SUSTAINABILITY REPORT 2014

| SUSTAINABILITY REPORT 2014

Contents

7 8-9 10-11 12-15 16-19 20-31 32-36 37-43

About this Report Vision, Mission and Key Sustainability Sustainability Strategy and Message from Garanti in Brief Milestones Focusing on Values Highlights Policy the CEO – Ergun Özen Stakeholders → Key Facts → Garanti’s Sustainability- → Our Vision → Sustainability Strategy → Garanti Bank in Numbers Related Indicators → Key Stakeholder Groups and → Our Mission → Sustainability Policy → Group Structure Engagement Platforms → Our Strategy → Sustainability Principles → Corporate Profile → National and International → Our Core Values → Garanti’s Products and Memberships Services → Approach to Materiality → Garanti’s Integrated Subsidiaries

44-61 62-95 96-112 113-132 133-137 138-157 158-193

Focusing on Corporate Focusing on Customers Focusing on Managing Focusing on Human Focusing on Appendix GRI G4 Content through Sustainable Environmental Impact Resources Communities Index Sustainability → Appendix 1: Key Stakeholder Finance of Operations Governance → Human Resources and the → Garanti Bank’s Corporate Groups and Engagement → Board of Directors and → Importance of Customer → Environmental Policy Business Environment Social Responsibility Policy Platforms Senior Management Experience and Satisfaction → Garanti Bank’s Environmental → Equality of Opportunity and → Education → Appendix 2: Environmental → Committees → Segment - Specific Programs Management System Diversity → Supporting the Participation and Social Impact → Risk Management, Internal that Contribute to Sustainability → Supply Chain Management → Health, Safety & Well-Being of Disabled Individuals in Assessment Model (ESIAM) Audit and Control Functions → Financial Health and Inclusion → Climate Change → Child Care Social and Economic Life → Appendix 3: Sustainability → Disciplinary Committee → Renewable Energy Management at Garanti → Security Measures → Support for Culture and Collaboration with → Policies and Principles → Garanti Bank and SMEs Bank → Good Work Life Relationship Cultural Heritage International Financial → Anti-Fraud Policy → Sustainability Collaboration → Climate Change Mitigation (“IYI”) Program → Community Investment Organizations → Ethical Principles with International Financial → Energy Efficiency Projects → Health and Nutrition Goals → Appendix 4: Whistleblowing → Whistleblowing Programme Institutions → Waste Management → Career Opportunities Program Programme → Transaction Monitoring → Garanti Bank Supports → Water Management → Promotion Opportunities → Appendix 5 – Anti-fraud → Prevention of Conflicts of Women Entrepreneurs → More Sustainability → Compensation and Rewards Policy Interest → Supporting Rural Initiatives from Garanti Bank → Fair and Transparent Premium → Appendix 6: Activities of the → Implementation of Basel Development with Models Bank’s Compliance Regulations “Agricultural Banking” → Garanti Bank Pension Fund Department → Sustainability Committee Products Foundation → Appendix 7: Role of the → Sustainability Team → Efforts to Expand the → Learning and Development Disciplinary Committee Informed Customer Group → Raising Awareness on → Appendix 8: Garanti’s → Environmental and Social Sustainability Integrated Subsidiaries Risk Assessment Process → Gelecek (Future) Meetings → Appendix 9: Change to → Management of Indirect → 4 Season Meetings the Environmental Impact Water Footprint → Garanti Managers Summit Assessment Regulation → Employee Satisfaction → Suggestion and Idea Platforms About This Report

This third sustainability report from T. Garanti Bankası A.Ş. (‘Garanti Bank’) represents the Bank’s performance on the issue of sustainability as determined in parallel with the feedback of its stakeholders for the 12 month period ending 31 December 2014. Where relevant, the Bank has also included data from the previous reporting period for comparative purposes. Garanti plans to report on its sustainability performance every 12 months. This report has been prepared in accordance with Global Reporting Initiatives (GRI) G4 reporting guidelines to comprehensive level and also includes application of the G4 Sector Disclosures Financial Services sector supplement. There is a comprehensive index according to GRI G4 principles presented in the annexes. Our Core Values

Our customers responsibilities. We Our environmental and encourage our employees social responsibilities are the cause of all our to take the initiative. We operations and efforts. believe in the energy for We undertake every effort We always strive to satisfy “desire” that makes our to be beneficial to society, employees creative and Our Vision our customers above and the environment and productive. We believe that beyond their expectations. humankind. We believe every employee of our Bank is to be the best bank in Europe. We are honest, courteous, is a “leader in their field” that the environmental and helpful, solution-oriented and that they are the ones social values set out by and always pleasant. who know best what they Garanti Bank for all of its are doing. stakeholders will be taken as a model not only in the “Garanti Bank and its banking sector but also in employees have high Continuous progress the entire national economy moral values” while providing significant We sustain the quality of contributions to Turkey’s We conscientiously follow our services by constantly development. rules and regulations improving ourselves rather without exception. Having than maintaining the status a good conscience is of quo. Investing in our people Teamwork paramount importance for Our Mission and technology to achieve both the organization and the individuals which continuous progress is an We believe in effective is to continuously and noticeably increase the value form it. inseparable element of our teamwork and open lines we create for our customers, shareholders, employees, policy. Our primary duty of communication. We the society and the environment by utilizing our is to sustain a high level of do not compromise these influence, agility and organizational efficiency. “The most important quality while constantly principles. We are opposed element for us is the improving the quality of to strict layers of hierarchy. human factor” our products and services. Everybody at Garanti Bank Our approach to improving from the CEO to the lowest We value individuals, attach quality is proactive; we ranking personnel and all strong importance to the strive to identify the needs of the organizations which human mind and invest and expectations of our we cooperate with coalesce continuously in human customers and address resources. Our quality is into a unified power to them before they are voiced driven and ensured by our help realize our vision. The employees. Every team by our customers. effective teamwork of the Our Strategy member is driven primarily Bank is strengthened by by a quest for quality. We collaboration, mutual trust is to maintain long-term sustainable growth by understand the importance and respect. continuously creating value. of delegating Association (ÇEDBİK). Key Sustainability →→ Examined 12 projects thoroughly in accordance with Environmental and Social Impact 35% Assessment Model. share in Turkey’s total →→ Reduced GHG1 emissions per total assets by Highlights installed wind power 23.8%. capacity →→ The amount of employees working in ISO 14001 certificated buildings reached 70%.

→→ Amount of waste sent to recycling increased by 42%.

→→ “Sustainability Award for Environmental and 369 Social Performance” received from EBRD2 . women entrepreneurs 96 →→ Supported the initiation of the CDP Water %70 received certificates disabled-friendly Program in Turkey. of employees from WEES branches working at ISO14001 →→ Established the Woman Steering Committee to certified offices empower women socially and economically.

→→ Continued its support for disabled customers with 96 disabled-friendly branches, 62 orthopedically impaired-friendly ATMs, 144 visually impaired-friendly ATMs, 117 visually and →→ Total loans provided to renewable energy orthopedically impaired-friendly ATMs and 7,154 investments reached US$ 3.5 billion. employees who completed disability-friendly training. →→ 35% share in Turkey’s total installed wind power capacity among all banks (52.3% share among →→ Organised 97 meetings in 67 provinces with Turkish Banks). nearly 30,000 SMEs with Garanti Anatolian Meetings. →→ New sustainability strategy and policy Garanti is →→ Developed a new product to help finance approved by the Board of Directors. unlicensed solar projects to support transition to →→ Organised Women Entrepreneurship Meetings one of only →→ Received the “CDP 2014 Turkey Climate a low carbon economy. with approximately 1,000 women in 5 provinces. 15 Turkish →→ One of only 15 Turkish companies that Disclosure Leadership” award. successfully qualified for the BIST →→ Increased the number of facilities covered by →→ Provided 2.1 billion TL loans to women companies that Sustainability Index in the first year. →→ First Turkish bank to sign the United its Environmental Management System to 605, entrepreneurs by the end of 2014. Nations “Women’s Empowerment successfully covering 70% of its employees. →→ Qualified to be included in the BIST Principles”. →→ Started “Join the Workforce Join Life” project qualified Corporate Governance Index with a score of →→ Became the first Turkish bank to be awarded oriented at the employment of disabled people 9.14 awarded by JCR Eurasia Rating. →→ Started to support HeforShe initiative that for the BIST with the Green Office Diploma for its under the leadership of Ministry of Family and emphasizes on men’s support for women Headquarters by WWF-Turkey. Social Policies. Sustainability →→ First bank in Turkey to publish a sustainability rights and gender equality. report that was in accordance with the Index in the →→ “Best Bank for Sustainability in Turkey“ for the →→ Share of women employees reached 57% in total. comprehensive option of the GRI G4 →→ Illustrated its support for actions on second time by World Finance Magazine. first year. climate change with new commitments to Reporting Guidelines. →→ 369 women received certificates in 4 provinces 6 areas under the scope of United Nations →→ “Best Bank in Sustainability” award received from within the scope of the Women Entrepreneurs →→ Obtained external assurance of its Scope 1 Climate Summit (http://business.un.org/en/ the Environmentally Friendly Green Buildings Executive School (WEES). and 2 emissions for CDP for the second time. commitments/3898).

