Albaraka Türk Sustainability Report 2020 World Trusts Us Contents
10 KEY SUSTAINABILITY INDICATORS
12 ALBARAKA TÜRK AT A GLANCE 12 Al Baraka Banking Group (ABG) in Brief 14 Albaraka Türk in Brief 16 Albaraka Türk’s Sustainability Journey 18 Shareholding Structure Albaraka Türk is a bank building its entire business model 19 Our Mission and Vision 20 Our Quality Policy, Core Corporate Values and Strategic Objectives in accordance with sustainability and working for this 22 Operational Map 24 Our Awards purpose.
26 MESSAGE FROM THE MANAGEMENT 26 Message from the Chairman 28 Message from the General Manager We carry out all our operations by taking into account an 30 Message from the Chairman of the Sustainability Committee environmental impact and trust approach. We consider 32 OUR SUSTAINABILITY ORGANIZATION 32 Al Baraka Goals (2016-2020) the social, environmental and economic values we have 34 Strategic Sustainability Areas 36 Sustainability and Social Responsibility Principles within the framework of trust and we aim to pass these 37 Principles of Donations and Contributions 38 Our Sustainability Organization values on to future generations. 39 Our Committees
40 OUR SUSTAINABILITY ACTIVITIES 40 Our Corporate Governance Approach Within the scope of sustainability efforts, we continue 64 Our Financial Capital 68 Our Manufactured Capital to take important steps to solve various worldwide 70 Our Human Capital 80 Our Intellectual Capital problems such as global warming, carbon emission and 84 Our Natural Capital 90 Our Social and Relational Capital water problems, and we continue to receive the positive
94 LOOKING TO THE FUTURE results of these steps.
96 GRI CONTENT INDEX
104 UNITED NATIONS GLOBAL COMPACT (UNGC) INDEX
105 OUR PERFORMANCE TOWARDS SUSTAINABLE DEVELOPMENT GOALS
106 CONTACT Success depends on us As Albaraka Türk, a company operating in Turkey for more than 35 years, we continue to be the leading bank of the sector in the field of sustainability. As in 2019, we ranked among the companies subject to the assessment of Borsa Istanbul (BIST) Sustainability Index this year as well. As a result of the assessments, we renewed our title as the first and only Participation Bank included in the Index. Future depends on us As a result of our environment-oriented efforts, we achieved an “A” score within the scope of the Carbon Disclosure Project (CDP), one of the highest scores. We achieved rating “A-” in the climate change category and “B-” in the water security category. We have continued to increase our score compared to 2019, and become one of the banks achieving the highest score this year as well. Sources depend on us We are an active participant in the Zero Waste Project launched by the Ministry of Environment and Urban Planning. We undertake saving-oriented projects in the fields of prevention/ reduction, reuse, and procurement. We significantly reduce paper consumption by successfully executing the digital transformation process and contribute to the Zero Waste Project. Growth depends on us The whole world faced a difficult year due to the pandemic. We continued to stay strong for our clients, and completed 2020, a challenging year, by achieving our goals. We increased our assets to TL 69.3 billion with a growth of 35%. Particularly, we continued to take significant steps on crediting the projects that will contribute to the sustainability of the world. Albaraka Türk Sustainability Report 2020 Key Sustainability Indicators
Key Sustainability Indicators
In addition to reaching successful financial and operational results in 2020, Albaraka Türk achieved pioneering sustainability indicators in different areas, especially combating climate change.
Financial Performance Adding Value to Widespread and Improved Competent and Young Efficient Use of Natural Social Shareholders’ Savings Service Network Human Resource Resources Investments
Total Assets Total Staff Average Age LEED GOLD Green Building Total Support Provided to Total Support Provided to TL 69.3 billion 3,390 35.8 Certification for the Head Office Education Vulnerable Groups Building TL 7,717,510 TL 291,711 Funds Extended The Number of Branches Average Seniority CDP Climate Change Score: TL 40.6 billion 230 9 Years Total Support Provided to Total Support Provided in A- Healthcare Other Areas
CDP Water Security Rating Note TL 118,808 TL 5,903,580 B- Total Support Provided to the Total Social Investments Environment in 2020 TL 46,050 TL 14,077,659
10 11 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Al Baraka Banking Group (ABG) AL BARAKA BANKING GROUP (ABG) OPERATION MAP in Brief
Driven by its robust capital structure, Al Baraka Banking Group (ABG) conducts business operations in diverse geographies of the world.
Al Baraka Banking Group is one of Access to three continents… Steadily expanding asset base the leading proponents of interest- With operations on three continents, At year-end 2020, Al Baraka Banking free banking in the global finance Al Baraka Banking Group provides Group reported total assets of USD industry. ABG delivers retail, high-quality and uninterrupted 28,250 million and shareholders’ corporate and investment banking services to its customers in 17 equity of USD 2,222 million. services in line with the principles countries with 12 banks, one digital Consolidating its stakeholder trust of participation banking. Boasting bank, two representative offices and with sustainable profitability, the strong global brand recognition, one investment firm. In addition to Group recorded net profit of USD ABG’s core strategic objective is Turkey, ABG has banking institutions 166 million as of end-2020. Al Baraka establishing a shared corporate in Bahrain, Algeria, South Africa, Banking Group’s shares are traded values system and providing services Lebanon, Egypt, Pakistan, Sudan, on the Bahrain and NASDAQ Dubai built on the philosophy of “One Syria, Morocco, Tunisia and Jordan; stock exchanges. Standard & Poor’s Mission – One Vision – One Identity.” an investment firm in Saudi Arabia; assigned ABG with long-term and a branch in Iraq; digital bank in short-term credit ratings of BB and B, Germany; and representative respectively. offices in Indonesia and Libya. The Group successfully operates in different geographies of the world in a coordinated manner thanks to its investments in innovation and digitalization. ABG moves steadily toward its corporate objectives with confidence. Demonstrating its exemplary corporate citizenship with the ABG Social Banking Program, Al Baraka Banking Group provides strong support to local development in strategic areas, such as education and healthcare, in countries where it operates. Conducting its business operations in line with UN Sustainable Development Goals, Al Baraka Banking Group is an active player in the global fight against climate change.
12 13 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Uninterrupted, high quality service coupled with sustainable success Albaraka Türk is committed to meeting the ever-changing needs and expectations of its customers Albaraka Türk in Brief in line with its core principle of delivering unconditional customer satisfaction. The Bank further bolsters its high quality service standards with a sincere and friendly Powered by its main shareholder Al Baraka Banking Group’s service approach. Albaraka Türk conducts all its business processes solid capital structure, Albaraka Türk is among the most in line with ISO 9001: 2008 Quality Certification. In 2016, the Bank took important financial partners of Turkish industrialists and a major step forward to ensure the continuity of its business operations investors in global markets. by obtaining ISO 22301 Business Continuity Certification.
Strong contribution to Turkey’s sustainable growth Albaraka Türk adopts a professional approach to corporate governance. As a result, the Bank benefits Albaraka Türk is the first participation Regional solution partner of the As a pioneer in the development from agility when faced with risks. bank in Turkey and the only Turkish private sector of the start-up ecosystem in Albaraka Türk also boasts key participation bank traded on the Powered by its main shareholder Al Turkey, Albaraka Türk significantly competitive advantages including an Borsa Istanbul stock exchange. The Baraka Banking Group’s solid capital contributes to the development advanced technology infrastructure Bank was founded by Al Baraka structure, Albaraka Türk is among the of the entrepreneurial ecosystem and well-trained personnel. The Bank Banking Group (ABG), one of the most important financial partners of in the country. The Bank offers not only delivers modern banking most distinguished groups operating Turkish industrialists and investors in incubation and acceleration support services to savers and investors but in the Middle Eastern finance sector, global markets. The Bank operates to entrepreneurs with technology- also accelerates Turkey’s sustainable Islamic Development Bank (IDB), and two overseas branches, in Erbil and based business ideas and projects, development. a domestic industry group operating Baghdad, Iraq. Albaraka Türk is taking via Albaraka Garage – a first among in the Turkish economy for over half major steps toward becoming a participation banks. Following Participation banking’s sustainability a century. regional financial power in the Gulf, the surge in start-up activity and leader Middle East, and North Africa. entrepreneurial drive prompted Conducting its participation As the Bank’s main partner, Al Baraka by Albaraka Garage, Albaraka Türk banking activities with the vision Banking Group enables Albaraka Türk Always standing by Turkey’s established the Fintech Venture of becoming the top participation to focus on the future with ambitious economy Capital Investment Fund. This bank in the world, Albaraka Türk objectives thanks to its robust capital To achieve its vision of “Becoming the fund aims to create commercial carries out sustainability and structure. As of December 31, 2020, Best Participation Bank in the World,” partnerships with talented corporate social responsibility Albaraka Türk’s partnership structure Albaraka Türk expends efforts to entrepreneurs who want meet the activities with its responsible banking breakdown included foreign partners deliver all its physical branch services Bank. understanding. Albaraka Türk at 62.12%, domestic partners at 1.03%, via end-to-end digital solutions. launched the Sustainable Banking and public float at 36.85%. Founded by the Innovation Venture Program with the support of its Albaraka Türk supports the real Capital Investment Fund, insha main shareholder, Al Baraka Banking Extensive service network economy by effectively fulfilling Ventures started to operate in Group (ABG). Under this program, Focusing on continuous its mission of financing production August 2020 as an affiliate of the Bank aims to be a pioneering development in order to reinforce and trade in line with the principles Albaraka Türk Participation Bank. financial institution that is sensitive Voluntary steps toward become the leader in this arena by stakeholder confidence in Turkey, of participation banking. The Bank This new affiliate was founded to people and the environment in environmental sustainability taking voluntary steps to address Albaraka Türk offers a seamless channels funds collected through to research, evaluate, test, and line with its relevant policies and As Turkey’s first participation bank pressing environmental issues, such experience through 228 branches private current accounts and implement technologies and procedures. The Sustainable Banking and the only participation banking as the climate crisis. During the spread across the country and participation accounts towards the applications that will bring innovative Program also demonstrates that institution traded on Borsa Istanbul year, the Bank was deemed worthy two overseas branches as well as real economy via services such as solutions to meet the financial Albaraka Türk supports economic (BIST), Albaraka Türk achieved of the CDP Turkey 2020 Climate alternative distribution channels as retail finance, corporate finance, needs of the Bank’s customers. insha and global development and works significant success in 2020, thanks to Leadership award in recognition of of the end of 2020. leasing and profit/loss sharing on the Ventures aims to develop financial together with all its stakeholders its expert human resources as well its commitment in this area. Thanks basis of individual projects. technologies (fintech) projects and for a sustainable world with the as its technological competencies. to its inclusion in the Borsa Istanbul grow by managing them. committed support of its employees. The Bank plans to set up the Sustainability Index for the second Environmental Social Governance time, Albaraka Türk reclaimed its title (ESG) system within the organization. as the first and only participation With this system, Albaraka Türk bank in this index. aims to achieve zero emission and
14 15 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Albaraka Türk’s Sustainability Journey
2015 2018 2020 • In the field of global climate • Responding to the Carbon • Albaraka Türk’s 2019 Sustainability change, Albaraka Türk participated Disclosure Project (CDP) Climate Report was made available to all 2015 in the Carbon Disclosure Project Change and Water Security surveys, stakeholders on the Bank’s website. 2015 Al Baraka Banking Group for the first time. Albaraka Türk achieved rating “C” • Albaraka Türk CDP Climate Change Albaraka Türk (ABG) announced its • Al Baraka Banking Group (ABG) in both surveys. and Water Security surveys were participated in the “ABG Goals” (2016- announced its “ABG Goals” • Albaraka Türk received the “Best responded to. The Bank’s CDP Carbon Disclosure 2020) in line with (2016-2020) in line with the UN Participation Bank of the Year” Climate Change score is “A-” and Project for the first time. the UN Sustainable Sustainable Development Goals. award at the third edition of the Water Security score is “B-.” Development Goals. • Within the scope of ABG Goals, Adding Value to Turkey Awards • Albaraka Türk was included in Albaraka Türk disclosed its social organized by Turcomoney. the Istanbul Stock Exchange targets in the field of health, • Valuing employee satisfaction, Sustainability Index for the second education and employment. Albaraka Türk was evaluated by the time, and repeated its title as the Great Place to Work Institute to first and only participation bank in 2016 identify Turkey’s best employers. this index. 2016 The Head Office Building • Albaraka Türk launched the • As an active participant in the Zero of Albaraka Türk was Sustainable Banking Program. 2019 Waste Project launched by the granted LEED GOLD Within the scope of the program, • Albaraka Türk became the first Ministry of Environment and Urban Certification. education, health, environment and only participation bank to Planning, Albaraka Türk introduced and vulnerable groups were be included in the Borsa Istanbul savings-oriented projects in the determined as focus areas. (BIST) Sustainability Index in the areas of prevention/reduction, • The head office building of 2019-2020 period. reuse and purchasing. Albaraka Türk was granted LEED • Achieving “B” rating in the Climate • Calculating its entire climate GOLD Certification. Change survey and “B-” in Water load, Albaraka Türk committed Security survey within the scope to determine SBTi-Science Based 2017 of Carbon Disclosure Project, Targets within two years and to 2017 • Within the scope of the Albaraka Türk managed to increase reduce its carbon emission. Albaraka Garage was Sustainable Banking Program, its ratings in both surveys. • Albaraka Türk focused on arranging launched, as the Start-up the activities conducted on • Albaraka Türk’s mobile banking its financial statements to reflect Accelerator Center. sustainability gained momentum. application garnered two awards climate risks and putting the In this context, Albaraka Türk – “Best User Experience” and TCFD-Task Force on Climate responded to the Carbon “Experimentalism & Innovation” – Related Financial Disclosure Disclosure Project (CDP) Climate in the “Mobile Apps and Websites” recommendations into practice. category at The Communicator Change surveys voluntarily and Albaraka Türk’s 2019 achieved a rating of “C” for the first Awards. 2018 Sustainability Report time. • Albaraka Türk launched Albaraka Albaraka Türk received • Albaraka Garage was launched, Publishing in order to ramp up and the “Best Participation was made available as the first start-up accelerator expand its publishing activities Bank of the Year” to all stakeholders center in the world established by and better serve its readership by award, organized by on the Bank’s releasing many more prestigious a participation bank. Turcomoney. website. • The Bank undersigned major works. projects for digitalization, a • ABG Goals Program achieved high strategic priority area for Albaraka target realization rates in the fields Türk. of education, health, employment and sustainable energy. • Albaraka Türk 2019 Sustainability 2019 2020 2020 Report was presented to its Albaraka Türk was As an active participant Albaraka Türk received stakeholders. included in the in the Zero Waste an A Rating within the Borsa Istanbul (BIST) Project, Albaraka Türk scope of the Carbon Sustainability Index in introduced savings- Disclosure Project (CDP), the 2019-2020 period. oriented projects. one of the highest scores.
16 17 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Shareholding Our Mission and Structure* Vision
Albaraka Türk conducts all its activities in line with the Albaraka Türk moves forward with firm steps with its priorities determined in its mission and vision. robust capital structure.
Free Float** Al Baraka Banking Group Our Mission Our Vision 497,480,654.03 489,961,269.23 To meet the financial To become 36.85% 36.29% needs of society the best by sharing our participation common benefits bank in the with the customers, world. employees and shareholders who participate in our success, while remaining 1,350,000,000.00 committed to 100% Local Shareholders the principles 13,915,557.65 of interest-free 1.03% banking, our core values and the Other ethical principles of 35,196,850.81 2.61% banking.
Islamic Development Bank Dallah Al Baraka Holding 105,860,668.28 207,585,000.00 7.84% 15.38%
* As of March 31, 2021. ** With 23,278,200.94 shares, 1.72% of the shares belong to Al Baraka Banking Group. ABG’s total share is 38.02%.
18 19 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Our Quality Policy, Core Corporate Values and Strategic Objectives Our Strategic Objectives
Albaraka Türk aims to offer products and services in a way that meets the current and potential Customers Process • Improving customer • Increasing efficiency expectations of its customers, together with its experience and being with digitalization- more effective in oriented projects and educated and constantly renewing employees who customer acquisition. achieving an innovative • Consolidating business model. accept quality as a way of life. brand image with sustainable banking and continuous communication model.
Our Quality Policy Our Core Corporate Values Solidity • Adhering to participation banking By working hand in hand with Collaboration principles and banking ethics our well-trained employees who • Growing by sharing the value while allocating resources for the embrace quality as a way of life and created with the shareholders, economy. continuously renew themselves: employees, customers and society. • Managing our customers’ financial • To offer products and services • Establishing strong, long-term interests with the highest ethical to meet the current and future relationships with stakeholders. standards. expectations of our customers; • Ensuring continuous development • To boost customer satisfaction of knowledge and skills of Social Responsibility through “personalized customer employees. • Supporting economic Competency and attention” and a “cheerful service” • Supporting growth of the development to improve Financial Organization approach; participation banking and banking society’s living standards while • Making growth and • Achieving strong IT • To continuously improve all our sector. moving forward to increase our profitability sustainable. competencies and a business processes as well as our Bank’s value, and implementing competent and agile product and service quality; Focus environmentally-friendly policies organizational structure. • Keep a close watch on technology • Utilizing our resources in in line with legal and regulatory • Maintaining employee and business developments and productive projects. requirements while also satisfaction and improve rapidly transform them into added • Converting our energy and contributing to numerous social corporate performance value. perseverance into social value and cultural projects. through a team spirit and making a positive impact on based on trust. the lives of our customers for the greater good of society. Sustainability • Becoming the sector leader by taking a • Contributing to the resolution of many leading role in combating climate change. Sincerity environmental issues such as climate crisis, • Supporting the UN Sustainable Development Valuing our customers and always • water and solid waste problems with the Goals under the leadership of Al Baraka offering friendly service. goal of achieving net zero emission and the Banking Group and to bring the business Providing utmost customer • Environmental Social Governance System to processes in compliance with these goals. satisfaction through our products be established within the Bank. and services in line with our • Minimizing the impact of the activities customer-oriented approach. carried out and the products and services provided to the climate change.
20 21 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Operational Map Albaraka Türk provides uninterrupted service to its customers with its strong service network spreading across Turkey and the opportunities provided by digital transformation.
Branches in Turkey • Bolu (1) • Eskişehir (1) • Kastamonu (1) • Ordu (1) • Uşak (1) • Adana (6) • Bursa (8) • Gaziantep (5) • Kayseri (4) • Osmaniye (1) • Van (1) • Adıyaman (1) • Çanakkale (1) • Giresun (1) • Kocaeli (6) • Rize (1) • Yalova (1) • Afyonkarahisar (1) • Çankırı (1) • Hatay (2) • Konya (11) • Sakarya (1) • Yozgat (1) • Aksaray (1) • Çorum (1) • Isparta (1) • Kütahya (2) • Samsun (2) • Zonguldak (1) • Amasya (1) • Denizli (2) • Istanbul (93) • Malatya (1) • Siirt (1) • Ankara (20) • Diyarbakır (2) • İzmir (7) • Manisa (2) • Sivas (1) Foreign Branches • Antalya (5) • Düzce (1) • Kahramanmaraş (1) • Mardin (1) • Şanlıurfa (2) • Baghdad (1) • Aydın (2) • Edirne (1) • Karabük (1) • Mersin (3) • Tekirdağ (3) • Erbil (1) • Balıkesir (2) • Elazığ (1) • Karaman (1) • Muş (1) • Tokat (1) • Batman (1) • Erzincan (1) • Nevşehir (1) • Trabzon (2) • Erzurum (1)
22 23 Albaraka Türk Sustainability Report 2020 Albaraka Türk at a Glance
Our Awards
Albaraka Türk, which was deemed worthy of many awards in 2020, received the CDP Turkey 2020 Climate Leadership Award.
• Bronze Award in “Workforce Management with Program organized by Environmental Management Performance Evaluation” at the “Great Place to Work Systems and Corporate Brandon Hall Awards Institute” Sustainability Principles at the • Gold Stevie Award with the • TSE Service Certificate with Brandon Hall Awards Digital Training Technology the measures taken within the • Silver Award with “Game at “Virtual Classroom scope of COVID-19 pandemic Work,” Bronze Award with Application” at “Stevie Awards • CDP Turkey 2020 Climate its flexible fringe benefits for Great Employers” Award Leadership Award application “Showcase” Program (Vitrin), Bronze Award with • “Best Employer Certificate” in “Talent Management with the category of “Companies High Potential Development” with over 2,000 Employees” and Bronze Award with as part of the Recognition
24 25 Albaraka Türk Sustainability Report 2020 Message from the Management
Message from the Chairman
In 2020, Albaraka Türk served as a role model for its stakeholders by successfully creating social value pursuant to Al Baraka Goals.
Dear Distinguished Stakeholders, Our sustainability efforts towards The additional points of Al Baraka I would like to thank all of our the UN Sustainable Development Goals’ second phase are financing stakeholders who are a major part The year 2020 was a unique year in Goals agriculture and circular economy… of Albaraka’s sustainability journey many ways. The Covid-19 outbreak As a responsible global citizen, ABG In the light of sustainable banking and who significantly contribute to quickly turned into a pandemic, has now completed the first part approach, Albaraka Türk has stepped the social value that we endeavor posing an unprecedented challenge of the Al Baraka Goals Program up firmly. In this respect, we pursue to generate. I hope we continue this to the healthcare systems and (2016-2020), which is linked to the a sustainable banking program to journey with the same passion and pushing the global economy into Sustainable Development Goals. maintain our successful financial excitement. a recession. As the world gradually Under this Program, ABG targeted and operational performance as well started to understand the depth at creating 51,000 new jobs and as realizing the targets of Al Baraka Best regards, and complexity of the challenge, we achieved 76% of this target with Goals, and our resolve will continue AL BARAKA were, once again, reminded of the its financing operations. ABG also in the second phase of the Goals. Mazin Manna critical importance of sustainability. targeted at financing of USD 822 GOALS In the first completed phase of Al Chairman million for education, healthcare and Albaraka Türk’s systemic Baraka Goals (2016-2020), we mainly Uninterrupted, premium services sustainable energy projects, which sustainability efforts in the areas focused on financing education, during the Covid-19 pandemic… were achieved one year ahead in of employment, the financing of healthcare and sustainable energy. In Operating in line with the principles 2019. education, healthcare, sustainable the second phase of Al Baraka Goals of participation banking across 17 energy projects provided a great (2021-2025), we will also endeavor countries, Al Baraka Banking Group Albaraka Türk played a crucial role contribution for the fulfillment of to focus on financing agriculture and (ABG) leveraged its strong capital in ensuring that Al Baraka Goals Al Baraka Goals. circular economy in addition to the structure to support its customers are achieved globally. Our systemic previously pursued sectors. in different parts of the world sustainability efforts in the areas during the Covid-19 pandemic. of employment, the financing of With all these efforts, our aim is to Our longstanding investments and education, healthcare, sustainable become a “net-zero” bank. At the our advanced digital capabilities, energy projects provided a great Board of Directors of Albaraka Türk, continuously improved with R&D contribution for the fulfillment of Al combating climate change and efforts, enabled ABG to deliver Baraka Goals. pursuing sustainable finance remains uninterrupted and premium our central focus. services to its customers. As per our sustainability priorities, we also contributed to social welfare by creating value in key areas – including healthcare, education, employment and sustainable energy – in regions where we operate.
26 27 Albaraka Türk Sustainability Report 2020 Message from the Management
Message from the General Manager
Albaraka Türk operates as a representative of
Al Baraka Banking Group (ABG), a highly respected “CLIMATE LEADER” Having been named the “Climate player in global financial markets, and assumes an Leader” by CDP Turkey in 2020, Albaraka Türk’s CDP Climate Change active role in combating climate change. score is “A-” and its Water Security score is “B-.”
