Ford Otosan EV Syndicated Loan

Location:

Turkey

Project number:

52568

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

26 May 2021

Status:

Signed

PSD disclosed:

09 Aug 2021

As permitted by paragraph 2.6 of Section III of the Access to Information Policy, disclosure of this PSD was deferred in accordance with paragraph 1.4.4 of the Directive on Access to Information.

Project Description

The EBRD provided EUR 650 million long-term loan to Ford Otomotiv Sanayi A.S. (the "Company", or "Ford Otosan") to finance the Company's investment programme for upgrading its next generation one-tonne commercial vehicle, which will include majority battery electrical vehicles ("BEV") and plug-in hybrid electrical vehicle ("PHEV") variants, in its production plants in Kocaeli, Turkey ( the "Project").

Project Objectives

The proceeds of the financing will be used by the Company for the capex needs of the next generation one-tonne commercial vehicle, which will be manufactured starting gradually in 1H23. The project will help Ford Otosan to transform its Kocaeli facilities to become the first and only integrated production centre for the assembly of electric vehicles in Turkey. This is in line with EBRD's Strategy for Turkey as it supports (i) higher value-added activities and (ii) increased energy and resource efficiency. The Project is also aligned with the EBRD's Green Economy Transition Approach.

Transition Impact

ETI score: 69

The transition impact of the Project will be derived from:

(i) Competitive quality as the Project will support higher operational standards and efficiencies at the Borrower's production plants in accordance with the Fourth Industrial Revolution ("FIR") and will significantly contribute to the digitalisation and integration of the supplier base in Turkey through wider integration into the value chain.

(ii) Green quality as the Project will support large scale manufacturing of BEV/PHEV model Commercial Vehicles.

Client Information

FORD OTOMOTIV SANAYI AS

Ford Otomotiv Sanayi A.S. is a joint stock company incorporated and domiciled in Turkey that manufactures, assembles and sells motor vehicles and parts under the Ford brand. 

Established in 1959, Ford Otosan operates as a joint venture between Ford Motor Company (via Ford Deutschland Holding GmbH: 100% owned by Ford Motor Company) one of the leading and best-selling automobile brands globally, and Koc Holding, Turkey's largest investment holding company active in a variety of sectors from automotive to consumer durables, each holding a 41% equity stake. The rest of the Company shares are listed on Borsa Istanbul.

EBRD Finance Summary

EUR 175,000,000.00

Up to EUR 650 million long-term loan, of which up to EUR 175 million is for the account of EBRD and up to EUR 475 million is syndicated to commercial banks.

Total Project Cost

EUR 888,499,968.00

Additionality

Key sources of additionality are (i) resource mobilization as EBRD mobilizes up to EUR 475 million of commercial financing, making this one of the largest private sector syndications recently in Turkey and (ii) standard setting as EBRD's engagement will help the Company to maintain/implement higher standards on gender inclusion.

Environmental and Social Summary

Categorised B (Environmental and Social Policy (ESP) 2019). The investments into capex program will finance new production lines and equipment within the existing Kocaeli facilities, for which associated Environmental and Social (E&S) impacts were readily assessed as part of the Environmental and Social Due Diligence (ESDD) and addressed by E&S corrective actions. The Company is well known to the Bank through previous transactions, has a robust E&S performance track record, strong Environment, Health and Safety (EHS) organisation with experienced staff at the corporate and facility level and duly implements the agreed Environmental and Social Action Plan (ESAP) for previous projects.

ESDD for the new Project has been undertaken in house and comprised the review of the ESDD questionnaire, the Company's annual E&S reporting, available information about the Project and a series of Q&A sessions with the Borrower. Previous ESDD and monitoring activities have confirmed that the Company is generally compliant with the Bank Performance Requirements (PRs) and reporting requirements and that progress has been made on pre-existing action plans in a timely manner. 

E&S impacts are associated with labour and working conditions with a specific focus on freedom of association and collective bargaining rights of workers, supply chain management, contractor management, construction labour and safety, air emissions, resource and energy efficiency, GBVH and COVID-19 response.

Environmental and safety issues are managed through a certified integrated management system (IMS). The necessary resources and capacities are in place to implement the IMS and to operate to the Bank's PRs. Ford Otosan's E&S standards also apply to its contractors and suppliers and this is reviewed on a regular basis. In terms of environmental performance, the Company operates in line with the requirements of the Turkish Regulatory Framework which is largely in line with the EU Environmental Directives.