1 Greenhouse gas. 2 In 2014, European Bank for Reconstruction and Development (EBRD) presented Garanti Bank with the “Sustainability Award for Environmental and Social Performance” for its comprehensive environmental social risk assessment system.

10 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 11 Sustainability Policy

Overall Sustainability Vision

Sustainability issues are gaining importance within Turkish society, and are Building on the Bank’s Core Values, increasingly impacting the banking sector. Garanti Bank defines Sustainability as Garanti Bank strongly believes that operating a commitment to building a strong and sustainably is a key driver to the long-term successful business for the future, while success of the Bank, and aims to be the minimizing negative environmental and leader in introducing and implementing social impacts, and sharing long-term values Sustainability sustainable banking to Turkey. with its customers, staff, shareholders and the communities it operates in. Garanti Bank aspires to achieve its aim of sustainable banking through technological innovations, managing the environmental Strategy and footprint of its operations and developing sound environmental and social risk assessment as part of its risk management Furthermore, Garanti Bank is aware of framework. The Bank also recognizes the Policy the need to collaborate and engage with importance of an effective organizational its peers and suppliers at a global level to structure and strong corporate governance identify new opportunities, capture emerging to maintain ongoing development and best practices and products and remain a successfully deliver its sustainability sustainability leader in Turkey. objectives.

Sustainability Responsibility for Sustainability Strategy Policy Framework The Board of Directors is authorized and responsible to approve the Sustainability In April 2014, Garanti Bank officially approved Policy. The monitoring, amendment, a new sustainability strategy and policy in order improvement, implementation and to acknowledge the importance it places on enforcement of the Policy are under the conducting its business activities in direct responsibility of the Sustainability a responsible manner and strengthen its Vision Committee. All changes and amendments to be the best bank in Europe and its Mission should be subsequently approved by the of increasing the value it creates for Board of Directors, then published its stakeholders. internally and made public through For more information about our Sustainability the Bank’s website. Strategy, please visit the webpage: http://www.garanti.com.tr/en/our_company/ sustainability/sustainability_approach.page

12 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 13 Sustainability Principles

Garanti Bank focuses on improving the basics of banking by integrating sustainability into its operations. The following principles highlight how the Bank will achieve its sustainability vision:

Focusing on Customers through Sustainable Finance

Areas of Focus

○○ Introduce new practices to Turkey that go beyond common practices and Focusing on Managing compliance to relevant Environmental Impact of national laws and regulations; Operations Focusing on Stakeholders ○○ Enhance E&S risk processes Areas of Focus across the Bank and its Areas of Focus subsidiaries to minimize the ○○ Measure and monitor Focusing on Human negative impact of lending the Bank’s environmental ○○ Liaise and engage with Resources and investment activities; footprint, and implement Focusing on Communities different stakeholders at the Focusing on Corporate measures to increase resource national and international Areas of Focus Sustainability Governance ○○ Educate customers on and energy efficiencies; Areas of Focus levels to follow the latest sustainability and become a developments and include ○○ Monitor employee Areas of Focus trusted advisor in supporting ○○ Set targets to reduce ○○ Invest in communities through their views into decision- satisfaction and ensure a fair and facilitating customers to emissions and resource usage direct contributions and making processes; remuneration and benefits ○○ Adopt an effective minimize their own footprint; in targeted areas and increase development of mutually scheme at all seniority levels; governance structure to cost effectiveness; beneficial partnerships; ○○ Play an active role in develop, implement and ○○ Develop products and increasing financial education ○○ Continuously educate monitor sustainability actions services that help catalyze ○○ Work closely with suppliers ○○ Build on Garanti Bank’s and sustainability awareness employees and proactively within the Bank; the transition towards a to benefit from the latest current philanthropy and within Turkish society; engage them to develop more sustainable economy, environmentally friendly sponsoring activities to and implement sustainable ○○ Integrate sustainable banking increase financial inclusion solutions and expand further increase the wellbeing ○○ Report transparently on issues initiatives in their day-to-day into Garanti Bank’s operations and commit to ethical sustainability across the and lifestyle of Turkish material for the Bank and its activities, both at and outside in line with the bank’s identity marketing and selling. supply chain. communities. major stakeholders. work. and culture.

Page 62 Page 96 Page 133 Page 37 Page 113 Page 44

14 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 15 Dear Stakeholders, We are European Investment Bank (EIB) for refinancing to I am delighted to present our second committed to SMEs and remained as the only bank in Turkey to Sustainability Report prepared in accordance borrow in Turkish Lira from the EIB. Message from with the “Comprehensive” version of GRI G4 contributing Globally, megatrends such as rapid population Sustainability Reporting Guidelines of the Global to sustainable growth, increasing urbanization and climate Reporting Initiative covering the 12-month period change are taking their toll on the finite to 31 December 2014. growth in the resources of our planet and impacting the the CEO 2014 was a year of slower-than anticipated- communities lives of communities across the world. These economic recovery for Europe and emerging long-term environmental and societal trends countries along with uncertainties for the global in which are accompanied by a rapid and intensifying economy. Although exposed to a double shock at we operate, transformation in technology. In short, Turkey, the onset of 2014 with the US Federal Reserve’s and the global community, is facing overarching tapering and domestic political uncertainties, conducting and often pan-national issues in environmental the Turkish economy outperformed expectations our business in and social sustainability, which necessitate owing to its flexible structure. The Central Bank collaboration between governments, communities of the Republic of Turkey’s sharp interest rate hike a responsible and the business world. in January, 2014 made in an attempt to restrain manner and As one of the largest financial institutions in loss of value in Turkish Lira and the macro- increasing Turkey, Garanti Bank can help drive wide-scale prudential measures adopted were restrictive sustainability transformation. Having embraced on domestic demand; still, a moderate growth the value the responsibility that accompanies our impact, performance was captured during the year, driven we provide we are committed to contributing to sustainable by external demand. While moderate domestic growth in the communities in which we operate, demand curbed imports, current account deficit for all our conducting our business in a responsible manner showed a meaningful improvement thanks to stakeholders. and increasing the value we provide for all our export performance. Inflation remained above stakeholders. expectations throughout the year as a result First formed in 2010, our Sustainability of the pressure on exchange rate due to the Committee is the body responsible for managing expectedly imminent interest rate increase by the Garanti’s sustainability-related initiatives and is FED, and the high food prices resulting from the chaired by one of our board members. Having drought. Nevertheless, the significant decline in worked to integrate sustainability into all our oil prices in the last quarter of the year positively operations, the Committee was pivotal in affected inflation and current account deficit. helping launch our new Sustainability Policy In spite of the difficult macro-economic and Strategy in 2014 for all the Bank’s business conditions, we, as Garanti Bank, continued activities. In 2014, the Committee membership to make effective use of our Bank’s capital in was restructured to include the Executive Vice keeping with our dynamic business model that Presidents of Support Services, Loans, Project prioritizes sustainable growth and profitability. and Acquisition Finance, Strategic Planning We maintained our strong capital structure and Investor Relations, SME Banking and the with a capital adequacy ratio of 14%, whilst Human Resources Coordinator. Reporting to the ratio of our common equity tier I capital to the Committee, seven working groups were total shareholders’ equity remained the highest established, each of which represents one of in the sector at 93%. Thus in 2014, we were the sustainability principles identified in our once again able to demonstrate the quality of Policy3 . The aim of this restructuring is to focus our shareholders’ equity and our adherence to sustainability efforts in line with our Policy and sustainable growth strategy. Meanwhile, thanks Strategy and to facilitate the decision-making and to the high credibility Garanti enjoys in the global implementation processes. markets, we were able to renew our syndicated loans with a record level of demand. We executed Dear Stakeholders, securitization transactions totaling US$ 1,050 As Garanti Bank, the way we manage the billion and two Eurobond transactions worth indirect impact of our lending activities on the € 500 million and US$ 750 million, respectively. environment and society is a critical component We managed to secure a 6-year loan for TL 218 of our approach to sustainable finance and our million and a 5-year loan of TL 69 million from the commitment to responsible banking. As a result