Contributing to the growth of CDP climate leadership We adopt a multi-dimensional We will resolutely continue our participation banking in Turkey, Albaraka Türk operates as a environmental sustainability breakthroughs in the field of Albaraka Türk is the rising star of representative of Al Baraka approach. sustainability. the sector in terms of sustainability. Banking Group (ABG), a highly At Albaraka Türk, we adopt a With these efforts, Albaraka Türk Operating with a sustainable banking respected player in global financial multi-dimensional environmental significantly contributes to resolving approach, our Bank designs its markets, and assumes an active sustainability approach by keeping global issues while focusing on business model within a framework role in combating climate change. close track of global developments financial success with its well of trust. Under this approach, Creating social value in the areas of in this key area. Our Head Office qualified human resources and Albaraka Türk shows great care in education, healthcare, employment, Building located in Istanbul, corporate capabilities. At Albaraka safeguarding and growing customer and sustainable energy as part of the Ümraniye was deemed worthy Türk, we are committed to recording savings while aiming to leave a UN 2030 Sustainable Development of LEED Gold Green Building further breakthroughs in the field of more inhabitable world for future Goals, our Bank is also a participant certification. Efforts are ongoing to sustainability in the future. I would generations by minimizing natural of the Carbon Disclosure Project. arrange our financials in a manner like to extend my gratitude to all our resource consumption across its Having been named the “Climate that reflects climate risks. We aim stakeholders, who contributed to our business operations. Leader” by CDP Turkey in 2020, to implement TCFD-Task Force on success in 2020. It is my sincere hope Albaraka Türk’s CDP Climate Change Climate Related Financial Disclosure that we maintain our sustainable score is “A-” and its Water Security recommendations. Additionally, we successes in the coming year. score is “B-.” As the one and only remain committed to determining participation bank included in the SBTi-Science Based Targets within Respectfully yours, Borsa Istanbul (BIST) Sustainability two years and reducing our carbon Index in the 2019-2020 and emissions by calculating our entire Melikşah Utku 2020-2021 periods, our Bank has climate load. Albaraka Türk aims Board Member and CEO undertaken a wide range of efforts to achieve net zero greenhouse to further boost its performance gas emissions on a global scale in waste prevention/reduction, with these studies pursuant to our reuse, and procurement. I state sustainable banking approach. with great pleasure that we have achieved high target realization rates in our voluntary projects with the committed participation of our employees.
28 29 Albaraka Türk Sustainability Report 2020 Message from the Management
Message from the Chairman of the Sustainability Committee
Albaraka Türk 2020 Sustainability Report, the product of our comprehensive efforts in the field of sustainability, offers a wide range of benchmarks and examples for all of our stakeholders.
Esteemed Stakeholders, A step to ensure future success: Our sustainability strategies guide We plan to contribute further to Sustainable Banking Program our operations. developing a sustainability culture in Albaraka Türk, the first participation Acting with the vision of “Becoming Albaraka Türk Sustainability Turkey. bank of Turkey and the only the Best Participation Bank in the Committee carries out its activities At Albaraka Türk, we are also a participation bank traded on World,” Albaraka Türk continues to based on the sustainability pioneer in sustainable banking. I Borsa Istanbul, leads the sector implement the Sustainable Banking strategies of the Bank. We prepare would like to extend my gratitude to in sustainable banking. From day Program successfully in line with sustainability reports on an annual all the Bank’s stakeholders, especially one, our Bank has contributed the goals of our main shareholder basis in order to minimize the impact our employees, who supported to the national economy while Al Baraka Banking Group (ABG). of our business operations, products, our sustainability efforts, including adhering to its participation banking Committed to extending its and services on climate change. combating climate change, with principles. Albaraka Türk strives to unbroken track record of financial In our sustainability reporting, we great awareness and responsibility. SUSTAINABLE BANKING be the innovation and development and operational achievements, disclose our efforts toward UN It is my hope that our sustainability leader in the industry. Diversifying our Bank does not compromise PROGRAM Sustainable Development Goals with journey will be crowned with even its products with efforts focused on its professional management Acting with the vision of “Becoming the Bank’s stakeholders. Albaraka greater successes in the coming year. on digital transformation and approach under any circumstances. the Best Participation Bank in the Türk’s 2020 Sustainability Report innovation, our Bank contributes At Albaraka Türk, we place great World,” Albaraka Türk continues to is prepared in light of the 2016 Respectfully yours, to social welfare in the fields of importance on the preservation of implement the Sustainable Banking GRI Standards, the latest reporting healthcare, education, employment, natural life for future generations Program successfully in line with the principles of the Global Reporting Mehmet Ali Gökce and renewable energy in line with Al and the protection of human rights. goals of our main shareholder Al Initiative. Our Sustainability Report Board Member and Baraka Banking Group’s “Al Baraka In addition, Albaraka Türk develops Baraka Banking Group (ABG). offers a wide range of benchmarks Chairman of the Sustainability Goals.” relationships based on transparency and examples for all of our Committee and accountability in line with its stakeholders. professional corporate management approach.
Implementing all legal compliance processes for the occupational health and safety of its suppliers, as well as its employees, Albaraka Türk continues its innovation and digitalization investments to ensure business continuity.
30 31 Albaraka Türk Sustainability Report 2020 Our Sustainability Organization
Al Baraka Goals (2016-2020)
Albaraka Türk conducted its sustainability activities consistently in line with the ABG Goals (2016-2020).
Operating in 17 countries including Making major social investments Albaraka Türk aims to generate high Turkey, Al Baraka Banking Group in the fields of education, health, added value in its focus areas in the (ABG) carried out the first phase education and sustainable energy, 2021-2025 period, when the second of its social responsibility program Albaraka Türk realized the following phase of ABG Goals will commence. named Al Baraka Goals (2016-2020). achievements in the 2016-2019 The following achievements were period. reached within the scope of ABG’s program as of end-20019. • Total employment: 9,753 • Financing Provided to Public and • A total of 38,565 employments, Private Sector Education Projects: • USD 210 million funding to public USD 132 million and private sector health projects, • Education Donations: USD 7.5 • USD 552 million funding to public million and private sector education • Financing Provided to Public and projects, Private Sector Health Projects: • USD 196 million funding to USD 288.5 million sustainable energy projects. • Health Donations: USD 171.7 thousand • Renewable Energy Financing: USD 153.8 million
32 33 Albaraka Türk Sustainability Report 2020 Our Sustainability Organization
GRI 102-44, GRI 102-45, GRI 102-46, GRI 102-47 GRI 102-44, GRI 102-45, GRI 102-46, GRI 102-47
Strategic Sustainability Areas
As an active player in the combat with global climate change, Albaraka Türk is taking firm steps to become a carbon-neutral bank.
Albaraka Türk 2020 Sustainability Reporting in accordance with Report was prepared in accordance 2016 GRI Sustainability Reporting with the core option of Global Standards, UN Sustainable Reporting Initiative (GRI)’s 2016 Development Goals (SDG) and ABG Standards Reporting Framework. Goals Albaraka Türk 2020 Sustainability Albaraka Türk 2020 Sustainability Report was prepared and issued Report was prepared in accordance to make the Bank’s sustainability with Global Reporting Initiative activities between January 1 – (GRI)’s most recent reporting December 31, 2020 more visible for framework, GRI Standards: Core stakeholders. The report presents option. The report was drafted by the economic, corporate, social, taking the sustainability priorities and environmental sustainability of Albaraka Türk, its principal activities of Albaraka Türk as a shareholder Al Baraka Banking Albaraka Türk 2020 Sustainability Report Prioritization of Goals corporate citizen to stakeholders Group (ABG), and stakeholders into in line with the principles of consideration. Within the report, transparency and accountability. UN Sustainable Development Goals • Anti-Corruption Policy Albaraka Türk 2020 Sustainability are also represented with icons. • Emissions • Economic Performance • Energy Management Report covers the sustainability Accordingly, the following priority • Market Presence
High • Use of Natural Resources activities conducted by the Bank’s matrix was prepared: • Indirect Economic Impact • Water Consumption domestic branches between January • Compliance with Environmental Regulations 1 – December 31, 2020. Albaraka Türk’s foreign subsidiaries are not included in the scope of this report. • Occupational Health and Safety • Human Rights • Procurement Practices • Customer Health and Safety • Occupational Training Medium Low Impact on Albaraka Türk Low Medium High
Priority for Stakeholders
Contact information to convey opinions and suggestions on Albaraka Türk 2020 Sustainability Report Seyfullah Demirlek (Manager) E-mail: [email protected]
34 35 Albaraka Türk Sustainability Report 2020 Our Sustainability Organization
Sustainability and Principles of Donations and Social Responsibility Principles Contributions
Continuing its sustainability and social responsibility Albaraka Türk provides in-cash and in-kind donations and activities in 2020 at full speed, Albaraka Türk also plays contributions to the socially-responsible persons, institutions a leading role in the fight against climate change. or NGOs with activities in the fields of healthcare, education, environment, vulnerable groups, culture etc.
• Best practices in sustainability and social responsibility around the world are monitored to enable the Bank to implement social responsibility projects that comply with its core values and ethical principles, and contribute to economic development. • Activities are carried out in priority areas of the Bank to help preserve our cultural assets and achieve UN Sustainable Development Goals.
In light of the principles in question, Albaraka Türk plays a pioneering role in the combat with climate change.
In this context, Albaraka Türk: Albaraka Türk bases all its efforts are undertaken as part of • Carries out operational activities sustainability and social sustainability activities. in an environmentally friendly responsibility activities on the • The Bank conducts efforts • Interest-free finance and • According to Article 5411 of the to the approval of the general way by making use of scientific following principles. in relation to Governance, participation banking principles, Banking Law No. 5411, “The amount assembly. Information regarding measurement methods in order to Environment, Human Rights, Albaraka Türk’s vision, mission, of donations to be extended by the amounts and beneficiaries of achieve net zero emission and to • Sustainability and Social Anti-Corruption and Anti-Bribery, ethical rules, and annual budget banks and institutions subject all donations and contributions limit the temperature increase to Responsibility activities are Management of Emergencies allowances are taken into account to consolidated supervision in made within the term in line with 1.5-2oC. Performs projects such as conducted in the target areas and Unexpected Incidents, when the persons, institutions a fiscal year shall not exceed the policy approved by the general Carbon Disclosure Project, Borsa such as education, healthcare, Occupational Health and Safety, or NGOs for donations and four per thousand of the bank’s assembly and the amendments in Istanbul Sustainability Index, Leed environment, vulnerable groups Business Continuity Management, contributions are determined by equity. However, minimum half of the policy shall be provided to the Gold Green Building Certification, and culture, and in collaboration and Banking Activities, which are the Senior Management’s decision. the donations and contributions shareholders through a separate Zero-Waste. with persons, institutions or NGOs identified as the Bank’s strategic • Albaraka Türk provides in-cash shall be composed of donations agenda item at the general • Takes into account CDP guidance operating in these fields. areas for sustainability. and in-kind donations and and contributions that may be assembly meeting.” in all these studies in addition to • In selecting the persons, • The Bank supports the social contributions to the socially- considered as expenditure or • Shareholders are provided with supporting environmentally-friendly institutions or NGOs for responsibility activities of the responsible persons, institutions deductible costs in the calculation detailed information on the projects with banking operations. collaboration in Sustainability Social Responsibility Club founded or NGOs with activities in the of the corporate tax base. The donations and contributions made • Takes the necessary steps to and Social Responsibility by employees. fields of healthcare, education, principles and procedures by the Bank at the first Ordinary inform its stakeholders regarding efforts, interest-free finance and • While extending cash and non- environment, vulnerable groups, applicable to the implementation General Assembly Meeting of the sustainability. In this regard, it aims participation banking principles, cash loans, the Bank prioritizes culture etc. in accordance with the of this provision shall be set by the relevant year. The compliance to create the TCFD infrastructure. as well as Albaraka Türk’s vision, projects that will create new framework specified in the Banking Board.” and effectiveness of the Bank’s • Club activities are supported in mission and ethical principles are employment opportunities and Law No. 5411. • According to Principle numbered practices and activities in relation addition to carrying out activities to taken into consideration. contribute to the easy access of • Donations and contributions are 1.3.10 under the CMB’s Corporate to donations and contributions increase employee awareness on • Carbon Disclosure Project (CDP), all members of society to quality provided by considering the laws Governance Communique with the provisions of applicable sustainability and corporate social BIST Sustainability Index, and education and healthcare services. and regulations the Bank is subject No. II-17.1, “a policy regarding laws and this Policy is subject to responsibility, and to encourage LEED Green Building Certification to. donations and contributions regular audits and assessments as voluntary participation in activities. shall be formed and submitted part of internal audit activities.
36 37 Albaraka Türk Sustainability Report 2020 Our Sustainability Organization
Our Sustainability Our Committees Organization
The Sustainability Committee and Sustainability Executive Albaraka Türk conducts sustainability activities through the Committee report to the Board of Directors and figure Sustainability Committee and Sustainability among the most important committees at Albaraka Türk. Executive Committee.
The Sustainability Committee and As per the resolution dated March Member: Süleyman Çelik (Assistant Albaraka Türk conducts sustainability • Identifying the risks, opportunities Roles and Responsibilities of the Sustainability Executive Committee 2020, Mehmet Ali Gökce was General Manager in charge of Human activities through the Sustainability and objectives in relation to Sustainability Executive Committee report to the Board of Directors and appointed as the Chairman and Values and Administrative Affairs) Committee and Sustainability climate change and ensuring that The Committee ensures: figure among the most important İbrahim Fayez Humaid Alshamsi was Member: Mehmet Fatih Yorulmaz Executive Committee. necessary reports are prepared in • Implementing the projects that will committees at Albaraka Türk. appointed as the Member. (Assistant General Manager in charge this regard. convey the Bank’s vision, mission of Marketing) The roles and responsibilities of • Evaluating corporate social and corporate values across the Albaraka Türk Sustainability Sustainability Executive Committee Member: Ömer Emeç (Strategic these committees are described responsibility projects submitted entire society, stakeholders and Committee Chairman: Melikşah Utku (General Planning and Economic Research below. to it for approval and taking business partners as part of the Chairman: Mehmet Ali Gökce (Board Manager) Manager) resolutions as to whether or not to Sustainable Banking Program. Member) Member: Mustafa Çetin (Assistant Roles and Responsibilities of implement such projects. • Monitoring national and Member: Ibrahim Fayez Humaid General Manager in charge of the Sustainability Committee • Evaluating the impact of the international practices and Alshamsi (Board Member) Finance) The Committee ensures: projects and activities on society standards for sustainability and Member: Mohamed Ali Chatti • Implementing the projects that and ensuring that measures taken corporate responsibility, while (Board Member) will disseminate the Bank’s in this regard are monitored. ensuring the Bank’s projects and vision, mission, and corporate • Discussing the issues efforts in this field comply with values across the entire society, reported by the Sustainability, such practices and standards. ALBARAKA TÜRK’S SUSTAINABILITY ORGANIZATIONAL CHART stakeholders and business partners Social Responsibility and • Formulating sustainability Communications Executive strategies and policies; Sustainability Committee Corporate Governance Committee as part of the Sustainable Banking (Board of Directors Committee) (Board of Directors Committee) Program. Committee and making the incorporating them into the Bank’s • Monitoring national and necessary decisions to resolve activities; and monitoring the Sustainability Executive Committee international practices and them. Bank’s sustainability performance. (Executive Committee) standards for sustainability and • Reviewing the annual and • Establishing an environmental, corporate responsibility, while periodical sustainability and social and governance system so Strategic Planning and Administrative Communication and Investor Relations Other Related ensuring the Bank’s projects and corporate responsibility reports. as to ensure this system works Economic Affairs and Brand Management Dept. Departments of our efforts in this field comply with • Working in coordination with in integration with the credit risk Research Dept. Procurement Dept. Dept. (Corporate Bank such practices and standards. the relevant department of ABG assessment system. (Sustainability (Environmental (Sponsorship and Governance (Other Necessary • Devising sustainable strategies and for sustainability and corporate • Identifying the risks, opportunities and KSS Activities Management Communication) Activities) Activities) policies, incorporating them into responsibility issues. and objectives in relation to Coordination) Services) the Bank’s activities and monitoring climate change and ensuring that the Bank’s sustainability necessary reports are drafted and performance. submitted. • Establishing an environmental, • Conducting evaluations on the FIELDS OF ACTIVITY AND RESOURCE UTILIZATION social and governance system, budget, scope and partners of Sustainability and Corporate Governance Activities integrating this system into the the requested CSR projects; credit risk assessment system. submitting these evaluations to Corporate Social Responsibility Activities the Sustainability Committee for approval; and following Sponsorship and Communication Activities up the projects that are being implemented. • Evaluating the impact of the projects and activities on society and ensuring that measures taken in this regard are monitored.
38 39 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Corporate Governance Approach
Thanks to its dynamic organizational structure, Albaraka Türk manages its business processes effectively.
Corporate Governance Committee
Advisory Committee
Remuneration Committee
Board of Directors Credit Committee
Information Technologies Governance Committee
Sustainability Committee
Executive Committee
Audit Committee General Manager
Treasury and Financial Digital Channels and Sales Credit Risk Central Operations Institutions Payment Systems
HR and Administrative Arbitration and Marketing Loans Finance Affairs Business Excellence
40 41 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Board of Directors
Mazin Manna Süleyman Kalkan Ibrahim Fayez Humaid Alshamsi Houssem Ben Haj Amor Prof. Dr. Kemal Varol Mustafa Büyükabacı Chairman Vice Chairman Board Member Board Member Board Member Board Member Mr. Mazin Manna was born in 1968. He Süleyman Kalkan was born in Kırşehir He was born in 1949 in the Ajman city He was born on 10 April 1975 and Kemal Varol who was born in 1943 in Mr. Büyükabacı graduated from Boğaziçi graduated from the University of London, in 1956. He graduated from the Faculty of the United Arab Emirates (UAE). received his bachelor’s degree from Iğdır, had his Master’s degree in Textile University, Department of Industrial Economics Department and London of Political Sciences, Department Mr. Ibrahim Fayez had his degree in Institut Superieur de Comptabilite Chemistry from the Institute of Science Engineering and earned his Master’s School of Economics and Political Science of International Relations at Ankara Economics from the Arab University of (Tunisia) on accounting and finance. In and Technology of Manchester University degree in the same field in 1984. He then in 1989. He started his professional career University. Mr. Kalkan began his Beirut in Lebanon in 1972. He commenced 1999 he received his certificate of public in 1965 where he had also completed his worked as a research associate at the in 1991 at Citibank, where he held various professional career as an assistant his professional career in 1969-1971 at accountancy from Institut Superieur de Doctorate in 1968. Since 1974, Mr. Varol same department. From 1989 onwards, positions during his 24-year tenure. Mr. inspector at İşbank in 1983. He then the Bank of Oman as Current Accounts Comptabilite. The same year, he started has been working as a senior manager he assumed various management roles at Manna served as the Citibank Bahrain served as Retail Loans Assistant Manager Chief. Later on, he became the manager working at Arthur Andersen/Moore in numerous companies including the capital markets and investment firms, mainly CEO between 2010 and 2015. During this in 1993, Commercial and Corporate of its Ajman branch (1971). In between Stephens as manager. Between 2005 and Sümerbank where he worked as General focusing on Asset/Portfolio Management period, he was responsible for corporate, Loans Regional Manager in 1995 and 1972-1976, he held the following positions: 2007, he served at Societe Generale as a Manager and Chairman of the Board. and Investment. In 1993, he joined Yıldız investment and retail banking at Citibank Non-performing Loans Manager from Manager of Financial Affairs at the Ministry manager of the accounting department. He is currently working as a Professor at Holding as the Founding Director and as well as for relations with Saudi Arabia. 1997 until the end of 2003 and sat on of Housing & Town Planning of UAE. He Between 2007 and 2013 he served as the Istanbul Commerce University. Kemal Board Member of Taç Investment Trust. Mr. Manna also served as Citibank’s the Disciplinary Committee for six years worked as Assistant General Manager CFO and the COO at SHUAA Capital. Varol has served as an Independent Board In addition, he served as Capital Markets Middle East Corporate and Investment at the same bank. Mr. Kalkan served as at Abu Dhabi Fund for Arab Economic Between 2014 and 2017 he served as the Member to the Board of Albaraka Türk and Financial Advisor at Yıldız Holding with Banking Co-President and held senior a Branch Manager during 2003-2010. He Development between 1976-1989; Board general manager of the same company. between 2013 and 2019. Mr. Varol who regard to capital, commodity and money positions in corporate and investment also served as Board Member of İşbank Member for European Arab Bank Holding Between 2018 and 2020 he served as has been serving as a Board Member of markets; and as Board Member at Family banking, including the General Manager affiliates, including TSKB (Industrial in Luxembourg (1978), Board Member the general manager of Amlak Finance. Albaraka Türk since March 2019, is also a Finans and other group companies. He position at Citi Islamic Investment Bank. Development Bank of Turkey), Anadolu for Industrial Bank of UAE (1983-1999), Since April 2020, he has been serving as member of the Credit Committee and the founded Bizim Securities, where he worked He has served as the General Manager Hayat Emeklilik (life insurance) and İş Board Member for Austrian Conference the Deputy CEO in charge of Business Executive Committee. as Founding Director and Board Member. and a Board Member at Al Baraka Banking Factoring. Mr. Kalkan was appointed as Centre Co in Vienna (1984) and Board Development and Investments at Al Mr. Büyükabacı founded the real estate Group since January 2020. Working as the the Executive Member of the Board and Member for Dubai Islamic Bank (1998- Baraka Banking Group. In March 2020, he division of Yıldız Holding, turning real estate General Manager of Abu Dhabi Islamic the General Manager of VakıfBank in 2001). He also worked as chairman of UAE has been elected as a Board Member at operations into a major line of business. Bank prior to his role at Al Baraka Banking March 2013 and served as the Chairman Bangladesh Investment Co in Bangladesh Albaraka Türk. He worked as Founding President of the Group, Mr. Manna was the General of the VakıfBank affiliates Güneş Sigorta (1988-1989), and Board of the Arab Fund Real Estate Group. He left Yıldız Holding at Manager of Middle East and North Africa, (insurance) and Vakıf International for Economic & Social Development the end of 2010. Later, he founded his own United Arab Emirates Senior Country AG (Vienna). He has served as Deputy in Kuwait (1983-2010). He has been the investment company, where he continues Officer, and Executive Committee Chairman of Halkbank between April Chairman and CEO of the Emirates to engage in investments in agriculture, Member at Credit Agricole CIB. Elected 2013 - April 2016. He also chaired the Islamic Bank in Dubai between 2004 and livestock, real estate and capital markets. as a Member of the Board of Directors at Audit Committee as an Independent 2011. Later on, his own company AlRabiah Between 2013 and 2016, Mr. Büyükabacı Albaraka Türk in March 2021, Mr. Manna Board Member. Mr. Kalkan was a member Trading Co. (Dubai). He has been a Board served as a Board Member at Borsa Istanbul, was appointed as the Chairman of the of the Supervisory Board of Demir-Halk Member of Albaraka Türk since April and between 2012 and 2018 he served as Board of Directors of the Bank as of April Bank (Nederland) N.V., one of Halkbank 2005, and he is also currently a member a Board Member at BİM Birleşik Mağazalar 5, 2021. At the same time, he serves as the affiliates between April 2013 – October of the Corporate Governance Committee A.Ş. He serves as Board Member Albaraka Chairman of the Bank’s Loan Committee, 2016 and served as the member of and the Sustainability Committee. Portföy Yönetimi A.Ş. Mr. Büyükabacı has Remuneration Committee, and Executive RCC (Remuneration & Compensation been serving as Board Member, Chairman Committee. Committee), NC (Nomination Committee) of the Audit Committee and Member of the and SBCC (Credit Committee). Mr. Kalkan Executive Committee and the Remuneration was appointed as the Board Member Committee at Albaraka Türk Participation of Albaraka Turk as of 31 May 2018, and Bank. In addition, he serves as the Vice he is currently a member of the Credit Chairman of the Board of Trustees at Committee, the Vice Chairman of the Istanbul Sabahattin Zaim University, a Board Executive Committee and the Chairman Member at Bahar Arsacılık ve İnşaat Yatırım of the Corporate Governance Committee. A.Ş., a partner in Abacılar Hayv. ve Gıda Tar. San. Tic. Ltd. Şti., Birler Gıda Tar. Hayv. San. ve Tic. Ltd. Şti. and Ortak Gözmer Gözlük San. ve Tic. Ltd. Şti.
