The World Bank
Green Finance Project (P178274)
Appraisal Environmental and Social Review Summary
Appraisal Stage
(ESRS Appraisal Stage)
Public Disclosure
Date Prepared/Updated: 06/29/2023 | Report No: ESRSA02855
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The World Bank
Green Finance Project (P178274)
BASIC INFORMATION
A. Basic Project Data
Country Region Project ID Parent Project ID (if any)
Turkiye EUROPE AND CENTRAL ASIA P178274
Project Name Green Finance Project
Practice Area (Lead) Financing Instrument Estimated Appraisal Date Estimated Board Date
Finance, Competitiveness Investment Project 7/17/2023 8/17/2023
and Innovation Financing
Borrower(s) Implementing Agency(ies)
Türkiye S?nai Kalk?nma Türkiye S?nai Kalk?nma
Bankas? (TSKB), Ministry Bankas? (TSKB), Ministry of
of Treasury and Finance Environment, Urbanization
and Climate Change
Public Disclosure
Proposed Development Objective
The development objective is to support the greening of firms through equity financing and mobilized private capital,
and contribute to the development of green capital markets and climate finance in Türkiye.
Financing (in USD Million) Amount
Total Project Cost 407.00
B. Is the project being prepared in a Situation of Urgent Need of Assistance or Capacity Constraints, as per Bank IPF
Policy, para. 12?
No
C. Summary Description of Proposed Project [including overview of Country, Sectoral & Institutional Contexts and
Relationship to CPF]
The project’s objective will be achieved through two components and an innovative design. The project aims to
simultaneously support (i) firms’ decarbonization and investments in green technologies, (ii) development of the PE
industry through a demonstration green fund, (iii) financial sector diversification and development of firms’ access to
diversified sources of long-term finance, (iv) lowering high corporate leverage, and (v) accelerate financing for the
green transition and enhanced climate action. The idea is to pioneer green private equity investments, therewith
enhancing local green and climate investment capacity and creating markets for private players so that the private
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Green Finance Project (P178274)
sector can take over eventually. By doing so, the project will ultimately support the transition to a low-carbon and
climate-resilient economy, contribute to financial sector diversification and support the development of domestic
sources of long-term finance and capital markets.
Component 1 will support the partial capitalization of a Türkiye Green Fund (TGF) while Component 2 will finance the
associated technical assistance. TGF’s objective will be to support investments in green and greening firms and
promote greening of the private equity industry through establishing a demonstration green fund in Türkiye. The fund
will have a double bottom line mandate, with non-concessional returns and sustainable impact maximization. TGF will
be established as a local PE fund regulated by the CMB, with the IBRD contribution to be channeled through TSKB,
Türkiye’s private development bank, and managed by a fund manager. TGF will be able to support equity and quasi-
equity (mezzanine) direct investments and invest in sub-funds, with a clear Investment Policy Statement, and have all
exit options.
The project will specifically target innovative green or greening firms, primarily SMEs and mid-caps that are already
green or intend to adopt green technologies in priority sectors. Priority sectors will be aligned with those identified in
the CCDR, namely power and energy, transport, forest landscapes, and agriculture. Eligible green firms’ activities will
primarily include renewable energy, energy efficiency, and circular economy adapted products. The Project Appraisal
Document includes a clear definition of green and greening firms for the purpose of this project. An Investment Policy
Statement (IPS) to be developed by TGF will include an eligibility list which will clearly detail the green sectors in
which TGF can invest, in pursuance of the policy mandate - consistent with any green taxonomy the authorities are
establishing, prevailing international taxonomies (such as the EU version), with considerations of local sector
Public Disclosure
development and priority sectors identified in the CCDR. The IPS and eligibility list will be fairly comprehensive to
minimize the risk of greenwashing. Minimum portfolio allocation to specific subsectors can be considered and will be
detailed in the Project Operations Manual (POM). The carbon footprint of the main product or service offering of the
firms will be carefully evaluated, carbon emission reduction potential estimated, and then tracked over the course of
the investment. TGF will also develop its own Green Investment Framework and follow international standards for
impact measurement and disclosure.
The project is aligned with the current Country Partnership Framework (CPF) for Türkiye, approved in July 2017, and
extended through the Program and Learning Review (PLR) in 2020. The project will contribute to the achievement of
CPF/PLR objectives under, respectively, Focus Areas I and II, more specifically enhancing access to finance for
underserved markets and improving competitiveness and employment in selected industries. The project will also
contribute to CPF/PLR objectives under Focus Area III on sustainability as the project aims at supporting firms across
sectors to improve their resource efficiency, sustainability, and green transition. The project also contributes to the
inclusion pillar of the CPF/PLR through its focus on women-inclusive firms. A new SCD for Türkiye is currently being
prepared, structured around growth, inclusiveness, and sustainability. Financial sector themes are embedded in all
three pillars and the project will therefore be directly linked with these SCD themes.
