SUSTAINABLE FINANCE

TSKB successfully internalized its philosophy of sustainable finance into its mission, vision, policies, standards and business processes.

With a strategic point of view to maintain a long term position, TSKB closely follows the new trends, opportunities and threats both in and outside Turkey and structures its products, services and sectoral priorities accordingly.

Besides renewable energy, environment and energy efficiency sectors also gained importance in the recent past throughout the world. TSKB identified renewable energy as one of the key sectors to support Turkey’s sustainable development in 2003 and focused on this business line since then. At the end of the seven years past, renewable energy and energy distribution sectors comprised an important portion of TSKB’s total credit portfolio.

TSKB and Climate Change
The combat with climate change requires carbon reduction or replacement technologies to be taken effective worldwide and as soon as possible. According to the projections, for the world to sustain its economic growth and to maintain carbon dioxide (CO2) concentration on a manageable level, production of two times more energy at a carbon level almost as much as half of today’s level, in 2050 is required.

Total green house emissions increased rapidly since 1950’s as industrialization grew. As a result of the common consensus that green house emissions will threaten the future of the humankind as it increases with its current ratio, governments, companies and NGOs started to be more active to solve the problem. Under these critical conditions, all the banks in the world will take responsibilities by means of managing environmental risks and developing sustainable finance models.

As one of the most important items on the agenda of the world, climate change is the primary issue on TSKB Environment Policy.

TSKB assures that environment preservation conditions are met in every project it finances by following the coherence throughout the life cycle of the project. TSKB highly considers the efficient use of natural and depleting resources such as energy, raw materials and water besides recycling and reuse of materials.

Management of environmental risks requires balancing of various factors regarding the project. Although a hydro electric power plant project points out a renewable energy source, negative environmental and social impacts could be possible during the construction. TSKB aims to direct resources to the right projects where environmental risk policies are managed. It is important for the Bank to be able to minimize or abate environmental impacts.

Renewable energy: Leaving a clean world to the future generations

Turkey is one of the fastest growing basic energy markets with an annual energy use of 194 GWh and 6-7% growth rate in energy consumption.

Passing two ordinances on renewable energy in 2005 and energy efficiency in 2007, Turkey has a great potential of renewable energy such as wind, water and heat. The total investment in electricity sector during 1987-2008 period amounts to 45.3 billion USD. The current renewable energy resources of Turkey comprise 14,301 MW hydro electric, 658 MW wind, 77 MW geothermal and 81 MW biogas/bio fuels.

The projection of investment potential to renewable energy in Turkey in the next five years is about 5 billion Euros.

Sources: TEİAŞ (Turkish Electricity Transmission Company), World Energy Council Turkish National Committee, DPT (State Planning Organization), EÜAŞ (Electricity Generation Company), DSİ (General Directorate of State Hydraulic Works) and TSKB Projections

Between 2007 and 2023, the predicted environmental investments in Turkey will approximately amount to 59 billion Euros.

The fast growing industrialization and urbanization will also accelerate the environmental investments. It is predicted that in the next 14 years the amount of environmental investments will be about 59 billion Euros in Turkey where a third of the investments will be realized by the private sector and the rest will be public sector investments.

Source: EU Integrated Environmental Strategy Project, Ministry of Environment and Forestry, 2006

TSKB aims for “low-carbon economy” for a livable tomorrow.
TSKB believes to support and improve low carbon economy for a better future. The Bank follows the trends and changes both in and outside Turkey and makes the necessary changes on its product-service line under the light of its innovative business approach.

GREENHOUSE GAS EMISSIONS IN TURKEY

Greenhouse gas emission of Turkey in 2007 increased by 12% and reached 373 million tones CO2 equivalent. This increase is 119% compared to 1990. 77% of the CO2 emissions in 2007 was from energy production and consumption of energy and 9% of it was based on waste disposal. Agricultural and industrial activities each have 7% share.

Source: TÜİK (Turkish Statistical Institute)

Energy is one of the primary sectors for TSKB.
TSKB continues its support to energy sector where it sees great growth potential.

As a holder of leading roles in the largest financing activities realized in Turkey, the total number of renewable energy projects that TSKB financed until 2009/3rd quarter is 80. The Bank evaluated about 150 renewable energy projects in detail up to date.

With the energy projects it financed TSKB has planned 2,218 MW installed capacity.

This level corresponds to 15% of the total installed renewable energy capacity and 5% of the total installed energy production capacity in Turkey.

All projects TSKB finances serve the transition from fossil fuel based energy production to renewable energy sources.

