social Policy (ESP), including the Environmental and Social Exclusion List and Environmental and Social Standards (ESSs), applies to the project. The project is assigned Category FI under the ESP as it involves financing through a financial intermediary in Türkiye. All Category A activities and selected Category B activities, as determined by AIIB, that may potentially result in (a) land acquisition and involuntary resettlement; (b) risk of adverse impacts on indigenous peoples and/or vulnerable groups; (c) significant risks to or impacts on the environment, community health and safety, biodiversity, and/or cultural resources; (d) significant retrenchment of more than 20% of direct employees and recurrent contractors; and/or, (e) significant occupational health and safety risks; hydropower and geothermal energy, utility-scale renewables, and waste-to-energy, will be excluded from the AIIB-financed facility.
Environmental and Social Instruments. YKL’s Environmental and Social Management System (ESMS) will be the instrument for this AIIB-financed facility. AIIB conducted Environmental and Social (E&S) due diligence (ESDD) on YKL’s: (a) E&S policies; (b) internal process steps for E&S risk management; (c) organizational structure, E&S function, capacity, and training; (d) supervision procedure and portfolio review; (e) control environment; and (f) external communication and grievance management. YKL’s ESMS will be enhanced to be appropriate and proportional to the E&S risks associated with the AIIB facility. Enhancements to the ESMS will be agreed upon with the Borrower in the form of an Environmental and Social Action Plan (ESAP), with specific actions and time-bound deliverables to help YKL meet AIIB’s requirements.
Environmental Aspects. With higher-risk activities excluded from the AIIB facility, environmental risks and impacts are expected to be limited, generally site-specific, largely reversible, and manageable through mitigation measures in line with good international practice. These may include, but not limited to: (a) biodiversity impacts, (b) site-specific construction-related impacts such as soil erosion and sediment run-off, and dust, noise, odor, air, and water pollution, (c) water and wastewater management; (d) hazardous materials and waste management, (e) chemicals hazards and emergency management, and (f) sustainability of water and energy use, among others. A tailored environment management plan (EMP) or procedure as part of the enhanced ESMS, related to the template for ESDD and assessment to serve as baseline and monitoring, will be addressed by the Borrower in the form of an ESAP, to comply with the ESP and relevant ESSs requirements.
Social and Gender Aspects. Typical social risks associated with leasing activities may include labor and working conditions, occupational health and safety (OHS), and community health and safety. Accordingly, the residual social risks are expected to be moderate and manageable through the application of appropriate mitigation measures. YKL will manage social risks through its ESMS, which includes procedures for screening, categorization, and monitoring of subprojects. During ESDD, areas for enhancement were identified, including the need to strengthen the integration of labor and working conditions, supply chain considerations, and gender-related aspects into ESMS procedures. These will be addressed through an ESAP. Under the project, gender considerations will be strengthened through ESAP. This includes integrating targeted gender-related screening questions into the subproject due diligence. AIIB and YKL are currently discussing the introduction of simple, operational screening questions.
Health and Safety, Labor and Working Conditions. Potential risks and impacts associated with the supported leasing activities are expected on occupational health and safety for workers during installation of leased equipment and/or operation and maintenance, which include, but are not limited to, working at height, exposure to electrical and fire hazards, and chemical hazards, among others. Specifically for vehicles, this potentially includes vehicle safety and fire hazards from manufacturing defects and poor maintenance for customers, pedestrians, and communities. A tailored Health and Safety plan or procedure as part of the enhanced ESMS, related to the template for ESDD and assessment to serve as baseline and monitoring for monitoring incidents, accidents, near misses, or fatalities in the project, and will be addressed by the Borrower in the form of an ESAP, to comply with the ESP and relevant ESSs requirements.
Stakeholder Engagement, Consultation and Information Disclosure. Given the nature of the project as an FI operation, stakeholder engagement activities will primarily take place at the subproject level. YKL will require its lessees to engage with relevant stakeholders, as appropriate, in a manner proportionate to the nature and scale of the subproject and associated environmental and social risks and impacts. YKL will disclose an overview of its ESMS and E&S polices on its website prior to the first disbursement.
Project Grievance Redress Mechanism (GRM). YKL has established an External Communications Mechanism (ECM), including contacts and processes to receive and handle related E&S matters, and its information, including AIIB’s Project-affected People’s Mechanism (PPM), will be disclosed in both Turkish and English, in an appropriate manner. The ECM, as project’s GRM, will be made available to project-affected people (PAP) and project-contracted workers. YKL will require its sub-lessees to establish a suitable subproject-level GRM or equivalent and inform people within the subproject’s footprint of its availability. The GRM will receive and facilitate the resolution of the concerns and complaints of people who believe they have been adversely affected by the project’s E&S impacts.
Monitoring and Reporting Arrangements. YKL will report to AIIB on an annual basis and provide a summary of the E&S aspects, including an overview of the E&S performance of its portfolio based on an agreed-upon format. As part of the ESAP, YKL will submit the first three subproject types financed under the facility to AIIB for prior review, this will support the alignment of E&S categorization and due diligence practices at the early stage of implementation. AIIB will conduct supervision of the project through the periodic review of E&S reports, ongoing engagement with YKL, and post-reviews of selected subprojects. This may include detailed reviews of E&S documentation and, where feasible, site visits to selected subprojects.
Asian Infrastructure Investment Bank
Francisco Fortuny
Senior Investment Officer