3 The Bank’s Principle for sustainable finance is divided into retail and corporate customer segments.

16 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 17 Garanti Bank of this approach, we conduct an in-depth analysis in our SME Banking platform, amounted to As Garanti As Garanti Bank, we will continue to strive of all greenfield investment projects above a TL 2.1 billion by the end of 2014. The Women to fulfill our responsibilities on both the local continues certain threshold through our Environmental and Entrepreneurs’ Executive School, a free-of-charge Bank, we will and international platforms in order to build to prioritize Social Impact Assessment Process. Through this training program, produced new graduates in the continue a sustainable future, voluntarily carry these financing process, we seek to maximize the environmental cities of Adana, Diyarbakır, Eskişehir and Kayseri to strive to responsibilities one step further and be a role and social benefits in the projects financed. with the collaboration of BULLC6 . We also co- model among the financial sector as well as renewable Simultaneously, we have continued our efforts organized the Women Entrepreneurs’ Gatherings fulfill our the non-financial sector. We are committed energy to monitor, measure and manage our direct in the cities of Istanbul, Sivas, Diyarbakır, Niğde responsibilities to remaining a pioneer in developing and impact on the environment. Our Environmental and Aydın with the Women Entrepreneurs’ implementing innovative solutions so as to investments Management System, certified to ISO14001 in Association of Turkey (KAGİDER). To increase on both the effectively manage our environmental and social as an integral 2013, remains the most extensive implementation the number of success stories which inspire local and footprint, risks and opportunities with utmost of an EMS among Turkish banks with a coverage women entrepreneurs, we ran Turkey’s Women care as in previous years. enabler for the of 605 points of service as at the end of 2014. In Entrepreneurs’ Competition for the eighth time international I would like to herein point out the fact that transition to addition, Garanti was awarded a Green Office in co-operation with the Ekonomist magazine platforms in the feedback that we receive from our valued Diploma by WWF in 2014. Moving forward, we are and “KAGİDER”. We also broadened the scope of stakeholders on the content of this report, which a low-carbon committed to continue expanding best practices our support to women entrepreneurs in 2014 and order to build underlines the steps that we have taken in the economy in in the field of sustainability across our entire value became the first Turkish bank to sign the Women’s a sustainable area of sustainability to date, play a crucial role in chain. Empowerment Principles launched by the United guiding us to determine the material sustainability Turkey. Our In recognition of our progress in measuring Nations. future. issues. I am confident that with the commitment wind energy and reporting our GHG performance and impacts, Our “Disabled-Friendly Banking” initiatives and drive from our employees in conjunction investments Garanti was named “CDP 2014 Turkey Climate remained a significant component of our with the support and guidance received from Disclosure Leader” by CDP, for our fifth annual sustainable finance approach. We introduced the other stakeholders from our shareholders to our amounted to submission, in 2014. We have also become the project “İşe Katıl Hayata Atıl” (Join the Workforce customers; we will continue to succeed even US$ 2 billion sponsor of the CDP Water Initiative in Turkey Join Life) in 2014 under the patronage of the better results all together as we progress along and will be one of the first companies in Turkey Ministry of Family and Social Policies to increase our sustainability journey. by the end to submit its response to CDP Water in 2015. the employment of people with disabilities. With of 2014 and Besides, we attended the Climate Summit in New this initiative we aimed to support people with Sincerely, York in September 2014 and pledged to fight disabilities to become independent individuals we launched against climate change in six different areas. who can take the responsibility of their own lives. our new SME Garanti Bank continues to prioritize financing Our open communication and cooperation with renewable energy investments as an integral our stakeholders in recent years has been key in product for enabler for the transition to a low-carbon keeping our sustainable banking vision dynamic unlicensed economy in Turkey. Our wind energy investments and constantly improving it. In a bid to perpetuate for example, amounted to US$ 2 billion by the end this improvement, we have authored another Ergun Özen | President & CEO solar energy of 2014 and we launched our new SME product first in terms of transparency in the Turkish [email protected] investments. for unlicensed solar energy investments. In banking sector and published the Sustainability recognition of these achievements, we received Report according to the GRI’s new G4 Guidelines. the Sustainability Award for Environmental and Another accomplishment in 2014 was, Garanti Social Performance from the European Bank for Bank being one of the 15 Turkish companies that Reconstruction and Development (EBRD). qualified for the recently launched Borsa Istanbul Key to financial inclusion and a cornerstone Sustainability Index. Meanwhile, we achieved of sustainable economic growth, SMEs have a score of 9.14 on the Borsa Istanbul Corporate remained our focus with nearly 30,000 SMEs Governance Index as awarded by JCR Eurasia visited during 2014 as part of Garanti Anatolian Rating. Gatherings. In addition, the Young Entrepreneurs’ All the achievements we earned and Gatherings co-organized with The Union of our intensive efforts during 2014 underline Chambers and Commodity Exchanges of Turkey our unwavering belief and commitment to (TOBB) continued in 2014. By becoming the sustainability as well as the critical importance sponsor of the BUBA4 platform led by BUMED5, we place on effective stakeholder engagement, Garanti Bank also supported the Entrepreneurship risk management and in maximizing the value we Foundation established in April 2014 to help contribute to society. university students in our country discover the entrepreneurial spirit and to support young entrepreneur candidates’ access to necessary resources. 4 BUMED Business Angels Loans provided to women entrepreneurs, 5 Boğaziçi University Alumni Association who we consider as a special customer segment 6 Boğaziçi University Lifelong Learning Center

18 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 19 Garanti in Brief Credit Cards 9,379,003 Key Facts 1/2 Share of digital channels in transactions 3,264,206

Number of 13.1 Customers Internet 85% million banking customers**

ATMs 4,152

US$ 81 US$ Cash and non-cash loans 17.0 78.9 billion billion

Presence in Cities Market Capitalization

Number of Employees Branches

US$ 1,005 107.2 541,012 19,036 billion

Total Assets POS Terminals* 1,547,579

Note: Numbers are based on the consolidated financial BRSA as of December 2014. Market Capitalization figure is as of December 31, 2014. Mobile banking * Includes shared POS customers** ** Active customers only – minimum one login or call per quarter.

20 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 21 Share of women employees working 70% in senior/middle level management positions Garanti in Brief 40% Volume of Loans 2/2 Ratio of Employees supplied to Renewable Key Facts working in ISO14001 US$ Energy projects (cumulative) certified facilities 3.5 billion

Number of teachers reached with ‘No Limits in Total amount of Teaching’ program US$ loans subjected to 92,932 ESIAM8 in 2014 Market share in 1,234 Turkey’s installed wind million power capacity 35%

Number of employees appointed as Sustainability Number Representatives of Garanti Anatolian 1,080 Meetings 97

Number of women entrepreneurs who received certificates from 369 WEES7 in 2014

7 Women Entrepreneurs Executive School. 8 Environmental and Social Impact Assessment Model.

22 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 23 Selected Consolidated Financial Indicators of Market Shares* (%) Garanti Bank (TL billion) 31.12.2013 31.12.2014 31.12.2013 31.12.2014 Total Performing Loans 12.5 11.9 Cash Loans 128.9 144.0 TL Performing Loans 10.8 10.6 Non-Cash Loans 34.2 37.7 FC Performing Loans 17.0 15.3 Total Assets 221.5 247.1 Credit Cards – Issuing Volume (Cumulative) 17.2 18.3 Shareholders’ Equity 23.0 26.6 Credit Cards – Acquiring Volume (Cumulative) 19.7 19.8 Total Deposits 119.2 133.4 Consumer Loans** 13.6 13.8 Profit before Taxes and 6.43 7.0 Provisions Total Customer Deposits 11.3 11.7

Profit before Taxes 4.4 4.8 TL Customer Deposits 10.4 9.9

Net Profit 3.3 3.7 FC Customer Deposits 12.9 14.8

Customer Demand Deposits 12.7 14.0

Mutual Funds 14.5 10.8

* For sector comparison, BRSA unconsolidated financials are used in market share calculation. Sector data is based on BRSA, commercial banks only. Key Financial Ratios (%) ** Includes consumer credit cards.

31.12.2013 31.12.2014 Garanti Bank in Numbers Average Return on 14.9 14.8 Equity 31.12.2013 31.12.2014

Average Return on 1.7 1.6 Branch Network 1,001 1,005 Assets +Domestic 990 994 Non-Performing 2.7 3.0 Loans Ratio +Abroad 11 11

Capital Adequacy 13.7 (Basel II) 13.9 (Basel III)* Ratio Personnel 18,738 19,036

* In-line with Basel III implementation starting January 2014, capital ATM 4,003 4,152 calculation methodology has been revised. As a result, 2013 YE capital ratios are not comparable with 2014 ratios. Total Customers 12,400,077 13,075,181

Internet Customers*** 2,655,303 3,264,206

Mobile Banking Customers *** 842,191 1,547,579

Credit Cards 9,302,545 9,379,003

Debit Cards (Paracard) 7,350,311 8,020,023

Note: Figures are based on the December 2014 consolidated financials. *** Active customers only

24 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 25 Group Structure Garanti Bank’s Credit Ratings

Garanti Bank’s Ownership Structure and Share Holdings Standard&Poor’s (June 27, 2014)

Number of Shares Nominal (TL) Share (%)

Doğuş Group* (Total) 101,747,654,520 1,017,476,545,2 24.2256 Long Term BBVA (Banco Bilbao Vizcaya Argentaria S.A.) 105,042,000,000 1,050,420,000,0 25.0100 Outlook FC ICR Negative BB+ Others 213,210,345,480 2,132,103,454,8 50.7644

Total 420,000,000,000 4,200,000,000,00 100

Long Term Stand-alone * Per disclosure on November 19, 2014; Doğuş Group and BBVA have entered into a Share Purchase Agreement dated November 19, 2014 with respect to TL ICR Credit Profile (SACP) the sale of shares of T. Garanti Bankası A.Ş. (“Garanti”) representing 14.89% of the share capital with an aggregate nominal value of TL 625,380,000.00. BB+ bb+ Following the completion of the share transfers, Doğuş Group’s and BBVA’s stake in Garanti will be respectively 10% and 39.9% of the share capital. The transfer of title for the shares sold from Doğuş Group to BBVA will be finalized once the transaction is approved by the relevant authorities in and outside of Turkey including the Banking Regulatory and Supervisory Authority, the Capital Markets Board and the Competition Board. You can reach the announcement from the Investor Relations website at the following link: www.garantiinvestorrelations.com.