D. Environmental and Social Overview
D.1. Detailed project location(s) and salient physical characteristics relevant to the E&S assessment [geographic,
environmental, social]
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Green Finance Project (P178274)
Climate Change Context: Highly vulnerable to the impacts of climate change, Türkiye can benefit from the accelerating
global trend of investors seeking green investment opportunities. Based on the Country Climate and Development
Report (CCDR), Türkiye needs to prioritize climate mitigation, adaptation, and resilience to ensure sustainable growth.
Investments are particularly urgent in the energy, power, transport, and agriculture sectors given their respective
contributions to greenhouse gas (GHG) emissions, carbon intensity, and vulnerability to climate change. Based on the
CCDR’s outline of a resilient and net zero pathway (RNZP), Türkiye needs to invest $165 bn over 2022–40 in addition
to the $482 bn baseline in the power, residential, and transport sectors. Half of these investments are expected to
come from the private sector, yet green finance is so far falling short of what is required. Increasing appetite by
international investors for green investments are an opportunity for Türkiye to crowd in private capital for achieving
its Intended Nationally Determined Contribution (INDC) targets, initially set at a 21 percent reduction in GHG
emissions from the Business as Usual (BaU) level by 2030 and currently being updated for Paris alignment. The
European Green Deal (EGD) and specifically the Carbon Border Adjustment Mechanism (CBAM), a climate measure
that should prevent the risk of carbon leakage, provide further emphasis on the need for the corporate sectors to
transition towards green to preserve growth potential.
Green Finance to address Climate Change: Türkiye’s corporate sector needs access to affordable long-term finance to
thrive, create jobs and contribute to sustainable economic growth. Corporates need access to long-term financial
instruments to make longer-term business investments and reduce rollover risks. However, given Türkiye’s weakly
diversified financial sector, corporates have relied on debt (predominately bank loans and short-term liabilities) as the
primary source of capital, leading to high corporate leverage and elevated financing vulnerabilities.
Public Disclosure
Overall, the project will have national coverage - potential investee firms will be located in the vicinity of main
business centers in the country. It is anticipated that the Türkiye Green Investment Fund will invest in about 30 firms,
and those will be located in urban and peri-urban areas.
Green Finance for Climate Change: The project will specifically target innovative SMEs that are already green or
intend to adopt green technologies in priority sectors. Priority sectors will be aligned with those identified in the
CCDR, namely power and energy, transport, forest landscapes, and agriculture. Criteria for green will include requiring
alignment with a national or internationally accepted taxonomy and/or requiring ISO standard acquisition by firms to
benefit from the support. The focus on innovative firms ties in with the private equity emphasis – private equity funds
tend to target the most innovative firms given the focus on growth potential. In the case of this project the innovation
lies in the area of greening.
Gender and Finance: Access to long-term finance via diversified sources is even more challenging for SMEs and, within
that group, women-led or managed firms given that financial institutions perceive them as higher risk. In Türkiye, 58
percent of loans require collateral when the business is managed by a woman, versus 38 percent when a business is
managed by a man. Although the situation has recently improved — 69 percent of adults now have an account in
Turkey, up from 57 percent in 2014 — only 54 percent of women have an account, compared with 83 percent of men.
This 29 percent gender gap is roughly three times as large as the average gender gap in emerging economies.
D. 2. Borrower’s Institutional Capacity
The project will be implemented by TSKB for both Components 1 and2. Under Component 1, IBRD will lend to TSKB
(as borrower) and TSKB (in its capacity as sponsor and Limited Partner) will use the funds to partially capitalize a
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Green Finance Project (P178274)
Türkiye Green Fund (TGF), which will in turn provide equity financing to green and greening companies. Component 2
will mainly consist of technical assistance support to TSKB.
TSKB was established in 1950 with the mission of supporting Turkish private sector development. The Bank provides
support for Turkey’s sustainable growth with corporate banking, investment banking and consultancy services
provided to its clients in a broad portfolio. TSKB is the 14th largest bank and the largest development bank by
shareholders equity in Türkiye as of end-2020. TSKB only lends to private companies. The loan portfolio distribution
by leading sector includes electricity generation (38 percent – of which 34 percent renewable), financial institutions
(14 percent), logistics (7 percent), energy distribution (6 percent), metal and machinery (5 percent).