42 43 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Board of Directors
Dr. Mohamed Ali Chatti Mehmet Ali Gökce Ghassan Ahmed M. Amodi Tawfig Shaker M. Mufti Melikşah Utku Board Member Board Member Board Member Board Member Board Member and CEO Dr. Mohamed Ali Chatti was born in Mr. Gökce was born in Çankırı in 1957. He was born on 19 April 1972 and received He was born on 3 June 1969 and received Mr. Utku was born in Ankara in 1968. 1984 in Tunisia. He earned his Bachelor’s He obtained his bachelor’s degree from his bachelor’s degree from “The American his bachelor’s degree from the University He graduated from the Mechanical Degree in Finance from the Institute Ankara University – Faculty of Theology University” (California - USA), on business of Bridgeport (Connecticut – USA) on Engineering Department of Boğaziçi of High Commercial Studies in Tunisia and Master’s Degree from University administration. He commenced his International Business. He commenced University (Istanbul, 1990). He completed and his Master’s Degree from Paris X of Turkish Aeronautical Association, banking career in 1994 at SABB (Saudi his banking career in 1993 at Al Bank Al his graduate studies at the London School Nanterre University in France. He then Institute of Social Sciences, Business. British Bank) as a management trainee. Saudi Al Fransi. There he served in the of Economics (1990-1992) and Master’s completed his Ph.D. in Finance in 2010 He commenced his banking career at Then, he was promoted to Assistant field of Corporate Banking until 1997 Degree in economic development at at Paris X Nanterre University, in France. Töbank as a “Banking Officer” and worked Relationship Manager in Corporate and from 1997 up to 1999, he served in Marmara University (Istanbul, 1998). In Dr. Chatti began his career in 2010 there until 1984. Between 1987-1991 he Banking Division and progressed to Head the field of private banking. Between 2004, he served as a consultant to the as Young Professional at the Islamic served as Assistant Manager at Faisal of Corporate Banking. Between 2007 and 1999 and 2002 he worked at Andersen General Manager of Albaraka Turk. In Development Bank (IsDB). Between 2011 Finance Institution. Then he worked as 2017, he served as the Regional Head – Middle East Financial Transaction. 2006-2007, he was the head economist and 2017, he worked as an Investment Ankara Branch Manager of Kuveyt Türk of Corporate Banking (SABB Western Between 2005 and 2007 he served as in Albaraka Turk. In addition, he was Analyst and Senior Investment Officer Participation Bank between 1991 and 1999. Region). Between 2017 and 2019, he Corporate Country Compliance Officer an economics columnist for Yeni Şafak at the Investments Department of IsDB. In 1999, he was appointed as Assistant served as the CEO of the SABB. Since at Samba Financial Group. Since 2007, he newspaper for over 10 years (1995-2009). He was also a lecturer about Islamic General Manager of Anadolu Finance 2020, he has been serving as the general has been serving as the Group Treasurer He later worked as Investor Relations Finance at the ESSEC Tunisia in 2012. Institution and served there until 2005. manager of Dar Altamleek and in 2020 he at Dallah Albaraka Holding Co. In March Manager between 2007 and 2009. He Since 2018, he is the manager of the Between 2006 and 2011 he served as has been elected as a Board Member at 2020, he has been elected as a Board continued as CIO Assistant General Islamic Finance Investments Division and Assistant General Manager of Türkiye Albaraka Türk. Member at Albaraka Türk. Manager in December 2009 and was managing three strategic portfolios for Finans Participation Bank. In 2011, he was appointed as CFO primarily responsible the IsDB: the equity portfolio of IsDB (in appointed as the CEO of Termikel A.Ş. for Financial Affairs, Budget and Financial the Islamic Financial institutions), Awqaf and served there until 2012. He served Reporting and Corporate Communication Portfolio (managing the Awqaf Properties as a Board Member of Asya Participation Departments. He was a Board Member Investment Fund) and the microfinance Bank between 2015 – 2016 and served of Borsa Istanbul from 2013 to 2016. As portfolio. In total, he is managing a as the CEO and the Chairman of “RCT the General Manager of Albaraka Turk portfolio worth more than US$ 2 billion. İn Varlık Yönetim A.Ş.” between 2012 and as of October 2016 Utku continued his October 2019, he was appointed as Acting 2017. He served as a Board Member duty, as well as Chairman of the Board of Director for the Islamic Financial Sector at the Türkiye Halk Bank between Directors of Bereket Varlık Kiralama A.Ş., Development Department at IsDB. Dr. 2016 and 2017. In March 2020, he has Albaraka Portföy Yönetimi A.Ş., Katılım Chatti represented IsDB on other boards been appointed as a Board Member of Emeklilik ve Hayat A.Ş. and Albaraka (first Islamic Bank in Nigeria for more than Albaraka Türk Participation Bank and still Kültür Sanat ve Yayıncılık A.Ş. He is a 6 years, a Trading company in Bahrain for he is a member of the Audit Committee, member of the Executive Committee, 4 years, a microfinance Bank in Sudan for Executive Committee and the Chairman Credit Committee, Remuneration 3 years) before joining Al Baraka Board of the Sustainability Committee. Committee and the Chairman of the of Directors. Dr. Chatti is a member of Information Technologies Governance the Audit Committee and a substitute Committee. member of the Credit Committee.
44 45 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Senior Management
Melikşah Utku Turgut Simitcioğlu Hasan Altundağ Mustafa Çetin Malek Khodr Temsah Volkan Evcil Board Member and CEO Deputy General Manager (CMO) Assistant General Manager Assistant General Manager Assistant General Manager Assistant General Manager Please see the Board of Directors page for Turgut Simitcioğlu was born in Erzurum Hasan Altundağ, who graduated from He was born in Afyonkarahisar in 1971. He was born in Beirut, Lebanon in 1981. Volkan Evcil was born in 1966 in Eskişehir. the CVs. in1961. After graduating from King Saud Ankara University, Faculty of Political In 1991, he ranked 20th in the national He received his Bachelor of Business In 1987, he graduated from Anadolu University, Faculty of Education in Saudi Sciences, Department of Economics, university exam. He went on to graduate Administration from The George University, Faculty of Economics and Arabia in 1989, he received his Master’s started his banking career in 1986 as from Boğaziçi University, Department of Washington University (Washington Administrative Sciences, Department degree in Business Administration an Auditor at Yapı ve Kredi Bankası Management in 1996. In the same year, D.C., 2003) and completed his master’s of Economics. In 1990, he began from Fatih University, Institute of Social Inspection Board. He served as Auditor, he started his professional career at Degree in Business Administration his career as Assistant Inspector at Sciences. Mr. Simitcioğlu joined Albaraka Operations Director and Field Director, Finansbank in the Corporate Banking from Thunderbird, the Garvin School Tütünbank’s Internal Audit Department Türk in 1990 and worked in the Fund respectively until 1999. Mr. Altundağ Management Trainee Program. Between of International Management (Arizona, after winning the exam for this position. Allocation Department from 1990 to who served as a Branch Manager at a 1999 and 2004, he served as Manager in 2006). He began his career with Bank of In 1992, he joined the Albaraka Türk 1995, and at the Central Branch from participation bank between 1999 and the areas of Corporate and Commercial America Business Banking in Washington family as Assistant Inspector, before 1995 until 2001. He was Director of the 2004, joined Albaraka Türk Participation Banking at Turkish Foreign Trade Bank. In DC followed by his tenure at the London- serving as Inspector, Chief Inspector, Central Branch between 2001 and 2003, Bank in March 2004. At Albaraka Türk, 2004, he joined Albaraka Türk as Branch based European Islamic Investment Bank Vice Chairman of the Internal Audit and later Director of the Corporate he served as Sultanhamam Branch Manager, holding this position until 2008. between 2007 and 2009. In 2010 Malek Department, and Vice President of Risk Banking Department, before serving Manager from 2004 to 2005, Regional He went on to serve as Marketing Manager Khodr Temsah joined Al Baraka Banking Management. He was named President as Central Branch Manager from 2003 Manager of Marketing between 2005 from 2008 to 2011; Foreign Transactions Group, Bahrain as Vice President of of Risk Management in 2006. Since to 2009. In December 2009, he was and 2011, Director of the Transformation Operations Manager between 2011 and Treasury where he established & oversaw February 2017, Mr. Evcil has been serving appointed Assistant General Manager, Administration Office from 2011 until 2012; Financial Institutions and Investor the global sukuk desk until 2014. Since as Internal Systems Senior Manager in thereafter serving as Assistant General 2013, and Manager of Strategy and Relations Department Manager and 2014, Mr. Temsah has been working with charge of the Internal Audit Department, Manager in charge of Credit Operations, Corporate Performance from 2013 to Corporate Governance Committee Albaraka Türk and is currently overseeing Internal Control Department, Risk Foreign Transactions Operations, Payment 2016. Mr. Hasan Altundağ was appointed Member from 2012 until 2017; and the Treasury, Financial Institutions and Management Department, and Legislation Systems Operations, Banking Services as Assistant General Manager – Marketing Assistant General Manager responsible Investment Banking Departments. He was and Compliance Department. In August Operations and Risk Monitoring. Still in 2017, and since July 2020, he has been for Finance and Strategy between 2018 also a member of the Board of Directors 2019, he became the Assistant General serving as Deputy General Manager serving as Assistant General Manager and 2020. Since July 2020, he has been for one of Morocco’s first Islamic banks, Manager in charge of Central Operations and Senior Assistant General Manager, – Sales responsible from Corporate working as the Assistant General Manager BTI Bank, between 2017 and 2020, where which consists of the Credit Operations Simitcioğlu has been serving as the Sales Directorate, Commercial and SME – Finance responsible for the Financial he served on the audit and board affairs Department, Foreign Trade Operations Assistant General Manager in Charge of Sales Directorate, Retail and Private Reporting Directorate, Financial Affairs committees. He knows English, Arabic and Department, Banking Services Operations Legal Follow-up Department, Collection Banking Sales Directorate, and Regional Directorate, Business Excellence and Turkish at an advanced level. Department, and Collateral Management Department and Credit Risk Monitoring Directorates. Mr. Altundağ also serves Innovation Directorate, Investor Relations Department. On January 27, 2020, he was Department. as Deputy Chairman of the Board of Directorate and Data Governance elected as the Member of Risk Center Directors at Albaraka Kültür Sanat ve Service units. He is also a Member of the Management in the Banks Association Yayıncılık A.Ş. Board of Directors of Albaraka Teknoloji of Turkey, representing the Participation Bilişim Sistemleri ve Pazarlama Ticaret Banks Association of Turkey. Anonim Şirketi, one of the affiliates of Albaraka Türk. Fluent in English and German, Mustafa Çetin holds the Capital Market Activities Advanced License and Corporate Governance Rating Specialist License.
46 47 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Senior Management
Fatih Boz Süleyman Çelik Mehmet Fatih Yorulmaz Mehmet Uludağ Yasemin Aydın Assistant General Manager Assistant General Manager Assistant General Manager Director Director He was born in Edirne in 1973. In 1995, he He was born in Samsun in 1963. He He was born in Kahramanmaraş in He was born in 1979 in Konya. He She was born in 1974 in Kahramanmaraş. graduated from the Faculty of Political graduated from Marmara University, 1980. In 2001, he graduated from the graduated from Dumlupınar University, She graduated from Istanbul University, Sciences, Ankara University. He held Faculty of Economics and Administrative Faculty of Civil Engineering, Middle East Faculty of Economics and Administrative Faculty of Political Sciences. Then, she a Master’s degree in political science Sciences, Department of Public Technical University with the third rank Sciences, Department of Business completed her Master’s degrees in MBA from the same school. From 1995 to Administration. Mr. Çelik started his in 3.5 years. In 2002, he received his Administration in 2001 and completed and Marketing Communications. She 1998, he worked as a director for various professional career in 1988 at Albaraka engineering Master’s degree from the his Master’s degree in Business started her business life in the banking companies. In 1998, Mr. Boz joined Türk. He worked in the Foreign Georgia Institute of Technology with a Administration at Gediz University in 2013. sector in 1996. Between 1996 and 2011, Albaraka Türk as Assistant Inspector on Transactions Department from 1988 to High Honor Certificate and took part in He started his professional career in 2004 she worked and managed in the fields of the Inspection Board. He went on to serve 1996, at the Fatih Branch between 1996 the engineering design of skyscraper- with the title of Assistant Specialist in the Digital Banking, Card Payment Systems, as Deputy Director of the Operations and 1997, and at the Ümraniye Branch style buildings in Atlanta. He joined the Albaraka Türk Denizli Branch. He worked Retail Banking, Organization & Quality Department in 2003, Branch Manager from 1997 to 2000. Between 2000 and Islamic Development Bank in Jeddah in as a specialist between 2006 and 2008 and in the business lines of Marketing, between 2006 and 2009, Manager in 2011, Mr. Çelik worked at Türkiye Finans 2005 and worked as a project manager and as an assistant manager between Operations, Product Development, and the Project Management Department as Ümraniye and Sultanhamam Branch in countries such as Afghanistan, 2008 and 2011 in our Bank. Between 2011 Information Technologies in this sector. from 2010 to 2011 and later as Credits Manager, Credit Operations Manager, and Pakistan and Sudan. He returned to the and 2017, he served as Branch Manager Between 2012 and 2017, she managed Operations Manager. In January 2017, he Human Resources Manager. In 2011, he USA in 2007 and completed his MBA in Manisa and Uludağ Branches, Aegean consultancy projects in various sectors was appointed Assistant General Manager was appointed Üsküdar Branch Manager at Harvard Business School as a High Regional Manager between 2017 and such as Organizational Structuring, responsible for central operations. As at Albaraka Türk, before assuming the Honor Student. Afterward, he provided 2019 and Commercial and SME Sales Process Development & Management, of August 2019, Fatih Boz serves as the role of Human Values Manager between management consultancy services to Manager between 2019 and 2020. In July Restructuring, and Digitalization and Assistant General Manager responsible for 2012 and 2017. Mr. Çelik was appointed the leading companies in the financial 2020, he was appointed as the Director selection and assessment activities in the Corporate Loans Allocation Department, Assistant General Manager in January sector in the Boston and Istanbul of Arbitration and Business Excellence to field of Human Resources. In 2017, she Commercial and SME Loans Allocation 2017 and is in charge of Human Values, offices of Boston Consulting Group. the head of the Ombudsman, which was started to work as Digital Channels and Department and Retail and Micro Loans Administrative Affairs, Procurement, Then, he served as General Manager established to coordinate and resolve Payment Systems Development Manager Allocation Department. Training and Career Management Advisor at Türk Telekom and Senior issues related to digitalization, new at Albaraka Turk. Ms. Aydın, who was Departments. Mr. Çelik is also Vice Director in charge of Marketing, Sales products, organizational changes and appointed as the Director Responsible for Chairman of Albaraka Kültür Sanat ve and Business Development at TTNET. In improvement of the Bank processes with Digital Channels and Payment Systems Yayıncılık A.Ş. and Albaraka Teknoloji 2014, he started to work as the manager the Branches. He still continues to work in in July 2020, is also a Board Member at Bilişim Sistemleri ve Pazarlama Ticaret responsible for Central Asia and Turkey in this position. Albaraka Teknoloji Bilişim Sistemleri ve A.Ş. the loan allocation unit of ICD, the private Pazarlama Ticaret A.Ş. sector branch of the Islamic Development Bank. In 2016, he established the Turkey office of Compare Europe Group, an international fintech initiative, as Country Director. Mehmet Fatih Yorulmaz, who joined Albaraka Türk as the General Manager Advisor in 2017, has been serving as the Assistant General Manager – Marketing responsible for Marketing Department, Product Management Department, Communication and Brand Management Department and Pricing Strategy and Governance Service Department since July 2020. Mr. Yorulmaz is also a member of the Board of Directors of Albaraka Kültür Sanat ve Yayıncılık A.Ş.
48 49 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Functions of the Committee: Corporate Governance • Evaluating the structure and Committees Under the Board of Directors Based on the powers delegated by effectiveness of the Board of the Board of Directors, the Credit Committee Directors regularly, and advising the Committee is authorized to allocate Board on necessary changes that Purpose credit lines within the framework may be introduced in this regard, The Committee has been formed of the methods/principles defined • Determining and supervising the to follow-up, evaluate and improve by the Banking Regulation and approach, principles and practices our Bank’s compliance with the Committees under Albaraka Türk’s Board of Directors Supervision Agency and to conclude in relation to performance principles of Corporate Governance the credit resolutions within assessment, career planning and and submit proposals to the Board assume key roles in the Bank’s business processes. delegated limits. In this respect the rewarding processes for the Board of Directors in this respect. These Committee; Members and executives. have been developed in accordance • Decides on branches’ credit limits with CMB’s Corporate Governance and conditions for extensions, Working Principles of the Committee Principles. • Evaluates and decides on the The committee convenes at least requests for limit allocations four times a year with one more than Albaraka Türk, which carries out providing preliminary evaluations and increases that exceed the the half number of its members and Audit Committee Credit Committee its activities with a professional to the Board of Directors when branches’ delegated powers, adopts by majority. The works and corporate governance approach, Purpose selecting the independent audit Purpose • Resolves on credit limits that are to proposals of the Committee are consistently increases its corporate The Audit Committee consists of firms and rating, survey and Within the authorities vested be decreased or canceled, discussed at the Board as an agenda governance rating. Board Members for the purposes of support services agencies; regularly by the Board of Directors, the • Monitors the general credit policies item. The Committee keeps written assisting the Board of Directors to monitoring the activities of the said Credit Committee resolves about of the Bank, records of its works. It also submits Composition of the Committee perform auditing and supervision institutions which are appointed demands for credit line allocations • Determines the terms and the information regarding the works The majority of committee members activities. The Committee was by the Board of Directors and with amounting up to 10% of the Bank’s conditions of credit extensions, and the reports including the results are non-executive Board Members. If formed on the basis of the provisions which contracts are signed; ensuring equity including their renewals, • Decides on converting credit lines of the meetings to the Board of deemed necessary, the Committee of Article 24/6 of the Banking Law the consolidated internal auditing of amendments and/or collateral of clients into other modes of Directors. Corporate Governance may assign people specialized No. 5411. partnerships subject to consolidation changes on condition that the credit facility. Committee convened 5 times in in their respective fields to the as per the regulations introduced tasks, powers and responsibilities 2020. Committee who are not Board Composition of the Committee with respect to the Banking Law, and should remain within the restrictions Working Principles of the Committee Members. The Audit Committee consists of coordinating their activities. defined in the Banking Law. The Credit Committee convenes with Remuneration Committee at least two non-executive Board the participation of all members. Working Principles of the Committee Members of the Corporate Members. Members must have the Composition of the Committee The Credit Committee’s decisions Purpose • The Audit Committee convenes at Governance Committee: qualifications determined by the The Committee consists of the given unanimously are implemented The Remuneration Committee least four times a year. Chairman: Süleyman Kalkan, Vice Banking Regulation and Supervision General Manager or Deputy General directly and decisions given by is tasked with guaranteeing a • The Audit Committee discusses Chairman Agency. Manager with at least two members majority are implemented after the balanced distribution of interests issues related to internal control, Member: Ibrahim Fayez Humaid elected by the Board of Directors approval of the Board of Directors. and rights across the Board, senior financial tables, internal audit Alshamsi, Board Member Members of the Audit Committee: from among the members that The committee agenda is determined management, employees and and other special items on their Member: Mansur Çelepkolu, Investor President: Mustafa Büyükabacı, Board meet the conditions required for by the General Manager. The written shareholders; and developing agenda, by also summoning the Relations Manager Member the General Manager (except for suggestion of the General Manager proposals and strategies on wages in Member: Houssem Ben Haj Amor, representatives of independent the term) to fulfill the assigned is asked for in limit increases done Functions of the Committee: line with their contributions to the Board Member audit agencies, if and when duties regarding credits. Two reserve by the Credit Committee. For • Examining whether the Corporate Bank’s value creation process. Member: Mehmet Ali Gökce, Board needed. members from among the Board proposals regarding credits for Governance Principles are adopted Member • Committee resolutions are Members meeting the conditions which financial tables have to be at the Bank, and if that is not the Composition of the Committee submitted to the Board of required (except for the term) for required, it is essential that the case, identifying its reason as well The Committee consists of at least Functions of the Committee: Directors for acknowledgment or the General Manager are elected financial analysis and intelligence as the conflicts of interest arising two members. Committee members On behalf of the Board, the Audit ratification based on its nature. to serve as a substitute for a Credit reports of credit requestors should from such failure to comply with are determined by the Board of Committee monitors the efficiency • Resolutions of the Audit Committee member who cannot be attached. Activities of the Credit these principles and proposing Directors. and proficiency of the internal Committee are registered in the participate in any meeting. Committee are subject to audit by corrective actions to the Board; systems of the Bank, the functioning Book of Resolutions as per the the Board of Directors. Each Board • Overseeing the activities and Members of the Remuneration of these systems as well as the related provisions of the Banking Members of the Credit Committee: Member is authorized to ask for all operations of the Financial Committee accounting and reporting systems Law. Chairman: Mazin Manna, Chairman of kinds of information from the Credit Institutions and Investor Relations Chairman: Mazin Manna, Chairman of in the framework of the Banking the Board Committee about the Committee’s Department, the Board Law and related regulations, and The Audit Committee convened Member: Süleyman Kalkan, Vice activities and to conduct all kinds of • Establishing a transparent system Member: Mustafa Büyükabacı, Board the integrity of the produced data, 5 times in 2020. Chairman control he/she finds necessary. including policies and strategies Member Member: Prof. Dr. Kemal Varol, for determining, evaluating and Member: Süleyman Kalkan, Vice Executive Board Member The decisions of the Credit training suitable candidates Chairman Member: Melikşah Utku, Board Committee are recorded in the for the Board of Directors and Member And General Manager minute book. The Credit Committee administrative management Reserve Members: Houssem Ben Haj minute book is kept according to positions, Amor, Board Member the procedures and principles that Reserve Members: Mohamed Ali the Board minute book is subject Chatti, Board Member to. The Credit Committee convened 94 times in 2020 with the full attendance of all members. 50 51 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Committees Under the Board of Directors
