Tackling the Climate Crisis

The 1.5°C Global Warming Special Report published by the Intergovernmental Panel on Climate Change (IPCC) in 2018 drew attention to the extraordinary weather events, extreme heat, water scarcity, and ecosystem damage which will occur on Earth if the global temperature rises 1.5°C above its pre-industrial level.

The climate crisis maintained its place on the agenda in 2020 despite the Covid‑19 pandemic. Although the social isolation of a large section of society during the pandemic had a positive impact on reducing greenhouse gasses, 2020 was recorded as one of the hottest years on record. In this respect, managing the physical and transitional risks caused by the climate crisis has become even more important.

Yapı Kredi’s climate-related risks and opportunities are classified as physical and transitional risks. In this respect, extraordinary weather events, extreme temperatures, domestic and international regulations related to climate change, stakeholder expectations, market expectations developed with the transition to a low-carbon economy, and emerging technologies are defined as climate-related risks and opportunities. All efforts related to sustainability, including climate-related risks and opportunities, are managed under the supervision of the Yapı Kredi Sustainability Committee. These efforts are regularly reported to the Executive Committee and the Board of Directors.

The basic approaches concerning climate-related risks are also included in the Reputation Risk Policy and the Credit Policies approved by the Board of Directors. The risk areas and sensitive sectors (non-environmentally friendly organizations, nuclear energy, mining, thermal power plant industry, water infrastructure, and the dam industry, etc.) defined in the context of the general principles of reputation risk management are assessed in the Environmental and Social Risk Assessment (ESRA) system. In this context, as part of corporate and commercial credits, all new investment and project financing credit requests, together with projects to which financial consultancy is provided with above USD 10 million investment value, are subject to the ESRA system in line with the Equator Principles (EP4, 2020). With the credit policy shaped as part of the transition to a low-carbon economy and the fight against climate change, Yapı Kredi committed not to finance new coal fired power plants and new coal mining projects.

Yapı Kredi has adopted a prospective capital planning approach to sustain its activities in the event of potential losses caused by market disruptions. The number of floods, the cost of physical damage resulting from extraordinary weather events, the ratio of fossil fuel projects in the energy portfolio, the carbon footprint of the project finance energy portfolio, operational greenhouse emissions, and energy consumption are treated and monitored as climate-related risks. Risk indicators related to potential future regulations are also closely followed up. Having faith in the importance of transparency regarding climate-related risks, Yapı Kredi became an official supporter of the Task Force on Climate-related Financial Disclosures (TCFD) in January 2021.

Yapı Kredi calculates and verifies its Scope 1 and Scope 2 greenhouse emissions in line with the ISO 14064 standard as part of the fight against climate change in its operational activities. Yapı Kredi obtains limited assurance statements in compliance with the ISAE 3410 International Assurance Audit Standard for its Scope 1, Scope 2, and Scope 3 greenhouse emissions on an annual basis.

Yapı Kredi has been transparent in reporting its governance structure, risks and opportunities, corporate strategy, and targets related to climate change since 2016 in line with the CDP Climate Change Program. Furthermore, the Bank also proactively takes into consideration the climate-related opportunities that emerge with regulations and stakeholder expectations. With the CDP Water Security Program, Yapı Kredi has been publicly disclosing its actions, risks and opportunities, governance structure, and strategies for the preservation and effective utilization of water resources since 2018.

Yapı Kredi believes in standing by its customers in the fight against climate change, and in Turkey's transition to a low-carbon economy. It carries out capacity-building activities for its customers in the context of national and international regulations and trends.