TSKB has been implementing several World Bank financed projects (under old safeguards policies), focusing on
renewable energy financing for solar, wind, hydropower and geothermal energy. Under these projects, TSKB has
established project implementation units including staff responsible for environmental and social issues. The Bank
assessed TSKB’s E&S performance as satisfactory under these projects.
TSKB has an ESMS in place and a dedicated E&S department with a total of 11 environmental and social specialists to
support ESMS implementation, including 2 specialists with OHS expertise. TSKB identifies impacts and manages risks
from own operations via the ISO 14001 Environmental Management System certification.
TGF will be managed by Maxis Private Equity Portfolio Management A.Ş. (Maxis), one of Türkiye’s largest asset
management companies and an affiliated company with TSKB, as the second implementing entity of the Project and
the Fund Manager. Maxis is one of the largest professional fund managers in Türkiye and holds a valid license by
Public Disclosure
Capital Markets Board (CMB) as a fund manager. Maxis will be the General Partner (GP) and Fund Manager of TGF.
Maxis will assume the role of GP through a new entity that Maxis will establish (Maxis-GP) who will be responsible for
establishing TGF in line with the CMB’s regulatory framework, including the registration with CMB, set up contractual
arrangements on behalf of TGF, including Limited Partnership Agreements (LPA) with LPs, and Fund Management
Agreement (FMA) with Maxis. As the fund manager, Maxis will be responsible for investment management from deal
sourcing, investment evaluation and decision (subject to Investment Committee approvals at the execution stage),
portfolio company management, and exit. TGF will have an Investment Committee (IC) composed of private sector
representatives with significant experience in private equity investments. The IC will make direct investment decisions
and decide with majority decision. The IC will be composed of Maxis and TSKB representatives, and representatives of
major LPs where applicable and/or independent private sector representatives, with details to be elaborated in the
Project Operations Manual (POM). Maxis must have three seats in the IC of TGF as required by the CMB regulation.
Risk management needs to be separate from procedures with risks evaluated before and on an ongoing basis after
the investment is approved. Periodic review of fund performance will help minimize the risks of deviating from the
investment mandate.
Maxis will establish an Environmental and Social Management System (ESMS) for TGF and will appoint dedicated E&S
manager with dedicated E&S specialists to oversee E&S risks management of portfolio investments for TGF.
II. SUMMARY OF ENVIRONMENTAL AND SOCIAL (ES) RISKS AND IMPACTS
A. Environmental and Social Risk Classification (ESRC) Substantial
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Green Finance Project (P178274)
Environmental Risk Rating Substantial
Environmental risk rating of the project is classified as substantial. The project is expected to have overall positive
environmental impacts by providing support to innovative green or climate friendly, or genuinely decarbonizing firms.
TGF will prioritize investments in innovative green or greening firms, specifically SMEs and mid-caps, in line with a
clear Investment Policy Statement (IPS). Eligible green firms’ activities will primarily include renewable energy, energy
efficiency, circular economy adapted products, and adaptation finance activities. The main environmental risks of the
TGF (Component 1) relates to the ability of the Fund Manager to implement an ESMS to manage the E&S risks of its
investees’ portfolio in line with the World Bank ESS9 requirements for financial intermediaries. As part of the ESMS,
TGF will conduct screening of eligible firms (SMEs and midcaps) for equity investments. Only those firms whose
business activities are assessed to be of low to substantial environmental and social risks will be eligible for Fund
investments. Firms with high risk activities will not be eligible for TGF investment. TGF will submit an evaluation
report of a proposed equity investments to the Bank for no objection before they are approved as investees of the
Fund under the Project. The TGF will also maintain a list of activities (E&S exclusion list, including a list of potential
subprojects with likely high E&S impacts/risks) that are not eligible for financed by project funds. The key E&S risks
are related to occupational health and safety (OHS), dust, noise, water use, energy use and waste management
resulting from the business activities to be implemented by the investee companies. These risks are expected to be
site specific, temporary and can be readily addressed through implementation of standard mitigation measures and
compliance with national environmental and social laws of Turkiye and the ESF. The overall supported portfolio risk is
thus considered substantial to take into consideration a range of potential investee firms’ activities over the life of
TGF’s investment. Firms with business activities rated as high environmental and social risk will not be eligible for
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financing. Given that Component 2 entails the provision of technical assistance for consultancy services for
establishment of the green investment taxonomy and ESMS , the E&S risk of this component is considered low as it
relates to the provision on consultancy services.
