July Sustainability Bulletin

1. First EBRD Loan to Türkiye’s Cement Sector to Boost Low-Carbon Investments

Since 2009, the European Bank for Reconstruction and Development (EBRD) has invested over €19.8 billion through 442 projects and trade finance limits, primarily in the private sector. The EBRD has now provided its first loan to Türkiye’s cement sector to promote low-carbon investments.

The EBRD has granted Çimsa a €25 million loan to finance its decarbonization investment program. The loan proceeds will be used to fund the installation of a solar power plant, a waste heat recovery facility, and resource efficiency processes, along with technology upgrades at Çimsa’s Eskişehir plant.

EBRD Türkiye Vice President Erdem Yaşar expressed confidence that the project would set a precedent in the sector, noting that cement is one of the most carbon-intensive industries. Çimsa’s long-term strategy, combining green transformation and global growth, has seen its carbon reduction commitments validated by the Science Based Targets initiative.

For more information: https://www.ebrd.com/news/2024/first-ebrd-loan-to-trkiyes-cement-sector-to-boost-lowcarbon-investments.html

2. Yapı Kredi Sustainable Syndicated Loan

Yapı Kredi has secured a $936 million sustainable syndicated loan with the participation of 46 banks from 25 countries. This marks Yapı Kredi’s first syndicated loan under its Sustainable Finance Framework.

Unlike traditional financial products, sustainable finance instruments and green loans enhance the financial sector’s reputation by providing not only economic but also ecological benefits. Moreover, transparent governance builds investor confidence and ensures preparedness for potential regulatory changes. Regular repayment of sustainable finance debts is crucial for countries to remain resilient to economic crises and ensure the continuity of development plans.

Yapı Kredi CEO Gökhan Erün emphasized the bank’s commitment to sustainable finance, noting that a $650 million subordinated bond issue in early 2024 received over $2.4 billion in demand from overseas investors. The $500 million additional Tier 1 bond issuance in April also saw more than double the demand. Erün highlighted that, including the recent $936 million sustainable syndicated loan, Yapı Kredi has sourced approximately $7 billion from abroad in the past year. The loan was secured in two currencies: $442.5 million and €454.5 million, with a maturity of 367 days and costs set at SOFR + 2.50% and Euribor + 2.25%, respectively. The syndication was co-coordinated by Abu Dhabi Commercial Bank and Emirates NBD, with sustainability coordination by First Abu Dhabi Bank, ING, Standard Chartered Bank, and Sumitomo Mitsui Banking Corporation.

For more information: https://www.aa.com.tr/tr/sirkethaberleri/finans/yapi-krediye-936-milyon-dolar-surdurulebilir-sendikasyon-kredisi/687911

3. Ülker Bisküvi Sustainable Bond Issuance

Ülker Bisküvi has issued a $550 million seven-year bond to international markets, marking Türkiye’s first sustainability-linked bond issuance of 2024.

According to the company’s announcement, J.P. Morgan Securities PLC, Merrill Lynch International, Emirates NBD Bank PJSC, HSBC Bank PLC, and Rabo Securities were mandated for the bond issuance, which attracted over 100 international investors from 20 countries. The company plans to use the funds to refinance its existing Eurobond financing. The bond transaction is expected to close upon signing the final agreements and the approval of the issuance document by the Capital Markets Board in July.

For more information: https://www.aa.com.tr/tr/sirkethaberleri/gida/ulker-biskuviden-550-milyon-dolarlik-tahvil-ihraci/688662

4. “Eco-Friendly” Boats in Muğla Akyaka Kadın Azmağı

In 2016, a project was launched to convert tour boats in the Akyaka Kadın Azmağı area of the Gökova Special Environmental Protection Region to electric, eco-friendly boats. Former Minister of Environment, Urbanization, and Climate Change Mehmet Özhaseki stated that the boats were made to operate on solar energy or by charging, resulting in cleaner water and air. Minister Özhaseki emphasized that the project supports the 2053 Net Zero Emissions and Green Development goals and highlighted the significance of protecting the region’s biodiversity and environmental values. The electric boats have minimized environmental and noise pollution in the area.