Functions of the Committee: Sustainability Committee d) Establishes a ESG system Composition of the Committee • To offer suggestions on issues such • To provide suggestions about • Establishing a remuneration policy and integrates with the loan risk The committee consists of at least as strategy, marketing, business specific sectors, geographical compatible with the scope and Purpose assessment system, three members of the Board of plan and balance sheet for any regions and customers, structure of the Bank’s activities, The goal is to establish policies that e) Manages the Sustainability Directors determined by the Board venture, partnership, investment, • To review the works that may affect strategies, long-term goals and represent the Bank’s core values Executive Committee in relation of Directors. The Chairman and the and financial activity, the Bank’s activities and other risk management structures, and ethical principles by taking into to the procedures of the Bank on Deputy Chairman of the Committee • To offer suggestions on issues issues that may arise before the preventing excessive risk-taking account the best practices in the determining climate change risks, are determined by the Board of such as purchasing and selling meetings of the Board of Directors, and contributing to effective risk field of Sustainability and Social opportunities and targets and Directors. The Committee may invite important goods, services and and make proposals, management, Responsibility worldwide. reporting. Bank executives and personnel, as it rights and acquisition or the • To make proposals for the • Reviewing the remuneration policy 3.2 In addition to evaluating deems necessary, to their meetings disposal thereof by other means, restructuring related to the debts at least once a year to ensure the Composition of the Committee corporate social responsibility and obtain their opinions. The making commitments, acquiring of the Bank’s customers, partial or effectiveness of the remuneration The Committee consists of at least projects submitted for the approval Committee may also benefit from participations, and engaging total liquidation of the debts and policy of the Bank, two Board Members. Committee of the Sustainability Committee, the opinions of independent experts in joint ventures and making in other matters, • Evaluating the remuneration Members are determined by the decisions are made regarding the and consultants, where necessary, investments with other methods, • To decide for the restructuring of policy and practices within the decision of the Board of Directors. projects. and costs are to be covered by making expenses, to decide upon the loans and receivables up to framework of risk management Reporting and secretarial duties of 3.3 Evaluates the impact of the the Bank. Secretarial works of the purchasing of goods, services the amount between 2% and 5% and submitting a report with the Committee are carried out by the projects and activities on society and Committee are carried out by the and rights, engaging in joint of the Bank’s shareholders’ equity, related suggestions to the Board of Board of Directors Spokesmanship. ensures that measures taken in this Rapporteur Department of the Board ventures, acquiring participations to decide on the liquidation or Directors every year, regard are monitored. of Directors. and making investments with abolition of the Bank’s loans, • Determining the suggestions of the Members of the Sustainability 3.4 Discusses the issues reported other methods up to the amount receivables and assets up to the Members of the Board of Directors Committee by the Sustainability Executive Members of the Executive Committee between 2% and 5% of Bank’s amount between 2% and 5% of and senior executives regarding Chairman: Mehmet Ali Gökce, Board Committee and takes the necessary Chairman: Mazin Manna, Chairman of shareholders’ equity, and making the Bank’s shareholders’ equity the remuneration principles by Member decisions to finalize them. the Board commitment up to the amount annually, to decide on the release, taking into account the long-term Member: Ibrahim Fayez Humaid 3.5 Working in coordination with Vice Chairman: Süleyman Kalkan, between 2% and 5% of Bank’s conciliation, waiver, acceptance goals of the Bank, Alshamsi, Board Member the relevant department of ABG for Vice Chairman shareholders’ equity for assets and other transactions with • Guaranteeing a balanced Member: Mohamed Ali Chatti, Board sustainability and corporate social Member: Mustafa Büyükabacı, Board included in the Bank’s assets, To respect to the Bank’s receivables distribution between the interests Member responsibility issues. Member examine the business processes, or payables up to the amount and rights of senior management, Member: Mehmet Ali Gökce, Board procedures and activities related between 2% and 5% of the Bank’s Bank employees and shareholders, Duties, Powers and Responsibilities Executive Committee Member to the activities of the Bank and shareholders’ equity annually. To • Ensuring that the members of the of the Committee Member: Prof. Dr. Kemal Varol, to make new proposals in these make proposals for dividends to Board of Directors of the Bank, 3.1 The Committee; Purpose Executive Board Member matters and approve the authority be distributed to shareholders, senior management and bank a) Implements sustainability and This Committee aims to ensure Member: Melikşah Utku, Board to be given by the Board of premiums and other payments to employees are rewarded in line corporate social responsibility that resolutions at the Board of Member And General Manager Directors, to support the Bank’s be made to the employees, with their contribution to the projects that will disseminate the Directors meetings are taken faster, units, • To make proposals for resolving Bank’s value creation process. Bank’s vision, mission, and corporate more effectively and soundly; and Functions of the Committee: • To review the effectiveness of legal disputes with Bank values across the entire society, to fulfill the duties stated in the • To make examinations and make the reports, information and customers, staff or third parties Working Principles of the Committee stakeholders and business partners regulations of the Committee and proposals forming a basis for business policies of the Bank, by peace, acquittal, acceptance, The Committee meets at least within the scope of sustainability the exercise of powers. These include the resolutions of the Board and to make determinations and waiver and other methods, to make once a year. The decisions are efforts. minimizing the problems of having a of Directors regarding general recommendations, decisions with respect to issues up taken by the majority of votes at b) Monitors national and low attendance at Board of Directors issues such as long-term strategic • To make credit and other risk to the amount between 2% and 5% the committee meetings. In the international applications meetings and making sure that the planning, policy and business classifications of the Bank and of the Bank’s shareholders’ equity case of a tie, the party involving and standards in the fields of urgent issues are discussed and plans, banking services, present the determinations and annually, the president is deemed to have sustainability and corporate settled. • To identify any changes or recommendations in this respect, • To decide on the appointment, constituted the majority. Decisions social responsibility and ensures deviations in the Bank’s existing • To examine the speed, adequacy relocation and promotion of are made in writing and signed by the compliance of projects and finance, investment, income and and integrity of the reports the employees with first degree the participating members. The efforts with these applications and expense policies and procedures, prepared for the Bank’s activities, signing authority, to present these Remuneration Committee convened standards, annual budget, and to make observations transactions to the approval of the four times in 2020. All committee c) Tracks sustainability performance • To make observations about the and proposals relating to the Board of Directors, members attended all of the by establishing sustainability Bank’s investment and finance existing reports and the financial • To fulfill the duties assigned by the meetings. strategies and policies and integrates level and opportunities, and requirements and internal risks of Board of Directors, them into company activities, adequacies or inadequacies of the the Bank on a quarterly basis, • To solve any problems that are changes in finance and investment • To make proposals for any not within the jurisdiction of any policies; and make suggestions amendment to the Articles other board, committee, organ, concerning the updating thereof, of Association, in particular unit and person, to support the • To express an opinion and decide concerning the increase of the relevant units within their duties on new products and derivative, Bank’s capital, and authorities. side and sub-products related to existing and approved products, 52 53 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Committees Under the Board of Directors
Working Principles of the Committee • Make sure that information Organizational structures which Advisory Committee • Organizing developmental and • Following up the Bank’s operations Members of the Committee shall technologies enable the Bank to are planned to be established educational seminars for the and reviewing the Bank’s business be convened immediately upon seize opportunities and maximize (especially the IT committees Purpose Bank’s staff to establish and activities in coordination with the invitation of the General Manager profitability, operating at the level of the Bank’s Advisory Committee was founded develop an interest-free banking Bank’s management following the or the Chairman of the Committee, • Establish an IT infrastructure senior management) to reach according to the “Communiqué culture within the Bank; ensuring interest-free banking perspective in particular if any critical problems with an organizational structure, the Bank’s strategic goals and on Compliance with Interest-Free that such trainings are included in at reasonable times, Providing and recommending arise. The meeting agenda shall resources, policies and procedures, maximize the expected benefits Banking Principles and Standards” routine training programs, • • Representing the Bank in interest- possible interest-free banking be sent by the General Manager or control systems, from IT projects and investments, (Communiqué) dated 14.09.2019 free banking-related activities solutions for financial transaction the Chairman of the Committee Ensure that bank management • To evaluate, monitor and review and numbered 30888 published • such as conferences, symposiums, problems that do not comply together with the meeting invitation. creates the necessary systems and the systems related to the by the Banking Regulation and Supervision Agency to maintain and forums and seminars concerning with the principles of interest-free In addition to the agenda sent, processes that will best manage management, regulation and develop Albaraka Türk Participation the Advisory Committee and banking, looking for alternative the points of interest can also and mitigate all risks related control of IT resources and projects Bank A.Ş.’s banking activities in sharing interest-free banking products together with the Bank be discussed and resolved at the to information technologies, within the framework of the best compliance with interest-free perspectives on issues discussed in management to replace products meeting. As a rule, the Committee including cyber-attacks. international practices (especially banking principles. such events with bank managers, that do not comply with the convenes prior to Board meetings. “Control Objectives for Information • Preparing a summary report on the interest-free banking rules, However; when necessary, it may Composition of the Committee and Related Technology” COBIT), Composition of the Committee activities of the Committee, the • Guiding the employees working in convene when there is no Board The members of the Committee are • To review, monitor and approve Committee members are appointed questions posed to the Committee the implementation of interest- meeting. The meeting is held with elected by the Board of Directors. the institutional goals related to by the Board of Directors with the during the year and the activities free banking transactions in the participation of at least three At least three members are elected information technologies and approval of the General Assembly. and decisions of the Committee compliance with the rules and members. The Chairman directs from among the members of the technologies related to these goals The committee consists of three and submitting it to the Board of principles of interest-free banking, the Committee meetings and the Board of Directors. The members to and ensure the achievement of members including the chairman, Directors, • Preparing the annual interest-free Examining all activities of the Bank banking report which shows the Vice Chairman in the absence of be elected to the Committee, other these goals, one reporter and two observers. • and documenting the interest- degree of compliance with the the Chairman. Decisions are taken than the members of the Board of • To ensure the establishment of free banking audit handbook and decisions and directives issued an IT Risk Management Plan and Members of the Advisory Committee by the majority of those present at Directors, should have sufficient ensuring that it is approved by the by the Advisory Committee and the meeting. Meeting minutes and knowledge and experience in the Program integrated with the Bank’s Chairman: Prof. Dr. Abdulsattar Abdulkarim Mohommed Board of Directors, submitting it to the Board of resolutions are recorded. Minutes field of information technologies. general risk management plan and Abughuddah* • Discussing the issues which Directors, are regularly signed by Committee The chairman and the deputy program, Member: Prof. Dr. Ahmed Mohieldin the Chairman has opted for • Preparing annual activity budget members and presented to the chairman of the Committee are • To monitor the suitability of IT Ahmed Hassan** examination at the Committee and having it approved by the Board of Directors. Executive determined by the Board of processes, resources, initiatives Member: Assoc. Prof. Dr. Necmettin among those issues in the report Board of Directors, Committee held 2 meetings in 2020. Directors. The Committee may and projects to assess whether Kızılkaya*** submitted by the controller to the • Ensuring protection from interest assign persons who have sufficient they meet the Bank’s business Member: Yousef Hassan Y. Khalawi**** Chairman and informing the Head earnings and distribution of Information Technologies knowledge and experience in the requirements, Member: Prof. Dr. Hamdi Döndüren Office regarding these issues, unavoidable interest earnings for field of information technologies • To evaluate the internal and • Approving the interest-free charity purposes, Governance Committee with the titles of “supervisor,” external IT audit reports and * His duty ended on November 05, 2020 due to banking principles compliance • Publishing periodic practical his death. expectations in the Articles of information on interest-free “advisor” etc., temporarily or to ensure that the Bank takes ** Purpose His duty ended on September 02, 2020 due to Association, regulations, forms and banking principles for the permanently in the Committee. The necessary actions on the findings his death. *** policies used by the Bank and also employees and participation The Committee aims to; Establish a Committee Secretary, who will carry identified in these reports. He was appointed as of September 02, 2020. **** approving the regulations made, account holders, series of standards and procedures out the secretariat of the Committee, • To submit reports to the Board He was appointed as of November 05, 2020. • Approving the standard • Submitting periodic reports to increase the operational efficiency can also be determined by the of Directors regarding the issues of information technology systems Functions of the Committee: agreements and contracts in the regarding the decisions taken Committee. specified under this topic and to transactions of the bank with third to the Advisory Board of TKBB and thereby ensure corporate present those issues requiring the • Answering questions submitted to the Committee and offering parties in terms of compliance (Türkiye Katılım Bankaları Birliği - discipline in the Bank’s management. Members of the Information resolution of the Board of Directors alternative solutions on interest- with interest-free banking Participation Banks Association of Besides, by applying these standards as per article 375 of the Turkish Technologies Governance Committee free banking principles, principles and taking part in the Turkey). and procedures transparently and Commercial Code and the Bank’s Chairman: Melikşah Utku, Board • Following up global developments development and improvement reasonably within the framework of Member and General Manager internal legislation to the approval of the mentioned forms when Working Principles of the Committee the best international practices, in the field of interest-free banking, Technical Member: Hood Hashem of the Board of Directors, Monitoring and analyzing necessary, The Advisory Committee, together • Ensure the harmony between the • Ahmed Hashem • The Committee may request the activities of the Bank and • Determining the interest-free with the new Communiqué, will Bank’s business strategies and all kinds of information and its subsidiaries subject to banking eligibility requirements for convene at least twice a month Information Technologies (IT) Functions of the Committee: documents from the Bank’s senior consolidation systematically in existing and new products of the and may also meet extraordinarily, strategies, • To evaluate, monitor and review management, provided that the terms of interest-free banking bank and its subsidiaries subject if necessary, by ensuring a majority upon the request of the President. • Strengthen the communication the budget, IT initiatives and matters fall within the duties and principles, to consolidation and expressing an opinion on the documentation The Advisory Committee meetings and collaboration between the projects related to IT resources responsibilities of the committee. • Coordinating with the audit (contract, form, procedure, can be held by physically present committees operating in the within the framework of the Bank’s unit to audit the compliance fields of IT governance and risk of the activities of the Bank committee, functioning, method members or by some or all members’ strategic objectives, Working Principles of the Committee etc.) to be prepared in this regard, participation via the electronic management at the Bank’s Head • To evaluate, monitor and review Information Technologies and its subsidiaries subject to Office level and the Board of consolidation with interest-free • Informing the Head Office of its channel. Advisory Board held 23 the IT strategy objectives and Governance Committee held 4 meetings in 2020. Directors of the Bank, banking principles, opinion on the applications made meetings in 2020. to the Committee,
54 55 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Taking into account the Albaraka These calculations are reported to Credit Risk Our Risk Management Approach Türk’s financial status, business relevant authorities on a regular Credit risk is defined as the activity profile and future growth basis. The Bank continuously probability of losses to Albaraka Türk expectations, the amount of capital monitors whether the market risk due to customer failure to partially required to achieve strategic complies with the legally prescribed or completely pay commitments to objectives is calculated via stress limits. Exchange rate risk is also the Bank on time, thus breaching Through the risk categories determined with the approval of tests and scenario analyses subject to review and supervision by the provisions of customer credit performed on a static and dynamic the Assets/Liabilities Committee. The contracts. This risk also involves the Senior Management, Albaraka Türk protects the savings basis. Present and future cyclical Bank’s foreign exchange rate strategy any losses in market value due factors that may have an impact on is intended to keep the exchange to deterioration in the financial of its shareholders against the fragilities in the market. the market where the Bank operates risk in balance and not to create position of the counterparty. On- are considered in performing stress short or long positions. balance sheet and off-balance sheet tests and scenario analyses on the portfolios are included in the credit Bank’s financial structure. These Liquidity Risk risk definition that is used at the efforts are evaluated along with The Bank’s liquidity risk consists of Bank. Albaraka Türk’s Risk Management On a fundamental basis, Albaraka included in the risk appetite. The other financial indicators. Capital funding liquidity risk and market System is designed to define, Türk faces market, liquidity and Bank’s strategies are associated with planning activities conducted in this liquidity risk. Funding liquidity risk The authority to extend credits measure, monitor and control credit risk, as well as strategic risk, a risk profile and risk appetite. If the context help ensure coordination refers to the likelihood of losses resides with the Board of Directors. encountered risks via policies, reputation risk and operational risk profile is expected to change in among the business processes occurring in cases where it is not The Bank’s Board of Directors procedures and limits. These efforts risk. The Bank sets risk policies and the future, such change is considered within the Bank. Albaraka Türk possible for Albaraka Türk to establishes policies related to the are aimed at monitoring, controlling, procedures and risk limits approved together with its level of impact on aims to ensure capital allocation adequately meet the entirety of extending and approval of credits, and if necessary, changing the risk by the Board of Directors to mitigate capital. In the creation of risk profile compatible with the risks of its its foreseeable or unforeseen cash credit risk management and other and return structure of future cash and manage its quantifiable risks. To risk type is analyzed on the basis of functional operations and maximize flow requirements without affecting administrative principles. The Board flows, and the nature and level of maintain risks within the set limits, sector and/or geographical location. risk-adjusted return on capital. As daily banking activities or the Bank’s also ensures the implementation associated activities. Albaraka Türk monitors and reports a result, the Bank evaluates risks financial structure. and monitoring of these policies, the referenced limits on a functional Board-Approved Risk Appetite by classifying them as market risk, while taking any necessary measures. Risk Management Practices in unit basis within the Bank’s internal Policy liquidity risk, credit risk, operational Market liquidity risk is the possibility The Board of Directors delegates International Standards systems and relevant bodies. The Albaraka Türk’s risk tolerance is the risk and other risks. of losses that may arise from the the power to extend credits to To monitor and control risks to which Presidency of Risk Management maximum degree of calculated risk Bank’s failure to close or balance the Credit Committee and Head the Bank is exposed on account which is organized within the that may be accepted according Market Risk any of its positions at market prices Office pursuant to the procedures of the banking activities, the Board framework of risk management to the Bank’s mission and vision. Albaraka Türk’s market risk refers to because the markets lack a certain and principles determined by legal of Directors is responsible for regulations carries out the activities In other words, it is the foreseen the probability of loss that may be amount of depth or are exposed and regulatory requirements. The establishing internal control, risk of the measurement, monitoring, amount of risk to be exposed before incurred due to exchange rate risk, to excessive volatility. Liquidity risk Head Office exercises the power management and internal auditing controlling and reporting of risks. deciding on the necessity of taking stock position risk, commodity risk may emerge due to factors such as delegated to them to extend credits systems under the Banking Law any precautions. Risk tolerance is and profit rate risk. maturity mismatch, deterioration via regional directorates/units or and ensuring and monitoring the The ultimate target of the Bank’s Risk the level of risk that the Bank deems in the quality of assets, unexpected branches. The Bank allocates credits proper functioning, conformity and Management System is to allocate acceptable given the diversity of Market risk primarily indicates the funding outflows, erosion in within the limits set based on each adequacy thereof. capital in compliance with the risks services offered. probability of loss that may be profitability levels and financial debtor or group of debtors. The exposed by our functional activities experienced on the Bank’s on- crises. system prevents customers from The Board of Directors periodically (economic capital) and to maximize Albaraka Türk’s risk appetite refers balance sheet and off-balance sheet exceeding the credit risk limit. reviews and assesses risk capital return adjusted for risk, thus to the level of risk that the Bank is positions as part of exchange rate To manage liquidity risk, the Bank management policies and strategies increasing the added value created. prepared to accept in pursuit of its risk, commodity risk, profit rate monitors cash flows daily and takes Albaraka Türk pays particular according to changing market strategic objectives. Risk appetite risk and stock position risk due to preventive and remedial measures attention to prevent any sector conditions. The General Manager The Assets/Liabilities Committee involves an acceptable level of movements in market prices. As for so that commitments are met as concentration that may adversely ensures that the Bank’s departments (ALCO) manages the structure of variation regarding these objectives. market risk, Albaraka Türk calculates required and on time. Liquidity risk affect the credit portfolio. Utmost operate in coordination pursuant to the assets vis-à-vis liabilities by A common feature of the Bank’s the foreign currency position risk is also evaluated by the Assets/ care is taken to prevent the risk of specified risk management policies evaluating the domestic and global risk appetite and risk tolerance and securities position risk, as well as Liabilities Committee on a weekly concentration on a small number and strategies as determined by the economic conditions concerning is the boundaries they set on the specific risks associated with market basis. of customers. Credit risks are Board. collecting and allocating funds in the acceptance of risk. However, risk risk, by using the standard approach. constantly monitored and reported direction of the risk management tolerance is broader. Albaraka Türk implements a policy by the internal systems units and The Board of Directors takes an policies of our Bank. where liquid assets are maintained risk management bodies. In this way, important part in the process of risk The Risk Appetite Policy, approved in sufficient amounts and quality, the Bank ensures that credit risk management by following policies Albaraka Türk’s current or future risk by the Board of Directors and taking into account the minimum complies with the “Regulation on and strategies on a consolidated and exposure is identified and defined. updated annually, specifies the risk liquidity coverage ratios as specified Credit Policies and Implementation unconsolidated basis, setting up limit Identified risks are measured and levels that the Bank may assume in applicable regulations and past Procedures.” systems and procedures with the prioritized to the extent possible. to implement its strategies and liquidity experiences. This approach Bank. By taking into account the risks achieve its objectives. The limits and addresses any liquidity requirement stemming from the Bank’s strategies triggering functions in relation to the that may arise from unexpected and the potential impact of the risk appetite and risk profile of the movements in the markets. strategy on the risk profile, ALCO Bank are defined as per the Bank’s ensures that all significant risks are risk profile and explained in detail.
