Environmental and Social Impact Assessment Process
Banks may face risks that may cause significant environmental or social impacts (for example, oil spills, etc.) in the projects they support through lending activities. Failure to address these risks in a timely and appropriate manner may result in negative environmental and social impacts as well as reputational damage and consequently a loss of investor support and customer loyalty, among other challenges.
Garanti BBVA considers the proactive management of such risks not only as a critical issue for success in risk management, but also as one of its most fundamental duties towards its stakeholders. Through its effective sustainability approach embedded throughout its organization, Garanti BBVA monitors its resource consumption, takes steps to reduce it, raises the awareness of employees and collaborates with suppliers. Moreover, to extend its work to a larger scale, Garanti BBVA also developed an Environmental and Social Impact Assessment Process (ESIAP) including Environmental and Social Impact Assessment Model (ESIAM) within the scope of Environmental and Social Loan Policies (ESLP) to help drive similar improvement across its loan portfolios.
Garanti BBVA has in-house ESG experts in its Sustainable Finance Team, which resides under the Investment Banking and Finance Department. Therefore Garanti BBVA can monitor the projects that are included in ESIAM, review and approve the routine monitoring reports and attend the site visits of projects that are classified as high risk in terms of potential environmental and social impacts. The consultant to be appointed when deemed necessary is determined in accordance with the criteria specified in the Guidance on Garanti BBVA Independent Consulting Service Requirements and Consultant Firm Selection Criteria. The environmental and social due diligence is carried out by the independent project consultant on the agreed scope of work. The due diligence period is followed by all lenders through the reports produced by consultants. The communication between lender/lenders’ consortium and consultant is provided by the green agent of the project.
Garanti BBVA ensures that the projects it finances meet the social and environmental standards required by legislation and the Bank’s policies that an impact assessment is undertaken by the project owner(s), if necessary, that prescribed measures are taken by the project owner(s) and that project owners have effective internal audit systems. In 2015, 2016 and 2017, 2018 and 2019 Garanti BBVA conducted 26, 22,28,37 and 29 site visits respectively to ensure the environmental and social action plans are being implemented by customers. Due to the COVID-19 Pandemic in 2020, site visits were carried out with remote monitoring methods such as online meetings, drone footages and more.
For ESIAP, our 2021 targets are:
- Succesfull implementation of the revised Environmental and Social Loan Policies
- Performing project environmental and social performance monitoring with remote monitoring methods in line with Covid 19 Pandemic Restrictions
- Supporting the customers in taking corrective-preventive concrete actions on environmental and social issues in the projects financed by Garanti BBVA.
Environmental and Social Risk Management System Implementation Scope1
||Compliance with our Fundamental Policies2 and Legislation
||Advanced Environmental and Social Criteria
||BSAs4 address compliance with our fundamental policies and legislation. Advanced Environmental and Social Criteria are not applicable to this segment. Yet, there are a number of practices regarding our customers’ financial health within the scope of our Bank’s plain, transparent and responsible banking practices.
||BSAs and GLAs5 address compliance with our fundamental policies and the legislation. More detailed criteria specific to a given transaction may be applicable under various borrowing agreements.
||BSAs and GLAs address compliance with our fundamental policies and legislation. Loans above the limit values specified in the related Risk Management System are subjected to advanced environmental and social criteria. The Green Loan structure may introduce additional criteria specific to a given deal. Sectoral Principles are also applicable.
||BSAs and GLAs address compliance with our fundamental policies and legislation. Loans above the limit values6 specified in the related Risk Management System are subjected to advanced environmental and social criteria. The Green Loan structure may introduce additional criteria specific to a given deal. Sectoral Principles are also applicable.
||BSAs address compliance with our fundamental policies and legislation. Additional environmental criteria are applied for Green Mortgage.
|Project Finance Loans
||In addition to compliance with general policy and legislation in contracts, advanced environmental and social criteria are applied in all project finance loans, regardless of financial limits or any criteria.
