Arcelik Green Loan

Location:

Turkey

Project number:

52666

Business sector:

Manufacturing and Services

Notice type:

Private

Environmental category:

B

Approval date:

15 Sep 2021

Status:

Disbursing

PSD disclosed:

11 Nov 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 provision of €150 million long-term loan consisting of (i) €83 million of Green Facility and (ii) €67 million of Investment Facility, to Arcelik A.S., a Turkish company engaged in production, sales and aftersales services of consumer durable goods and consumer electronics, to finance the company's investment programme that includes (i) green investments under the Company's Green Financing Framework , (ii) new production line and (iii) other modernisation and health and safety investments at the company's manufacturing units in Turkey.

Project Objectives

The proceeds of the financing will be used by the company to support the investment programme at its manufacturing facilities in Turkey over the perios of 3 years.

The Green Facility will finance Arcelik's green investments under its GFF across its production facilities in Turkey. The Investment Facility will finance (i) modernisation investments in Eskisehir Refrigerator Plant, (ii) new production line in Eskisehir Refrigerator Plant, (iii) modernisation, health and safety, and other investments in Bolu Cooking Appliances Plant.

The Project is in line with the EBRD's Strategy for Turkey as it supports the energy and resource efficiency improvements and supports inclusion priorities. The Project is also aligned with the EBRD's Green Economy Transition Approach given its contribution to climate change mitigation and other environmental goals as well as promotion of international green capital markets standards and novel green financing instruments.

Transition Impact

ETI score: 68

The transition impact of the Project will be derived from:

(i) Green quality as the Project, through the Green Facility, will support the green investment programme at Turkish production plants implemented under the GFF of the Company developed in line with London Market Association ("LMA") Green Loan Principles ("GLP"), and externally verified by a Second Party Opinion ("SPO"). The green investment programme will have significant climate change mitigation benefits, resulting in a reduction of greenhouse gas emissions, which will hence contribute to the achievement of the Company's 2030 climate targets formulated in line with Science Based Target Initiative ("SBTi") and consistent with the objectives of the Paris Agreement. Furthermore, the green investments will result in significant water and material savings through introduction of water efficiency and circular economy measures in both production facilities and products.

(ii) Inclusive quality as the Project, through the Investment Facility, will improve access to high value-added/high technology work-based learning and employment opportunities for around 500 young people including those with disabilities, who will develop competencies in line with advanced new digital technologies in partnership with the Turkish Employment Agency.

Client Information

ARCELIK AS

Arcelik A.S. is a joint stock company incorporated in Turkey involved into production, sales and aftersales services of consumer durable goods and consumer electronics. Established in 1955 in Istanbul, Arcelik is the leading white goods manufacturer of Turkey and has 28 different production facilities in 9 countries including Turkey, Romania, Russia, China, South Africa, Pakistan, Thailand, India and Bangladesh. The company is majority owned and controlled by Koc Group, Turkey's largest investment holding company active in a variety of sectors, with a 57.24 per cent of shares, while Burla Group has 17.61 per cent of shares in the company. The remaining 25.15 per cent stake of the company is listed on Borsa Istanbul.

EBRD Finance Summary

EUR 150,000,000.00

Up to €150 million long-term loan, consisting of (i) €83 million of Green Facility and (ii) €67 million of Investment Facility

Total Project Cost

EUR 150,000,000.00

Up to €150 million.

Additionality

Key sources of additionality are (i) innovative financing instrument as  the Green Facility, the first LMA GLP compliant loan instrument for an industrial company in Turkey, will help promote international green capital markets standards and novel green financing instruments and (ii)  standard setting as the EBRD's engagement will help the Company to maintain/implement higher standards on gender inclusion.

Environmental and Social Summary

Categorised B (2019 ESP). The investments into the capex program will finance energy and resource efficiency needs within existing plants, for which associated Environmental and Social ("E&S") impacts were readily assessed as part of the Environmental and Social Due Diligence ("ESDD") and these can be addressed by E&S corrective actions. The green investments will have significant beneficial E&S impacts and will bring Green House Gas ("GHG") reduction of about 274,000 tonnes CO2e per annum.

The Company is well known to the Bank through previous transactions; has a good E&S performance track record; strong Environmental, Health & Safety ("EHS") organization with experienced staff at the corporate level; and duly implements agreed Environmental and Social Action Plan ("ESAP") for previous projects.

ESDD has been undertaken in line with the ESD ESDD response to COVID-19 and included a review of the ESDD questionnaire, the Company's annual E&S reporting, Sustainability Reports and available information about the Project. Potential E&S impacts are associated with labour and working conditions with a specific focus on freedom of association and collective bargaining rights, supply chain management, contractor management, operation and construction labour and safety, air emissions, resource and energy efficiency, GBVH and COVID response.

Overall, ESDD has confirmed that the Company is in full compliance with the local regulatory requirements, has the required E&S capacity and robust E&S management systems in place to deliver the Project in line with the EBRD PRs. Its environmental performance indications are also aligned with relevant EBRD PR and EU norms and Good International Practices.

The ESAP agreed for the previous transaction has been updated to include additional items targeted at prevention of GBVH under a dedicated gender component focusing on providing training to the Company's employees and raising awareness of GBVH among the Borrower's contractors and core suppliers and enhancing the grievance mechanism.

Technical Cooperation and Grant Financing

None

Company Contact Information

Ozkan Cimen
investorrelations@arcelik.com
+902123143434
http://www.arcelikglobal.com
Karaagaç Cad. No: 2-6, Sutluce-34445; Istanbul, Turkey

PSD last updated

11 Nov 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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