56 57 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Our Risk Management Approach Material Developments Regarding 2020 Activities
As of 2020, there is no lawsuit against the Bank that Regarding strategic risk, Albaraka Türk aims to make rational may have an impact on Albaraka Türk’s financial decisions and adapt to emerging conditions by closely status and activities. monitoring economic conditions, technology, financial and social developments, as well as the legal and regulatory environment and the banking sector in Turkey and abroad. Information on the Lawsuits Against Remarks on the Independent Audit the Bank that May Have an Impact and Public Audit Conducted During on the Bank’s Financial Status the Accounting Period and Activities, and Their Potential Pursuing the principle of full Consequences compliance with the laws, Albaraka Operational Risk Other Risks Counterparty credit risk refers to the As of 2020, there is no lawsuit against Türk successfully completed all Operational risk is defined as the Other risks Albaraka Türk might face possibility that the counterparty of the Bank that may have an impact routine audits performed by audit risk of loss due to insufficient or include strategic risk, reputation risk, a transaction, which brings about on Albaraka Türk’s financial status authorities including BRSA, CMB, unsuccessful internal processes, counterparty credit risk, country risk liabilities to both parties, defaults and activities. There are no lawsuits Ministry of Finance, Undersecretariat people, and systems or loss due and concentration risk. before making the final payment in filed against Albaraka Türk in 2020 of Treasury, and CBRT as per to external effects. Legal risk and the cash flow. The Bank manages that may affect the financial situation applicable regulations. compliance risk are included in this Regarding strategic risk, the Bank counterparty credit risk according to and activities of Albaraka Türk on risk group, while reputation risk and aims to make rational decisions the volume, nature and complexity environmental, social and corporate strategic risk do not fall under this and adapt to emerging conditions of the activities, in due consideration governance issues. risk type. by closely monitoring economic of best practices and in line with conditions, technology, financial and applicable legal and regulatory Operational risk is a type of risk social developments, as well as the requirements. inherent in all Bank operations and legal and regulatory environment Internal Control and Audit Activities for Risk Management activities. Operational risk may arise and the banking sector in Turkey and Country risk refers to possible from employee or system errors; abroad. Reputation risk for Albaraka losses that the Bank may incur when transactions that may be performed Türk encompasses any factor that borrowers in a country are unable to based on insufficient or incorrect constitutes a possibility of loss for fulfill or avoid fulfilling their overseas The Internal Control Department conducts risk-oriented and legal information or documentation; the Bank. These factors include obligations due to the uncertainty impediments to the flow of negative perception of the Bank by of economic, social and political interactive controls at Head Office units and branches in information between divisions in the different or related parties including conditions in the relevant country. organizational structure of the Bank; existing or potential customers, In due consideration of legal and order to ensure that Albaraka Türk’s business operations are uncertainties in the limits of powers; partners, competitors or supervisory regulatory environment, market or structural and/or operational bodies; loss of confidence in the conditions and customer satisfaction, executed in an organized, effective and reliable manner. changes, natural disasters, terrorism, Bank or ruined reputation due to Albaraka Türk forges commercial ties and fraud incidents. non-compliance with applicable to foreign financial institutions and laws. For the risk of reputation countries in light of feasibility studies To monitor and control its risk of the internal systems. These units management systems are effective The Bank classifies operational to be avoided and/or controlled focused on the economic conditions exposure, Albaraka Türk has and departments operate under the and adequate. The Inspection Board risk in five groups according to by the Bank’s Risk Management of each country. developed adequate and efficient supervision of the Audit Committee fulfills its audit responsibilities their respective source: employee System, a proactive communication internal systems, consistent with the and the Board of Directors. based on a risk-focused approach. risk, technology-related risks, mechanism that gives the customers Concentration risk is defined as scope and structure of its business Emerging technologies are organizational risk, legal and priority is established any time a the possibility that the amount activities. These internal monitoring The Inspection Board conducts utilized and compliance of Bank’s compliance risk, and external condition that could detriment of a single risk or the amount of and control systems accommodate audit, inspection and investigation operations with internal and external risks. The Bank also takes required the Bank’s reputation or image is certain risk types result in high the dynamic operating environment activities in relation to the entirety of regulations is evaluated during preventive measures to maintain detected. losses that could threaten the and encompass all Bank branch Albaraka Türk’s business operations. audits. Inspections are concerned operational risks at acceptable levels. Bank’s operations and its ability to locations and divisions. The internal Efforts are made to provide with more than just the findings As part of this system, advance perform its core business activities. systems also operate in accordance assurances to senior management that are turned up: processes are with the methods and principles not only in that the Bank’s activities analyzed, recommendations are preparations are already in place Policies on concentration risk are stipulated by applicable laws, rules are being carried out in line with the made to improve efficacy, and for worst case scenarios. While divided into sector concentration, and regulations. The Inspection requirements of current laws and corrective and other action is evaluating reputation risk, the system concentration based on collateral, Board, Internal Control Department, regulations as well as with the Bank’s proactively followed up. The findings, considers operational risk in relation concentration based on market risk Risk Management Department, own strategies, policies, principles, opinions and recommendations at to reputation risk, as well as its level type, concentration based on loss and Legislation and Compliance and objectives but also that the the end of internal control activities and impact on reputation risk. type, and concentration arising from Department all fall within the scope Bank’s internal control and risk creditors. 58 59 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
The Analytical Control Team under monitoring processes; establishing • Coordinating the notification and Internal Control and Audit Activities for Risk Management the Internal Control Department and ensuring the functioning of application processes conducted monitors trends and identifies systems to guarantee adoption of before regulatory and supervisory irregularities via use of internal and the aforementioned; and checking authorities. external data. These trends and whether or not the Bank’s business irregularities are presented to the activities comply with the regulatory With the purpose of designing, The Analytical Control Team under the Internal Control Internal Control Department and framework on the Prevention of administrating and coordinating the senior management to ensure that Laundering Proceeds of Crime. Staff activities to prevent the laundering necessary measures are taken. members appointed to the units proceeds of crime and financing of Department monitors trends and identifies irregularities under internal systems perform terrorism, the Compliance Service Findings and recommendations their tasks in an independent and performs the following tasks; via use of internal and external data. in light of control activities impartial manner; in addition, • Devising corporate policies and are communicated to senior these employees have sufficient procedures, management and followed up by professional knowledge and • Notifying policy changes to the the Internal Control Department and experience. The activities of the units Financial Crimes Investigation audited parties on a real-time basis within internal systems are evaluated Board, are initially shared and evaluated scope of risk-based control plan with plan. These control efforts help via the Internal Control Department periodically by the Audit Committee • Performing risk management, with the personnel who conduct personnel specialized in different Albaraka Türk achieve its objectives Portal. and the Board of Directors. monitoring and control activities these efforts. This approach helps the banking activities. By analyzing and determine whether its business and reviewing the effectiveness Bank quickly take and implement business processes, opinions and operations are performed effectively, The Internal Control Department The Legislation and Compliance and reliability thereof, necessary complementary and suggestions to increase operational efficiently, and in compliance with supports the training courses Department is composed of a • Conducting compliance related preventive measures, while efficiency and effectiveness are internal and external regulations. organized to raise Bank-wide sufficient number of staff working training activities, introducing appropriate and feasible conveyed to the relevant units. In The Department provides opinions awareness on internal control under the guidance and supervision • Setting up necessary warning solutions that can improve existing addition, the Control Service in the and recommendations to adopt activities. of a President and Vice President. systems related to control and business processes and operations. headquarters actively participates in necessary measures to address Currently, the Department has 21 monitoring; establishing and All these efforts are monitored and risk control self-assessment studies, the deficiencies identified. It also The Legislation and Compliance employees. The President also serves ensuring the functioning of evaluated closely and continuously process modeling and projects. In contributes to further awareness Department is responsible for as Compliance Officer. systems to ensure adoption of the by staff members who carry out the these studies, processes are reviewed across the Bank via training courses managing compliance risk effectively. former, banking activities as well as internal with the business units, risks on these organized at the branches. The Department also examines the In line with the Internal Regulations • Minimizing the risk of incurring control employees. processes are determined, controls effects of domestic and international on the Legislation and Compliance unexpected losses and related to risks are suggested, The Information Systems Controls regulations on the Bank’s operations; Department, the Department directly reputational damage for the Bank; The inspection system is designed contributing to the establishment Team under the Internal Control follows up and reports on reports to the Audit Committee and proactively identifying problems to examine on the basis of risk and development of the internal Department monitors whether establishing mechanisms that ensure the Board of Directors. that may lead to losses, without any internal restrictions, all control environment and internal the Bank’s information technology compliance with amendments • Rectifying deficiencies and operations of the Bank, domestic control systems throughout the Bank. operations are conducted in to such regulations; presents The Department consists of two introducing corrections, and foreign branches and other accordance with domestic and information and opinions to the service units: Legislation Service and • Checking compliance of units including those at the Head The Internal Control Department global rules and guidelines on Board of Directors regarding planned Compliance Service. transactions with policies related Office, and subsidiaries subject conducts risk-oriented and best practices. The Team reviews IT business activities and new products to the Law on Prevention of to consolidation periodically. In interactive controls at Head Office processes and provides opinions on and procedures; organizes meetings The Legislation Service performs the Laundering Proceeds of Crime, addition, the inspection system aims units and branches in order to control points when necessary. with the participation of relevant following tasks related to legislative • Correcting deficiencies identified to identify insufficiencies, errors ensure that Albaraka Türk’s business units to evaluate whether the compliance controls: by internal and external and fraud with utmost professional operations are executed in an Changes made pursuant to BRSA services purchased by the Bank fall • Monitoring establishment of supervisory bodies, attention and care; present organized, effective and reliable regulations, applicable law and under the scope of the Regulation and reporting on mechanisms • Drafting reports on monitoring, opinions and recommendations on manner. The findings, opinions and internal Bank guidelines are on Procurement of Support Services to ensure the Bank’s compliance control, training and audit prevention of same in addition to recommendations at the end of actively monitored. Albaraka Türk’s by Banks; provides feedback to with changes to mandatory or activities; and presenting such effective and efficient use of internal internal control activities are initially business processes are analyzed relevant Head Office units as a result applicable regulations; reports to the Board of Directors. resources; evaluate the accuracy and shared and evaluated with the and controlled to keep the control of decisions taken at these meetings; • Corresponding with authorized reliability of information and reports personnel who conduct these efforts. points, implementation booklets and and coordinates the communication bodies on matters that raise In light of global best practices submitted to BRSA; and perform This approach helps the Bank quickly procedures up to date in line with and application processes doubt or are not clearly stated in regarding identifying and monitoring special audits in conformity with the take and implement necessary applicable laws, rules, regulations carried out before regulatory and legislative or regulatory sources; suspicious transactions, Albaraka intended purpose of internal audit complementary and preventive and the Bank’s objectives. As part supervisory authorities. communicating the results of Türk Compliance Unit uses “Inter at the request of the Board or Audit measures, while introducing of analyses and control efforts, such correspondence to relevant AML,” a fully automated system Committee. The inspection system appropriate and feasible solutions the Information Systems Controls To ensure Albaraka Türk’s compliance persons; integrated with the Bank’s core is aimed at developing a systemic that can improve existing business team presents opinions and with the obligations stipulated under • Notifying relevant units of changes banking system. • Furthermore, and disciplined approach to evaluate processes and operations. All these recommendations to the related Law No. 5549 on the Prevention to legislation as identified via daily Paygate Inspector, a program by and improve the effectiveness of the efforts are monitored and evaluated units to boost operational efficiency, of Laundering Proceeds of Crime, checks; Fineksus, is used along with Dow Bank’s risk management, control and closely and continuously by staff bolster effectiveness and minimize the Legislation and Compliance • Organizing meetings with Jones’ lists to control transactions; as governance processes in line with the members that carry out the banking risks. Department is responsible for participation of relevant units a result, full compliance is ensured internal strategies, policies, principles activities as well as the internal performing the following tasks: to evaluate whether support with domestic and international and targets. These efforts aim to help control employees. Matters that are deemed important Devising relevant policies and services procured by the Bank sanction decisions. Albaraka Türk achieve its objectives. by senior management or the Board’s procedures for the Bank; conducting are subject to the Regulation on The Internal Control Department request for examination thereof, risk management, monitoring and Banks’ Procurement of Support Staff awareness on the prevention of Control Service, operating under the conducts regular controls for all or as a result of the Department’s control activities; reviewing the Services; providing feedback to laundering proceeds of crime and Internal Control Department in the branches from the Head Office control efforts, are examined and effectiveness and reliability of such relevant Head Office departments financing of terrorism is raised via headquarters, carries out controls in and on-site controls for the branch redirected to relevant units. activities; organizing training efforts; regarding the decisions taken at periodic in-class trainings, branch the Bank’s business units within the locations identified in the annual developing necessary warning these meetings; visits, and web-based courses within systems in relation to control and the Bank.
60 61 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Corporate Governance Approach
Anti-Corruption Systems at Albaraka 2. Service Providers and Business 5. Donations and Sponsorships Effective Mechanisms for Anti-Bribery and Anti-Corruption Türk Partners • Although Albaraka Türk provides • To uphold and further bolster The Bank does not work with persons in-kind and in-cash donations and its national and international or entities about which there is contributions, political donations reputation, protect customers, negative intelligence involving are prohibited and excluded from and retain its well-qualified staff, bribery, corruption or similar forms the scope of these activities. Albaraka Türk holds the Ordinary General Assembly for its Albaraka Türk’s relevant units of financial crimes. Service providers • The Bank’s donation and under Internal Systems perform and business partners are obliged sponsorship activities must comply shareholders every year in accordance with the legislation risk monitoring and auditing/ to comply with the provisions with applicable laws, regulations reporting efforts related to anti- of this Policy and other relevant and rules specified in the Bank’s and legal provisions. corruption and anti-bribery. regulations. The Bank terminates Donation and Contribution Policy. • Non-compliant activities are business relations with persons and reported to the Bank by the entities failing to comply with such Policy Breaches and Sanctions Internal Control Department, provisions and other applicable • Albaraka Türk imposes sanctions Inspection Board, and Legislation regulations. and disciplinary action, including Albaraka Türk’s Anti-Bribery and while adhering to international • Albaraka Türk holds the Ordinary and Compliance Department, as termination of employment, for Anti-Corruption Policy is designed norms and national laws, the Bank General Assembly for shareholders well as via the Whistleblowing Line. 3. Facilitation Payments employees who act contrary to the to demonstrate the Bank’s strict is actively engaged in the fight every year in accordance with the • The Bank has established the Albaraka Türk does not allow persons Anti-Bribery and Anti-Corruption commitment to and compliance against laundering proceeds of legislation and legal provisions. Policy on Compliance with or entities within the context of this Policy. with applicable laws, rules and crime, bribery, corruption and Requirements of the Prevention Policy to offer or receive facilitation • Employees will not be punished regulations, ethical and professional other forms of financial crime as a Employee Duties and of Laundering Proceeds of Crime payments in order to guarantee or and/or retaliated against for acting requirements and principles, as core principle. Responsibilities and Financing of Terrorism to accelerate a routine transaction or honestly, transparently and based well as universal rules on the fight • Albaraka Türk is well aware of • All employees of Albaraka Türk effectively combat laundering process with government agencies. on goodwill and reporting conduct against bribery, corruption and its obligation to comply with must comply with the Anti-Bribery proceeds of crime and financing of against or attempts to contradict other forms of financial crime. The all applicable laws, rules and and Anti-Corruption Policy, internal terrorism. 4. Abuse of Authority or Position the provisions of this Policy. Anti-Bribery and Anti-Corruption regulations during its business regulations, and all applicable • Albaraka Türk considers the • Employees are prohibited to • In cases where conditions require Policy of the Bank is applicable to operations and transactions laws aimed at combating bribery, Anti-Bribery and Anti-Corruption perform an unlawful transaction legal action, such incidents are all persons and organizations acting performed in and outside Turkey. corruption, and similar forms of Policy as a core component while carrying out their duties in escalated to legal authorities. on behalf of and serving the Bank. • The Bank meticulously examines financial crime. of all other Bank policies and order to obtain an unfair benefit These parties include shareholders, the findings of controls and audits • Employees are also obliged to regulations. With this perspective, on their or other persons’ or Corruption Incidents Detected employees, managers, customers, performed by the units under report any suspected bribery and the Bank has adopted a “zero entities’ behalf. Employees may not and Actions Taken Corruptions service providers, suppliers, Internal Systems, and reports corruption incidents or similar tolerance” approach to bribery and use powers or authorities vested Determined and Actions Taken consultants, external auditors, and made to the Whistleblowing Line, forms of financial crime related corruption. to them for purposes of obtaining Against Them representatives. The Bank’s Anti- classifies them under relevant to banking transactions and • The Bank stands against corruption, unfair earnings for themselves, • There was no significant corruption Bribery and Anti-Corruption Policy categories of bribery, corruption, activities involving the Bank’s staff, bribery, fraud, embezzlement their acquaintances, or other third incident that occurred in 2019. In is an indispensable component of and similar forms of financial crime; customers and third parties to and all unlawful conduct, and is persons or entities, or in a manner addition, there is no matter that internal regulations, banking laws, and makes sure necessary actions the Internal Control Department, committed to complying with to result in losses for the Bank or the Bank has taken to court due and other legislation including are taken. Inspection Board or Legislation and relevant laws, rules, regulations and its customers. to an attempt of corruption by Albaraka Türk Conflicts of Interest • Albaraka Türk punishes Compliance Department via the principles. • Employees are obliged to observe employees. Policy, Ethical Rules and the Bank’s acceptance or payment of means specified in the Albaraka • At Albaraka Türk, it is strictly the confidentiality of information Personnel Regulations, all of which bribes with the harshest possible Whistleblowing Line Procedure. unacceptable and prohibited to obtained at the time of performing Training Provided to Employees on are adopted and embraced by the action as defined in its Personnel receive or offer bribes regardless their duties, not disclose such the Fight against Money Laundering, Board of Directors and employees. Regulations, namely dismissal. This Stakeholder Duties and of whether it is under the name of information to third parties without Bribery and Corruption way, the Bank assures employees Responsibilities cash payment, profit, commission, prior consent, or use the same to • Albaraka Türk raises employee Main Duties and Responsibilities that no pressure or retaliation will • Persons and organizations acting contribution, or the like. the benefit of themselves or third awareness on combating Related to Anti-Bribery and Anti- be levied against them when they on behalf of and serving the parties. corruption, bribery and similar Corruption reject to offer or accept bribes. Bank, including service providers, The primary areas of risk where • Employees are responsible for forms of financial crimes, as well as • The Bank guarantees that any suppliers, consultants, external bribery and corruption may occur complying with the contracts, prevention of laundering proceeds Albaraka Türk’s Duties and matters related to implementation auditors, and representatives, must are described in detail below: commitments, and similar of crime and financing of terrorism Responsibilities or violation of this Policy are strictly observe applicable laws, documents signed with the Bank, through periodic in-class trainings, • Albaraka Türk is committed to published on the corporate rules and regulations combating 1. Gifts and Hospitality as well as the Policy on Conflicts branch visits, and web-based ensuring the continuity of the website in an accurate, complete, bribery, corruption and similar Albaraka Türk employees may in of Interest, Personnel Regulations, courses within the Bank. reputation and trustworthiness comprehensible, and timely forms of financial crimes. no way receive gifts or incentives and the provisions of other internal • The Anti-Bribery and of the banking profession among manner, for the purposes of that could cause them to act in a regulations and applicable national Anti-Corruption Policy is the general public, as well as updating all stakeholders, certain way during banking activities and international laws. communicated and made available upholding and improving such including the public, in line or which constitute bribery. Subject to all employees via the Bank’s reputation and trustworthiness. with the Corporate Governance to the approval of the Head Office, communication channels. Aiming to preserve stability and Principles and Albaraka Türk’s it is permitted to exchange gifts, trust within the banking sector, commitment to sustainability. have ordinary business dinners, and organize or attend programs and events involving dinner and hospitality with customers and suppliers. 62 63 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Financial Capital Financial Ratios
With its high capital adequacy ratio, Albaraka Türk possesses Increasing its total assets by 34.9% to TL 63,316 million a competitive edge against its competitors. despite the COVID-19 pandemic, Albaraka Türk’s funds collected rose 29.8% to TL 51,613 million. Financial Ratios (%) 2016 2017 2018 2019 2020 Funds Extended/Total Assets 69.2 69.5 62.0 57.9 58.6 Funds Extended/Funds Collected 98.1 99.5 91.5 74.8 78.6 Total Funds/Total Assets 70.5 69.9 67.8 77.4 74.5 TL 69,316 Million TL 4,044 Million Total Assets Total Shareholders’ Equity Non-Performing Loans Ratio 4.7 4.7 4.7 6.9 7.2 Net Non-Performing Loans Ratio 2.3 2.0 2.0 3.6 4.1 2016 32,851 2016 2,279 Ratio of Provisions for Non-Performing Loans 52.3 57.7 47.3 42.6 61.0 Capital Adequacy Ratio 13.5 17.1 14.7 15.0 13.5 2017 36,229 2017 2,482
2018 42,224 2018 3,261 Albaraka Türk’s Position in the Sector
2019 51,392 2019 3,822 With its diversified product portfolio, Albaraka Türk is a leader 2020 69,316 2020 4,044 in the development of the participation banking sector in Turkey.
Sectoral Growth (%) 2018-2019 2019-2020 TL 51,613 Million TL 40,583 Million Total Funds Funds Extended Albaraka Participation Banking Albaraka Participation Banking Türk Banks Sector Türk Banks Sector
2016 23,155 2016 22,722 Total Assets 21.7% 37.5% 16.1% 34.9% 29.8% 36.0% Funds Extended 13.6% 26.9% 12.3% 36.4% 45.0% 32.4% Funds Collected 38.9% 56.7% 24.2% 29.8% 50.0% 34.9% 2017 25,310 2017 25,193
Market Shares (%) 2019 2020 2018 28,623 2018 26,185 Albaraka Albaraka Participation Albaraka Albaraka Participation Türk/ Türk/Banking Banks/ Türk/ Türk/Banking Banks/ 2019 39,769 2019 29,749 Participation Sector Banking Participation Sector Banking Banks Sector Banks Sector Total Assets 18.1% 1.14% 6.33% 15.9% 1.14% 7.16% 2020 51,613 2020 40,583 Funds Extended 17.4% 1.04% 6.02% 16.3% 1.08% 6.59% Funds Collected 18.2% 1.48% 8.15% 15.7% 1.42% 9.07%
64 65 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Financial Capital
Sustainable Growth Performance
Focused on providing effective solutions to meet all customer needs and expectations with its diversified product portfolio, Albaraka Türk recorded a market share of 24.14% in the sector with a lease certificate issuance volume of TL 11.3 billion in 2020.
As of year-end 2020, Albaraka Türk Reliable international financing SME customers. The Bank has a increased its total assets by 34.9% facilities total of 1,010 correspondents in 115 year-on-year to TL 63,316 million With the support of the diversified countries, and 59 nostro accounts and boosted its total funds by product portfolio and solid financing in 15 currencies under 45 banks in 29.8% to TL 51,613 million. Despite facilities of its primary shareholder 24 different countries. Focused on the challenging conditions of the ABG, Albaraka Türk did not exercise providing effective solutions to meet pandemic, Albaraka Türk expanded the recall option of the subordinated all customer needs and expectations its funds to TL 40,583 million with loan of USD 250 million in 2020, with its diversified product portfolio, an increase of 36.4% and its equity which it obtained from abroad Albaraka Türk recorded a market to TL 4,044 million with an increase in 2015. The Bank extended the share of 24.14% in the sector with a of 5.8%. As a result, Albaraka Türk loan until 2025 and diversified lease certificate issuance volume generated net profit of TL 255 its long-term funding sources. of TL 11.3 billion in 2020. Albaraka million as of end-2020. Further Adding value to the savings of its Türk plans to take additional steps consolidating its equity structure shareholders, Albaraka Türk is the to further consolidate its financing with a capital increase of TL 450 only participation bank included in facilities in the coming year. million in 2020, Albaraka Türk the BIST 100 Sustainability Index. boosted its operating income by Boasting a highly reputable position 4.4% to TL 4.8 billion. Meanwhile, the in the international banking sector as Bank’s net profit share income rose well as capital markets, Albaraka Türk 107% to TL 1.7 billion. provides effective and high-quality services to its Retail, Corporate and
66 67 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Manufactured Capital
Operating in the Retail, SME, Albaraka Mobile: Focal point of the Internet Branch Commercial and Corporate and Albaraka Türk digital ecosystem Regularly updated in terms of Across its extensive branch and ATM network, Albaraka Türk Digital Banking areas, Albaraka Türk Closely monitoring the rise of mobile both content and technology delivers services with 228 domestic technologies in the banking industry, infrastructure, Albaraka Türk expands financial inclusiveness with its service infrastructure and two overseas branches as well Albaraka Türk consistently develops Internet Branch was one of the most as 293 ATMs. Steadily improving its its own service offering via Albaraka preferred channels by customers in for the visually and physically disabled. financial inclusiveness in light of Mobile. With the impact of the digital 2020. During the year, the following current developments in technology, migration caused by the Covid-19 new features were made available via Albaraka Türk provides uninterrupted pandemic, the Albaraka Mobile Albaraka Türk Internet Branch: and high-quality services via digital user base grew 40% in 2020. The channels by effectively leveraging the Bank also introduced new services • KOLAS (Easy Addressing System) benefits of digital transformation. on its mobile platform. During the • SWIFT Transactions Number of Branches for the Visually Number of ATMs for the Visually year, the following new features and • Union of Notaries Secure Payment Disabled: Disabled: Improving service channels functionality were rolled out via System with digital transformation and Albaraka Mobile: • “Pay with Albaraka” Network 221 292 innovation • Online Private Pension and TCIP As the innovative face of • Arabic and English Language Transactions Number of Branches for the Number of ATMs for the Physically participation banking, Albaraka Support • Silver Account Opening and Silver Physically Disabled: Disabled: Türk commenced a comprehensive • Money Withdrawal from Other Trading 220 9 digital transformation effort to Bank ATMs with QR Code • Short Term Lease Certificate better serve its customers 24/7 via • Huawei AppGallery Participation Fund Trading alternative distribution channels. • Jet Financing • TEFAS Investment Funds Putting people at the heart of its • Digital Confirmation • Qualified Lease Certificate Book 230: Total Number of Branches 293: Number of Total ATMs business model, the Bank aims to • Investment Transactions Building Procedures deliver its customers an excellent • Payments • Short Term Participation Hedge 2016 213 2016 274 experience across all channels. Fund Trading Providing innovative solutions in Albaraka Assistant • Electronic Bill of Exchange (ELÜS) conjunction with fintechs and other Albaraka Assistant enables Display solution partners, Albaraka Türk has customers to perform transactions • My Messages Menu 2017 220 2017 287 developed its own digital ecosystem. through both written and voice • Iraq Internet Branch & Albaraka commands. With its latest feature Mobile Iraq upgrade, Albaraka Assistant can 2018 230 2018 313 answer customer questions and Remote Face-to-Face Banking find the desired menus, as well as Experience with Albaraka Türk Call execute money transfers and invoice Center 2019 230 2019 307 payments. Albaraka Türk Call Center played a major role in meeting customer expectations and demands without the need for physical service 2020 230 2020 293 infrastructure during the Covid-19 pandemic. Adopting a remote working model after the outbreak of the pandemic, Albaraka Türk Call Center truly became a digital branch. Improving its current applications with artificial intelligence technologies, Albaraka Türk Call Center provided its customers with a remote face-to-face banking experience with its video call service infrastructure.