1 Based on systems that are in place as of June 2021. / 2 One of our core policies, Environmental and Social Credit Policies, includes a list of prohibited activities and customers. / 3 Not applicable. / 4 Banking Service Agreements. / 5 General Loan Agreements. / 6 Corporate Loans (Business Loans) for a new project or the capacity increase of the existing project and that meet all of the listed five criteria are subject to ESIAM. i.The majority of the loan must be linked with the project on which the debtor has effective operational control (directly or indirectly). ii.The total amount of the loan and the participation of Garanti BBVA (before syndication sales) is USD 50 million or more. iii.The term of the loan is two years at minimum. iv.The lender anticipates that the primary funds for repayment of the loan are derived from the project. v.The scope also includes export financing to be granted as buyer credit to private sector or public enterprises. On the other hand; it does not apply to other financial instruments that are not linked to any project, such as asset finance, acquisition financing, hedging, leasing, letter of credits, general purpose corporate loans and general working capital expenditure loans (for a company to continue its
Environmental and Social Impact Assessment Case Studies
Çanakkale Bridge and Motorway Project
The 1915 Çanakkale Bridge and Motorway Project, where Garanti BBVA is the intercreditor agent, has a total of 88 kilometers length between Malkara and Çanakkale is developed by the Ministry of Transport, Maritime Affairs and Communications General Directorate of Highways. The project will be the world's longest suspension bridge with a 2023-meter long span and with a total length of 4.6 kilometer.
Within the scope of the project, an Environmental and Social Impact Assessment (ESIA) process has been carried out in accordance with international standards, in particular Equator Principles, IFC Performance Standards and Garanti BBVA Bank Climate Change Action Plan. ESIA has been carried out to outline and document the potential environmental and social impacts and provide mitigation measures to prevent, avoid, reduce or compensate for any adverse impacts. Some of the actions taken are listed below:
- For each tree to be affected within the scope of the project, 5 trees will be planted.
- Throughout the project route, geophysical surveys and geotechnical studies have been carried out and the potential risks and sensitive areas (unexploded mines, archaeological finds etc.) have been determined in advance and necessary precautions have been taken.
- During the studies carried out in the Çanakkale Bosphorus, experts will monitor marine mammals and ensure that construction methods and possible noisy works will be carried out in such a way as not to cause harm to living environment.
- Environmental noise monitoring and modeling studies will be carried out in the project. Noise levels will be minimized by measures such as landscape, noise barriers, asphalt type change, where noise limits are likely to be exceeded.
- The Community Support Program will be implemented by providing education, consultancy and equipment support to improve the socio-economic conditions of the settlements located near the project route.
- A transparent communication policy will be followed at all stages of the project and the community and all stakeholders will be informed about the construction and operation phases. A Grievance Mechanism will be established and implemented to manage the queries and grievances.
For more details about the project, you can visit the project web site www.1915canakkale.com.
Gebze-Orhangazi-Izmir Motorway (including the İzmit Gulf Crossing and Access Roads) Project
Gebze-Orhangazi-İzmir Motorway (including the İzmit Gulf Crossing and Access Roads) Project consists of the financing, design, construction, operation and maintenance and transfer of 433 km of new three-lane dual carriageway tolled Motorway. It includes a crossing by a suspension bridge of the Izmit Gulf between Dil İskelesi in the north and the Hersek Peninsula in the South, the design and construction and transfer of 44 km of new Access Roads, the taking over and operation and maintenance and transfer of 27 km of existing highway and the design and construction of the widening and transfer of 3 km of existing Motorway and an interchange.
A comprehensive Environmental and Social Impact Assessment (ESIA) Report was prepared by the Independent Consultant Company in accordance with International Finance Corporation (IFC), European Bank for Reconstruction and Development (EBRD) and the Equator Principles (EPs) requirements as a part of Financial Agreement.
