Integration of Environmental, Social and Governance Criteria into Banking Operations
While the traditional face of risk management is usually associated with financial risks, the management
of environmental, social, and governance (ESG) risks has become increasingly important as the concept of
sustainability has grown in importance over time.
The maturity of banks to effectively manage environmental and social risks is seen as part of their overall
risk management practices. This link between sustainable financing and risk management helps banks to control
risks arising from their own operations while at the same time allowing them to take into account indirect
risks that may arise from their lending activities.
Development and Investment Bank of Türkiye takes measures both to control environmental and social risks arising from its operations and to take into account indirect risks that may arise during lending operations.
In lending practices, environmental and social risk assessments have become part of a routine decision-making process.
With these assessments, the Bank analyzes the risks of customers and projects in detail.
Prioritizing activities that can have a positive impact further extends the Bank’s risk-based approach.
With the responsibility that comes with its identity, Development and Investment Bank of Türkiye keeps
sustainable financing among its main priorities and pioneers the realization of effective investments in
many different fields, such as renewable energy, energy efficiency, tourism, environmental protection, and
the job-creating manufacturing industry. These investment projects are evaluated in terms of environmental
and social risks. The Bank’s policy was approved by the Board of Directors, and the “Environmental and
Social Policy” and “Environmental and Social Risk Assessment Procedure” were published in 2020.
The Environmental and Social Risk Assessment System, which is managed in compliance with the “Environmental
and Social Risk Assessment Procedure in the Lending Process”, ensures that the environmental and social
impacts (direct, indirect and cumulative) that may arise during the construction and operation phases of an
investment or project are identified, assessed and necessary measures are developed to mitigate any negative
impacts.
To minimize environmental and social impacts, Environmental and Social Action Plans (ESAPs) are prepared that
identify actions to be implemented by the client and include a monitoring program. These plans support the
development of the client’s capabilities in this area.
The Bank’s risk assessment model is at the heart of its ESG risk assessment efforts. This model provides a risk-based assessment of existing operations and investment projects to be financed.
This assessment identifies four different risk categories - Category A (High Risk), B+ (Medium-High Risk), B- (Medium Risk), and C (Low Risk) - which are fully aligned with the definitions in the World Bank’s new Environmental and Social Framework. The application of this model considers environmental and social risks, as well as the likelihood of their occurrence, the management capacity of the company, and the level of impact on the environment and society. The Bank’s comprehensive risk assessment strengthens risk management and sustainability maturity while protecting the Bank’s reputation and position in the sector.