For more information: https://181.csb.gov.tr/cevre-sehircilik-ve-iklim-degisikligi-bakani-mehmet-ozhaseki-cevre-dostu-elektrikli-tekneler-ile-suyumuz-da-havamiz-da-daha-temiz-daha-berrak-haber-287913

5. Watsons Türkiye Publishes Its First Sustainability Report

Watsons Türkiye has published its first sustainability report, covering all activities under the “Watsons Goodness Movement.” The report highlights the company’s efforts to reduce its carbon footprint and increase its sustainable product category.

Watsons Türkiye General Manager Mete Yurddaş stated that responsible corporate practices and working towards a sustainable future are part of the company’s mission. The report, which emphasizes continuous improvement, aims to present their efforts transparently and honestly.

The company aims to use at least 20% recycled plastic content in its plastic packaging by 2025 and reduce greenhouse gas emissions by 50.4% compared to 2018 levels by 2030.

For more information: https://www.dunya.com/sirketler/watsons-turkiye-ilk-surdurulebilirlik-raporunu-yayimladi-haberi-733918

6. Microsoft Purchases Carbon Credits for Sustainable Agriculture Practices

Boston-based company Indigo Ag, which provides sustainable agriculture and biological solutions, has announced a new carbon removal purchase agreement with Microsoft. Indigo will provide Microsoft with 40,000 tons of carbon credits generated by promoting regenerative farming practices among U.S. farmers. These practices include techniques to improve soil fertility and health, reduce carbon emissions, enhance ecosystems, and improve farmers’ livelihoods.

Founded in 2013 to support environmental sustainability improvements among farmers, Indigo Ag launched its carbon program in 2019. The system developed by Indigo has reportedly removed over 340,000 tons of emissions and saved over 19 billion gallons of water. Indigo Ag CEO Dean Banks highlighted Microsoft’s leadership in corporate climate action and the importance of this agreement.

This announcement contributes to Microsoft’s growing portfolio of carbon removal purchases and is part of the technology giant’s initiative to become carbon negative by 2030. This initiative includes projects based on direct air capture (DAC), ocean-based carbon removal, biochar, and various large-scale nature-based carbon removal agreements.

For more information: https://www.esgtoday.com/microsoft-adds-regenerative-agriculture-carbon-credits-to-climate-portfolio/

7. EU Carbon Removal Certification System

In line with the Paris Agreement, which aims to combat global warming, the EU continues to make significant strides towards its goal of achieving net zero emissions by 2050.

In November 2022, the European Commission proposed an EU-wide carbon removal certification scheme to promote and accelerate effective and high-quality carbon removal activities. This proposal was approved by the Parliament on April 10, 2024.

Carbon removals, which involve extracting carbon dioxide from the atmosphere and storing it permanently, include activities like direct air capture and storage, carbon farming to enhance soil and vegetation carbon retention, and storing carbon in long-lasting wood-based products.

Certification ensures that carbon removal activities are accurately measured, and that carbon is stored for as long as possible. This harmonized certification is expected to facilitate funding for carbon removal activities from both public and private sources. As outlined in the plan, to qualify for certification, carbon removals must be capable of storing carbon for several centuries. Products must keep carbon out of the atmosphere for at least 35 years, and carbon farming activities must be sustained for at least five years.

The EU’s carbon removal certification system will be implemented in two stages. First, adopting high-quality standards and second, approving certification rules necessary for measuring, monitoring, reporting, and verifying carbon removals. These steps highlight the EU’s concrete and committed approach to tackling carbon removal and climate change.

For more information: https://www.europarl.europa.eu/topics/en/article/20231109STO09918/carbon-removals-extra-measures-to-reach-climate-neutrality

8. EU Ecodesign Regulation (ESPR)

The Ecodesign for Sustainable Products Regulation (ESPR), published in the EU Official Journal on June 28, 2024, is seen as a significant step by the European Union (EU) towards environmental sustainability and circularity.

The ESPR, which sets out rules for the sustainable production and consumption of products, was created due to the absence of comprehensive regulations and the fact that up to 80% of environmental impacts are determined at the design stage. The regulation aims to integrate environmental sustainability aspects into a product’s features and processes along the entire value chain.

