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The Banks Association of Türkiye's Key Activities on Sustainability in the Banking Sector

As is known, climate change is considered one of the greatest challenges of our time globally. It is widely acknowledged that this issue not only has various effects but also necessitates redefinitions in terms of socio-economic development and geopolitics. Meanwhile, it has been observed worldwide that investments defined as Environmental, Social, and Governance (ESG) have become mainstream. In this process, establishing a strong "green finance" and a low-carbon economic model through these ESG investments has been identified as a primary objective. After the initial impacts of the COVID-19 pandemic, key ESG issues that emerged in 2020 gained more prominence and attention in 2021 among regulators, employees, customers, and other stakeholders. Organizations have increasingly incorporated ESG factors into their general operations and governance. As regulators progressively incorporated ESG issues into their agendas in 2021, rule-making and reporting standardization became a significant focus, with the process advancing rapidly.

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Sustainability Working Group: Within this process, the Banks Association of Turkey (TBB) Board of Directors established the Sustainability Working Group in 2009 to guide banks on managing the environmental and social predictability, transparency, and traceability of their operations more systematically.

The activities carried out by our association on sustainability are organized under main headings.

The "Sustainability Guide for the Banking Sector," prepared by the Working Group in 2014 considering the environmental and social dimensions of development, was updated in March 2021 and announced to members, relevant institutions, and the public. 

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TBB's Board of Directors has made the following recommendations on sustainability, which have been communicated to members and the public:

• Monitoring TCFD Recommendations: The Task Force on Climate-Related Financial Disclosures (TCFD) recommendations and the initiatives, especially by UNEP-FI, regarding climate change are followed and evaluated.

• Promoting Awareness on Climate Change: Efforts are underway to raise awareness on climate change and contribute to activities in this field.

• Guide on Establishing a Green Asset Ratio: Statistical studies are conducted to measure and monitor sustainable finance. Today, with the increasing impacts of global warming and related climate change, measuring, analyzing, and managing climate-related financial risks has become one of the most critical agenda items for financial supervisory authorities and banking and finance institutions worldwide. In this context, it has been decided to create a Green Asset Ratio (YVO) guide for the banking sector, taking into account international regulations and practices in our country. A "Guide on Establishing a Green Asset Ratio" was prepared by the Green Asset Ratio Working Group, specially formed with the participation of BDDK representatives, to develop a methodology for calculating the ratio. Additionally, the Working Group is carrying out studies on preparing heat map methodologies.

• Monthly Meetings on Members' Good Practices in Sustainability: Monthly meetings are held with public authority officials on "Good Practices in Sustainability by Members."

• Development of Training Modules on Sustainability: Basic and advanced training modules on sustainability have been developed.

• Contribution to National Sustainability Platforms: Contributions are made to national sustainability platforms.

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European Green Deal: The European Green Deal has been primarily developed to respond effectively to global change and related transformations, and it continues to evolve. The new economic model and associated initiatives are closely monitored. Furthermore, our members and our Association participate in the relevant Specialist Working Groups established within the framework of the Green Deal Action Plan by the Ministries. Members also participate in the meetings of the Taxonomy Technical Expert Group established by the Ministry of Environment and Urbanization's Climate Change Department.

Events and Training Programs: Webinars on "Potential Effects of Risks and Opportunities from Climate Change on the Banking Sector" and "The EU Green Deal" were organized, as well as a Sustainable Banking Workshop, and the "Turkey Transition Finance Workshop" in collaboration with the Institute of International Finance (IIF). A webinar titled "Management of Climate Risks and Green Finance" was also held.

In partnership with EBRD, BDDK, and TBB, the "Climate Transition Planning Masterclass Series" was conducted between March and July 2024.

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Presentations and awareness meetings on sustainability are held at both national and international levels and in universities (e.g., EBF, ABA, IIF, COP28, Istanbul University, ISO).

Collaborations on sustainability between banks and the real sector are carried out with organizations such as ISO and TİM. Participation and contributions are also provided to events organized by universities and NGOs.

 

A webpage on "Sustainability" has been created on our TBB’s website, which includes national and international studies on sustainability. This page features the recommendations made by our Association, the sustainability initiatives of our members, and the works of the Turkey Participation Banks Association members on sustainability, along with important international reports in both Turkish and English.

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TBB Activities

Sustainability has been included as one of the fundamental values of the Association (see Appendix 1).

Sustainability is also a core activity in our Association’s strategic plans.

In line with international best practices, the Sustainability Consulting Project is being implemented by TBB. Under this project:

• A framework for adapting to changing environmental conditions while protecting the environment and balancing socio-economic needs has been established. Procedures have been created to support the environmental dimension of sustainability, and an environmental management system has been established.

• The Sustainability Committee was established within the Association to manage the economic, environmental, social, and governance impacts of sustainability in line with internationally accepted principles.

• The Association has obtained the ISO 14001 Certificate.

• Work on ISO 14064 and Zero Waste Certification is ongoing.

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Recent Activities

The following activities have recently been undertaken:

• Risk Assessments on Climate Change: A draft guide on creating Heat Map Methodologies has been prepared to serve as a guide for banks' assessments of sector-specific climate risks in transition and physical risk assessments.

• www.greenfinanceTürkiye.com Website: Work is ongoing to establish an English-language website titled "Green Finance Türkiye."

• Technical Sub-Working Group on Sustainable Finance: A Technical Sub-Working Group on Sustainable Finance has been established.

• Meetings and Collaborations: Meetings and collaborations with relevant public institutions and representatives of the real sector continue.

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TBB Board Recommendations on Sustainability:

Recommendation I: At the TBB Board of Directors meeting on December 4, 2019, it was stated that "Sustainability and Climate Change" is a topic of increasing importance globally, is closely followed in both our country and international markets, and that our members are conducting individual studies. It was decided that the existing Working Group within our Association should continue its activities, focusing on organizing training and conferences and identifying areas for action under relevant regulations.

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Recommendation II: At the TBB Board meeting on October 14, 2021, the impacts of climate and environmental risks on the economy and the banking sector and the TBB Sustainability Working Group’s efforts were evaluated. Based on the UN Sustainable Development Goals and Turkey's 11th Development Plan (2019-2023), a recommendation was made for banks to develop and implement inclusive financial instruments to raise customer awareness and support low-carbon investments.

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