When these projects are completed more than 4 million tones of CO2 emission reduction will be achieved in Turkey.

Renewable energy loans used by TSKB (as of 2009/3rd quarter)
Electricity production Financed investments
1,260 million USD is committed to 80 continuing electricity production projects with an expected installed capacity of 2,218 MW 72 (HEP) Hydroelectric- Total 2,046 MW installed capacity
4 (WPP) Wind Power - Total 94 MW installed capacity
2 (GPP) Geothermal Power - Total 57 MW installed capacity
2 Biomass (based on landfill gas-LFG) - Total 21 MW installed capacity
Natural gas distribution projects Distribution in 17 regions – 180 million USD

Turkish industry’s energy intensity is high and is almost two times as much as EU15 countries. The only way to reduce this amount is by implementing energy efficiency mechanisms. This issue is of great importance in terms of climate change and sustainable development.

TSKB started financing energy efficiency projects in 2009.
Energy efficiency projects took its place within financing of renewable energy investments in 2009.

Turkey has to decrease its dependency upon fossil fuels and the ratio of energy in GNP. Rapid implementation of energy efficiency projects is vital for our country. Energy efficiency is as important as reduction of world greenhouse gas (GHG) emissions and the combat against climate change.

With its high awareness level on these issues, TSKB started considering energy efficiency projects and developing its capacity. During this reporting period, TSKB added 3 energy efficiency projects in its energy portfolio.

Two of these investments are in iron and steel and the third one is in paper sector where in both industries energy consumption and saving potential is high.

  • Iron and Steel Sector: One of the projects financed aimed to reduce the energy intensity per unit product by increasing the number of production shifts and transferring the furnace waste heat to production. The second project aimed at changing the electric motors of the plant and making technological amendments in the production line that serve energy efficiency. With this investment the energy intensity per unit product will be reduced.
  • Paper Sector: This project aims to increase the dry elements on the production line with the help of the waste heat formed during production and as a result to reduce the total energy consumption in paper unit.


Another important transaction of 2009: 420 million USD worth of credit from the World Bank’s Clean Technology Fund (CTF)
Under the loan contract signed on June 9, 2009, TSKB secured 350 million USD credit from The World Bank and 70 million USD credit from the Clean Technology Fund, which is managed by the World Bank aiming to supply the finance that countries need in transition to low carbon economy.

As Turkey has been one of the first countries that CTF provided resources with, TSKB has been the first business partner selected in Turkey. This loan will be allocated to investments of private sector companies on energy production and energy efficiency projects based on renewable energy sources.

The number of environmental investments of various sectors that TSKB finances has reached 18.

Some of these investments are:
  • Wastewater treatment plants in textile, food, automotive and paper sectors.
  • Gas emission reduction and dust collection investments in cement, energy and automotive sectors
  • Investments for the compatibility to EU norms in chemical and logistics sectors
  • Process development and improvement investments in automotive sector regarding ISO 14001 Environment Management Standard
  • Infrastructural investments on natural gas distribution aiming to reduce CO2 emission and air pollution
  • Projects concerning resource savings and energy efficiency in metal, packaging and food sectors
  • Recycling investments in harbors.

Innovative products from TSKB in portfolio management

Turkey's first privately-owned development and investment bank TSKB is introducing new thematic product and creating first market practices in the  fund industry. These new structure products are becoming popular with TSKB's market leading attempts.

These products will not only allow investors to make 100% capital guaranteed investments in alternative markets, but also help them staying away from the short-term market fluctuations. TSKB, emphasizing its prominent role in the capital markets with Capital Guaranteed Funds and provides investment alternatives in regarding to benefits of diversification.


Gold Standard Carbon Credits
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1)  19/01/09 - %10 Return Guaranteed Clean Energy Fund: First innovative investment fund which invests in Renewable Energy, Energy Efficiency and Waste Management sectors, with CARBON FOOT PRINT Social Responsibility Project

2) 29/06/10 - 100% Capital Guaranteed Agriculture Fund: First fund in Turkey to invest in agriculture commodities and also first public offering fund by a consortium  composed of  five Intermediary Institutions

3) 12/10/09 - 100% Capital Guaranteed Dynamic Commodity Fund: First fund which applies alpha generating strategy and invests in commodities with a broad coverage that aims to generate a return from both bullish and bearish market movements through its active control mechanism

4) 25/01/10: 100% Capital Guaranteed Emerging Countries Stock Exchange Markets Funds: First fund boutique concept in the market by investing on 22 emerging markets more than 750 stocks


2009 thematic investment fund
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