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.
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.
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.
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
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
Up to €150 million.
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
Company Contact Information
Karaagaç Cad. No: 2-6, Sutluce-34445; Istanbul, Turkey
PSD last updated
11 Nov 2021
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Independent Project Accountability Mechanism (IPAM)
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