Garanti’s depository receipts Depository Receipts program Garanti Bank Moody’s (March 30, 2015) are listed on the London Stock reached a size of 172 million shares has a market Exchange Main Market and are as of 2014 year-end. Garanti Bank capitalization traded on the International Order share (GARAN), the most traded of TL 39.6 Book (IOB) service for international stock with an average daily turnover shares. In 2012, Garanti participated of TL 665 million, increased its BIST Long Term billion (US$ in the prestigious tier of the U.S. 100 turnover market share to 21% Outlook FC Deposit Negative Baa3 17.0 billion) as Over-The-Counter (OTC) market, in 2014 from 15% in 2013. GARAN OTCQX International Premier, where is also the most traded stock by of the end of companies traded must meet high foreign investors with a total foreign 2014 and is the financial standards and an effective transactions turnover of US$ 33.7 disclosure process. Having qualified billion in 2014. most valuable in 2014 to join OTCQX® ADR 30 Long Term Short Term TL Deposit TL Deposit company Index launched by OTC Markets Group Inc. in cooperation with Bank Baa3 P-3 in Turkey. of New York Mellon, Garanti has established itself among the top 30 Depository Receipts traded on the OTCQX marketplace, selected Short Term Baseline Credit based on their market capitalization, FC Deposit Assessment - BCA turnover and liquidity. Garanti Bank has a market P-3 ba1 capitalization of TL 39.6 billion (US$ 17.0 billion) as of the end of 2014 and is the most valuable company Long Term in Turkey. With an actual free float Adjusted National Scale Short Term National ratio of 49.95% and TL 19.8 billion BCA Rating Scale Rating floating market capitalization, ba1 Aa3.tr TR-1 Garanti also has the highest free float in BIST 100. Garanti’s

26 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 27 Fitch Ratings (June 16, 2015) Garanti Bank’s Corporate Governance Ratings

Long Term Short Term Outlook FC FC Stable* BBB-* F3* JCR Eurasia Rating (December 11, 2014)

Long Term Short Term TL TL BBB-* F3*

Viability Support National Rating Rating AA+ Long-Term Rating bbb- 3* (tur)* Overall Score 9.14 -

Convergence Level to Corporate AAA(Trk) Distinctive * Rating Watch Positive (RWP) since December 1, 2014 Governance Principles

Notch Degree and Valuation aa Superior JCR Eurasia Rating (May 20, 2015)

Long Term Short Term Long Term International International International FC TL BBB FC A-3 BBB+ (Stable) (Stable) (Stable)

Short Term International Long Term National TL AAA Local Rating

A-2 (Trk) (Stable) (Stable) Subcategories Weight Score

Shareholders 25% 9.07 Short Term National Local Stand Sponsor Public Disclosure and 25% 9.25 A-1+ Rating Alone Support Transparency (Trk) A 1 (Stable) Stakeholders 15% 9.05

Board of Directors 35% 9.15

28 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 29 Corporate Garanti’s Profile Products and Services

Garanti Established in 1946, Garanti Bank Following the best practices in is Turkey’s second largest private corporate governance, Garanti is Garanti facilitates life for its commands a bank with consolidated assets of jointly controlled by two powerful millions of customers with its rich US$ 107.2 billion as of December entities, Doğuş Holding Co. and pioneering product range and the following 31, 2014. Garanti is an integrated Banco Bilbao Vizcaya Argentaria position in section summarises our main financial services group operating S.A. (BBVA), under the principle of products and services. For a detailed all lines of in every segment of the banking equal partnership. Having shares description of Garanti Bank’s sector including corporate, publicly traded in Turkey, depositary business products and services, please see commercial, SME, payment receipts in the UK and the USA, pages 48 to 93 of the 2014 Annual through the systems, retail, private and Garanti has an actual free float Report. investment banking together with of 49.95% in Borsa Istanbul as of profitable and https://www. its subsidiaries in pension and December 31, 2014. garantiinvestorrelations.com/en/ sustainable life insurance, leasing, factoring, With its dynamic business images/pdf/garanti_bank_annual_ brokerage, and asset management model and superior technology growth strategy report2014.pdf besides international subsidiaries integrated to its innovative products it pursued in the Netherlands, Russia and and services, Garanti continues to since the day Romania. differentiate itself and facilitate the As of December 31, 2014, lives of its customers. Its custom- of its Garanti provides a wide range of tailored solutions and the wide establishment. financial services to more than 13 product variety play a key role in million customers with more than reaching US$ 78.9 billion cash and Garanti’s 19 thousand employees through non-cash loans. The high asset an extensive distribution network quality attained through advanced of 994 domestic branches; 6 risk management systems and Integrated foreign branches in Cyprus, one in established risk culture place Luxembourg and one in Malta; 3 Garanti apart in the sector. international representative offices Garanti Bank is renowned not Subsidiaries in London, Düsseldorf and Shanghai only for adding value to its clients with 4,152 ATMs, an award-winning and shareholders but also to its Call Center, internet, mobile and stakeholders and society as a whole, social banking platforms, all built as exemplified by the amount A list of Garanti’s subsidiaries on cutting-edge technological of support the Bank provides to and their respective shareholdings infrastructure. cultural, artistic, environmental, are provided in Garanti’s investor Garanti commands a pioneering educational and sporting activities relations’ website. position in all lines of business in Turkey. https://www.garantiinvestorrelations. through the profitable and com/en/about-garanti/ sustainable growth strategy detay/Garantis-Integrated- it pursued since the day of its Subsidiaries/18/27/0 establishment. Its competent and Detailed descriptions of the different dynamic human resources, unique subsidiaries are presented on pages technological infrastructure, 76 to 87 in the 2014 Annual Report. customer-centric service approach, https://www.garantiinvestorrelations. innovative products and services com/en/images/pdf/garanti_bank_ offered with strict adherence to annual_report2014.pdf quality carry Garanti to a leading position in the Turkish banking sector.

30 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 31 Milestones Table 1: Selection of Key Sustainability Milestones since 2010 2012