68 69 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Human Capital Albaraka Türk’s Human Values Profile Title Total Average University Average Business Newly Male Female Retired Disabled English Other Staff Age Graduation Seniority Beginners Recruited Employee Employee Employee Employee (TOEFL) Foreign Rate 2020 2020 Languages
Senior Management 10 50.0 100% 17.7 - 1 10 - 4 - - - Albaraka Türk consolidates its corporate competencies Unit/Regional Manager 49 43.4 100% 14.3 1 18 47 2 - - - - with the continuous development opportunities it Branch Manager 230 42.3 99.1% 14.4 - 26 230 - - - - - Manager 1,080 38.8 98.8% 11.5 4 109 1,041 39 5 9 27 5 offers to its employees. Director/Specialist 1,288 33.7 98.4% 7.5 29 247 1,019 269 4 30 47 15
Assistant Specialist/ 463 29.6 91.4% 3.9 106 100 331 132 1 34 9 56 Authorized
Auxiliary Personnel 14 44.1 7.1% 15.3 1 1 14 - 2 - - 1
Safety 256 36.8 20.3% 8.9 4 44 254 2 - - - 1
Total 3,390 35.8 91% 9.0 145 546 2,946 444 16 73 83 78 Albaraka Türk’s Human Values Policy • Employing people in the sufficient is designed to employ, improve number required, proper for the and retain well-trained and skilled job, with appropriate intellectual people with the qualifications and and professional knowledge and strategies. In particular, the Bank expertise required at the national as skills, while ensuring that they work Total Staff 3,390 should seek a balance between well as international level. This way, with commitment to achieve the risk and reward in setting the the Policy aims to help Albaraka Türk highest level of productivity and Remuneration Policy. achieve and uphold – in the most profitability; Average Age 35.8 • The Bank’s remuneration and effective, rapid, reliable and efficient • Providing occupational training, performance criteria should not manner – its purpose, vision, mission improvement and development lead to steep rises in the level Average Seniority 9.0 years and corporate values. opportunities to the entire of counterparty credit risk or exposure to extreme risks. staff in line with the work to be • The Remuneration Policy should The Human Values Policy is performed; Labor Turnover 9.1% not be closely linked with the formulated and laid down by the • Providing work environments Bank’s short-term profitability. Head Office. The Assistant General that encourage the staff to think • The Policy should be Female Employee Rate 13.1% Manager in charge of Human innovatively and progressively and commensurate with the Bank’s Values is primarily responsible for generate new ideas and products; long-term financial standing and Exerting efforts to internally train implementing, developing and • Male Employee Rate 86.9% capital adequacy, and prevent following up the Human Values people for management and conflicts of interest. Policy. This responsibility is also officer positions, and giving priority • The Board of Directors is in charge applicable for all relevant managers to trained staff within the Bank for High School 8.6% of approving, regularly reviewing, within their areas of responsibility. appointments to vacant positions; and supervising implementation of • Informing Bank staff on subjects the Remuneration Policy. The core principles of Albaraka Türk’s relevant to them, developing Higher Education and Above 91.4% Human Values Policy include: communication procedures and Enriching employee experience principles that enable employees is a top priority… Albaraka Türk listens to its staff • Respecting the personality of to convey their opinions and ideas members via its Employee employees, and protecting their to managers easily; Performance-based remuneration • The Policy should be open and Experience activities. The Bank rights arising from employment; • Creating a working environment policy transparent, and support and shapes its processes in line • Communicating the corporate that boosts employee motivation Albaraka Türk takes a meritocratic follow up the performance system. with feedback received from its culture, ensuring staff commitment for work, and conducting efforts to approach to setting its Remuneration • The Remuneration Policy should employees. Corporate mobile, to the corporate values and improve their social relations; Policy. The Bank formulates its encourage and support Bank staff Remuneration Policy in accordance in their career goals. e-mail, Skype, Microsoft Kaizala, culture, and encouraging all • Encouraging the Bank’s staff with the following principles: • Remuneration plans should be WhatsApp via GSM and social media employees to pursue shared to achieve success, developing made in a manner to prevent are among the communication objectives; practices in this regard, • The Wage Management System exposure to extreme market channels used at Albaraka Türk and rewarding outstanding should reflect the Bank’s corporate risk; the general approach performance. to receive staff opinions and culture, mission and structure. to remuneration should not suggestions. In addition, the contradict the Bank’s market risk • The Remuneration Policy should Employee Mentality event is be designed by considering the strategy. held for staff members who have Bank’s budget and solvency. • The remuneration process should completed their first six months • Rewarding practices should be fair be aligned with the Bank’s risk and based on equal opportunity. appetite, risk capacity, financial at the Bank. The Employees’ objectives and long-term Committee convenes every year where personnel can convey their
70 71 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Prioritizing employee expectations: assessment platform. The firm that turn the Rotational Work (Working Our Human Capital Change Council designed the recruitment module in from Home) periods of Branch Albaraka Türk established the use at the Bank opened the role-play Operations Service staff into training Change Council to evaluate internal simulation for testing in the last two opportunities. employee requests. The Change months of the year. The role-play • A Digital Allocation training program Council is comprised of Bank tool started to be examined in terms was held for Corporate, Commercial, employees in order to strengthen of its suitability for internal use. SME and Retail Sales Service staff With the Discover in-house entrepreneurship program the common working culture by working in branches and all Branch stepping up activities in this area. Development maps for employees Managers about using the updated created within Albaraka Türk, it is aimed to increase the The Council regularly holds meetings After launching in fourth quarter allocation screens. online and receives feedback on its 2019, orientation activities for • An Optimum Process program innovation performance of the Institution and to enrich the agenda items for discussion. new employees were expanded training was administered to identify this year. An orientation coach the business processes managed culture of discovery. A leading employer brand: “There Is was assigned to each newly hired by the various units of the Bank, More” employee. In addition, an orientation determine the critical success Albaraka Türk was named the “Best booklet containing up-to-date factors, draw up the processes, Employer” for three years in a row information about Albaraka Türk’s conduct and monitor the processes by GTPW-Great Place to Work. At general structure and facilities was from a single point. requests via representatives elected of Resignation Survey. As part of the Employee Experience sub- Albaraka Türk, online branch visits are prepared. Due to the pandemic, • A Micro Allocation Processes by them. The annual Performance Employee Experience efforts, committee and upper committee. held in order to foster a collaborative the printed booklet was digitized training was conducted to increase Assessment enables Albaraka Türk the Bank collected attitudes, The sub-committee consists of business culture as part of the Bank’s and sent to new Bank recruits. A the awareness of Retail Sales Service staff to provide their feedback. thoughts and suggestions from the Assistant Human Resources “There Is More” initiative. These Welcome Box is also presented to staff about issues to be considered Employee suggestions are also heard the following: 238 candidates and Administrative Affairs General visits are designed to bolster the new staff members. Benchmarking while preparing the credit file and on the “Discover” platform set up interviewed during the year on Manager, Human Resources Manager, shared corporate culture among and research were performed to carrying out the Bank’s allocation at Albaraka Türk. Employees who their interview experience; 34 Training and Career Manager, employees and will continue to be modify the Welcome Box in 2020. processes. generate successful solutions are newly recruited employees on Administrative Affairs Manager, held in the coming year. The ongoing Products to be removed from the • Foreign Trade training programs rewarded as part of these efforts. their orientation experience; 97 Assistant Communication and Brand Masters in the Field application box were identified. A cost study were administered for sales staff at employees on their appointment/ Management Manager, Process ensures the transfer of experience was also carried out in conjunction branches affiliated with the South With the Discover in-house rotation experience; 397 employees Management and Organizational and culture to the new generation with Administrative Affairs to identify Anatolian Regional Directorate entrepreneurship program created who participated in the assistant Development Service Manager, of Albaraka employees. Pursuant to products to be added to the revised and Central Anatolia Regional within Albaraka Türk, it is aimed to specialist, specialist and operations Customer Experience and CRM the Bank’s growth strategy, efforts Welcome Box. Directorate in order to promote and increase the innovation performance management certification exams Service Manager, in addition to are underway to make Albaraka market foreign trade products and of the Institution and to enrich the on their promotion certification Human Resources employees who Türk the most preferred banking Digital transformation-based reduce errors during the operational culture of discovery. BigBang, an process experience; 20 employees carry out Employee Experience institution in the market. The goal is training processes. idea-sharing platform, encourages who participated in the assessment activities. to attract talented employees who Digitalization efforts at the Bank • As part of the Union Trainings, Bank employees to generate and process on their assessment center are open to change and innovation enabled uninterrupted training personnel participated in training implement ideas on the Bank’s areas work experience; and 16 employees The upper committee consists of and to maintain this position in the activities during the pandemic. programs held by the Participation with high innovation potential and who resigned from their job on their the General Manager, Assistant sector. During the year, face-to-face Employees participated in the Banks Association of Turkey (TKBB), issues that require development. resignation experience. The feedback General Manager, Managers, and interviews were suspended due to trainings remotely through live virtual Banks Association of Turkey (TBB) BigBang is a platform that aims to was communicated to the relevant the Employee Experience team. the pandemic. All interviews began classrooms. As a result, occupational and Interbank Card Center (BKM). transform these ideas into successful Human Resources Department With these committees, Albaraka to be conducted on the Microsoft health among the workforce was • Pursuant to the Communiqué on innovations. services and the Training and Career Türk aims to set up a network Teams platform, which started to be maintained at the maximum level. Compliance with the Principles and Management Department services. where all departments and services used at the Bank in 2019. To expand In addition, a positive contribution Standards of Interest-Free Banking In 2020, Albaraka Türk expanded the that conduct activities that touch the Bank’s interactions with university was made to staff members’ comfort, issued by BRSA, the Interest-Free scope of its Employee Experience An Employee Experience survey was people’s lives can discuss the staff students, a Recruitment Simulation work-family balance, and employee Banking Standards Compliance activities. The Bank established the conducted across the organization to feedback received and make joint was conducted with students as part satisfaction. In 2020, the average Certification program was organized employee life cycle and started to discover the attitudes and thoughts decisions. The first sub-committee of an activity organized by İŞKUR and score of the training satisfaction in partnership with the Participation regularly solicit the attitudes and of employees during the time when meeting was held in December a university association. Participant surveys was 85%. Banks Association of Turkey and thoughts of employees regarding the Bank quickly transitioned to 2020. The Employee Experience feedback was solicited and received. Marmara University, Institute of each stage. The Alterna platform, working from home due to the sub-committee is scheduled to The simulation was performed In the reporting year, Albaraka Türk Islamic Economics and Finance. used during the demo process, pandemic. The survey results were convene once a month while the face-to-face before the pandemic employees received a total of 153,810 • Train the Trainer and Effective continued to be used; all employee shared with senior management. upper committee will convene and online after the outbreak. hours of training – an average of Presentation Techniques training surveys were prepared on Alterna. During the implementation phase of when deemed necessary. With the Employment offers were extended 42.04 hours per person. About 90% programs were administered to In fourth quarter, Albaraka Türk the Voluntary Remote Work initiative, support of these committee bodies, as a result of interactions at these of these trainings were held on transfer the experience, knowledge removed the print version and the an Employee Experience survey was the Bank plans to expand the scope events. digital platforms. and practices gained in the Bank to digital version of the Resignation performed at Bank headquarters. of Employee Experience activities the staff in line with Albaraka Türk’s Form received via e-mail. The This effort was designed to consider and boost the number of regularly In 2020, Albaraka Türk renewed In 2020, Albaraka Türk’s training culture and working principles. process was added to the Employee the staff feedback and suggestions; administered surveys. Surveys are its contracts with third party activities included the following: These programs also aimed to Experience and started to be sent the results of this survey were also also planned for other contact recruitment portals. Development expand the internal trainer staff to Bank employees who resigned submitted to senior management. points at the Bank in addition to the of role-play simulations started • A Teller Operations Development and focus on internal resources in from their job under the name In 2020, Albaraka Türk established employee life cycle. during the year for the Bank’s online program was implemented to training programs.
72 73 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Service Manager Development them consolidate the information app, Bank staff can continue their Our Human Capital Program: The Service Manager learned. At the Stevie Awards for personal development and learning Development program is designed Great Employers competition, which on the road, on the service bus for employees preparing for the recognizes the best practices of the during their commute, at home – in Manager position. The program is a world’s leading employers, Albaraka short, anywhere. two-month development journey. Türk was presented with the Gold During this journey, preparatory Stevie in the category of “Best Master’s and Doctorate Theses: The Albaraka Türk places great importance on providing assignments, and a reading list were Training Technology Applications.” “Thesis” section on the main page suggested to Manager candidates. The Bank won this award with its of Albaraka Academy is for all Bank employees with professional certifications through Subsequently, a five-day Virtual Virtual Classroom Application employees to share their knowledge (Live) Classroom training program on the Albaraka Academy digital with other staff members via a institutions, universities, and training firms to boost the – consisting of “Team Coaching,” training platform, where training and common platform. In this section, “Problem Solving,” “Management development activities were available master’s/doctorate theses authored competencies of its workforce. in the Digital Age” and “Motivation” during the pandemic 24/7 without by employees who are graduates modules – was administered to interruption. of these respective programs the trainees. The development are published. In 2020, Albaraka journey included sufficient time for Graphics Tablet: Five graphics Academy’s Thesis section hosted 67 trainees to complete book and video tablets were purchased to boost theses in total. • Training programs that must be Compulsory Certificates (as per legal • Logistics and Supply Chain recommendations as well as project the efficiency of trainings on the conducted in accordance with and regulatory requirements): Management Certificate assignments. The program was Bank’s virtual classroom platform. Online Certification Exams: legal and regulatory requirements • Certified Fraud Examiner successfully completed with Virtual As a result, the virtual classroom During the year, 828 Albaraka Türk continued in 2020. These Certificate (CFE) (Live) Classroom trainings over a five- whiteboard application was used employees attended the in-house Certificate Total Staff included: “Information Security,” • Certified Anti-Money Laundering day period. more effectively by internal and online certification exams: 333 “Occupational Health and Safety,” Capital Market 761 Specialist (CAMS) external trainers. for the Operations Management “Prevention of Laundering of Crime Licensing (SPL) • Certified Information Security Education Aid Practices Certification Exam and 495 for Proceeds and the Financing of Manager Certificate (CISM) International Orientation Programs: the Basic/Advanced Participation Terrorism,” “Basic First Aid,” “In- Private Pension 1,115 • Foreign Trade Certificate Postgraduate Education Aid: In 2020, International Orientation Banking Certification Exam. Service Delivery” and “Security Licensing (BES) • Certificate for Control Self- Educational assistance payments programs were carried out as part Officer Identity Renewal.” Technical Staff 1,734 Assessment (CCSA) were made to 44 staff members of the Bank’s training activities. Albaraka Academy TV: Educational • Specialized IT training programs Competence (SEGEM) • Professional Scrum Manager – who graduated from postgraduate Under the International Orientation technologies (videos) are used as – such as “Business Analysis,” “ITIL Level I (PSM I) programs in 2020 to encourage programs, participants from an instructional tool on Albaraka Foundation,” “Secure Software” Basic First Aid 330 • Certified Data Analyst ACDA the professional and personal international banks and institutions Academy TV. Established to “Agile Foundations and Leadership” • Cisco Certified Network Associate development of the Bank’s who are visiting Albaraka Türk improve the knowledge, attitude “Analyst: Data Science,” “KOBIL” Other External Certifications: (CCNA) employees. are given training on the basic and behavior of Bank employees, and “Unit Test” – were held • Project Management principles of participation banking, Albaraka Academy TV is based on especially for staff working in the • International Financial Reporting Manager Development Trainings Foreign Language Education Aid: As the responsibilities and processes the principle of sharing information Information Technologies area Standards part of the Application Instruction of various Bank departments, and and mutual interaction. to remain up-to-date on relevant • Human Resources Expertise Branch Manager Development on Foreign Language Education, five information on the Bank’s products technical issues. • International Certified Internal Program: Branch Manager employees who wanted to improve and services. To date, 81 participants Digital Library: Various documents Auditor (CIA) Development training programs their professional foreign language in total, including 17 in 2020, uploaded to the Digital Certification efforts for employees • International Certified Internal were held for Bank personnel to knowledge and skills were provided have participated in the Bank’s Library, where training related Albaraka Türk places great Control Specialist (CICS) be included in the Branch Manager with classroom instruction support. International Orientation programs. documentation and materials are importance on providing employees • International Certified Information candidate pool. A total of 75 An additional 100 staff members stored online to be accessed from with professional certifications Systems Auditor (CISA) employees participated in the were provided with online English e.Mobile Application: In 2020, any location at any time, were through institutions, universities, • International Certified Information programs that were administered in instruction support. Albaraka Academy launched its downloaded 30,243 times in total as and training firms to boost the Security Management (CISM) three groups in 2020. These training e.Mobile application with a design of end-2020. competencies of its workforce. As • International Information efforts were conducted on the Educational Technologies compatible with mobile browsers. part of the Professional Competence Technologies Infrastructure Library Virtual (Live) Class platform during As a result, the app can be accessed Certificates Application Instruction, Specialist (ITIL) the pandemic. Virtual Class: Albaraka Türk has from anywhere and training sessions the certification costs of employees • Certified Public Accountant entered the digital training era under can be viewed quickly and easily who are entitled to receive nationally Certificate (SMMM) Management Workshop: The its organization-wide digitization 24/7. Albaraka Academy introduced and internationally valid certificate • Strategic Procurement and Management Workshop program drive. In virtual classrooms, Bank the e.Mobile application to better types – CISA, CICS, CIA, ACAMS, CFE, Negotiation Management was administered to further develop employees can engage in video and support learning anytime and SMMM, among others – continued Certificate the competencies of staff who are audio interaction with instructors via anywhere with its new interface to be paid by the Bank. With this • Certified Internal Control preparing for the Service Manager their computers, ask questions, take specially designed for mobile benefit, the Bank actively supports Professional (CICP) position at the headquarters units. notes, and reinforce their learning devices. In 2020, 30,322 log-ins were the continuous development of • Natural Gas Heating and Gas During the year, 27 personnel process with assessment questions recorded to the Albaraka Academy the professional and personal Burner Service Personnel (Level 4) attended the programs held in posed during training. In addition, platform via mobile devices. Thanks competencies of its employees. • Corporate Communication two groups; a total of 304 hours of training sessions are recorded and to Albaraka Academy’s e.Mobile Certificate training was provided under this then shared with participants to help effort.
74 75 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Human Capital
With Compass screen, Albaraka Türk won an award in the Albaraka Türk aims to maximize operational efficiency by category of “Workforce Management with Performance using robotics combined with digitalization and artificial Evaluation” at a competition held by Brandon Hall Group intelligence. in 2020.
Sustainability-Based Performance Albaraka Türk’s performance Career Planning Promotion Processes: All staff Operations Manager Pool: The management system for 17 years Management management system includes promotion processes at Albaraka Bank recorded 115 employees in and strives to further boost its Performance evaluations of the 3D Performance Evaluation, Online Mentorship Project: Türk for 2020 were completed within the Operations Manager Pool as of effectiveness each day with the branch employees are based on which is a version of the 360 Mentorship efforts continued the scheduled calendar. During year-end 2020. During the year, 15 introduction of new management numerical data. By using numerical Degree Performance Evaluation to be conducted at the Bank in the year, promotion certification Specialists were appointed from standards. The Bank regularly data in branch staff performance System adapted to the Bank. 2020. Under the 2020 Mentor trainings and exams were carried out the pool as Operations Managers, inspects its processes every evaluations, in addition to the The performance management Albaraka initiative, experienced online in compliance with pandemic while 17 Operations Managers year with internal and external manager’s assessment, objectivity system is used in addition to the Branch Managers (mentors) share restrictions. were promoted to Second Level inspection methods and analyzes is ensured in this process. This manager’s employee evaluation their professional knowledge Operations Managers. their compliance with quality approach fosters the loyalty and (competency evaluation) and and experience with new Branch Digital Assessment Center management system standards. In trust of employees to the Bank. The evaluation with numerical data. With Managers (mentees). This effort Applications: With Assessment Quality and Digital Technologies 2020, the External Audit Process Compass screen was developed the 3D Evaluation, the employee is started out with face-to-face Center applications, the was conducted online for the first to measure the performance of enabled to express his/her opinions meetings with the participation of development points of job Access and Authorization: A time. The audit was successfully branch operations employees about both his/her direct manager 34 mentors and 37 mentees, before candidates can be observed segregation of duties approach is completed. Based on the audit over the system and monitor their and second manager. Business moving online due to Covid-19 objectively, and actions can be adopted in defining the screens and results, the Bank’s ISO 9001:2015 performance instantly. With this relationship evaluation forms help precautionary measures. 2020 taken as needed. In 2020, the Bank authorizations that Bank employees Quality Management System innovation, Albaraka Türk won an teams that have business relations Mentor Albaraka was successfully conducted its Assessment Center will need while performing their certification was renewed. award in the category of “Workforce with each other to evaluate the completed during the year. To boost applications online. job tasks. Albaraka Türk aims to Management with Performance service they receive and develop dissemination of knowledge and maximize operational efficiency Document Management System: Evaluation” at a competition held by constructive suggestions. Power BI experience within the Bank, another Manager Candidate Pool: The Bank by using robotics combined As part of document management Brandon Hall Group in 2020. screens were prepared and opened mentorship initiative was introduced attaches great importance to and with digitalization and artificial efforts at the Bank, employees can to all headquarters unit managers to for Service Manager candidates. invests in its internal resources. intelligence. With the various digitally access the documents Performance measurement efforts view the evaluation results. This effort is ongoing with the Managers who will take Albaraka improvements in 2020, the Bank they need while performing their based on numerical data was participation of 19 mentors from Türk forward into the future are started to conduct access and transactions. Documents that extended to include headquarters Managers are specially trained to senior managers and 19 mentees who developed and cultivated as a result authorization requests on mobile are updated, newly published or staff during the year. As a first spread the culture of providing are Manager Candidates. of meticulous evaluations. In 2020, platforms. Albaraka Türk received suspended on the digital platform step, a screen was developed to feedback and increase awareness Manager Candidate Pool activities the Gold prize in the “Excellence in are shared periodically with the measure and instantly monitor across the Bank. Before performance Career Desk Platform: In 2020, 244 continued in a performance, Technology” category for its artificial entire Bank via electronic bulletins. the performance of employees in evaluations, informational e-mails are questions were sent to HR business potential, and development- intelligence applications used in the Headquarters Operations, Allocation sent to managers who will conduct family units and answered via the oriented way. During the year, 11 Unit authorization process at the awards Robotic Process Automation: Robotic and Call Center units with numerical evaluations stating the importance Career Desk. This platform was Managers and 34 Branch Managers competition held by Brandon Hall process automation (RPA) is the data. of constructive feedback. At the end launched as a Career and Talent were appointed from the Manager Group. journey initiated by the Bank to of the 2020 performance period, a Management Service initiative during Candidate Pool. Albaraka Türk was create value in key areas, such as feedback survey was assigned to all the year. Career Desk offers a wide presented with the Brandon Hall Quality Management System: Digital Culture Transformation and employees who were evaluated on range of benefits, including serving Excellence award in the category of Albaraka Türk’s quality journey Internal Customer Experience, and their job performance. The survey as a new channel and information “Talent Management” in recognition started in 2004 with the philosophy achieve gains in cost, speed, digital aimed to measure the rate at which platform featuring expanded of its Manager Development of “Write What You Do, Do What workforce, and error reduction. RPA managers give feedback to their accessibility, acting with the principle Program. The Bank was proud that its You Write.” Today, the Bank is based on integrating software that employees and to raise awareness of confidentiality, responding to internal development efforts were adopts an approach embodied automates complex and rule-based on this issue. The survey results were questions in a transparent way, and recognized with this prestigious by “Transform the Excellence tasks that do not require human submitted to the senior management having access to frequently asked award. Culture into a Lifestyle.” Albaraka decision-making in any application in the Power BI report. questions by everyone. Türk has implemented its quality into the processes.
