DFF - Netlog CapEx

Location:

Turkey

Project number:

53003

Business sector:

Transport

Notice type:

Private

Environmental category:

B

Approval date:

31 May 2022

Status:

Disbursing

PSD disclosed:

07 Jun 2022

As per section 1.4.2 (iii) of the Directive on Access to Information: "For Projects approved by Bank management where the Board of Directors has delegated the approval authority, the PSD shall be disclosed at the start of the relevant no-objection notification period to a member country of the Bank in accordance with Article 13 (iii) of the Agreement Establishing the EBRD."

Project Description

Provision of a senior loan of up to EUR 25 million (or TRY equivalent) to Netlog Lojistik Hizmetleri A.S. ("Netlog" or the "Borrower"). The Bank's investment will be used for financing the capital expenditures of the Borrower including (i) the acquisition of electric vehicles ("EVs"), to be used for deliveries across Turkey; (ii) the upgrading and expansion of the existing racking system of the Borrower's e-fulfilment centres to increase its storage capacity; and (iii) the acquisition of e-commerce mechanization equipment and supporting materials for their e-fulfilment centres (the "Project").

Netlog targets to be the first business to consumer ("B2C") operator in Turkey to deliver half of its shipments via zero-emission vehicles, in addition to increasing the storage capacity and improving the operational efficiency by modernisation of the mechanisation equipment in its e-fulfilment centres.

Project Objectives

The Project's overall objective is to achieve the Borrower's expansion in consumer delivery operations and improve its operational efficiency in the e-commerce business line, maintaining good financial and operational performance and GHG savings.

Transition Impact

ETI score: 66

The Project's transition impact stems from the following key areas:

1-Competitive: The successful implementation of the Project will increase Netlog's daily e-commerce delivery capacity and improve its operational efficiency in the e-commerce business line. In addition, the equipment to be purchased will increase the storage capacity of its e-fulfilment centres and is expected to double the capacity of inbound and outbound items as well as to significantly reduce the dock to stock time and the stock to shipment times.

2-Green: 67% of the EBRD's proceeds are in line with the Bank's Green Economy Transition (GET) approach. The new fleet, including a large number of EVs, will have an immense positive environmental impact contributing to 77% reduction in CO2 emissions compared to the equivalent operations with diesel vehicles. In addition, the Project is expected to facilitate the first widespread use of EVs in the e-commerce parcel delivery segment in Turkey.

Client Information

NETLOG LOJISTIK HIZMETLERI AS

Netlog, established in 1984, is the parent company of the Netlog Logistics Group, a Turkey based internationally acclaimed full-scale integrated logistics service provider. Netlog is a long-standing client of the Bank with the latest transaction signed under the Resilience Framework in May 2020 (completed as of May 2022).

The Group is among the top 100 logistics service providers in the world. Headquartered in Istanbul, the Group operates with a fleet of more than 3,000 vehicles on 118 warehouses across 6 countries - Turkey, Belgium, Netherlands, UK, USA and UAE.

EBRD Finance Summary

EUR 25,000,000.00

Up to EUR 25 million senior loan with a maturity of 6 years, including 1-year grace period.

Total Project Cost

EUR 25,000,000.00

Additionality

The Bank is highly additional in relation to the financing structure, risk mitigation and standard settings. The EBRD provides long-term financing, which is aligned with the Project's needs and is not readily available in the market from local commercial banks at the required tenors. The EBRD's long-term involvement provides comfort to the Company willing to take on more risk and/or finance, enabling outcomes such as innovation and expansion into new markets. The Project promotes widespread use of EVs in the delivery of e-commerce products, hence, contributes to the emission reduction due to shift from diesel delivery trucks to electrical pop-up vehicles. The Company also benefits from the efficient use of resources due to optimized warehouse setting and mechanisation of equipment and application of more automation. The Project will also address the skill gap and promote equal opportunities in the traditionally male-dominated logistics sector by introducing a first-of-its-kind EV driver training programme for women.

Environmental and Social Summary

Categorised B (ESP 2019).  The project is expected to result in environmental benefits, specifically a reduction in GHG and other emissions, through the deployment of electric vehicles (EVs) for last mile delivery versus the use of diesel/petrol vehicles. The Environmental and Social (E&S) impacts and risks associated with the project are limited and can be generally mitigated and managed through existing company management provisions. Netlog is an existing client of the Bank and the Environmental and Social due diligence (ESDD) has shown the need for an Environmental and Social Action Plan (ESAP) to improve management provisions at the project and corporate level. This has been agreed with the company. Key issues considered include E&S risks associated with the project and company approach to labour and working conditions, health and safety, supply chain risk management and stakeholder engagement and disclosure. Any risks, predominantly H&S safety risks, associated with warehouse upgrades and operations will need to be managed through appropriate management plans with oversight from the company as part of its ISO certified environmental management system and soon to be ISO certified H&S management system. Risks associated with the use of EVs, either by the company or through outsourced will need to be managed through the company transport management system, which will need to be enhanced to align with ISO standards, as well as contract provisions on driver safety and codes of conduct.