○○ Became the first and only ○○ Full-time “Sustainability Team” ○○ Reported on its GHG institution in Turkey to be emissions and climate change established under the Project 2014 2013 deemed worthy of the Investors strategy as part of its CDP Finance department. disclosure for the 5th time. in People (IIP) certificate in the Since the Bank’s ○○ Qualified for the BIST ○○ Signed “Energy Efficiency in ○○ Signed the United Nations “Gold” category. Sustainability Index and BIST inception in 1946, ○○ Released 4 training videos Buildings” manifesto developed Global Compact. Garanti has had a long Corporate Governance Index. on investment and financing by the Business Council for ○○ Launched the Sustainability and proud history of Sustainable Development in ○○ First bank in Turkey to become a processes of unlicensed E-Learning Program that is open ○○ Became the first bank in Turkey leading the way in electricity generation with Turkey. member of the Turkish Business to prepare a sustainability to all Bank employees. banking in Turkey and solar power systems. Council for Sustainable has achieved many report in accordance with ○○ Increased the number of service Development (TBCSD). the comprehensive option ○○ Joined the “HP Planet firsts. A detailed list of ○○ Within the Barrier-Free points which are included in the key milestones in the of the new Global Reporting Banking project scope, online Environmental Management ○○ Received the “Carbon Partnership Program” for Bank’s history can be Inıtiative (GRI) G4 Sustainability training design consisting System to 260. Performance Leadership” award the disposal of used printer Reporting Guidelines covering viewed on pages 15 - of comprehensive video from CDP Turkey by receiving cartridges. 18 of the 2014 Annual the 18-month period to the end and applications for the use ○○ Launched an e-learning the best score among 32 Report, accessible from of 2013. programme about its responding companies. of employees who require ○○ Agreed to make Executives the following website. “Sign Language” has been Environmental and Social Risk ○○ Received “CDP 2014 Turkey Summit and Future Meetings completed. In 2015 it is due to Management for its employees ○○ Joined the WWF Green Office Climate Disclosure Leadership” https://www. be executed. involved in lending operations. Program. carbon-neutral. garantiinvestorrelations. award by getting the highest score among the 42 companies ○○ ○○ com/en/images/pdf/ ○○ Started “Join the Workforce Became the first Turkish Bank Set up its Environmental ○○ Launched efforts to facilitate garanti_bank_annual_ evaluated in the “Carbon Join Life” project oriented at to achieve an A level for its Management System and disabled customers’ access to Disclosure Leadership Index”. Sustainability Report, which Environmental Policy. report2014.pdf the employment of disabled financial services. people under the leadership of was prepared following ○○ Became the first bank to receive GRI G3.1 Guidelines (Global ○○ In achieving its ISO14001 Table 1 shown on pages Ministry of Family and Social ○○ Started its first initiative for an a Green Office diploma from Reporting Initiative). certificate, became the Turkish 32 and 34 provides Policies in October 2014. WWF Turkey by successfully bank with an Environmental environment-friendly supply examples of the Bank’s completing the WWF Green ○○ Recognized as “Best Bank for Management System chain by including a binding key sustainability ○○ Designed to increase Office Programme launched at Sustainability in Turkey“ by implemented in the highest milestones since 2010. cooperation between provision concerning full its Headquarters. “business and university”, a World Finance Magazine. number of buildings and to the compliance with Garanti Bank’s broadest extent. joint cooperation agreement Environmental Management ○○ Added 6 more buildings to its ○○ 10 was signed with Marmara Awarded by IAIR with the WWF Green Office Program. ○○ System in supplier contracts. University, Department of “Best Bank for Sustainability – Women Entrepreneurs Leaders Business Administration in Europe” award. School initiated with women ○○ Increased the number of service ○○ “Rotaban” project brought into German. entrepreneurs to basic points which are included in the ○○ Joined the pilot programme business, which aims to provide practice aiming to reduce fuel Environmental Management of the International Integrated ○○ Engaged in a strategic expertise in the management consumption of Garanti Bank’s System to 605. 9 Reporting Council (IIRC). and marketing trainings. partnership with BUBA , which personnel service buses in brings together entrepreneurs ○○ Became the first bank to adopt ○○ Obtained external assurance Istanbul. seeking financing and angel ○○ First bank in Turkey to be the Women’s Empowerment on its Scope 1 and 2 GHG investors seeking ventures member of Global Banking Principles (WEPs) developed by emissions reported to CDP for ○○ Launched Disability-Friendly with high growth potential. Alliance for Women (GBA), the United Nations. the first time. worldwide. Banking initiative.

10 IAIR - International Alternative Investment Review, the first-ever magazine that emphasizes 9 BUMED (Boğaziçi University Alumni Association) Business Angels. sustainability from the perspective of the global economy.

32 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 33 Garanti’s Sustainability- Qualified for the BIST Related Indicators Sustainability Index First Bank to adopt Women’s Corporate Governance and Economic Environment Empowerment 31.12.2013 31.12.2014 31.12.2013 31.12.2014 Market Value Fossil Fuel Consumption Principles 13.52 16.97 40,59111 37,180 (US$ billion) (MWH)

Electricity Consumption Rank Among Publicly- 130,388 116,010 Held Companies (MWH) 1 1 at BIST (by Market Scope 1 Emissions Capitalization) 9.3 12 8.7 (1,000 tCO2e) Rank Among Private Scope 2 Emissions (1,000 2 2 68.5 57.4 2011 Banks (by Asset Size) tCO e)13 2 Rank Among Private Scope 3 Emissions (1,000

Banks (by Loan 2 2 tCO2e) associated with 3.7 3.7 ○○ Became a member of Volume) Business Travel United Nations Environment Non-Performing Loans Reduction in annual GHG Programme Finance Initiative 2.74% 2.98% (%)* Emissions caused by (UNEP FI). CDP 2014 Operational Renewable 3.0 3.2 Earnings Per Share Energy Projects financed 0.79 0.87 by the Bank (million tCO e) ○○ Launched its Environmental and Turkey (TL)* 2 Social Loan Policies. Ratio of Scope 1&2 GHG Net Income (TL)* 3,338,793 3,684,547 Emissions to the Bank’s 351 268 Climate Total Assets (tCO e/TL 2 ○○ Established its Environmental Number of Meetings billion) and Social Impact Assessment Disclosure of the Sustainability 1 4 Committee Greenhouse Gas Emissions Process (ESIAP). Caused by Business 0.20 0.20 Leader Travel (tCO e/number of * Based on BRSA consolidated financials. 2 ○○ Construction of the Pendik employees) Technology Campus started - to Ratio of Technology Based be designed according to the Learning Hours to the Total 26% 18% LEED criteria. Training Hours (%) Total Paper Consumption 1.73 1.68 ○○ KOBİLGİ (SME Information) (x1,000 tons) seminars started. Water Consumption 331 381 2010 (x1,000 m3) ○○ Established “SALT”, an important milestone in the ○○ First submission of its Bank’s longstanding support for greenhouse gas (GHG) culture and the arts. emissions and climate change 11 G4-22: Restated based on a methodology update in in 2015. strategy to CDP. 12 G4-22: Restated based on a methodology update in Scope 1 emissions ○○ Received acknowledgment in in 2015. the CDP Project Global 500 ○○ Established its Sustainability 13 Garanti Bank calculated the grid emission factor for 2014 as 0.495 Report 2011. Committee. tCO2e/MWh based on the production values published by Turkish

Electricity Transmission Company, whereas 0.525 tCO2e/MWh was ○○ Share in operational Wind ○○ Established “Atölye” (Workshop) used for 2013. Accordingly, the decrease in the grid emission factor has Energy Power Plants in Turkey - project-based innovation resulted in a reduction in Scope 2 emissions. increased to 40%. platform.

34 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 35 Customers Focusing on 31.12.2013 31.12.2014

Number of Cities visited 7 7 within the Scope of GAM14 Stakeholders Number of SMEs visited 1,990 1,835 stakeholders in order to make sure the impact within the Scope of GAM on both Garanti Bank and its stakeholders is positive. Volume of Loans supplied G4-24 G4-25 G4-26 G4-27 Garanti Bank uses stakeholder feedback to Renewable Energy 3.1 3.5 to determine the strategically important projects (cumulative, US$ issues and also to focus on the most relevant billion) sustainability subjects for the Bank and its stakeholders. Dimensions used to identify stakeholders are: Garanti Bank uses Stakeholder engagement helps; ○○ By dependency: Stakeholders that are most dependent on Garanti e.g. customers who are stakeholder ○○ to improve economic performance; dependent on Garanti’s products and services feedback to Human Resources Social Responsibility for their financial health and planning ○○ to minimize and manage risks; determine the ○○ to understand stakeholder demand and ○○ Stakeholders who are, or in 31.12.2013 31.12.2014 31.12.2013 31.12.2014 By influence: strategically future may be, able to influence the ability of expectations; Ratio of Women Garanti to meet its objectives important ○○ to be aware of developments and innovations Employees to Total 57% 57% Number of issues and also of goods and services; Employees (%) New Teachers ○○ By willingness to engage: This is the reached individual stakeholder/stakeholder group to focus on the ○○ to manage environmental impact; through the 11,746 14,597 willing to engage with Garanti on a certain Average Seniority (years) 7.99 7.27 most relevant ○○ to shape community investment activities. “No Limits sustainability-issue in Teaching” sustainability Garanti Bank interviewed numerous strategic 15 Average Age of Employees 32.1 32.6 Project ○○ By responsibility: Stakeholders to whom subjects for the corporate customers in order to understand Garanti has, or in the future may have, their expectations from the banking sector, financial, operational or legal responsibilities Bank and its how banks should improve and the current Average Training sustainability challenges they face. Based Duration per Employee 54 44 Number of stakeholders. ○○ By proximity: Stakeholders that Garanti on the feedback received from customers, (hours) people reached 729,747 1,129,111 interacts with most, those Garanti depend on the Bank updated its sustainability strategy through in day-to-day operations, those Garanti has to include actions to educate customers on “SALT”.16 Number of Women longstanding relationships with etc. sustainability and become a trusted advisor in Employees in Senior supporting its customers in minimizing their Management (number of 26/83 21/75 ○○ By representation: Stakeholders that are own environmental footprint. women managers/total through regulatory structures or culture/ number of managers) Another key component of Garanti Bank’s tradition entrusted to represent other engagement with customers is maintaining individuals e.g. representatives of consumer open and collaborative communication organizations, trade union representatives on issues relating to environmental and social risk management during project due Stakeholders which are identified using the diligence. Through this engagement process, above-mentioned criteria are prioritized based the Bank aims to contribute to its customers’ on their ability to influence Garanti Bank and environmental and social risk management the level of the Bank’s impact on stakeholders. capacity building as well as raising awareness Based on the outcome of this assessment, on the impact of sustainability issues in the Garanti Bank has identified its main 14 Garanti Anatolian Meetings. business world. stakeholders, as its customers, employees, top 15 The total number of the “High School-Learning Leader Teacher”, “Solution-Oriented Communication”, “The Chemistry of Teaching” and “Development Program for Education Executives” (EYGEP) programs alongside with the “No Limit to Learning” project that continued management, shareholders, investors, suppliers under the title “Learning Leader Teacher”. and finance sector. Garanti Bank proactively 16 SALT numbers are given as cumulative since the year 2012. monitors, empowers and cooperates with these