76 77 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Human Capital
The trainings provided are as follows: • Trainings for fire response teams they may encounter in business Occupational Health and Safety on fire and fire response methods, life and their legal rights and • Occupational health and safety • Trainings for emergency teams on responsibilities, trainings at least every three years their duties and responsibilities in • Trainings for the occupational as specified in the legislation, case of an emergency, health and safety board and risk • Refresher training through distance • First aid training for our employees assessment teams on their duties education method for the first in the number specified in the and responsibilities specified in Albaraka Türk maintained its business continuity during time in Turkey within the scope of legislation, the legislation. Occupational Health and Safety • Trainings for groups that require the COVID-19 pandemic process, thanks to the strong renewal, special policies in business life In 2020, there were no occupational • Onboarding for new hires, (disabled, women, pregnant, accidents at the Bank’s Headquarters, occupational health and safety policy it has established. • Trainings about emergencies and breastfeeding, young, children, branches and regional directorates. course of action in emergencies, elderly), covering the difficulties
Albaraka Türk considers protecting point of view, a series of procedures As part of the Occupational Relations with Suppliers Rate of procurement from domestic the health and safety of all have been implemented in the Health and Safety activities of the suppliers its stakeholders, especially its Headquarters, from protection 16 branches opened in the fiscal Number of 291 98.65% employees and customers, as its and control measures to hygiene year 2020, the Bank conducted Domestic Firms main priority. The Bank introduced conditions, and from security a risk analysis, emergency plan, new practices to safeguard the measures to communication in emergency drill, emergency team Albaraka Türk provided refresher training Number of 4 1.35% health and safety of employees at challenging situations, in order to list, occupational health and Foreign Firms the Head Office in Istanbul and all prevent all problems that may arise safety instructions, floor plans, through distance education method for branch locations. due to pandemics in 2020. Thanks occupational safety training, and TOTAL 295 100.00% to the efforts that made a difference employee representative selection the first time in Turkey within the scope of Occupational Health and Safety in all these areas, it became the first efforts. In addition, Headquarters Effective control mechanisms for activities are carried out by the OHS bank that received the COVID-19 Safe Building Risk Analysis was prepared Occupational Health and Safety renewal. supplier companies Board in Albaraka Türk. The Bank’s Service Certificate in our country as a and precautions were taken for Albaraka Türk attaches great importance OHS Board carries out activities for: result of the audit performed by the potential risks. to suppliers’ upholding Albaraka Türk • The Bank’s OHS Council is Turkish Standards Institute. values in all material aspect. To this responsible for: Identifying Emergency Activities for Business end, the Bank conducts the following inspections for its suppliers in the area required health and safety The recommendations and Continuity Responsible procurement practices Albaraka Türk shares its conditions, measures and tools notifications of official institutions The following activities were carried Albaraka Türk cooperates with expectations and standards with of human values: that should be in place at Albaraka and the Ministry of Health regarding out in 2020 as part of Emergency numerous suppliers from domestic its suppliers within the framework Türk to prevent any diseases or the pandemic are constantly Activities by Albaraka Türk: and international markets to of its sustainability/environmental Identity information, SSI (Social bodily injuries that may be caused followed and all measures have been conduct its operations and business policies. Albaraka Türk seeks the Security Institution of Republic by devices, equipment, machinery, taken in this regard. Informative • The Bank effectively organizes processes. Evaluating suppliers following primary criteria in selecting of Turkey) registration, health raw materials, and the like used in posters and videos-pictures of Emergency Management efforts is a key part of the Bank’s value its suppliers. Regarding the product certificate, professional competence the workplace. official and authorized institutions to ensure the safety of customers, chain. Albaraka Türk establishes and intended purpose of supply documentation, and the like are • Adopting, implementing and are shared throughout the employees, documents, computer relations with suppliers pursuant processes: obtained from subcontracted checking the necessary tools Headquarters building regarding the systems and data against possible to a comprehensive series of employees for the Head Office building and safety measures to prevent pandemic. The current risk analysis damages that may arise at corporate documentation. These • Experience or branch locations before start of work. occupational accidents at Albaraka has been revised by making a risk Head Office and the branches. include: Procurement Procedure; • Management Skills Türk; notifying employees of assessment regarding COVID-19 and These efforts are relevant to all Purchasing, Selling, Construction, • Quality SSI documents of employees of supplier their responsibility to comply epidemic diseases. Corrective and employees, assets, activities and Rental and Service Regulation; • Price companies operating in their own with principles and conditions preventive actions have been taken. systems of the Bank in the event of Supplier Information Form; • Timely Delivery facilities (e.g. manufacturing activities) stipulated for this purpose; acts of God, terrorist acts, system and Supplier Evaluation Form. • Sufficient Capacity may be requested if deemed necessary. and instructing employees on In addition to the measures against damages, workplace movements Committed to achieving full legal • After-Sales Services (Technical necessary health and safety the pandemic, the following and other such unexpected and and regulatory compliance in every Capability) Contracts signed with suppliers include measures. activities were carried out in 2020 extraordinary situations. aspect of its operations, Albaraka • Product Efficiency provisions stipulating that all suppliers • Preventing occupational accidents for Headquarters and all branches, • Emergency training was given Türk also expects all its suppliers • Geographical Location will fully comply with SSI and other and illnesses through continuous separately for each location in to the emergency crews at to fully adhere to the Bank’s applicable laws while performing enforcement of the provisions of line with the framework of the Headquarters and the branches. corporate values, applicable laws, Long-term relations with suppliers services at the Bank; any sanctions or applicable regulations. Occupational Health and Safety Law • Fire/evacuation drills were rules and regulations. The Bank Albaraka Türk has adopted the core penalties arising from their failure to No. 6331: conducted at all branches. prefers suppliers who conduct principle of establishing long-term comply will be borne by the supplier. First Bank with COVID-19 Security manufacturing operations at relations with suppliers. The Bank Suppliers may be subject to on-site Certificate • Preparing risk analyses, Occupational Health and Safety global standards. Furthermore, the acts meticulously and takes many inspections at specified intervals. Albaraka Türk attaches great • Preparing emergency plan, Trainings Bank opts for domestic suppliers criteria into account in selecting importance to the health of its • Setting up emergency crews, Albaraka Türk also provides trainings in the selection process in order suppliers. Support service providers may also be employees and society at all times • Drafting floor plans, for all its employees within the scope to contribute to the sustainable subject to on-site inspections by the and under all conditions. From this • Conducting evacuation drills. of occupational health and safety. development of Turkey’s economy. Inspection Board.
78 79 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Product enrichment efforts In 2020, Albaraka Türk completely • The Digital Allocation project is a Albaraka Türk has largely completed overhauled the hardware and major effort to improve the Bank’s Our Intellectual Capital its digital transformation projects related software in its IT systems internal processes. The project was related to infrastructure development infrastructure. The renewed completed, making the allocation and product enrichment. To ensure infrastructure was designed and process faster and more efficient. the sustainability of the Bank’s installed in a scale that will allow In addition, the fund extending digital transformation drive, efforts the Bank to achieve its next five-year process was accelerated by Albaraka Türk strengthens its intellectual capital by are ongoing to boost customer targets. The renewal process was completing the XML integration acquisition and introduce/sell digital carried out without any interruption of the Participation Banks Invoice developing innovative products and services in conjunction products/services to customers. to ongoing banking services. Albaraka Center. These various efforts take into Türk’s systems infrastructure revamp with the fintechs that it supports as part of its digital account Albaraka Türk’s strategic is a major success story in the Business Excellence and Innovation priorities and customer expectations industry. Department post-pandemic. Other efforts focused on digital transformation efforts. In terms of product and service transformation by the Albaraka Türk The Bank has established the IT development, Albaraka Türk’s Business Excellence and Innovation systems infrastructure required for outstanding projects completed in Department in the 2020 reporting big data analytics. Many artificial 2020 include the following: year included the following: intelligence supported analytical Digital transformation, effective To secure the Bank’s position as an models are planned for this • With the completion of the SLA-Service Level Agreement/SLA- use of technology, and operational innovative pioneer in the sector, infrastructure. Artificial intelligence first phase of the Card and POS OLA Process Experience Platform: efficiency rank among the top issues fintech cooperation projects are models have been developed and project, the Bank brought all its Dashboards were developed and on the banking industry’s agenda carried out to provide profitability put into use in areas such as text credit card transactions in-house, implemented to monitor all of today. In 2017, Albaraka Türk initiated and cost advantages. These efforts analytics, complaint management, reduced supplier dependency, Albaraka Türk’s direct or indirect digital transformation efforts in aim to adapt developments in the and abandonment paths. AI and established the systems operational contact points with order to provide customers with digital world to the banking industry algorithms to be used in conjunction infrastructure to deliver faster and the customer on a daily basis. The the new products and services quickly. with big data analytics are poised to better quality service. SLA project is designed to ensure they need through new business become the Bank’s most important • The digital banking infrastructure the traceability and measurability models, transform into a global Improvement, simplification, and decision support systems. More was strengthened thanks to of the Bank’s operations. This effort digital brand preferred by the optimization of internal processes: and more Bank processes are being projects aimed at enabling aims to boost productivity and customers, and make digitalization Albaraka Türk has engaged in efforts robotized by using RPA. The smart customers to access the Bank’s improve customer experience in part of the corporate culture. to improve and simplify its internal document classification solution services without visiting a physical business processes by means of These organization-wide efforts are processes by using new technologies is also gaining in popularity by branch. The Web Customer manager dashboards developed ongoing. effectively and efficiently. As a eliminating deficiencies. The Bank Acquisition project made it in-house. The speed and quality result, the Bank outperforms the completed the digital confirmation possible to become a Bank of the service provided by the Projects conducted by Albaraka sector average in terms of service mechanism in terms of instruction customer without going to a Albaraka Türk Operations Center Türk in the digital transformation levels (e.g. SLA, OLA). Albaraka Türk processing. This effort aims to branch. The Financing at the Dealer are followed by service level roadmap can be grouped under five is committed to implementing process customer instructions project enabled the use of funds agreement (SLA)s. Currently, speed main themes: projects designed to boost quickly without error. without the need to visit a branch and quality are measured via 947 resource efficiency and deliver cost location. The Insurance Sales performance indicators and 315 Products and services that will optimization. API banking efforts are ongoing and IPS Transactions from Digital SLAs. Measurement results are improve customer experience and to establish a robust financial Channels projects facilitated transparently shared with relevant that come into direct contact with Development of competencies, ecosystem – a key goal at the Bank. customer access these services teams and used in the planning of the customer: Albaraka Türk carries capabilities, and infrastructure: To Improvements and upgrades for the from their homes. training and development activities. out a range of projects to boost provide customers with the best current API portal are ongoing. In • Albaraka Türk completed and Service level agreements are revised customer acquisition and improve products and services via the latest terms of API portal development in activated the integration of the in line with evolving customer customer experience. These efforts technologies, the Bank conducts the banking industry, Albaraka Türk is Semosis Notes Payment System expectations and customer are aimed at benefiting target projects to bolster its capabilities positioned among the top ranks. and the Cash Simple projects – centricity. As a result, processes customers, facilitating development and infrastructure. These efforts aim two of the Bank’s most innovative recorded improvements up to 40% of innovative products, improving to make Albaraka Türk more agile Agile product development strategy fintech efforts. In addition, in terms of speed and quality. current products, and introducing and well prepared for the future. In line with the Bank’s agile product the Notaries Union Secure the Bank’s offerings on digital development strategies, Albaraka Payment System integration, Process improvement: To contribute Türk aims for continuous product OYAK Investment and TEFAS to the Bank’s ongoing digitalization channels. Sustainable growth/profitability and development and delivery. This integration were completed and drive and foster a continuous effective risk management: To ensure objective is being pursued by launched during the year. With the improvement culture, Albaraka New business models and integration sustainable growth and profitability, expanding the micro-service-based completion of the E-Hypothec Türk took its processes to the next with the ecosystem: Various activities Albaraka Türk undertakes efforts to mobile framework infrastructure project, the Bank moved its level and delivered better services are conducted to close the gap improve the control environment and switching to micro-service hypothec process to an electronic to customers thanks to adopting between Albaraka Türk and leading with effective risk management architecture in every possible area. environment. Agile Process Improvement and digital banks in the market. These projects, reduce banking risks and The transition to HTML5 to make the Lean Six Sigma models. The Bank efforts include a range of projects cyber risks, and boost the Bank’s banking system more flexible and recorded an average of 32% (max. to expand customer acquisition compliance with legal and regulatory user-friendly is complete. The Bank 80%) improvement in the targeted and improve customer experience. requirements. has taken a major step toward agility processes. with this effort. 80 81 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
A major step toward digital on the systems infrastructure Alneo delivers an innovative and Our Intellectual Capital transformation: AlbarakaTech Global of solarisBank AG, a financial seamless solution for the POS In recent years, Albaraka Türk has technology company that has world, where fintechs are focusing established many new affiliated obtained the necessary approvals on gaining market share from the entities to support and enrich the and licenses from the German banking sector. In a short time, opportunities and intellectual Central Bank Bundesbank. insha Alneo has become one of Turkey’s know-how required for digital was launched as a platform banking first artificial intelligence-supported transformation. The Bank has service to provide participation easy and fast payment platforms. Albaraka Türk’s Digital Signature Project is expected to save always prioritized providing the banking services in Europe with a Alneo consists of one application software and hardware infrastructure modular structure using solarisBank’s that will serve as a safe box at the 2,000 trees in the next 10 years. needed to achieve its strategic banking license. This innovative shopkeepers and another that acts goals. Efforts are ongoing to meet service aims to deliver a socio- as a wallet that the customer can the Bank’s infrastructure and skill financial solution for Muslims and use if s/he desires. In addition to set requirements for its digital Turkish citizens in Europe. The removing materials such as physical transformation. The Bank has insha service includes applications POS devices and rolls, Alneo offers identified the following as priority that offer customer onboarding installment opportunities for all areas: artificial intelligence analytics, in just eight minutes in the digital debit and credit cards. open banking infrastructure, environment without going to a Dynamic flow: With the innovative deliver its customers a more secure, Albaraka Türk established a new microservice architecture, and branch and that touch the lives of Serving 17 thousand commercial low code technology approach, faster, and digital service. The Digital department – Digital Branch mobility. users, not only for financial needs. customers with this innovative Bank processes that do not move Signature project is also expected Management – with the vision of The Bank delivers a multi-language technology, Alneo has both forward systematically within the to save 2,000 trees over the next 10 becoming a digital bank. This unit is AlbarakaTech Global was established platform banking service by facilitated new customer acquisitions organization – such as e-mail, in- years. responsible for further developing to create the necessary capabilities providing other functionality, such as and liberated Albaraka’s POS house correspondence, telephonic the Bank’s remote interaction model for these goals, benefit from the namaz reminders, prayer room maps, structure. In 2020, Alneo performed communications – are transferred Organizational changes: New with new communication channels 85 thousand transactions with a total to the platform in a fast way. This products, new or modified created with advanced technologies, R&D ecosystem, and productize and zakat calculator – features that approach ensures that these legislation/regulations, evolving especially the call center. Digital the technological output. This new are increasingly sought by Muslims. value of TL 225 million. processes are systematically demands and intensive changes Branch Management aims to meet entity started operating at Teknopark monitored and that blocked points to business processes require customer needs by providing one-to- Istanbul campus with 218 staff as In 2020, insha’s user base expanded insha Ventures also includes brands can be detected, easily accessed, fast action to ensure customer one communication without a branch, of December 1, 2020. The Bank’s IT to more than 40 thousand. During that will soon enter our lives. These and reported. With about 350 satisfaction. Albaraka Türk delivering customer support as well as software development functions the year, the insha application up and coming brands include processes transferred to the low established the Ombudsman sales and consultancy services. were transferred to AlbarakaTech was completely renewed. A wide NakitBasit, which can meet customer code platform in a short time and function to quickly identify these Global for this purpose. AlbarakaTech range of products and services cash needs in places such as markets followed up, the Bank has reduced change needs and prevent gray areas. In 2020, Albaraka Türk also set up a Global aims to provide technologies have joined the insha family. These and fuel stations; Semosis, which will transaction times by 250%. The Ombudsman is a structure that new business line – Digital Channels that will enable Albaraka Türk to include InLoyal, a loyalty program move notes transactions to an online provides solutions by collecting and Payment Systems – to operate achieve its strategic goals and to that provides discounts, cashback platform; Kozmos, a subscription Workforce management: Albaraka regular feedback from employees with end-to-end agile methodology. Türk aims to maximize capacity via the in-house communication Affiliates of this business line include the serve the banks within Al Baraka and smart offers to its customers fee and management solution; utilization and eliminate workload platform and coordinating relevant Digital Channels and Payment Systems Banking Group and other institutions in different retail stores; inBox, KimlikBasit, a remote customer imbalances by centralizing its work teams to evaluate the feedback. Development Department, Payment in the market in the future. a marketplace for products and acquisition service; and POSBasit, a tasks. Workforce management Systems Operations Department and services of other fintech companies virtual POS service. enables the management of work The Project Management Office was Digital Branch Management Department. An innovative force: insha Ventures operating in tax, insurance, payment, tasks by systematically grouping restructured in a way that better insha Ventures was founded investment and other areas; and Albaraka Kültür Sanat ve Yayıncılık processes and people according to develops and supports skilled and Additionally, the Bank established to research, evaluate, test, and inGold, a platform where users Albaraka Türk, which carried out their skills. An increase in the speed experienced project managers in the Arbitration and Business implement technologies and can trade physical gold and other important works in the fields of and quality of work task completion order to execute the Bank’s digital Excellence Department this reporting applications that will deliver precious metals. culture, arts and publishing since its is achieved by: transformation efforts with a more year. Affiliated units include the establishment, has institutionalized effective and robust supporting Ombudsman, Process Management and innovative solutions to the meet • Performing the right jobs by the organization. The strengthened Organizational Development. financial needs of customers via Currently serving customers its 35 years of experience and right persons, project management organization financial technologies. only in Germany, insha plans to knowledge within the body of • Employing rapid use of additional aims to: During the year, Albaraka Türk set up the complete its technical and legal Albaraka Kültür Sanat ve Yayıncılık. resources during busy periods, • Provide more effective support Foreign Customers Fund Management In August 2020, insha Ventures implementation in 2021 and operate Albaraka Kültür Sanat ve Yayıncılık • Providing instant measurement of toward reaching the Bank’s function. This unit aims to manage was established as an affiliate of in France, Austria, Belgium and the started its operations in 2018 and capacity utilization rates. strategic goals, funds and assets with an approach that Albaraka Türk to develop financial Netherlands. aims to reach readers and art lovers • Increase coordination and boosts the satisfaction and loyalty of technologies. Working many fintechs, by always prioritizing moral and Biometric signature: The Digital cooperation between business qualified foreign customers residing insha Ventures offers innovative Alneo, another key brand within ethical concerns with its social Signature project, implemented units, abroad or at home. Foreign Customers solutions for the industry. insha Ventures, is an application responsibility awareness. Albaraka by Albaraka Türk in 2019, digitized • Ensure that IT resources are Fund Management implements policies that can be used with credit cards Türk plays a key role in transferring manual processes, resulting in allocated to more efficient determined for foreign private banking cost and time savings. As of 2019, projects, and customers in line with the Bank’s goals, insha is Europe’s first Islamic digital of 21 different banks and receive the Turkish-Ottoman cultural biometric signature of transactions • Present an effective management promotes private banking products and banking service operating within payments in various ways such as QR heritage to future generations with below 20 thousand is conducted process for senior management to services effectively and efficiently, and insha Ventures. The service is built Code, SMS, e-mail, and credit card the works it publishes. at 19 Bank branch locations. With make project investments in the maximizes added value by attracting viewing. In 2020, the application this effort, Albaraka Türk aims to right areas. private banking customers to Albaraka recorded a customer base of nearly Türk by expanding the variety of product 20 thousand and a transaction and service offerings. volume of more than 200 million.
82 83 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Natural Capital
Albaraka Türk was included in the Istanbul Stock Exchange Albaraka Türk Headquarters Building Sustainability Index for the second time in 2020, and is the first LEED GOLD certified Bank maintained its position as the first and only participation Headquarters Building in Turkey. bank included in this index.
Albaraka Türk works jointly with Incorporating a sustainable approach LEED GOLD Green Building Gray Water/Environment Loan from Active participation in Carbon its stakeholders to develop in all aspects of its corporate Certification for the Head Office Albaraka Türk Disclosure Project (CDP) humancentric and environmentally- culture, Albaraka Türk is a pioneer Building Combining its innovative product Carbon Disclosure Project (CDP) friendly projects that support of environmental sustainability Constructed by Albaraka Türk in approach and its environmental is recognized as the world’s most economic and global development among participation banks. The Bank the light of the latest technological responsibilities, Albaraka Türk comprehensive and prestigious for a more inhabitable world under moves steadily forward to achieve developments, the Headquarters introduced the Gray Water/ environmental project. CDP aims to its Sustainable Banking Program. its sustainability goals. Albaraka Türk Building is the first LEED GOLD Environment Loan product. Gray collect and share information that With this approach, the Bank conducts and participates in a wide certified Bank Headquarters Water Loan Project was launched will enable companies, investors strives to achieve UN Sustainable range of sustainability initiatives, Building in Turkey. Albaraka Türk with the aim to fund projects and governments to take action Development Goals for 2030. Aiming including Borsa Istanbul (BIST) Headquarters Building, which was focusing on enabling the reuse of against the threat of climate change. to become the leader among Sustainability Index, Green Building entitled to obtain this certificate recycled water obtained from gray Albaraka Türk achieved a “C” score participation banks in this subject, Project (LEED EBOM), Carbon within the scope of the works started water in areas such as reservoir in 2017 and 2018 under CDP. The Albaraka Türk steadily continues its Disclosure Project (CDP), and Zero in 2016, has been granted this feeding, garden irrigation, vehicle Bank, which received a B rating in efforts. Waste Project. certificate by considering the criteria washing, rough cleaning works, 2020 within the scope of the Carbon such as carbon footprint, water and cooling tower feeding and laundry Disclosure Project (CDP), received an Activities within the scope of ISO First participation bank included in energy efficiency, environmental washing. The intended audience A Rating in 2020, one of the highest 14001 Environmental Management the BIST Sustainability Index consciousness of the materials and of the product was determined as scores. Systems Adopting a multi-dimensional resources used, internal environment retail and commercial customers in Albaraka Türk shapes its business approach to sustainability, Albaraka quality and innovation. need of funding for environmentally activities in line with its vision Türk ranked among Turkey’s leading friendly projects aiming to contribute of “Becoming the World’s companies subject to the assessment to sustainability, water efficiency, Best Participation Bank.” The of the BIST Sustainability Index in energy efficiency, environmental Bank conducts environmental 2019. Albaraka Türk became the first awareness of materials and sustainability activities according participation bank included in this resources, interior-exterior building to ISO 14001 Environmental index on November 1, 2019. Albaraka environmental quality, preventing Management Systems. Albaraka Türk was included in the Istanbul waste of resources by recycling, etc. Türk is aware that its products and Stock Exchange Sustainability Index Albaraka Türk offers its customers services are in constant interaction for the second time in 2020, and a grace period, a long-term loan with the environment. Therefore, repeated its title as the first and only facility, profit rate reduction, and the Bank strives to minimize the participation bank included in this interest-free financing within environmental impact of this index. the scope of the Gray Water/ interaction and contribute to the Environmental Loan. fight against climate change.
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Our Natural Capital
Within the scope of CDP studies in 2020, Scope 1&2&3 Albaraka Türk plans to expand its CDP efforts, progress with greenhouse gas emission calculations for 2019 were made SBTi and assign scientific targets by calculating the entire and verified. climate load of the Bank within 2 years.