ESPR stands out as a framework legislation that includes requirements for conformity assessment procedures, performance measurement concerning energy consumption or other parameters, and the use of online tools to calculate product performance. Under the regulation, all products in the internal market must comply with minimum ecodesign requirements. ESPR also introduces a digital product passport system to provide information on product sustainability, durability, and repairability. This system aims to help businesses and consumers make more informed choices and increase transparency regarding the environmental impacts of products.

Moreover, the regulation includes measures to prevent the destruction of unsold consumer goods. Large companies must provide information about the volume of unsold products sent for re-manufacturing, reuse, or recycling rather than disposal. The regulation also allows for the complete ban on the destruction of unsold products in certain categories. Additionally, ESPR enables member states to introduce incentives, such as green taxation, to encourage consumers to make sustainable choices when sustainable products are not sufficiently affordable.

For more information: https://commission.europa.eu/energy-climate-change-environment/standards-tools-and-labels/products-labelling-rules-and-requirements/sustainable-products/ecodesign-sustainable-products-regulation_en

9. European Central Bank’s Corporate Bond Portfolio

On June 25, 2024, the European Central Bank (ECB) announced the release of several financial disclosures providing information on the carbon footprint and climate risk exposure of its portfolios. The ECB reported that the carbon intensity of its €367 billion corporate bond portfolio decreased by 35% from 2021 to 2023.

Following the launch of its climate action plan in 2021, the ECB’s second climate-related disclosures aim to increase transparency, further integrate climate change issues into monetary policy, improve risk assessment tools, and enhance the external assessment of climate risks.

The ECB noted that most of the emissions reductions resulted from issuers of securities becoming more carbon-efficient, with about one-fifth of the reduction in 2022 and 2023 attributable to efforts to redirect reinvestments to issuers with better climate performance. ECB President Christine Lagarde stated that the ECB would continue to reduce the carbon footprint of its corporate portfolios along a path supporting the Paris Agreement’s goals but would rely on issuers to fulfil their emissions reduction commitments, especially for public sector assets.

For more information: https://www.esgtoday.com/ecb-reports-35-emissions-reduction-in-e367-billion-corporate-bond-portfolio/

10. Oklahoma Court Decision on Anti-ESG Law

In 2022, Oklahoma passed the Energy Discrimination Elimination Act (EDEA), which prohibits state agencies from doing business with financial institutions that boycott traditional energy companies. The law requires the state treasurer to identify these financial institutions and distribute the list to state agencies. State agencies are then prohibited from engaging with these institutions and must divest from any publicly traded securities of these institutions, with certain exceptions.

In May 2024, an Oklahoma court temporarily blocked the implementation of the EDEA. The lawsuit, filed by a taxpayer and a beneficiary of the state retirement plan, argued that the EDEA contains unconstitutional provisions and sought a temporary injunction against its enforcement. Oklahoma District Court Judge Sheila Stinson issued the injunction, finding that the claims of constitutional violations and vagueness might be valid. The court temporarily barred the state treasurer, employees, and representatives from enforcing the EDEA provisions. The court will decide in later proceedings whether to permanently block the EDEA.

For more information: https://oklahoma.gov/treasurer/energy-discrimination-act.html

11. Canada Enacts New Corporate Greenwashing Rules

The Canadian Government has enacted rules to prevent companies from making false or misleading claims about the environmental impact of their products or activities, known as greenwashing. The new rules, based on amendments proposed in the Fall Economic Statement of November 2023, are part of the Canadian Competition Act.

Under the Deceptive Market Practices section of the Act, it is prohibited to make public statements about the environmental benefits of a product unless they are supported by adequate and proper testing. Companies that violate these rules may face penalties of up to $10 million for the first offense and $15 million or three times the benefit gained from the deceptive conduct, or 3% of annual revenue, whichever is higher, for subsequent offenses.

Several law firms have warned that these new regulations could pose significant risks for companies. They stated that “the increased risk could weaken not only the ability of companies to communicate their environmental initiatives and commitments but also potential initiatives and commitments.”

For more information: https://www.esgtoday.com/canada-passes-new-corporate-greenwashing-rules-into-law/