Social Risk Rating Substantial
The social risk rating of the project is classified as Substantial. Overall, the project is expected to have positive
environmental and social impacts as it will support equity investments in innovative green or climate friendly, or
genuinely decarbonizing firms; including women-led or managed firms. The project will target midcaps as well as
Small and Medium Enterprises (SMEs) which traditionally face more barriers in accessing private equity investments.
These investee firms are not expected to have adverse effects on climate or environment; on the contrary, they are
expected to contribute to decarbonization. While large scale major civil works are not expected within the scope of
the project (investee firms will be in operational phase), there may be a need for civil works of moderate scale during
the life of the project. Since the these are private firms, it is expected that land expropriation , restrictions to land use
or involuntary resettlement, as defined under ESS 5, shall not occur under the project. The TGF will support
innovative greening SMEs and midcaps, therefore it is expected that the main social risks will be associated with (i)
labor and working conditions, and occupational health and safety (OHS) in these investee firms; (ii) perceptions
around “greenwashing”; (iii) social inclusion aspects, i.e. access to capital by women-led or women-managed firms, as
they face more obstacles in accessing finance in Türkiye; and, (iv) capacity of TGF to implement ESMS. While
significant risks and impacts on community health and safety are not anticipated at this stage, general community
health and safety risks associated with the business activities of investee firms can be expected. Sexual exploitation
and abuse (SEA) and sexual harassment (SH) risks are assessed as low, and justification for the risk rating in provided
in a SEA/SH risk dedicated section. The project developed a Stakeholder Engagement Plan (SEP) which will assist the
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Green Finance Project (P178274)
project to strengthen outreach to potential investee firms, including those led by women, and also to prevent any
perceptions of “greenwashing”. The SEP includes a grievance mechanism to address and resolve any grievances
associated with the E&S impacts of the project. The project design includes developing taxonomy for green
investments, which will be transparent and agreed with various stakeholders. This should also help manage
perceptions of greenwashing. The project design w includes specific activities and an indicator to measure the
number of women-inclusive firms financed through equity. Lastly, the TGF will establish an ESMS to manage and
address environmental and social risks and impacts. The ESMS will include an E&S Policy, due diligence and risk
categorization procedure, Exclusion List, a requirement for the compliance with national environmental and social
laws, and any applicable ESF ESSs. One of the premises of the ESMS will be TGF's management commitment and
responsibility for the ESMS implementation. The ESMS will be established based on a timeline agreed to by the Bank
and the Borrower, but certainly before the TGF makes any investments. The project will provide support for the
establishment of the ESMS, including capacity building of the TGF for implement ESMS. The TGF will have dedicated
E&S specialists.
B. Environment and Social Standards (ESSs) that Apply to the Activities Being Considered
B.1. General Assessment
ESS1 Assessment and Management of Environmental and Social Risks and Impacts
Overview of the relevance of the Standard for the Project:
The standard is relevant. Overall, the project is expected to have positive environmental and social impacts since will
Public Disclosure
support (i) the greening of firms through equity financing and mobilized private capital, and (ii) the development of
an enabling environment for green and climate finance in Türkiye. The project will support equity investments in
green/climate-friendly firms, and it expected to create more jobs in the greening sectors and specifically support
women-inclusive firms.
The main E&S risks and impacts of the project are associated with the Component 1: Capitalization of the Türkiye
Green Fund (TGF). The TGF will be required to develop and implement an Environmental and Social Management
System (ESMS), in line with ESS9 requirements, which will include an E&S policy, and due diligence and review
procedures which will be applied to all investee firms. The ESMS for the Fund will include documented procedures for
conducting E&S due diligence and for assessing, categorizing and managing E&S risks throughout the transaction
cycle i.e. screening, approval, execution and exit from investee companies. In line with ESS 9 requirements for
financial intermediaries, the main applicable requirements for the Fund’s ESMS are the World Bank Group (WBG)
Exclusion List, E&S exclusion list for the project, the national E&S laws in Türkiye and the ESF ESSs.
Under Component 2, the project will finance technical assistance and implementation support for TSKB. Technical
assistance will support TSKB in setting up TGF and during early implementation. This will include support for the
preparation of TGF’s Green Investment Framework (for screening, appraisal, and monitoring) as well as the
development an ESMS for TGF. No equity investments will be made until TGF has an established ESMSs satisfactory to
the Bank.