ESIA is a study predicting and evaluating the impacts the Project might have on the physical, natural, cultural, social and socioeconomic environment during the design, construction and operation phases, and identifying measures that Borrower’s will need to take to avoid, reduce, remedy, offset or compensate for adverse impacts, and to provide benefits where possible. A Stakeholder Engagement Plan (SEP) was prepared as part of the Environmental and Social Impact Assessment (ESIA) Report. SEP describes the mechanisms by which people especially local communities and other stakeholders to be are informed about the Project and gives opportunities to provide comments and input to the Project development. ESIA summarized this mitigation in its Environmental and Social Management Plan (ESMP) and suggested to develop a series of plans and procedures to set arrangements for implementation and monitoring these mitigations throughout the Project. As a part of the ESMP requirements, a route-wide Biodiversity Action Plan (BAP) for the terrestrial and freshwater environmental has been also prepared in accordance with the findings of ecological studies for the Project. Animal Crossing Procedure has been also prepared to identify specific locations to maintain ecological connectivity to fragmentation within the areas specified in ESMP and provide suitable design for converting culverts and underpasses to be used by target species and a design for new animal crossings in accordance with Designing Road Crossings for Safe Wildlife Passage: Venture County Guidelines. In addition to BAP, several documents has been prepared such as Land Acquisition Compensation and Resettlement Plan (LACRP), Emergency Prevention and Response Plan (EPRP), Cultural Heritage Mitigation Strategy including A Change Finds Procedure (CFP), Human Resources and Labour Management Plan, Occupational Health and Safety Management Plan, Marine Environmental Design Management Plan (MEDMP), Marine Environmental Construction Management Plan (MECMP), Terrestrial Environmental Construction Management Plan (TECMP).
Environmental and social monitoring studies are periodically conducting for the Project and construction works are being evaluating in detail with respect to environmental impacts, permits and licenses, workers health and safety, archaeological sites, grievance mechanism and expropriation. During the monitoring period of the Project, implementations of the site specific mitigation along the motorway related to wetland, watercourses and sensitive areas are reviewing by the independent consultant company and Lenders.
The Phase I (Approximately 52 km / Gebze-İzmir) and Phase II-A (Approximately 25 km / Bursa-İzmir) section of the Project has been started to operate and construction works at Phase II-B (Approximately 327 km. / Bursa-İzmir) section of the Project are ongoing.
The SOCAR Aegean Refinery (STAR) Project
The SOCAR Aegean refinery (STAR) Project consists of the construction, start-up and operation of a new oil refinery plant processing 10 million tons of crude oil per year. The Project site is located on the Aliağa Peninsula, which hosts oil refining, petrochemicals, iron and steel manufacturing plants, ship breaking facilities and various other industrial facilities. The Peninsula is bordered by the town of Aliağa to the east, the Aegean Sea to the west, Nemrut Bay to the south, and Aliağa Bay to the north.
Construction activities at the refinery site started in December 2014. Construction at the Jetties area started in June 2015 with piling activities for Jetty 1.
The Project’s facilities are being constructed on approximately 246 hectares of land. The primary goals of the Project are summarized as follows:
- ensure the continuity of supply for the PETKİM complex by meeting the raw material demand in an economic and reliable manner;
- produce Ultra Low Sulphur Diesel and Jet Fuel for the domestic market, which is currently experiencing supply shortages;
- create additional synergy by establishing Refinery - Petrochemicals integration;
- add value to the national economy through production, trading, employment, logistics, and other related activities; and
- contribute to the reduction of Turkey’s foreign trade deficit.
An Environmental Social Impact Assessment (ESIA) study including Environmental and Social Action Plan (ESAP) have been prepared in terms of compliance with the applicable national and international legislation and requirements. The Project will be operated in accordance with the defined environmental and social requirements. Lender’s Environmental and Social Consultant (LESC) is undertaking construction monitoring and to visit the site twice a year. Within the scope of the Project requirements, Project Environmental Performance(1), Environmental, Social and Health and Safety Management Performance(2), Occupational Health and Safety Issues(3), and Social Aspects and Management(4) subjects are reviewing in detail by the Borrowers, Project team, and the Lenders.
(1)Resource Efficiency and Management, Waste Management, Wastewater Management, Hazardous Materials Management, Air Quality, Noise, Surface, Groundwater, Seawater and Sediment Control, Soil Management, Management of Soil Dumping Sites and of Topsoil, and Biodiversity.
(2)Environmental, Social, Health and Safety Policies, Organization of ESHS Management, Assessment of Environmental and Social Impacts, Contingency Planning and Emergency Procedures, Staff Training and Supervision, Auditing, Inspections and Review.
(3)Accident Reporting, Recording and Investigation, General Housekeeping Issues, Storage of Hazardous Material and Hazardous Waste, Site Safety Issues, Occupational Exposure to Noise, Vibration and Air Pollutants, Personal Protective Equipment, Health and Comfort, Work Equipment and Machinery Safety, and Use of Safety Signs and Traffic Safety.
(4)Labour and Working Conditions, Community Health and Safety and Security, Information Disclosure and Stakeholder Engagement, and Chance Find Procedure.