36 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 37 To that end, the Bank communicates with customers different from each other. through various means including As a result of the feedback bilateral meetings to present from the European ESG the Bank’s approach, sectoral rating agencies, Garanti Bank conferences where real and developed its Human Rights financial sector representatives Declaration are brought together to discuss https://www. sustainability issues and garantiinvestorrelations.com/ ongoing consultations with en/corporate-governance/ project owners during project detay/Declaration-of-Human- Key Stakeholder Groups development, implementation Rights/584/1866/0. and operation phases. Ongoing Similarly, Garanti Bank consultations in particular supported Garanti Moscow and Engagement are critical to establishing an in developing its Human open and positive dialogue Rights declaration (both with our customers and enable declarations were approved Platforms our expert team to transfer in 2014). Another example of knowhow on regulatory stakeholder engagement with and technical issues to our these groups are the meetings customers who are in the with European Climate Fund process of undertaking various and Carbon Tracking Initiative, investments. where information sharing about Garanti Bank informs, Key Stakeholder Groups For those stakeholder awaiting trends of either side of Several experts from consults, negotiates and and Engagement Platforms are groups where high impact is the energy sector took place. Human Resources, Corporate proactively monitors the provided on Appendix 1 of this not reciprocal Garanti Bank While certain stakeholder Brand Management and expectations of its stakeholders Report. informs, consults, negotiates groups do not have a high Marketing Communication and with regard to its sustainability Critical issues raised by key and undertakes proactive impact, the Bank nevertheless Sustainability departments performance through a range stakeholder are groups, and the monitoring of these groups. considers it an important made a questionnaire to explain of different engagement Bank’s replies on these issues Accordingly, the Bank has responsibility to passively the studies to increase the channels, such as the banking are available on Table 5, page arranged several interviews monitor these stakeholder sustainability performance. service process, strategic 55 of this report. For more with columnists. Based on the groups due to their possible As part of this ongoing collaborations, one-to-one information, please examine outcome of these interviews, significance outside the stakeholder engagement meetings, conferences, seminars, Appendix 1. Garanti Bank found that the Bank as well as in order programme that formed a direct workshops, focus group studies, Bank’s efforts to mitigate to be able to engage in input to the preparation of this surveys and similar platforms. the environmental and productive collaborations when GRI G4 report, the bank applied social risks of loans were appropriate. For example, the GRI principle of ‘stakeholder not clearly understood by Garanti Bank has identified inclusiveness’ for defining the media. Similarly, Garanti that universities fall under this report content, reviewed Bank arranged meetings with category. Garanti Bank, gave an its stakeholder engagement leading ESG rating agencies half-day long training to MBA program and undertook specific to understand the level of students Sabancı University additional engagements interest for each sustainability during reporting period about where further information was topic. As an outcome of these integration strategies to main required to ensure that it fully meetings, the priorities of activity fields of sustainability, understood the priorities of its Turkish stakeholders and the future trends and comparison most important stakeholders expectations of European ESG of real and financial sectors based on their interest in, rating agencies were found to in terms of important and influence over the Bank’s be substantially sustainability issues. activities.

38 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 39 National and International Memberships

Table 2: Ini tiatives and Organizations Supported by Garanti Bank Garanti Bank has joined numerous reporting initiatives the UN Global Compact and and is working with many UN Women. These Principles, Initiative/Organization Date of Adoption Participation Status organizations in the field of which Garanti is the first sustainability. bank in Turkey to adapt, are HeforShe 2015 Voluntary Working in close cooperation grouped in 7 key headings with its stakeholders to fully and provide guidance on how CDP Water Program 2015 Voluntary integrate sustainability, Garanti to empower women in the closely follows national and workplace, marketplace and Women’s Empowerment Principles (WEPs) 2014 Voluntary international developments and community.17 In 2015, Garanti engages in knowledge sharing has also extended its support to Global Reporting Initiative (GRI) 2013 Voluntary with the financial sector through the HeforShe initiative that is a various platforms. Garanti solidarity campaign for gender WWF Green Office 2013 Voluntary supported Environmental equality initiated by UN Women and Social Risk Assessment and emphasizes on men’s Garanti intends to continue Programme of which content support for women rights and to support activities and training Turkish Green Building Association (ÇEDBİK) 2013 Voluntary was set by United Nations gender equality. programs that bring together International Integrated Reporting Council Environment Programme – Having the objective of the finance sector with others, 2013 Voluntary (IIRC) – Pilot programme Finance Initiative (UNEP FI) spreading this approach across enabling them to collaborate in in and II. Sustainable Finance all of its stakeholders, Garanti the field of sustainability in the UN Global Compact 2012 Voluntary Forum that was organized continued to cooperate with its coming years. The initiatives in 2014 by co-operation of integrated subsidiaries during that Garanti Bank subscribes Business Council for Sustainable 2012 Voluntary Business Council for Sustainable 2014. Besides Garanti Asset to are listed below with the Development in Turkey Development in Turkey, UNEP Management 18 which devised date of adoption. These FI and UN Global Compact – its Environmental, Social, are mostly internationally- HP Planet Partners 2012 Voluntary Turkish Local Network. Governance Risk Management adopted initiatives which In 2014, Garanti Bank signed framework and Responsible have been developed with Equal Opportunities Model (FEM) 2012 Voluntary Women’s Empowerment Investment Policy in 2013, the participation of a wide Principles, which were Garanti Factoring formulated its range of stakeholders though United Nations Environmental 2011 Voluntary developed in 2010 by Environmental and Social Loan Garanti was not involved in their Programme Finance Initiative (UNEP FI) collaboration between Policies in 2014. development. CDP Climate Change Program 2010 Voluntary

The Banks Association of Turkey 1958 Obligatory 17 http://www.weprinciples.org/ 18 Garanti Asset Management is a signatory to the UN Principles for Responsible Investment (UN PRI) since August, 2011.

40 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 41 Approach to Figure 1: Garanti Bank’s Materiality Matrix for Sustainability Issues 20 1.2

Materiality Audit & Internal Controls Internal & Audit OHS & HR Responsible & & Innovation Technology Centricity Customer E&S Risk Management Governance Corporate Corruption Performance Financial G4-18 Ethical & BriberySales & Compliance Legal Energy & Change Climate and Conditions Economic 1

Garanti pays particular attention internationally, which helped us ○○ potential financial gain or loss; to its stakeholders (including ensure that the report was materially Scarcity Water ○○ severity of occurrence and scale employees, investors, customers, complete. We also applied the of the risks and opportunities; government entities and non-profit Principle of Completeness by Career Management and Management Career of Employability Promotion Philanthropy and Philanthropy Activities Sponsoring Products Responsible and Services organizations) when identifying risks making sure there was no material ○○ reputational impacts; and determining their magnitude. information omitted by checking 0.8 ○○ level of stakeholder interest; During the reporting period, the report content against feedback Garanti Bank undertook a detailed received from our key stakeholder ○○ relevance to Banking sector. materiality assessment, which groups during the Reporting Period The results of this prioritisation, formed the starting point for the and through top management’s which were approved by the materiality analysis required under review of the Report’s completeness Executive Vice President for GRI G4. and accuracy. The way the Bank Environmental Footprint Environmental Project and Acquisition Finance of Suppliers Engagement Stakeholder Labor Rights & Human Reporting & Transparency In carrying out our materiality applied the Principle of Stakeholder and Sustainability, and a member assessment for the Sustainability Inclusiveness to the report content 0.6 of the Sustainability Committee, is explained in the section on

Report, we applied the GRI have determined the focus and level Principles for Defining Report Focusing on Stakeholders. of detail provided on each topic in Content and Quality so as to identify The following figure summarises this report. For example, we have the information to be disclosed, by the results of this materiality provided a more in depth insight Degradation considering the Bank’s activities, analysis. As part of the G4 to Garanti Material into Water and Occupational Health Environmental Leveraging Sustainable Leveraging Education Financial and Health impacts, and the substantive materiality analysis, we updated the Practises and Safety. Conversely, we have expectations and interests of our topics relevant to our organisation included a shorter, more general stakeholders. We applied the and to our stakeholders making 0.4 overview of some areas such as Principle of Materiality by ensuring use of a variety of sources such as biodiversity that were deemed less Labor and Child Forced that the issues regarded as most the Bank’s commitments, media material within the boundary of our important to our key stakeholder searches and the outcome of our organization. groups were prioritised in this engagement process. We then For more detailed information report. We provide examples of the linked these to the corresponding on Identified Material Aspects Non-discrimination- Remuneration Fair impact on this Report’s content and GRI G4 aspects and had regard to and Boundaries, please refer to prioritisation of issues of applying whether the aspect was material Appendix 9 on page 130 of the 1 July the Principle of Materiality in the within our organisation, outside the Impact of Suppliers Social Urbanization 2012 – 31 December 2013 Garanti 0.2 following section. organisation, or both. We prioritized Bank Sustainability Report19. The method of application of topics based on their significance of Stakeholder Inclusiveness Principle impact – their potential influence on to the report is explained in the Garanti Bank’s ability to deliver on Stakeholders section. its vision and strategy and influence We applied the Principle of on its stakeholder’s assessments Sustainability Context by taking and decisions. Their significance of Indigenous Rights Indigenous into consideration general trends impact is determined based on the 0 in sustainability in Turkey and following criteria: 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 Material to Stakeholders 19 For the 1 July 2012 – 31 December 2013 Garanti Bank Sustainability Report, please visit: http://www.garanti.com.tr/en/our_company/sustainability/developments/reports.page?gbid2=202122 20 No significant changes were observed in the input used for the 2014 materiality analysis, compared to input used for 2013 analysis.