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Green Finance Project (P178274)
The TGF will prioritize investments in innovative firms, primarily SMEs and midcaps, that are already green/ climate-
friendly or genuinely decarbonizing. Green firms include any enterprise or project based special purpose vehicle
established to develop or invest in activities that contribute to (i) low energy intensity production, (ii) reduction in
GHG emissions by developing renewable energy power plants or decreasing utilization of non-renewable sources, (iii)
circular economy practices to reduce their or their stakeholders’ natural resource utilization, (iv) reduction in air, soil
and water pollution, (v) more efficient and sustainable use of natural resources, and (vi) increasing resilience to the
impacts of climate change.
Greening firms, i.e., those that cannot yet be considered green but have credible decarbonization plans, will also be
investment targets. SMEs and midcaps in any sector which have/plan to have concrete adaptation and/or
decarbonization plans – aligning with Türkiye’s net zero emissions by 2053, relevant national strategies and
forthcoming green taxonomy – and environmentally and socially sustainable practices to increase their
competitiveness and maintain their climate-resilient growth potential. These firms can either be high GHG emitters or
adopters of industrial good practices in order to compete and extend their market. These companies’ policies and
investments will support them to decarbonize their activities, mitigate and adapt to climate change impacts,
implement circular economy practices, and address environmental issues. The TGF will also target and measure
throughout the Fund investment cycle investments in women-inclusive firms.
The ESS2 requirements will be integrated into the ESMS to be established and implemented by the Fund Manager
and will address any working conditions and OHS risks associated with equity investments in SMEs.
Public Disclosure
The E&S monitoring and reporting: The Bank will review and approve the ESMS to be prepared for the TGF. It will also
review and approve an initial set (as defined in the ESCP) E&S Due Diligence reports for equity investments. The TGF
will also submit to the Bank semi-annual E&S Performance reports. The TGF will hire qualified E&S specialists to
implement the ESMS.
One of the key risks relates to meaningful and effective stakeholder engagement, public and beneficiary outreach,
and perceptions of greenwashing. A core part of the project design will focus on establishing an effective green
investment framework, transparent sharing of information in timely, clear and accessible manner and format, and an
inclusive process of participation and consultation for all disadvantaged firms (including women inclusive firms) and
other interested parties. For this, the TSKB prepared a SEP in a participatory manner. It includes a grievance
mechanism to address complaints about environmental and social issues in the project. The TSKB prepares an
Environmental and Social Commitment Plan (ESCP). The ESCP sets out the activities to be carried out during project
implementation and could be adjusted during the project cycle in line with the evolution of environmental and social
risks and impacts. The SEP will be disclosed d prior to project appraisal and consulted upon with stakeholders.
ESS10 Stakeholder Engagement and Information Disclosure
TSKB prepared a draft SEP for the project with consultation activities at key ministerial, business association, investor
and firm stakeholder level.
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Green Finance Project (P178274)
The SEP identifies and analyzes key stakeholders (i.e. affected parties, other interested parties and disadvantaged
and vulnerable groups) and describe the process and modalities for sharing information on the project activities,
incorporating stakeholder feedback into the project design and implementation and reporting and disclosure of
project documents. The SEP also integrates proposed citizen engagement activities and indicators.
During project preparation a detailed stakeholders mapping has been carried out. The main stakeholders are be
SMEs and midcaps who will potentially benefit from the project, and the workers in these firms, women-led or
managed firms, potential investors to the TGF, and communities in the vicinity of investee firms. Additionally,
disadvantaged types of direct beneficiaries include women- led or managed firms, who may face more barriers to
access finance. The project will target these firms in order to narrow the gender gap in access to finance.
Strategies for information disclosure and consultations will include both digital technologies, such as virtual meetings
and focus groups, social media and TSKB and TGF webpages, as well as in-person modalities of stakeholder
engagement. TSKB prepared draft SEP and will disclose it (in Turkish and English languages) before project appraisal;
and carry out stakeholder consultations on the project design and environmental and social aspects of the project.
The TSKB already has an external communication mechanism as a part of their Sustainability Management System.
TSKB has publicly disclosed on its website its broader Sustainability Policy, as well as the other policies and
procedures that make up its ESMS. TSKB also discloses on its website the risk categorization of the projects which are
assessed through its ESMS and approved. For high-risk projects, TSKB discloses the key environmental and social risks
assessment and management documents on its website.
Public Disclosure
On an annual basis, TSKB publishes and discloses a Sustainability Report, covering an assessment on its
environmental and social performance and compliance based on the principles in its Sustainability Policy (which can
be accessed at https://www.tskb.com.tr/en/sustainable-banking/tskb-and-sustainable-banking/our-sustainability-
reports).
