Environmental And Social Risk Evaluation

Under its Sustainability Policy framework, TSKB launched a well-structured Sustainability Management System in 2005 which has been certified with ISO 14001 since 2007.

Under SMS, TSKB has a particular procedure to manage environmental and social risks arise from lending activities. Within the procedure, TSKB developed an environmental and social risk evaluation tool on voluntary basis called ERET in 2005 (which is the first implementation of such a model in Turkey), in order to identify and manage external risks related with the lending activities of TSKB.

ERET is developed by TSKB’s experienced engineering team, the first and only engineering team in Turkish finance industry, which works in coordination with the Financial Analysis Department on project’s risk analyses.

What is ERET?

ERET is a detailed questionnaire to determine environmental and social risks of both the clients and their projects which is applied to all project finance and corporate loans regardless of scope, size, sector and loan amount of investment projects.

ERET comprehensively evaluates environmental and social risks under forty-five separate headings which can be listed as;

Environmental Social
Land use (forestry and agricultural) Cultural heritage
Resource consumption Population and settlement patterns
Solid Waste Social organizations and groupings
Climate and meteorological conditions Child or forced labour (protecting the work force)
Air emissions Occupational health and safety to prevent accidents, injury and disease?
Energy consumption Land acquisition and involuntary resettlement
Noise Community health, safety and security
Geology Health or safety risk level of raw materials
Soil Stakeholder engagement
Natural hazards External communications
Water resources Grievance mechanism
Waste water  
Natural parks or protected areas  

ERET involves a detailed study, taking both existing and future aspects into account, of the potential environmental and social impacts and the potential legal and financial liabilities that might arise be they from an investment project whose financing by TSKB is being considered or from the project owner’s other activities. Instead of a sector specific approach, it allows making a comprehensive evaluation through assessment of client and project’s various potential impacts. The tool categorizes projects based on level of risk from A, representing high risk, to C, representing minimal risk.

ERET is prepared and updated based on the high-risk sectors’ ESG risks. ERET model’s environmental and social rating methodology is constantly reviewed by TSKB teams so that the relative weights used in making calculations of high-risk issues may be increased and greater attention may be given to issues entailing risk.


TSKB ensures that all investment projects financed under its loans comply with the National Environmental and Social Regulations and Legislations. However, TSKB has developed individual action plans for each ERET risk score of investments. Hence, all required actions are included as conditions of loan agreements signed with the clients. For projects with above average or high environmental impacts, the bank develops an action plan with the client outlining how environmental and social impacts can be monitored and mitigated. The plan principally involves preparation of detailed Environmental Social Impact Assessment, Environmental and Social Management Plan and Monitoring Plan in line with the international standards, including World Bank Environmental and Social Frameworks and IFC performance standards.

Which Projects?

As mentioned above, ERET is applied to each and every project finance and corporate loans regardless of scope, size, sector and loan amount of investment projects only and only if the project is not listed in “List of Activities that are not to be financed” under “Environmental & Social Impact Policy”. This list is developed considering the high risk and sensitivity sectors. TSKB declares not to finance these sectors due to high environmental and social risks.


How to apply?

ERET is settled under P2 Procedure in ISO 14001 certified Sustainability Management System which demonstrate how the Bank applies Environmental and Social elements into the loan finance offering, from receipt of application through to the offering of finance and monitoring of the investment.

The model is based on studying the environmental impacts of investment projects subject to credit evaluation and other activities of the project owner with both current and future perspective. It defines the dimensions of the environmental risk, clarifies acceptable limits for the risks involved and ensures that the project complies with the general lending policies of TSKB. It also covers reducing/offsetting potential risks and the related environmental and social action plans to reduce the environmental and social impacts. In case of a high environmental and social risk factor, a plan is prepared in cooperation with the client on how to reduce the impacts and to trace them.

Furthermore, High risk (A) and medium risk (B+) projects are monitored via site visits by an independent adviser and/or TSKB Engineering Team at least annually in construction period and once in operation phase in order to ensure that the investor fully complies with the action plans negotiated and undertaken in the loan agreement and provides a constant improvement in his systems.

If any deficiency or non-conformity is observed and the investor does not take the necessary precautions, TSKB has the right to refuse or withdraw the credit.

As a part of ISO certified Sustainability Management System, policy related lending are activities are audited annually by both internal and external auditors. In external side, every year 3rd party ISO 14001 auditors checks whether TSKB manages and implements ERET in compliance with P2 procedure and does the necessary monitoring. Moreover, the system enables a platform for senior level management of TSKB to discuss internal and external audit results and initiate development of necessary action plans.

2016 Results

TSKB publishes Integrated Report and responds to CDP-Climate Change annually where it states explicitly that all existing lending is subject to its Policies.


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Risk Category (Project Owner)
A - 2 - 2 1 9 5 5 5 4 3
B+ 21 7 11 9 10 9 13 18 16 15 14
B- 21 7 12 15 22 42 40 36 22 31 16
C 30 25 15 24 31 27 21 60 17 2 3
Risk Category (Project)
A - 3 - 1 - 6 3 2 3 3 4
B+ 13 2 3 3 7 7 9 15 18 13 11
B- 13 8 11 24 24 47 48 63 25 23 18
C 38 27 24 22 33 27 19 39 14 13 3
Project # 51 37 38 50 64 87 79 119 60 52 36

In 2016, TSKB evaluates 79 investment projects having total investment amount of US $2.5B to various industries. Regardless of the investment amount, loan size, loan type and sector, each project’s environmental and social risks have been evaluated, monitored and reported. With 48.6% almost half of the funding provided by the Bank has been allocated to renewable energy generation projects.

Industry Amount
Construction $654.88M
Tourism $75.13M
Textile $14.03M
Automotive $53.60M
Metal and Machinery $122.23M
Logistics $49.19M
Chemical & Plastic $132.50M
Food & Beverage $19.20M
Education & Health $94.00M
Renewable Energy $1.215B
Other $70.33M

Türkiye Sınai Kalkınma BankasıTurkey’s comprehensive environmental portal cevreciyiz.com is supported by TSKB.