ESDD showed that the Company has well-developed EHS and Corporate Social Responsibility (CSR) structures and capacity to fully implement the Bank's PRs. Environmental and Occupational Health and Safety (OHS) issues are managed through the IMS certified to ISO 14001, ISO 14064 Greenhouse Gases Quantification and Verification System Standard and ISO 50001 Energy Management System Standard, ISO 9001 and ISO 45001 standards at all operations. Environmental targets are transferred into individual business targets through the scorecard practice and the achieved results influence the performance based remuneration of employees of all levels. The primary targets are adopted in compliance with Ford Global Environmental Operating System (EOS), which has specific Key Performance Indicators (KPIs) on reduction of energy consumption, water consumption, eliminated waste, VOC emission. Also an Environmental Compliance Index (ECI) scorecard is monitored at the group level. Within the scope of EOS, independent external audits are conducted. Besides, ISO 14001, ISO 50001, ISO 14064 standards audits, additional environmental audits are conducted by Koc Holding every two years. The performance results are reported to the executive management through monthly reports, to FMC management by means of Ford Global Emission Management Database, to Koc Holding through annual reports and to the external stakeholders through annual sustainability reports.

The ESDD and ongoing monitoring confirmed that the Company has a strong Human Resources Management system in place and their labour practices are in line with PR2 requirements. The workers are free to join a union. Currently a collective bargaining agreement is in place, which is being renewed every two years after successful completion of negotiations with the workers organisations. The Company will continue to work on best practices to maintain and improve the social dialogue at the workplace in line with the ESAP requirements. There is an effective employee grievance mechanism and a free hot line provided for worker complaints (including contractor workers).

The Company has implemented a COVID- 19 response plan that incorporates adequate employee and community health and safety measures. The Company does not plan any labour restructuring or redundancies within the coming years as the labour force will increase owing to the plant enlargement.

The Company is among the pioneers in the country by promoting gender equality at their facilities. Some of the achievements made in the last years include (i) signing of the Declaration of 'Equality at Work' promoted by the broader international community, (ii) committing to improving career opportunities for women in the Company (iii) investing in young women who would like to work in the industry by establishing a 50% quota for its internship programme, (iv) working towards achieving 50% of female recruitment rate for white collar positions and 25% target for female employment in blue collar jobs (vi) improving internal awareness-raising about gender equality, and (vi) reaching out to the community and the country raising awareness about gender equality through its CSR Programmes. The Company has become the first automotive company in Turkey to get FEM certification (Equal Opportunities Model) from KAGIDER. In 2020, the Company has conducted women only workshops and trained women in Gender Based Violence and Harassment (GBVH) risks and reporting/support mechanisms. They will continue to develop and implement new training on all forms of harassment at all facilities in 2021.

Key EHS and labour standards of the company also apply to its contractors and core suppliers through a Ford Corporate Certification Process. This is verified via contractor and supplier selection process, risk assessment and management procedures, audits and reviews as well as supplier development support. All contractor personnel receive training on environment, energy efficiency, occupational health and safety in order to ensure their compliance with the standards prior to commencement of works at their facilities.

The Company has a robust communication/stakeholder engagement programme. They engage with other operators and stakeholders in the local area through regular meetings, newsletters, etc. Existing stakeholder engagement practises and communication channels are deemed sufficient to communicate the nature of the Project to stakeholders.

Ford Otosan discloses E&S information through its annual GRI/G4 standard sustainability report and through its website. In addition, as a listed company, Ford Otosan is required to disclose certain corporate and operation information in line with regulatory requirements. This is achieved through a public disclosure platform. Earthquake, fire safety and emergency risks were also addressed for Kocaeli plants through the review of the technical report and additional preventive measure on structures safety has been included into ESAP.

The Project is associated with significant savings of the greenhouse gas (GHG) owing to the implementation of the novel technologies. ESAP agreed for the previous transaction has been amended to include items focusing mainly on labour and GBVH aspects. The Bank will monitor implementation of the ESAP through review of annual Environmental and Social Reports and communications with the Company as necessary.

Technical Cooperation and Grant Financing

None

Company Contact Information

Mutlu Akpara, Senior Treasury and Risk Manager
makpara@ford.com.tr
+902165647100
http://www.fordotosan.com.tr/
Akpinar Mh. Hasan Basri Cd. No:2 34885 Sancaktepe / Istanbul, TURKEY

PSD last updated

09 Aug 2021

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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