42 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 43 Focusing on Board of Directors and Corporate Senior Management The Chairman and the CEO have different management cooperate to determine the Bank’s roles at Garanti Bank. The Chairman chairs the strategic targets, in a manner which promotes Board of Directors whilst the CEO’s duty is to synergy. Sustainability lead and manage the Bank’s operations. This Garanti Bank’s Board of Directors seats 10 clear distinction establishes a balance between members with the following composition as authorities and powers within the scope of the at 31 December 2014: 4 executive directors, 3 Bank’s corporate structure, drawing the lines non-executive directors (excluding independent of decision-making capacity of each position. directors) and 3 independent directors. There Governance On the other hand, the Board and the senior were 9 male and 1 female board members.

Table 3: Garanti Board Members

Board Member Role Gender Age Group

Ferit Faik Şahenk Chairman Male 30-50

Süleyman Sözen Vice Chairman Male 50+

Ahmet Kamil Esirtgen, Ph.D. Board Member Male 50+

Ergun Özen President and CEO Male 50+

Dr. M. Cüneyt Sezgin Independent Board Member Male 50+

Angel Cano Fernández* Board Member Male 50+

Jaime Saenz De Tejada Pulido Board Member Male 30-50

Manuel Castro Aladro* Board Member Male 30-50

Manuel Pedro Galatas Sanchez- Independent Board Member Male 50+ Harguindey

Sema Yurdum Independent Board Member Female 50+

*With the Board of Directors Resolution dated 4 June 2015, it was resolved that the resignation of Angel Cano Fernández and Manuel Castro Aladro be accepted.

The principles adopted by Garanti Bank Commercial Code and other relevant legislation. regarding whether there are rules and For more information about Garanti Bank’s restrictions on Board members assuming duties Board of Directors and senior management, outside of the Bank have been developed to be please refer to page 99-105 of the 2014 Annual fully compliant with the Banking Law, Turkish Report21 .

21 https://www.garantiinvestorrelations.com/en/images/pdf/garanti_bank_annual_report2014.pdf

44 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 45 Committees Disciplinary Committee

Garanti Bank has 19 Committees22 and ○○ Implementing the Bank’s corporate strategy Please refer to the following website for the a Discipline Board Presidency, which are by aiming to comply fully with all legal role and activities of the Bank’s Disciplinary the basic elements of the Bank’s corporate requirements, Committee: management structure. https://www.garantiinvestorrelations. For detailed information regarding committees ○○ Observing full compliance with ethical and com/en/corporate-governance/detay/ such as name, number of attendees, ratio of corporate values, Committees/81/394/0 women, etc. please refer to: http://www.garanti.com.tr/en/our_company/ ○○ Maintaining a balanced and integrated sustainability/sustainability_approach/ performance economically, socially and committees.page environmentally. Joint targets of the Bank’s committees include: For more information about Garanti Bank’s ○○ Ensuring efficiency and productivity within committees, please refer to pages 108 to 116 of the framework of acceptable risk parameters, the 2014 Annual Report23 . Policies and Principles

Garanti Bank has established strong systems Some of the above-mentioned policies are and processes in light of legal requirements, available on Garanti Bank’s website in Turkish Risk Management, Internal which serve to guarantee the Bank’s long-term and in English. All policies listed above are sustainability and strength when it comes to accessible in Turkish by employees through the generating added value. Garanti Bank has set out Bank’s intranet. Audit and Control Functions a number of policies and principles on issues from The following section gives details on customer satisfaction to legal compliance that some of the main policies in force at the Bank. include: Further information is also available on pages ○○ Environmental Policy 118 to 128 of the 2014 Annual Report25. At Garanti Bank, risk management, internal the performance of the Board of Directors is ○○ Environmental and Social Loan Policies audit and control functions are performed by evaluated by the shareholders during the annual teams that report to the Board of Directors and general assembly meetings where the release ○○ Ethical Principles carry out their responsibilities in compliance of the board members are submitted to the ○○ Ethical Sales Principles with applicable legislation and independent of approval of the shareholders. executive functions. For more detailed information on the ○○ Garanti Bank Risk Management Strategy, As part of its risk management strategies, Compliance, Anti-Fraud Monitoring, Internal Policy and Procedures which are vitally important for sustainable Audit and Control departments, please refer to ○○ Internal Control Policies performance, Garanti Bank systematically pages 118 to 120 of the 2014 Annual Report. The monitors and measures its risk exposure detailed operations of Compliance department ○○ Customer Satisfaction Policies through methods compliant with international are provided in Appendix 6. ○○ Social Media Policy standards and in line with its framework of Please visit pages 121-123 of the 2014 written risk policies. Annual Report to find more information on the ○○ Anti-fraud Policy As per general industry practice and relevant Management of Market Risk, Interest Rate Risk ○○ Internal Audit Charter articles of the Bylaws On Procedures And in the Banking Book, Liquidity Risk, Credit Risk, Principles of General Assembly of Shareholders Operational Risk, Reputational Risk and Other ○○ Sustainability Policy of Türkiye Garanti Bankası Anonim Şirketi, Risks24. ○○ Total Quality Policy

○○ Compliance Policy

22 Garanti Bank has established a Woman Steering Committee in 2015. The information contained in this section covers the only Committees that were active in 2014. 23 https://www.garantiinvestorrelations.com/en/images/pdf/garanti_bank_annual_report2014.pdf 24 https://www.garantiinvestorrelations.com/en/images/pdf/garanti_bank_annual_report2014.pdf 25 https://www.garantiinvestorrelations.com/en/images/pdf/garanti_bank_annual_report2014.pdf