Labour provisions, including for contractors, were reviewed against EBRD's PR2 which identified some areas for improvement with respect to enhancing GBVH provisions, its internal grievance mechanism, and routine internal reviews against EBRD's requirements. Stakeholder engagement and information disclosure will need to be enhanced through a formal strategy and further enhancements to its external grievance mechanism.

ESDD considered potential supply chain risks for the project, specifically with respect to the EVs, which will be procured from a Turkish supplier through its own supply chain. To further mitigate any risk, the company will need to enhance its supply chain management system to consider potential E&S risks and impacts, including forced labour.

Technical Cooperation and Grant Financing

The Bank has provided technical cooperation support for the technical and GET due diligence of the Project through financing provided by the GET Project Preparation and Implementation Framework with a contribution of 20% by the Company via a Client Cost Sharing Agreement - EUR 23,200.

Company Contact Information

Cicek Kopraman
info@netlog.com.tr
+90 (212) 622 5000
+90 (212) 622 50 45-46
www.netlog.com.tr
Orhan Gazi Mh. Tunç Cd. No: 1 Esenyurt / Istanbul / Turkey

Implementation summary


PSD last updated

07 Jun 2022

Understanding Transition

Further information regarding the EBRD’s approach to measuring transition impact is available here.

Business opportunities

For business opportunities or procurement, contact the client company.

For business opportunities with EBRD (not related to procurement) contact:

Tel: +44 20 7338 7168
Email: projectenquiries@ebrd.com

For state-sector projects, visit EBRD Procurement:

Tel: +44 20 7338 6794
Email: procurement@ebrd.com

General enquiries

Specific enquiries can be made using the EBRD Enquiries form.

Environmental and Social Policy (ESP)

The ESP and the associated Performance Requirements (PRs) set out the ways in which the EBRD implements its commitment to promoting “environmentally sound and sustainable development”.  The ESP and the PRs include specific provisions for clients to comply with the applicable requirements of national laws on public information and consultation as well as to establish a grievance mechanism to receive and facilitate resolution of stakeholders’ concerns and grievances, in particular, about environmental and social performance of the client and the project. Proportionate to the nature and scale of a project’s environmental and social risks and impacts, the EBRD additionally requires its clients to disclose information, as appropriate, about the risks and impacts arising from projects or to undertake meaningful consultation with stakeholders and consider and respond to their feedback.

More information on the EBRD’s practices in this regard is set out in the ESP.

Integrity and Compliance

The EBRD's Office of the Chief Compliance Officer (OCCO) promotes good governance and ensures that the highest standards of integrity are applied to all activities of the Bank in accordance with international best practice. Integrity due diligence is conducted on all Bank clients to ensure that projects do not present unacceptable integrity or reputational risks to the Bank. The Bank believes that identifying and resolving issues at the project assessment approval stages is the most effective means of ensuring the integrity of Bank transactions. OCCO plays a key role in these protective efforts, and also helps to monitor integrity risks in projects post-investment.

OCCO is also responsible for investigating allegations of fraud, corruption and misconduct in EBRD-financed projects. Anyone, both within or outside the Bank, who suspects fraud or corruption should submit a written report to the Chief Compliance Officer by email to compliance@ebrd.com. All matters reported will be handled by OCCO for follow-up. All reports, including anonymous ones, will be reviewed. Reports can be made in any language of the Bank or of the Bank's countries of operation. The information provided must be made in good faith.

Access to Information Policy (AIP)

The AIP sets out how the EBRD discloses information and consults with its stakeholders so as to promote better awareness and understanding of its strategies, policies and operations following its entry into force on 1 January 2020. Please visit the Access to Information Policy page to find out what information is available from the EBRD website.

Specific requests for information can be made using the EBRD Enquiries form.

Independent Project Accountability Mechanism (IPAM)

If efforts to address environmental, social or public disclosure concerns with the Client or the Bank are unsuccessful (e.g. through the Client’s Project-level grievance mechanism or through direct engagement with Bank management), individuals and organisations may seek to address their concerns through the EBRD’s Independent Project Accountability Mechanism (IPAM).

IPAM independently reviews Project issues that are believed to have caused (or to be likely to cause) harm. The purpose of the Mechanism is: to support dialogue between Project stakeholders to resolve environmental, social and public disclosure issues; to determine whether the Bank has complied with its Environmental and Social Policy or Project-specific provisions of its Access to Information Policy; and where applicable, to address any existing non-compliance with these policies, while preventing future non-compliance by the Bank.

Please visit the Independent Project Accountability Mechanism webpage to find out more about IPAM and its mandate; how to submit a Request for review; or contact IPAM  via email ipam@ebrd.com to get guidance and more information on IPAM and how to submit a request.

 

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