TSKB has a grievance mechanism and procedures in place to receive complaints from both internal and external
stakeholders via their website, phone call or e-mail (these can be reached at https://www.tskb.com.tr/en/about-
us/tskb-contact-form and https://www.tskb.com.tr/en/contact). This grievance mechanism has been satisfactorily
implemented under other World Bank financed projects. The grievance mechanism is accessible to various
stakeholders, and it can be used to submit feedback, complaints and/or suggestion by all stakeholders. Additional
measures to enhance the GM to handle sensitive SEA/SH complaints shall be included during project implementation.
For complaints submitted in writing, a "Confirmation Letter" is issued with the date of receipt of the complaint and
the signature of the relevant unit head. After complaints are received, a "Complaints Statement" is issued to record
the subject within the grievance system. After assessment and investigation of the complaint, an Evaluation and
Conclusion Statement is communicated to the submitter of the complaint within 30 days after the application.
After TGF’s formal establishment, the TGF will establish a grievance mechanism to manage and address E&S
concerns and grievances by stakeholders. Detailed GM procedures for stakeholders and project workers will be
presented in the revised SEP including departments responsible to receive and address grievances, different
means/channels of receiving grievances (e.g. e-email, webpage, phone number, mail, as well as a channel for
handling SEA/SH complaints sensitively and confidentially) and stipulated time frames to address and respond to
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grievances. A database to log complaints shall be established. The ESCP includes requirements for additional GM
procedures which need to be completed and implemented during project implementation.
The SEP includes a budget and strategies to report back to stakeholders during project implementation. In addition,
the ESCP includes any additional GM procedures which would need to be completed and implemented during
project implementation.
The SEP will be updated, as needed, during project implementation.
B.2. Specific Risks and Impacts
A brief description of the potential environmental and social risks and impacts relevant to the Project.
ESS2 Labor and Working Conditions
This standard is relevant. The project will include direct and contracted workers. Community and primary supply
chain workers are not anticipated to be engaged within the scope of this project.
Direct workers in this project are employees of TSKB engaged to support the core activities project under the
Component 1. Contracted workers are: (i) workers of the Fund Manager firm (Maxis) engaged to manage the TGF; (ii)
Employees of consulting firms engaged to provide technical advice under the Components 1 and 2.
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ESS2 requirements will apply to the direct and contracted workers. Working conditions and OHS requirements in line
with ESS2 will also be integrated to the TGF’s ESMS, to ensure that labor risks associated with equity investments in
the investee firms are managed consistent with ESS2.
Assessment of existing labor management procedures: TSKB has a set of human resources policies and procedures in
place which meet the requirements of ESS2 and national labor and OHS legislation. The TSKB's human resource
policies define employees’ rights such as compensation and wages, working hours, overtime hours and payment,
leaves (maternity, annual, sick, unpaid), recruitment, training, promotions, severance payment, disciplinary
measures, non-discrimination and equal opportunity. The policies prohibit forced labor and the minimum working
age at TSKB is 18 years. Human resources procedures prohibit harassment including sexual harassment and provide
for mechanisms to report such cases. Human resources policies are accessible to employees on the TSKB’s intranet
webpages sites.
The TGF will be established during project implementation. In the ESCP, the Borrower will commit that the terms
and conditions of employment of the TGF Fund Manager’s workers will be consistent with the requirements of ESS2.
In the ESCP, the Borrower will commit that any consulting firms directly hired under the project to carry out the core
project activities, will be engaged under the terms and conditions as required by the national labor law and ESS2.
The ESCP will require the TSKB and the TGF Fund Manager to ensure that national labor and OHS laws, and ESS2 are
applicable throughout the life of project to its own employees, and and any contracted workers engaged under the
project.
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Occupational health and safety: TSKB’s facilities are equipped with fire safety instruments as required by local
regulation and there is an emergency action plans in place. The staff receives routine training on fire safety and first
aid. Regular drills are conducted and reported. TSKB holds OHSAS 18001 certification and reports to its management
on a yearly basis on the implementation. TSKB have incident reporting procedures and as per national OHS Law notify
the Ministry of Labor within 3 business days about OHS related incidents.
The banking regulation in Türkiye requires all banks to establish grievance mechanism for customers and employees.
In line with ESS2 on Labor and Working Conditions, TSKB has an internal employee grievance mechanism. Each
grievance is be processed according to internal employee grievance procedures. These grievance mechanism
procedures will be described in detail in the SEP. The grievance mechanism for employees is accessible via intranet
webpages, and employees can also lodge grievances to the human resources departments. In addition, TSKB has
Code of Ethics applicable to its employees and associated Code of Ethics Committee, where employees can raise
workplace ethics concerns, including SEA/SH.