CDP ACHIEVEMENTS The practices implemented within • Air Conditioning: The air in the • Water: In the Head Office, water- the scope of the Carbon Disclosure external environment was purified saving apparatus were installed Project (CDP) are as follows: from dust, dirt and poisonous in the lavatory faucets, helping 2017 2018 2019 2020 gases by using high-efficiency reduce water consumption by Determination of the Calculation and verification Calculation and verification Calculation and verification • Service Vehicles: Service vehicles filters to provide clean air to the around 20%. Water efficiency calculation method by of Scope 1&2&3 greenhouse of Scope 1&2&3 greenhouse of Scope 1&2&3 greenhouse have been replaced by vehicles Head Office building. was achieved by adopting drip identifying organizational gas emission for 2017 gas emission for 2018 gas emission for 2019 with reduced exhaust emissions. • Energy Saving: Timers of the irrigation system and sprinkler limits within the scope of Electric cars have been put into light sensors in the Head Office systems in green areas. Treated greenhouse gas emission use at the Head Office. offices have been re-adjusted, artesian water was used in calculations • Use of Refrigerating Gas: The resulting in approximately 6% lavatories and for the purposes amount of refrigerating gas used in less energy consumption. The of irrigation in the green areas of Calculation of Scope 1&2&3 Determination of Climate Determination of Climate Determination of Climate the equipment at the Head Office operating system of the garden the Head Office. Wastewater used greenhouse gas emission Change risks, opportunities Change risks, opportunities Change risks, opportunities building remained within GWP and lights has been changed, leading in the lavatories was treated as for 2016 and targets and targets and targets ODP values. to approximately 50% less energy part of the Gray Water Project and Determination of climate Determination of Water Determination of Water Determination of Water • Solar Window Film: Use of air consumption. reused in the reservoirs. change risks, opportunities Management risks, Management risks, Management risks, conditioners has been reduced • Transport: Personnel shuttles are • Detailed analyses were performed and targets opportunities and targets opportunities and targets opportunities and targets and greenhouse gas emissions used for transport to the Head in the fields of paper consumption, dropped thanks to the solar Office building. Shared personnel fuel consumption, aircraft usage
Responding to the 2017 Calculation and verification Calculation and verification Calculation and verification window films placed on the facade shuttles helped reduce CO2 mileage, annual activity reports, CDP Climate Change Survey of water consumption of water consumption of water consumption of the Head Office building. emissions and protect the nature. annual financial statements, calculations for 2017 calculations for 2018 calculations for 2019 • Insulation: Energy efficiency has • Lighting Systems: High-efficiency investor presentations, corporate remained a priority for the Head lighting fixtures are used in the risk management reports, project Responding to the 2018 Responding to the 2019 Responding to the 2020 Office building and insulation has Head Office building. Fluorescent finance and corporate finance CDP Climate Change Survey CDP Climate Change Survey CDP Climate Change Survey been determined to be above bulbs used in lighting fixtures portfolio information, generator Responding to the 2018 Responding to the 2019 Responding to the 2020 minimum standards. are selected from among low- fuel information (diesel/lt), CDP Water Security Survey CDP Water Security Survey CDP Water Security Survey • Energy Saving: The operating mercury models. The Head Office electricity consumption (kWh) system of heating and cooling building has a design that enables information, air conditioning gas devices has been replaced, maximum daylight utilization. In usage data (kg), and heating data resulting in approximately 20% less this way, it is aimed to reduce the (fuel oil, coal, etc.). energy consumption. energy spent on lighting and to • Fresh Air: The rates of fresh air increase the positive effects of Albaraka Türk plans to expand its circulated inside the Head Office daylight on the people working CDP efforts, progress with SBTi building have been kept above the indoors. (Science Based Targets Initiative) and international level. Air handling assign scientific targets by calculating units providing fresh air were the entire climate load of the Bank monitored through the automation within 2 years. system and the rates of fresh air inside the Head Office building were kept under constant control. Smoking was banned in the areas where there is a risk of smoke getting inside the building.
86 87 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
Our Natural Capital
Thanks to successfully executing its digital transformation drive, Albaraka Türk’s Carbon Footprint Year Scope 1 (tCO2e) Scope 2 (tCO2e) Scope 3 (tCO2e) Scope (1 & 2) Total Albaraka Türk significantly reduced its paper consumption and (tCO2e) 2020 3,844.99 7,964.88 2,901.06 10,865.94 14,710.93 contributed to the Zero Waste Project in 2020. 2019 3,922.06 7,410.19 2,901.12 11,332.25 14,233.37 2018 3,546.69 7,618.11 2,339.02 11,164.80 13,503.82 2017 5,198.40 7,564.60 2,143.90 12,763.00 14,906.90
Albaraka Türk’s Water Footprint • The vehicle tracking system was New targets within the scope of ** installed in the vehicles which are TCFD 2020 60,013 used by branches for marketing Keeping a close track on efforts to 2019 61,173 and vehicle usage was tracked in combat climate change, Albaraka 2018* 60,394 detail. Türk conducts scope 3 greenhouse * • The exterior of the Headquarters gas emission calculation studies to 2017 22,487 building was covered with solar determine the financial risks arising * Zero Waste Goal film. In this way, the sun beams from climate change in line with Water footprint was only calculated for the Head Office building in 2017 and 2018. Albaraka Türk is an active participant ** The Head Office and all branches were included in the calculations for 2019. coming to the building are TCFD. For this purpose, it is aimed Note: The reported data on carbon and water footprints refers to previous year’s calculations. in the Zero Waste Project launched prevented and the cooling systems to calculate the risk of greenhouse by the Ministry of Environment are operated less frequently. gas emissions caused by the loan Total Electricity Consumption (joule) and Urban Planning. The Bank has • To prevent waste batteries portfolio and commercial risks and undertaken a wide range of efforts from mixing with the natural to convert it into financial risk with 2020 16.193 MW to further boost its performance environment, the Bank separates the determined internal carbon 2019 16.192 MW in prevention/reduction, reuse and and collects batteries at the price. In parallel with the scope 2018 15.503 MW procurement. In 2020, the Bank Headquarters building. 3 emission inventory studies, the implemented the following Zero • The cardboard boxes used in efforts to determine the internal 2017 15.366 MW Waste related projects: the transportation works of the carbon price will be completed in Headquarters building are used the second half of 2021. Scope 3 Total Paper Consumption (tons) • By reprogramming the approximately 15 times, and emissions will also play a major role photocopiers, unnecessary the cardboard boxes that have in Albaraka Türk’s net zero emission 2020 125 printouts that were sent to the completed their economic lives target. By simulating the methods 2019 130 printer and forgotten to be taken are delivered to the recycling determined for reduction over 2018 101 or sent again were prevented and facilities of the municipalities. various scenarios in addition to the duplex printing option was set as • Periodic maintenance of tools, current inventory, the cost-effective 2017 93 default on devices. equipment and fixtures is carried methods will be made a part of • Waste papers are delivered out regularly and therefore our strategic growth. to companies assigned by the equipment can be used for a long municipalities. time. Head Office Paper Consumption Data: Branches and Regional Offices: • Water saving apparatus, which • Artesian water and gray water are provides the same effect with less used instead of mains water in water consumption by increasing the toilets, washbasins, pools and Sheets: 1,402,036 Sheets: 13,443,769 the pressure of the water, were garden irrigation and cleaning installed on the sink faucets in the works of the Headquarters Headquarters building. building. Trees Cut: 168.24 Trees Cut: 1,613 Thanks to successfully executing its digital transformation drive, Albaraka Türk significantly reduced its paper consumption and contributed to the CO Released: 17,805.9 kg Zero Waste Project in 2020. 2
88 89 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities
102-40, 102-42, 102-43 102-40, 102-42, 102-43
Stakeholders Communication Channels Our Social and Relational Capital Shareholders Investor Presentations, Investor Trips, Investor Activities, General Assembly, Annual Report Rating Agencies Credit Rating and Corporate Governance Compliance Rating Reports Employees Internal Communication Channels, Professional and Personal Development Programs, Activities for Employees’ Families Affiliates Internal Communication Channels, Professional and Personal Development Despite the COVID-19 pandemic, Albaraka Türk’s total Programs, Activities for Employees’ Families Customers Advertising Campaigns, Complaint and Suggestion Handling Channels, Field number of customers rose to 757,967 as of the end of 2020. Research Team, Ethnographic Field Research Based on Qualitative Methods Suppliers Procurement Procedure, Purchasing, Sales, Construction, Rental, Services and Bidding Regulations; Supplier Information Form, Supplier Evaluation Form International Financial Institutions Corporate Promotional Materials, Memberships, Representation at Events, One-on-one Visits and Exchanges Associations Corporate Promotional Materials, Memberships, Representation at Events Media Press Releases, Visits aimed at Press Members, Leadership Communication, Efforts to enrich and deepen the In 2020, the interface was changed Social Media Channels customer experience for customer needs in the mobile Public Activities aimed at Full Compliance with Laws, Events Supporting Public Albaraka Türk increases customer branch for customers who now Activities loyalty with loyalty campaigns and use online channels rather than National and International NGOs Sustainability and CSR Partnerships & Reports customer experience outputs. branches. With the digital statement and Institutions With the loyalty campaigns, it is campaign, saplings were planted in aimed to deepen the financial Hatay to support the nature after the Memberships and Platforms Boasting a high profile on national and international professional platforms, relationship of the customers with forest fire, and future paper wastage Albaraka Türk continues to bolster its corporate reputation domestically and the Bank. In line with the research was prevented. globally. outputs of the Customer Experience Service, products, services and even Transparency- and accountability- process designs are performed based relationships with Memberships and Supported Initiatives pursuant to the requests, needs and stakeholders complaints of the field, thus ensuring Striving to transform its activities full integration with the lives of into a value chain, Albaraka Türk customers. builds transparent and interactive relations with the stakeholders on its Albaraka Türk carried out many stakeholder map to generate added Boasting a high profile on national and international campaigns to gain new customers value together. and penetrate current customers professional platforms, Albaraka Türk continues to bolster its during the 2020 operating period. Striving to transform its activities The Bank strives to touch the lives of into a value chain, Albaraka Türk corporate reputation domestically and globally. its customers in every aspect through builds transparent and interactive activities such as advantageous relations with the stakeholders on rates in financing products, raffle its stakeholder map to generate campaigns and brand collaborations. added value together. The Bank has capitalized on recent Memberships Supported Initiatives The Bank holds various campaigns technology developments – digital to stand by our customers on their transformation in particular – and Accounting and Auditing Organization for Islamic Borsa Istanbul Sustainability Index Financial Institutions (AAOIFI) special days. In this regard, discounts established strong communication Carbon Disclosure Project were offered in places where books channels with stakeholders. General Council for Islamic Banks and Financial were sold for its teacher customers Organizations (CIBAFI) Science Based Targets Initiative on Teachers’ Day. Institute of International Finance (IIF) Islamic Financial Services Board (IFSB) Participation Banks Association of Turkey (TKBB) United Nations Global Compact (Al Baraka Banking Group Membership)
90 91 Albaraka Türk Sustainability Report 2020 Our Sustainability Activities Our Social and Relational Capital
Corporate Social Responsibility
Positioning itself as an exemplary corporate citizen, Albaraka Türk conducts all its activities with social responsibility in mind.
Albaraka Türk Katılım Bankası A.Ş. Some of the corporate social Gaza Islamic University PC With the vision of “Being the Best responsibility activities carried out by Laboratory: A PC laboratory was Participation Bank in the World,” it Albaraka Türk in 2020 are as follows: established at the Gaza Islamic has initiated the Sustainable Banking University for the use of visually Program under the leadership of Bereket Foundation Scholarship impaired students. its main partner Al Baraka Banking Support: Bereket Foundation Health Supports: Financial supports Group (ABG). Considering UN provided scholarships to 1,892 were provided for the health Sustainable Development Goals students in total in 2020, consisting problems of persons in need. as an integral part of this program, of 1,807 undergraduate and 85 Sapling Planting: 4,605 saplings Albaraka Türk aims to become a doctorate students. were planted on behalf of the Bank leading financial institution that Distance Education Tablet Support: employees as part of struggling with is sensitive to people and the Tablet support was provided for forest fires. environment, supports economic students who are educated through National Solidarity Campaign: After and global development and distance education and in need of the mobilization announced by the works with all its stakeholders for a tablets. Presidency, TL 5 million support was sustainable world. provided for the campaign.
Social Responsibility Club Activities Albaraka Türk sponsored the events below in 2020:
Activity Date Subject of the Number of Number of Persons Amount of Donation DESCRIPTION Activity Volunteers Supported Raised with the Albaraka Art 2nd Period (January-June) Contribution of our Employees WBAF 2020 May Ramadan Card Support 9 725 TL 108,750 2nd IBF Turk-Arab Business Summit August Clothing Support Campaign 8 532 TL 106,400 7th Anatolian Sun Generates Energy September Stray Animals Aid Campaign 7 - TL 4,000 TKBB Sponsorship Participation Fee October-November- A101 Cards (3 Months) 15 68 TL 58,000 8th Islam Economics Workshop December MÜSİAD EXPO November Izmir Earthquake Aid Campaign 12 100 TL 20,000 December Tablet Support Campaign 10 103 TL 41,200
Total 61 1,528 TL 338,350
92 93 Albaraka Türk Sustainability Report 2020 Looking to the Future
Looking to the Future
A sector standout with its Employment Generation, Education, • Financing for Education Projects: robust capital structure, digital Health, Sustainable Energy, Circular USD 55 million (Group Target: USD Conducting all its business operations in line with ABG transformation investments and Economy, Agriculture and Global 416 million) innovative subsidiaries, Albaraka MBA Program. • Donation Goal for Education Goals, Albaraka Türk focuses on Employment Generation, Türk consistently adds value to Projects: USD 4.5 million (Group its stakeholders. Driven by the Albaraka Türk set the following Target: about USD 10 million) Education, Health, Sustainable Energy, Circular Economy, widespread service network and priorities within the scope of the • Financing for Sustainability/ innovative product portfolio of 2021-2025 ABG Goals: Renewable Energy Projects: USD Agriculture and the Global MBA Program as part of its ABG as well as its solid financial 150 million (Group Target: USD 444 structure, Albaraka Türk operates in • Financing for Healthcare Projects: Million) sustainability and corporate social responsibility activities. line with ABG Objectives (2021-2025). USD 198 million (Group Target: USD • Financing for Circular Economy ABG’s focus areas in sustainability 445 million) Projects: USD 5.5 million (Group and corporate social responsibility • Donation Goal for Healthcare Target: USD 226 million) activities are as follows: Projects: USD 275 thousand (Group • Financing for Agricultural Projects: Target: about USD 5 million) USD 450 million (Group Target: USD 682 million)
Environmental Social Governance and Climate Plan (2021-2023)
2021 2022 2023 Main Tasks 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 ESG Loan Allocation System Indexing of the Forms and Review System and the Restructuring of the Risk Rating Approval Process
TCFD Carbon Price Determination IFRS Base III Creation
SBTs SBT Model Preparation Application
NetZero Target Planning Evaluation and Public Disclosure
NetZero emissions studies will continue in 2023 and beyond.
94 95 Albaraka Türk Sustainability Report 2020 GRI Content Index
GRI Content Index
GRI CONTENT INDEX (CORE) GRI Standards Disclosures Page Number/Direct Source Reason of Omission Our Sustainability and Social 102-11 Responsibility Priorities, p. 36-37 102-12 UNSDG Memberships and Represented Platforms, 102-13 p. 91
“For the Materiality Disclosures Service, GRI Services reviewed that the GRI content index is clearly presented and the references Strategy for Disclosures 102-40 to 102-49 align with appropriate sections in the body of the report.” 102-14 Message from the Management, p. 26-31 102-15 Message from the Management, p. 26-31 This report has been prepared in accordance with the GRI Standards: Core option. Ethics and Integrity Our Sustainability and Social 102-16 Responsibility Priorities, p. 36-37 Our Sustainability and Social 102-17 GRI Standards Disclosures Page Number/Direct Source Reason of Omission Responsibility Priorities, p. 36-37
GRI 101: Foundation 2016 Governance GRI 102: GENERAL GRI 102: General Disclosures 2016 DISCLOSURES 2016 102-18 Our Sustainability Organization; p. 38-39 Organizational Profile 102-19 Our Sustainability Organization; p. 38-39 102-1 Front cover 102-20 Our Sustainability Organization; p. 38-39 102-2 Albaraka Türk in Brief, p. 14-15 102-21 Our Sustainability Organization; p. 38-39 102-3 Albaraka Türk in Brief, p. 14-15 102-22 Our Sustainability Organization; p. 38-39 102-4 Albaraka Türk in Brief, p. 14-15 Our Corporate Governance Approach, 102-23 p. 40-63 GRI 102: GENERAL 102-5 Albaraka Türk in Brief, p. 14-15 DISCLOSURES 2016 Our Corporate Governance Approach, 102-6 Albaraka Türk in Brief, p. 14-15 102-24 p. 40-63 102-7 Albaraka Türk in Brief, p. 14-15 Our Corporate Governance Approach, 102-25 102-8 Albaraka Türk in Brief, p. 14-15 p. 40-63 102-9 Albaraka Türk in Brief, p. 14-15 Our Corporate Governance Approach, 102-26 p. 40-63 102-10 Albaraka Türk in Brief, p. 14-15 Our Corporate Governance Approach, 102-27 p. 40-63
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GRI Content Index
GRI Standards Disclosures Page Number/Direct Source Reason of Omission GRI Standards Disclosures Page Number/Direct Source Reason of Omission Our Corporate Governance Approach, Reporting 102-28 p. 40-63 Strategic Sustainability Areas, 102-45 Our Corporate Governance Approach, p. 34-35 102-29 p. 40-63 Strategic Sustainability Areas, 102-46 Our Corporate Governance Approach, p. 34-35 102-30 p. 40-63 Strategic Sustainability Areas, 102-47 Our Corporate Governance Approach, p. 34-35 102-31 p. 40-63 This report contains the information of 102-48 Our Corporate Governance Approach, 2020 reporting period. 102-32 p. 40-63 This report is the second sustainability GRI 102: GENERAL 102-49 Our Corporate Governance Approach, report of Albaraka Türk. 102-33 DISCLOSURES 2016 p. 40-63 102-50 01.01.2020-31.12.2020 Our Corporate Governance Approach, 102-34 p. 40-63 102-51 Report Front Cover Our Corporate Governance Approach, 102-52 Annual 102-35 p. 40-63 Strategic Sustainability Areas, GRI 102: GENERAL 102-53 Our Corporate Governance Approach, p. 34-35 DISCLOSURES 2016 102-36 p. 40-63 102-54 GRI Content Index, p. 96 Our Corporate Governance Approach, 102-37 102-55 GRI Content Index, p. 96-103 p. 40-63 102-56 GRI Content Index, p. 96-103 Our Corporate Governance Approach, 102-38 p. 40-63 Our Corporate Governance Approach, GRI 200: ECONOMIC STANDARD SERIES 102-39 p. 40-63 Economic Performance Stakeholder Engagement Strategic Sustainability Areas, 103-1 102-40 Our Social and Relational Capital, p. 90-91 p. 34-35 GRI 103: There is no collective bargaining practice MANAGEMENT Strategic Sustainability Areas, 102-41 103-2 within Albaraka Türk. APPROACH p. 34-35 2016 Strategic Sustainability Areas, 102-42 Our Social and Relational Capital, p. 90-91 103-3 p. 34-35 102-43 Our Social and Relational Capital, p. 90-91 GRI 201: ECONOMIC Our Financial Capital, Our Manufactured Strategic Sustainability Areas, 201-1 102-44 PERFORMANCE 2016 Capital, p. 64-69 p. 34-35
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GRI Content Index
GRI Standards Disclosures Page Number/Direct Source Reason of Omission GRI Standards Disclosures Page Number/Direct Source Reason of Omission Indirect Economic Impacts GRI 300: ENVIRONMENTAL STANDARD SERIES Strategic Sustainability Areas, Energy 103-1 p. 34-35 GRI 103: Strategic Sustainability Areas, 103-1 MANAGEMENT Strategic Sustainability Areas, p. 34-35 103-2 APPROACH p. 34-35 GRI 103: Strategic Sustainability Areas, 2016 MANAGEMENT 103-2 Strategic Sustainability Areas, p. 34-35 103-3 APPROACH 2016 p. 34-35 Strategic Sustainability Areas, 103-3 GRI 203: INDIRECT p. 34-35 Albaraka Türk’s Sustainability Journey, ECONOMIC IMPACTS 203-1 p.16-17 Active Participation in Carbon Disclosure 2016 302-1 GRI 302: Project (CDP), p. 85 Procurement Practices ENERGY 2016 302-5 Our Natural Capital, p. 87 Strategic Sustainability Areas, 103-1 p. 34-35 Water Strategic Sustainability Areas, GRI 103: MANAGEMENT Strategic Sustainability Areas, 103-1 103-2 p. 34-35 APPROACH 2016 p. 34-35 GRI 103: Strategic Sustainability Areas, MANAGEMENT Strategic Sustainability Areas, 103-3 103-2 p. 34-35 APPROACH p. 34-35 2016 Strategic Sustainability Areas, GRI 204: PROCUREMENT 103-3 PRACTICES 204-1 Our Relations with Suppliers, p. 79 p. 34-35 2016 GRI 303: 303-1 Our Natural Capital, p. 87 Anti-Corruption Policy WATER 2016 303-3 Our Natural Capital, p. 87 Strategic Sustainability Areas, 103-1 Emissions p. 34-35 GRI 103: Strategic Sustainability Areas, MANAGEMENT Strategic Sustainability Areas, 103-1 103-2 p. 34-35 APPROACH p. 34-35 GRI 103: 2016 MANAGEMENT Strategic Sustainability Areas, Strategic Sustainability Areas, 103-2 103-3 APPROACH p. 34-35 p. 34-35 2016 Strategic Sustainability Areas, GRI 205: ANTI- Effective Mechanisms for Anti-Bribery and 103-3 205-1 p. 34-35 CORRUPTION 2016 Anti-Corruption, p. 62-63 GRI 305: EMISSIONS 305-1 Our Natural Capital, p. 89 2016
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GRI Content Index
GRI Standards Disclosures Page Number/Direct Source Reason of Omission GRI Standards Disclosures Page Number/Direct Source Reason of Omission Compliance with Environmental Regulations Human Rights Strategic Sustainability Areas, Strategic Sustainability Areas, 103-1 103-1 p. 34-35 p. 34-35 GRI 103: GRI 103: MANAGEMENT Strategic Sustainability Areas, MANAGEMENT Strategic Sustainability Areas, 103-2 103-2 APPROACH p. 34-35 APPROACH p. 34-35 2016 2016 Strategic Sustainability Areas, Strategic Sustainability Areas, 103-3 103-3 p. 34-35 p. 34-35
GRI 307: GRI 412: HUMAN RIGHTS 412-2 Our Human Capital, p. 70-77 ENVIRONMENTAL ASSESSMENT 2016 307-2 Our Natural Capital, p. 84-85 COMPLIANCE 2016 Customer Health and Safety Strategic Sustainability Areas, 103-1 p. 34-35 GRI 103: GRI 400: SOCIAL STANDARDS SERIES MANAGEMENT Strategic Sustainability Areas, 103-2 Occupational Health and Safety APPROACH p. 34-35 2016 Strategic Sustainability Areas, Strategic Sustainability Areas, 103-1 103-3 p. 34-35 p. 34-35 GRI 103: MANAGEMENT Strategic Sustainability Areas, GRI 416: 103-2 APPROACH p. 34-35 CUSTOMER HEALTH Our Quality Policy, Core Corporate Values 416-1 2016 AND SAFETY and Strategic Objectives p. 20-21 Strategic Sustainability Areas, 103-3 2016 p. 34-35
GRI 403: 403-1 Occupational Health and Safety, p. 78-79 OCCUPATIONAL HEALTH AND SAFETY 403-2 Occupational Health and Safety, p. 78-79 2016 Training and Education Strategic Sustainability Areas, 103-1 p. 34-35 GRI 103: MANAGEMENT Strategic Sustainability Areas, 103-2 APPROACH p. 34-35 2016 Strategic Sustainability Areas, 103-3 p. 34-35
GRI 404: 404-1 Our Human Capital, p. 70-77 TRAINING AND EDUCATION 404-2 Our Human Capital, p. 70-77 2016
102 103 Albaraka Türk Sustainability Report 2020 Our Performance towards Sustainable Development Goals
United Nations Global Compact Our Performance towards Sustainable (UNGC) Index Development Goals
Operating in 17 countries including Turkey, Al Baraka Banking Group (ABG) signed the United Nations Global Compact (UNGC) in 2016. ABG issues an annual Progress Report in line with the UN Development Goals for 2030. Detailed information on the activities carried out by the Bank in this area can be accessed in the ABG 2019 Sustainability and Corporate Social Responsibility Report: As an institution that supports 2030 UN Sustainable Development Goals, Albaraka Türk conducts https://www.albaraka.com/getmedia/f88b392f-03f7-46c4-b686-2621360df4e8/SSR19EN.pdf its sustainability and social responsibility activities in line with these goals.
Albaraka Türk supports the following purposes in line with its 2021-2025 targets in coordination with its main shareholder ABG.
• No Poverty (1) • Good Health and Well-Being (3) • Quality Education (4) • Gender Equality (5) • Affordable and Clean Energy (7) • Decent Work and Economic Growth (8) • Industry, Innovation and Infrastructure (9) • Reduced Inequalities (10) • Responsible Consumption and Production (12)
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Contact
ALBARAKA TÜRK KATILIM BANKASI A.Ş. Head Office: Saray Mahallesi Dr. Adnan Büyükdeniz Caddesi No: 6 34768 Ümraniye/ISTANBUL-TURKEY Telephone: +90 216 666 01 01 Fax: +90 216 666 16 00
Albaraka Türk Katılım Bankası A.Ş.
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