The Net Zero Approach

While climate change poses a serious threat to society and the global economy, it also presents a commercial opportunity for businesses that develop solutions to transition to the green economy. And the banking sector, as a financier, plays an important role in scaling new technologies that will decarbonize other sectors. As Yapı Kredi, we have taken significant steps in our environmental, social, and governance actions, prioritizing the effects of the climate crisis. Yapı Kredi is dedicated to supporting our customers in their transition to carbon-neutral operations, managing their climate-related risks, and committing to organizations that work to prevent the global climate crisis. We are committed to reducing emissions in our operations and those we finance, and to supporting the transition to a net-zero economy. We guide to our customers on their journey to net zero, not only as a financier but also as an advisor and partner.

As Yapı Kredi, we have taken significant steps to provide financing for green investments in the real sector. To that end, we have supported numerous pioneering international initiatives and proven our commitment to net zero transformation. In 2019, we became one of the founding signatories of the UN PRB. In line with the climate risk action plan provided for under the Paris Climate Agreement, we committed to the Science Based Targets Initiative (SBTi) to reduce our emissions in 2021. Moreover, we became the first and only institution in Türkiye to commit to setting emission reduction targets within the framework of the "Business Ambition for 1.5°C". We became a member of the NZBA (Net Zero Banking Alliance) in 2023 to further reinforce our position in the transition to a net zero economy. We also became a supporter of the "Task Force on Climate-related Financial Disclosures" (TCFD) to provide clear and consistent information regarding the risks and opportunities presented by the climate crisis.

In line with our commitments, we launched a new project within the scope of the Carbon Transformation Program initiated by our main shareholder, Koç Holding, in 2021. Under this project, we completed the measurement and analysis of financed emissions for the first time in 2022. These emissions, which constitute almost all of the banking sector’s greenhouse gases, were measured using the PCAF methodology. In 2023, we conducted a modeling study of interim net zero emission reduction targets in accordance with the guidance provided by SBTi. In the same year, we also conducted a financial feasibility study to achieve the set targets. During this study, we developed decarbonization strategies for priority sectors and identified action sets to achieve these strategies. After the feasibility and strategy study, we submitted our modeled targets to SBTi for approval. Furthermore, at the beginning of 2024, we completed the work initiated to improve the data quality and methodology for calculating financed emissions, which plays a pivotal role in the implementation of the strategy.

Emission Measurement

Combating the Climate Crisis
At Yapı Kredi, we have been calculating and verifying the emissions arising from our operational activities at the Head Office (Plaza D Block and Banking Base) and service buildings (Yeniköy Koru and Darıca Archive) since 2011. In 2019, we expanded our verification scope and began implementing it in all our locations. In 2021, we began calculating and verifying Scope 1, 2, and 3 emissions at all our locations, including domestic and international subsidiaries, in accordance with the ISO 14064 standard. Additionally, for the first time in 2022, we calculated the 2021 emissions of our loan portfolio corresponding to Scope 3 Category 15, using the PCAF (Partnership for Carbon Accounting Financials) methodology as a reference.

Target Modeling

After measuring our emissions, we set our science-based reduction targets for our emissions from our loan portfolio in accordance with our SBTi commitment. In line with the guide published by SBTi for the financial sector, we modeled our interim targets for 2026 and 2030 according to the selected target methodology, taking 2021 as the target base year and had verified by SBTi.

Net-Zero Transformation Strategy

In 2023, we developed decarbonization strategies in alignment with the climate crisis strategy and SBTi guidelines for the sectors we have prioritized to achieve our target set and created action clusters to realize these strategies. While developing our transformation plan, we conducted an interactive process with the Steering Committee consisting of our senior management and our Working Group members, which includes relevant teams. We conducted our activities in accordance with the credit policies and strategies of our Bank.

At the core of our Bank's transformation strategy for these sectors is to support the transformation needs of our customers. In the context of investment loans, the financing needs that will arise as a result of the transformation actions planned for the sector form the basis of the sector's loan strategy. One of the most basic loan opportunities is the provision of loans for technologies that reduce emission intensity for capacity increase investments that will arise as capacity utilization rates increase in response to rising demand. The strategy also encompasses the provision of financing to companies that have committed to reducing their emission intensity in line with their transformation plans for existing capacities.

Among the priority sectors, companies with high energy consumption are planning investments to generate energy with renewable resources in order to reduce their emission intensity. In addition to providing financing for these investments, our sector strategies also include offering loans for the greening of energy consumption through purchasing green electricity certificates, particularly in the absence of integrated facility investments. Another aspect of our Bank’s transformation strategy is to provide the financing our customers need for the integration of technologies developed following the widespread adoption of carbon capture strategies suitable for sectors, such as carbon capture and storage. At Yapı Kredi, we will continue to make progress in our working capital loans and investment loans in line with our current strategies and targets.

 

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