Overall, it is assessed that TSKB’ labor management procedures, including procedures relating to working conditions
and terms of employment, nondiscrimination and equal opportunity, grievance mechanisms and OHS meet the
requirements of ESS2.
The current Turkish Labor Law (No.4857) is to large extent consistent with ESS2 requirements. Turkey ratified all the
four Core ILO Conventions and OHS ILO Conventions. The main gap with ESS2 is related to the requirement for the
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grievance mechanism for workers. However, TSKB has such mechanisms in place. The ESCP will require that the TGF
Fund Manager also provide grievance mechanism for its employees. Forced labor is prohibited by the Turkish
Constitution.
In line with ESS9, TGF, through its ESMS, will apply relevant requirements of ESS2 to investee firms. Exclusion Lists
will include prohibition of financing of activities involving forced and child labor and screening, due diligence and
monitoring of potential investee firms will include compliance with national labor and OHS laws, performance on
labor and working conditions, OHS and SEA/SH risks in workplaces. Legal agreements between the TGF and investee
SMEs will include requirements for compliance with national labor and OHS laws, ESS2 OHS requirements and
prevention of SEA/SH. Labor and working conditions risks and impacts will be identified, assessed and addressed
within the scope of the TGF’s ESMS in accordance with relevant ESS2 requirements.
ESS3 Resource Efficiency and Pollution Prevention and Management
ESS 3 is relevant. As the main E&S risks of the project involves equity investments into SMEs and midcaps, potential
risks related to investee company project activities such as air emissions, water releases, energy efficiency and waste
management at the sub-project level will be mitigated through implementation of The TGF’s ESMS. The ESMS which
is fully discussed under ESS9, will include all the necessary processes and procedures to ensure site specific
considerations related to resource efficiency, pollution prevention and management are addressed and managed.
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Firms with business activities which might cause significant pollution impacts, will be rated as High and thus, will be
considered ineligible for financing.
ESS4 Community Health and Safety
ESS 4 is relevant. The implementation of investee firm business activities might cause impacts associated with the
community health and safety. Such impacts will be identified, assessed and addressed within the scope of the TGF’s
ESMS in accordance with ESS4 requirements. Firms with business activities which might be associated with significant
community health and safety impacts rated as High risk will be considered ineligible for financing.
ESS5 Land Acquisition, Restrictions on Land Use and Involuntary Resettlement
This standard is relevant . While activities which may cause restrictions on land use, land acquisition and/or
involuntary resettlement are not expected at the stage, any ESS5 related impacts will be identified, assessed and
addressed within the scope of the TGF’s ESMS in accordance with ESS5 requirements. TGF investee firms will be
private entities and thus will not be able to carry out any land expropriation. Any land purchase will be willing buyer-
willing seller market based transaction. Firms with business activities which may cause significant involuntary
resettlement will be rated as High risk and thus will be considered ineligible for financing.
Public Disclosure
ESS6 Biodiversity Conservation and Sustainable Management of Living Natural Resources
This standard is relevant. Activities which might adversely impact biodiversity conservation and sustainable
management of living natural resources will not be eligible for financing within the scope of implementation of
existing firm business activities in Turkiye. However, investee firms business activities that may have impacts on
biodiversity will be identified, assessed and addressed within the scope of the TGF’s ESMS in accordance with ESS6
requirements. Firms with business activities which might be associated with significant biodiversity impacts rated as
High risk will be considered ineligible for financing.
ESS7 Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities
This standard is not relevant. There are no known Indigenous Peoples in Türkiye which meet the definition of ESS7.
ESS8 Cultural Heritage
This standard is relevant. Sub-projects investments having significant impacts on cultural heritage will not be
eligible for financing within the scope of the project. Investee firms business activities that may have impacts on
cultural heritage will be identified, assessed and addressed within the scope of the TGF’s ESMS in accordance with
ESS 8 requirements. Firms with business activities which might be associated with significant cultural heritage
impacts rated as High risk will be considered ineligible for financing.
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The World Bank
Green Finance Project (P178274)
ESS9 Financial Intermediaries
This standard is relevant. The project will require that the TGF establish and implement a satisfactory ESMS to
manage E&S risks and impacts of its investee companies.
