Yapi ve Kredi Bankasi : Yapı Kredi Green Bond Allocation and Impact Report 2021

Green Bond Allocation and Impact Report 2021

Contents

Table of Contents
1. INTRODUCTION ..........................................................................................................................................	1
1.1 YAPI KREDI AT A GLANCE .....................................................................................................................................	1
1.2 SUSTAINABILITY AT YAPI KREDI .......................................................................................................................	2
1.3 YAPI KREDI SUSTAINABILITY MANAGEMENT SYSTEM ...............................................................................	2
1.4 CONTRIBUTION TO UN SDGS ..............................................................................................................................	3
2. YAPI KREDI'S INAUGURAL GREEN BOND ................................................................................................	4
3. ALLOCATION AND IMPACT OF PROCEEDS ...............................................................................................	4
4. CALCULATION METHODOLOGY .................................................................................................................	5
5. EXTERNAL REVIEW ....................................................................................................................................	6

1. Introduction

1.1 Yapı Kredi at a glance

Yapı ve Kredi Bankası A.ẞ. (hereinafter referred to as "Yapı Kredi"), established in 1944 as Turkey's first retail focused private bank with a nationwide presence, is the 3rd largest private bank in Turkey with total assets worth TRY 591.2 billion as the end of first nine months of 2021. Yapı Kredi has a strong shareholding structure which ensures sustainable and profitable growth. Yapı Kredi's 9.02% of the shares are directly owned by Koç Holding A.ẞ. and 40.95% of the Bank's shares are owned by Koç Financial Services, which is 100% owned by Koç Group. Yapı Kredi has always played a pioneering role in the banking sector and has been sustainably strengthening its market positioning through a customer-centric approach and focus on innovation. Targeting to constantly increase its contribution to the financing of the Turkish economy with its customer-centric approach, Yapı Kredi provides service to its customers with 15,795 employees and 826 branches covering all regions of Turkey. Total cash and non-cash loans of the Bank increased by 21% and reached TRY 465 billion in 9M21, while its total assets were worth TRY 591 billion.

Yapı Kredi is active in retail banking (comprising of card payment systems, individual banking, business banking, private banking and wealth management) as well as corporate, commercial banking and SME banking. The Bank's operations are supported by domestic subsidiaries engaged in asset management, brokerage, leasing and factoring as well as international banking subsidiaries in the Nederland, Malta and Azerbaijan.

Yapı Kredi aims to ensure long-term sustainable growth and value creation for all stakeholders, and become the first choice of customers and employees. Yapı Kredi's strategy is being a customer centric commercial bank driven by cutting edge technology and committed workforce, delivering responsible growth. In its activities Yapı Kredi espouses a corporate governance concept built on integrity, responsibility and accountability, and operates on its nine values; sustainability, customer centricity, being united, competitiveness, target orientation, resilience, agility, innovation, and productivity.

1

1.2 Sustainability at Yapı Kredi

As one of the leading financial institutions in Turkey, Yapı Kredi believes it has a role to play in low carbon transition and a sustainable future for the society. Sustainable finance, and combatting climate change and environmental degradation are two of the four major pillars of Yapı Kredi's sustainability strategy. In that respect, guided by the United Nations Sustainable Development Goals (SDGs), Yapı Kredi aims to increase and expand its sustainable product portfolio that drive innovation, sustainability and profit, strengthen green industries and manage its environmental and social impacts. Yapı Kredi supports its clients with its financial solutions to facilitate implementation of sustainable business models and transition strategies.

Yapı Kredi believes economic sustainability cannot be achieved without social and environmental sustainability, therefore its sustainability approach is integral and comprehensive. While managing its impact on environment and society, Yapı Kredi also aims to contribute to sustainable development of society and transition to a low carbon economy.

Yapı Kredi embraces a distinctive business model that aims at sustainable profitability and the long-term social and economic benefit of communities it serves, striving to create value for all stakeholders in line with its sustainability approach.

For this purpose, Yapı Kredi employs its five core capitals. These five basic resources, that form the foundation of the Bank's achievements and that are affected by the Bank's operations, products and services, are its Financial Capital, Human Capital, Social Capital, Intellectual Capital, and Natural Capital. Policies, practices, performance results and goals associated with Yapı Kredi's material issues are detailed under the following five main groups.

Financial Capital	Human Capital	Social Capital	Intellectual Capital	Natural Capital
• Robust equity		• Competent and		• Long-term		• Efficient and		• Efficient energy
• Long-term		talent		stakeholder		secure information		and emission
financial stability		professionals		relations based on		technologies		management
• Sustainable		• Participative and		mutual value		• Innovative strength		• Resource
profitability		pluralistic		creation		• Efficient processes		efficiency
• Ethical and principal		workplace		• Contribution to		• Academic		• Environment
banking		• Inclusive and		social welfare		collaborations		friendly products
• Transparent and		creative working		• Unconditional				and services
innovative corporate		environment		customer
governance		• Attaching		satisfaction
• Improved access to		importance to
financial services		occupational
through sustainable		health and safety
product portfolio

1.3 Yapı Kredi Sustainability Management System

Yapı Kredi acts with the purpose of creating sustainable value for its customers, shareholders, employees and all other stakeholders, and integrates this approach across its entire business models and regularly engages with its stakeholders to understand their needs and expectations from the Bank. Yapı Kredi's stakeholders are including but not limited to customers, employees, investors, regulators, civil society and academia.

Yapı Kredi evaluates the impact of its sustainability performance on its business outcomes, and shapes its business strategy in accordance with the requirements arising from its sustainability principles. In this context, Yapı Kredi leverages the expertise of Koç Holding, its main shareholder, in the field of sustainability. The positive momentum of the sustainability performance is secured through measuring, monitoring, evaluation and reporting activities, which are continuously developed upon in terms of scope and efficiency.

2

The performance in this area is also shared with stakeholders through transparent and effective communication channels.

The Yapı Kredi Sustainability Management System (SMS) has been developed to ensure continuous monitoring and improvement of the sustainability performance. The system evaluates all business activities from a holistic perspective, and monitors them in accordance with relevant policies and procedures. At Yapı Kredi, as sustainability is one of the strategic areas that the Bank focuses on, the Bank considers ESG factors in its corporate governance strategy. Yapı Kredi embeds sustainability in its day to day business cycle within the scope of SMS. Sustainability is incorporated in decision making mechanisms through SMS, while the same is true also for defining associated duties and responsibilities.

Within the scope of SMS, sustainability activities are followed up holistically within the framework of policies and procedures. Within SMS, actions are taken aimed at the environmental and social impacts of the Bank's both operational and banking activities. All performance results within the scope of SMS are reviewed semi-annually by the Sustainability Committee. Integrated reports are published annually and are shared with all stakeholders of the Bank.

1.4 Contribution to UN SDGs

Yapı Kredi believes sustainable economic development cannot be achieved without social and environmental development. Guided by the United Nations (UN) Sustainable Development Goals (SDGs) adopted in 2015 by all United Nations Member States, Yapı Kredi seeks to provide innovative financial services and products to solve global challenges. To that end, Yapı Kredi's Sustainability Committee chaired by a Board Member, oversees Yapı Kredi's overall sustainability strategy.

Financial Capital

Intellectual Capital

Human Capital

Relationship and Social Capital

Natural Capital

Material Issue		SDGs

Business ethics Financial performance Management of legal and regulatory environment Risk management

ESG integration into financials and sustainable product portfolios

Digitalization

Data security

Training and development

Employee health and safety

Employee engagement

Customer experience

Customer privacy

Responsible product offering

Environmental footprint

3