Tofaş New Passenger Car



Project number:


Business sector:

Manufacturing and Services

Notice type:


Environmental category:


Approval date:

22 Jul 2015



PSD disclosed:

24 Jul 2015

Translated version of this PSD: Turkish

Project Description

The EBRD is providing a long-term loan to Tofaş Türk Otomobil Fabrikası A.Ş. of up to €200 million to finance the development and the launch of new hatchback and station wagon passenger cars, including the related research and development expenses as well as fixed-asset investments. With EBRD finance the company aims to manufacture approximately 700,000 units of vehicles in the period of 2016-2023 in its production facility in the north-western Turkish city of Bursa.

Transition Impact

The project is expected to achieve a strong transition impact in Turkey, particularly through (i) supporting and enhancing innovation and research and development (“R&D”) stemming from collaboration between industry, local universities and local suppliers; and (ii) demonstration of new replicable standards and practices in relation to youth and gender inclusion and blue-collar workers in the automotive industry.   

1. Transfer and dispersion of skills

The enhancement of innovation and R&D capabilities at Tofaş is expected to lead to transfer and dispersion of multi-layered skills through linkages to local suppliers via co-design and collaboration with universities. The project will enable the demonstration of the essential steps for contributing to the country’s knowledge economy with the creation of an innovative ecosystem involving all relevant stakeholders, from manufacturers and suppliers, to research centres, academia, and vocational schools.

2. Demonstration of new replicable corporate standards and practices in relation to youth inclusion and gender

EBRD will support Tofaş’s existing policies and procedures with respect to youth and gender inclusion. The cooperation between Tofaş and EBRD will have a significant potential to contribute to youth and gender inclusion in Turkey by setting an example and creating demonstration effects within the sector in relation to vocational education and training and equal opportunities. Tofaş will pioneer the setting of technical training standards and provision through improved vocational education and training in line with employer needs in the sector, the establishment of stronger links to local schools to create effective work-based learning opportunities, and the introduction of equal opportunities measures that meet national standards.

The Client

Tofaş Türk Otomobil Fabrikası A.Ş. is incorporated in Turkey for the manufacturing and selling of motor vehicles. The company operates as a joint venture between Fiat Auto S.p.A, holding a 37.86 per cent equity stake, and the Turkish conglomerate Koç Holding A.Ş., with a 37.59 per cent equity stake. Other Koç Group individuals and entities hold 0.28 per cent of the equity while the remaining shares (24.3 per cnet) are listed on Borsa Istanbul and the Luxembourg Stock Exchange.

EBRD Finance

€200 million long-term A/B loan, of which €100 million will be for the EBRD’s account and €100 million will be syndicated to B-lenders.

Project Cost

€415 million

Environmental and social categorisation, impact, and mitigation

Categorised B (2014 ESP).  Environmental and Social Due Diligence (ESDD) has shown that the environmental and social (E&S) impacts associated with the design and manufacture of two new passenger cars at an existing facility are site-specific, readily identified and addressed through already established mitigation measures. The company operates a world class manufacturing facility, has implemented the World Class Manufacturing (WCM) standard (Gold Award) and is already largely compliant with the EBRD’s performance requirements (PR). An Environmental and Social Action Plan (ESAP) has been agreed with the company to structure the project and existing operations fully in line with the PRs.

The Tofaş facility has been in operation since 1968 with various upgrades and expansions over the years. Tofaş also has its own R&D facility. Environmental and occupational health and safety (OHS) issues are managed through an integrated management system certified to ISO 14001, ISO 9001 and OHSAS 18001 standards. Tofaş’s environmental and OHS standards also apply to its contractors and suppliers. This is verified via contractor and supplier risk assessment and management procedures, qualifying criteria, audits and reviews as well as supplier development support. 

Tofaş has a large workforce of approximately 6,500 employees, the majority of which are members of trade unions. The company’s human resources and labour provisions are in line with the Turkish labour requirements and the EBRD’s PR 2. Company labour standards also apply to contractors and suppliers through a company code of conduct. The Bank reviewed labour issues at the company, including their communication with workers and the unions, and how grievances and disputes are managed. To improve worker communications, Tofaş has set up an internal communication platform to supplement union representation and consider worker issues in a formal manner. This platform provides a more proactive and participatory approach in employee engagement and is complemented by an internal grievance mechanism to address day-to-day worker grievances. Project monitoring will include labour issues and grievance processing.

The company operates in line with the requirements of the Industrial Emissions Directive, notably with respect to volatile organic compounds (VOCs) and EU best available technologies for the sector. All emissions are monitored and are within prescribed limits. The production process has a high level of water reuse and recycling (98.5 per cent). Wastewater is treated before being used as irrigation water or discharged to a nearby river. The company takes the approach of sending zero waste to landfill. All waste is recycled or reused. Energy demand is high and as such various energy efficiency investments have been implemented. The company also has an ISO 50001 certified energy management system in place. Current annual greenhouse gas emissions are approximately 110,000 tonnes carbon dioxide equivalent. Water and energy consumption and greenhouse gas emissions per vehicle are decreasing year on year, in line with the company’s targets. The project is not expected to affect this trend but will result in an approximately 5 per cent increase in total consumption. Project vehicles will be designed to meet Euro 6 emission standards.

Tofaş has a world-class approach to occupational health and safety, which is managed through the management system and is championed by a variety of staff. OHS provisions, worker appreciation and training and overall OHS performance are excellent (the company won the European Good Practice Award for OHS in 2013). The facility has been upgraded over the years and has the necessary fire prevention and response equipment in place. The facility is located in an industrial area and significant impacts to communities are not expected. Project vehicles will be designed to meet the New Car Assessment Programme (NCAP) 3-star safety ratings.

Tofaş discloses E&S information through its annual sustainability reports in line with the G4 Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI) and through its website. As a listed company, Tofaş is required to disclose certain corporate and operational information. Existing stakeholder engagement practices and communication channels are deemed sufficient to communicate the nature of the project to stakeholders. The company will need to disclose information about the project, including relevant E&S information through annual sustainability reports. In addition, Tofaş will maintain the external grievance mechanism.

Technical Cooperation

Technical Cooperation funds from the EBRD’s Gender Advisory Services provided by the Shareholder Special Fund will be used to help the company strengthen its human resources policies and practices to improve women’s participation in blue-collar and managerial positions and provision of equal opportunities. Up to €75,000 will be used for an initial examination, development of a gender action plan, and targeted support for the implementation of the plan.

In addition, Technical Cooperation funds will be used to support youth inclusion and blue-collar workforce development through improved transition from training into employment in the automotive sector. Up to €75,000 will be used for the development of a specific action plan that will help the company identify key challenges in recruiting and training, and to further support the implementation of the plan.

Company Contact

Fidan Sevilmiş, Finance Manager
Tofaş Türk Otomobil Fabrikası A.Ş.
Büyükdere Caddesi No:145
Tofaş Han 34394
Zincirlikuyu/İstanbul Turkey

+90 212 275 3390


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