TSKB, the borrower, who will be establishing TGF already has in place Sustainability Policy and an ESMS in place for
managing the E&S risks of their financing activities. The highest level of direct responsibility for ESMS is the Board
Members of TSKB via the Sustainability Committee. The Committee consists of three Board Members, the CEO and
two Executive Vice Presidents to manage sustainability activities. The TSKB ESMS is broadly in line with ESS9
requirements. Under component 1, TSKB will transfer the proceeds of the World Bank loan to the Türkiye Green Fund
(TGF). The TGF will be managed by the Fund Manager – Maxis – an affiliated company with TSKB operating as a
private equity fund. As TGF will be a newly established fund, the Fund Manager will be required to develop and
implement an ESMS in line with World Bank ESS 9 requirements for financial intermediaries to manage the E&S risks
of the Fund.
The TGF’s ESMS will be required to have the following elements: 1. Environmental and Social Policy; 2. Exclusion List;
3. Environmental and Social Risk Evaluation Procedures in the investment process including: a) Environmental and
Social Due Diligence and Risk Screening; b) Environmental and Social Risk Categorization; c) Identification and
Public Disclosure
preparation of appropriate site-specific environmental and social assessment (ESA) instruments, such as ESMP, to
address site-specific impacts as well as impacts of associated facilities (if any); d) Requirement for Environmental and
Social Action Plan (ESAP) preparation; e) Integration of the ESAP into the investment contract between the TGF and
SMEs; 4. Environmental and social monitoring and semi-annual reporting; 5. Roles and responsibilities for ESMS
implementation at TGF; 6. Senior Management Commitment; 7. Environmental and social training process; 8.
External and internal communication 9. Internal control and management review.
The TGF's ESMS, of a quality acceptable to the World Bank, will be prepared and established before any TGF
investments are made. The timelines for the ESMS establishment are included in the ESCP. In line with ESS9, the E&S
policy and summary of ESMS procedures shall be publicly disclosed.
The project will include support for the preparation of TGF’s Green Investment Framework (for screening, appraisal,
and monitoring) as well as the development of an impact measurement framework, including developing an
environmental and social risk management system for TGF.
TGF will develop its own Green Investment Framework and follow high standards for impact measurement and
disclosure. The framework will need to include ESG considerations with net-zero KPIs. TGF should seek a Second Party
Opinion on the framework and make it publicly available and report transparently on its impact. Impact should be
measured according to a formal impact management and measurement system - before investment and regularly
after investment. TGF would report more broadly than the typical PE fund, including on impact metrics (such as GHG
emission reduction), portfolio composition etc. (except for commercially sensitive data).
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The World Bank
Green Finance Project (P178274)
TGF will have an Advisory and an Investment Committee. The Advisory Committee would be responsible for the
Fund’s overall policy but would not have any role regarding individual investment or exit decisions. Such decision will
be made by the Investment Committee, which will need to decide with majority decision. The limited partners
(investors) including the borrowing party (TSKB) can in principle be part of the Advisory Committee, but the
Investment Committee should be constituted by representatives from the general partners/fund managers and
independent experts with experience in PE and green investments. TGF will hire qualified environmental and social
specialists to advise the Fund Manager on the ESMS implementation, and carry out E&S due diligence and manage
the environmental and social risks of the proposed TGF investments.
B.3 Other Relevant Project Risks
NA
C. Legal Operational Policies that Apply
OP 7.50 Projects on International Waterways No
OP 7.60 Projects in Disputed Areas No
Public Disclosure
B.3. Reliance on Borrower’s policy, legal and institutional framework, relevant to the Project risks and impacts
Is this project being prepared for use of Borrower Framework? No
Areas where “Use of Borrower Framework” is being considered:
The Use of Borrower Framework is not being considered.
IV. CONTACT POINTS
World Bank
Contact: Gunhild Berg Title: Lead Financial Sector Specialist
Telephone No: 5258+87809 Email: gberg@worldbank.org
Borrower/Client/Recipient
Borrower: Türkiye S?nai Kalk?nma Bankas? (TSKB)
Borrower: Ministry of Treasury and Finance
Implementing Agency(ies)
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The World Bank
Green Finance Project (P178274)
Implementing Agency: Türkiye S?nai Kalk?nma Bankas? (TSKB)
Implementing Agency: Ministry of Environment, Urbanization and Climate Change
V. FOR MORE INFORMATION CONTACT
The World Bank
1818 H Street, NW
Washington, D.C. 20433
Telephone: (202) 473-1000
Web: http://www.worldbank.org/projects
VI. APPROVAL
Task Team Leader(s): Gunhild Berg
Practice Manager (ENR/Social) Varalakshmi Vemuru Cleared on 14-Jun-2023 at 12:41:4 EDT
Public Disclosure
Jun 29, 2023 Page 15 of 15