46 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 47 donations (cash or otherwise) to any political restricted or banned under national legislation Anti-Fraud Policy party or political organization or representatives and/or international agreements to which Turkey or candidates thereof on the name of the Bank, is a party. It also does not finance projects or even if the donation is given to gain benefit to activities of people or corporations which have the Bank. The employees are not allowed to ask been proven to employ child workers or violate donations or similar benefits from the clients human rights. Garanti Bank rejects loan requests The Bank’s “Anti-Fraud Policy” is designed to For Garanti also sets out the responsibilities of the senior and other employees of the Bank for any political for such projects or activities without undertaking help prevent corruption within the organisation. management, Disciplinary Committee, Audit party, association or organization. any further social or environmental impact Tackling all types of corruption, including Bank, the Committee, Anti-Fraud Committee, Internal As explained on pages 82-91, in line with its evaluation and without any minimum limit on the bribery and extortion, is a matter of the utmost essentials of Audit Department, Anti-Fraud Monitoring Environmental and Social Loan Policies, Garanti size of the loan. Bank does not finance any activities which are priority for Garanti Bank. The Bank has necessary good corporate Department, Human Resources, Learning and mechanisms in place to carefully and closely Development Department, Bank management monitor this issue in all actions by its employees, governance and all other employees under a systematic and customers, and suppliers. practice are comprehensive approach in order to establish, The primary purpose of the Anti-fraud Policy, develop and improve control systems with the in which such mechanisms are set out, is to transparency, purpose of preventing any potential incidences of ensure prevalence of conditions for an honest accountability, fraud against the Bank. and reliable working environment by raising The policy is applied uniformly and Whistleblowing awareness of all kinds of misconduct within the straight- consistently without consideration of the duty, Bank. forwardness, position or seniority of any persons found to be By defining all types of misconduct, this responsible for incidents of misconduct be they Programme policy aims to create a common point of fairness and employees or other stakeholders. All policies and view and raise awareness with the aim of ethical procedures are published on the Bank’s intranet preventing potential incidences of misconduct, and announced to employees. The types of issues to identify them in the shortest period of time, values. covered by the Policy are explained in detail in and to determine the measures which need Appendix 5. Employees are obliged to be familiar with Reporting can be done by e-mail or verbal to be taken against misconduct. The policy both the statutory rules and the rules of conduct declaration. In case of verbal declaration, it can with which they have to comply throughout be conducted via the line +90 212 318 23 75. In their employment. As part of their duties and additional to the personnel declarations, our responsibilities under the Anti-Fraud Policy of the customers or third parties can send e-mails to Bank, they are required to report any irregular act the e-mail address [email protected] or transaction committed by any other employee stated on the Garanti Bank website, to inform of the Bank with malicious intent, or which is in problems related to operational risk or other contradiction with the applicable laws and the issues. The Compliance Department forwards Ethical Principles regulations of the Bank, or which may cause harm all issues reported to the relevant department to the Bank. Such reporting should be done to to take necessary actions. This Whistleblowing the respective employee’s line manager and the Programme, which is elaborated in the Bank’s Compliance Department (‘Uyum Müdürlüğü’) Anti-fraud Policy, covers the practices, processes immediately after on becoming aware of any and acts, which the employees are expected to The Bank’s Ethical Principles define Garanti The Ethical Sales Principles emphasize that such act or transaction. Similarly, personnel are report on as listed in Appendix 4. Bank’s general principles such as integrity, “reputation” is the Bank’s most important value obliged to report any instance of fraud, theft in equality, transparency, protection of social and set out the expected code of conduct, online banking, ATM banking or credit cards to benefits, respect for the environment, and in detail, for employees who engage in sales the Anti-Fraud Monitoring Department (‘Güvenli emphasize the responsibilities of employees activities. Operasyon Müdürlüğü’). Personnel are also in situations where conflicts of interest may Educational videos and information packs obliged to immediately report to the Compliance arise as well as the importance of the concept about the importance of legal compliance in Department any issue regarding misuse of power of confidentiality first and foremost relating banking and raising awareness were produced. within the Bank. to customer information. All employees These will be published in 2015 with our CEO’s are provided training on the Bank’s ethical video message in 2015. principles. Furthermore, all new employees One of the fundamental principles adopted are required to sign the Ethical Principles at by Garanti Bank and its employees is that of ‘no the start of their employment. The full text of discrimination’; the Bank makes no discrimination the Ethical Principles is available on the Bank’s in its business relations on the basis of language, web-site: race, gender, politics, philosophical belief, https://www.garantiinvestorrelations.com/ religion, sect or similar reasons. en/corporate-governance/detay/Ethical- As per the Ethical Principles, employees Principles/94/405/0 are not allowed to directly or indirectly give

48 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 49 Prevention of Conflicts of Interest

The aim of the Bank’s Ethical Principles and Ethical Sales Principles are to help regulate employee behaviour and the professional relations of employees in parallel with the Bank’s commitment to corporate governance principles and ethical values. These principles Transaction have been prepared on the basis of the provisions of the Banking Law and other related regulations, occupational ethics, Monitoring Garanti Bank’s Personnel Communiqué and procedures. Both documents are published on the intranet and can be accessed by all Bank In addition to electronic transaction personnel and lay out principles that monitoring to detect suspicious activities all Bank personnel are responsible for related to money laundering or criminal following such as use of insider information activity, external fraud activities are monitored and accepting gifts. In the event that any centrally at by the Anti-Fraud Monitoring compliance failures are identified, necessary Department with an enterprise fraud disciplinary sanctions are taken with respect management perspective. The Department to the responsible party in line with the monitors issuing, acquiring, online/ Bank’s Personnel Communiqué and Ethical telephone banking, demand deposit account Such transactions are also regulated Principles. transactions and consumer loan/credit card and/or monitored by BRSA and CMB. As a Under Turkish law, companies that are part applications across all channels on 24/7 basis consequence, all transfers between Garanti of a holding group can engage in intragroup with using rule and score based software Bank and its related parties are regulated sales of goods and services and are subject (FICO – Falcon Fraud Manager Tools). and/or monitored as per relevant regulations to the inspection of the Thin Capitalization, of the Ministry of Finance, BRSA and CMB Transfer Pricing and Offshore Income Groups and reported to the related authorities. For Directorate of the Turkish Tax Inspection further detail, please see page 144 of our Board (TTIB). 2014 Annual Report26 . Additional information on the mandates of board members in different affiliates Real-time and online actions are taken of Garanti Bank or other companies or immediately to stop fraudulent activities and associations are not subject to restrictions anti-fraud strategies are updated rapidly and can be found through the Public and efficiently against constantly changing Disclosure Platform web page; fraud trends thanks to the Department’s ever- http://www.kap.gov.tr/en/companies/ growing experience and expertise and its traded-companies/all-companies/detail. quick adaptation to of new technologies. aspx?sId=1081

26 https://www.garantiinvestorrelations.com/en/images/pdf/garanti_bank_annual_report2014.pdf

50 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 51 Garanti Bank it is exposed to in line with its TL 866,982.21. Based on the strategy and activities through Implementation of will continue report issued following the BRSA limits and audit activities, while inspections, which concluded that to efficiently complying with legal regulations the Bank has premium debt due Basel Regulations manage the and overseeing potential stress to investment fund accounts that conditions. The efficiency and were opened without customers’ risks it is adequacy of the audit and risk instructions, order of payment exposed to in management systems will be regarding the premium debt of Official reporting in line the BRSA will begin by mid- 2015 supervised by the Audit Committee TL 21,767,306 within the period with Basel II began in July 2012. for banks wishing to calculate line with its and the Board of Directors, and December 2007-December 2011 was Provided that banks operate in their credit risk using IRB and their strategy and necessary work concerning the sent to our Bank by Saving Deposit line with defined standards, Basel operational risk using AMA, which management of risks, which the Insurance Fund in December 2013. II contributes to the development will be executed individually. The activities Bank will be exposed to, will be The premium debt and the overdue of market discipline. The Basel year coming will be an important through coordinated by the relevant risk interest thereupon were paid in committees also in 2015. January 2014, and a lawsuit was regulations also contribute to a period calling for spadework for limits and audit stronger and more powerful banking all parties including the Board of filed against this act. However, a industry, while integration with the Directors, senior management and activities, while deal was reached with the SDIF global financial system helps the risk management for those banks complying Fines Incured during the concerning the cancellation of the banking industry curb the size of the that will file applications for IRB and Reporting Period overdue interest that amounted to informal economy. In 2014, The Risk AMA. with legal TL 15,603,108 and the said lawsuit Management Department continued The Regulation on the Internal regulations Based on the Turkish Competition was withdrawn in 2014. to undertake the necessary Systems of Banks has been Board decision dated 2 November Furthermore, the following took coordination to ensure compliance expanded in terms of ICAAP within and overseeing 2011, numbered 11-55/1438-M, it was place in relation to tax audits: with Basel requirements. the frame of the second pillar of potential stress decided to initiate an investigation As a result of the inspections The roadmap for the Basel II, and was then enforced against the Bank pursuant to Law held by the Tax Inspection Board implementation of Basel III under the title Regulation on the conditions. No. 4054, which relates to the Istanbul Large Taxpayers Office requirements in Turkey has been Internal Systems of Banks and Protection of Competition in order regarding the purchase and clarified to a large extent as various ICAAP. The ICAAP Report prepared to determine whether the Bank cancellation process of the founder regulations issued by the BRSA for within the frame of this Regulation had made an agreement, or was share certificates by our Bank in compliance with these requirements is expected to serve as a key input involved in a concerted act, to 2008 through the funds generated came into force as of 1 January of the reviews to be performed restrict competition regarding the following the capital increase, 2014. These regulations included by the legal authority on the interest rates that were applied to payments made to the holders the Regulation on Equity of Banks, bank’s corporate management, banking products. As a result of of the founder share certificates Regulation on Capital Conservation risk management and the liability the investigation, by its decision were considered as dividend and Countercyclical Buffers, to allocate additional capital, as dated 8 March 2013, the Turkish payments and a Tax Audit Report Regulation on the Measurement well as for the decisions to be Competition Board imposed an was issued claiming that the Bank and Evaluation of Leverage Levels made. In order to help improve the administrative fine amounting had caused under accrual of the of Banks and the Regulation on relationship between banks’ risk to TL 213,384,545.76 against income and corporate taxes. Measurement and Evaluation profiles, risk management practices the economic group composed A settlement was agreed with of Capital Adequacy of Banks. and risk mitigation systems with of the Bank, Garanti Ödeme the Revenue Administration for Communiqués on calculation of their capital levels, guides have Sistemleri A.Ş. and Garanti Konut the tax assessment for the total credit risk with internal rating based been published on various topics Finansmanı Danışmanlık A.Ş. Under amount of TL 211,510,761.15 (actual approach (IRB) and calculation of including Country Risk, Market Risk, Article 17 of the Misdemeanour tax: TL 84,604,304.46 and fine: operational risk with advanced Operational Risk, Counterparty Law no. 5326, three quarters of TL 126,906,456.69), which was measurement approach (AMA) Credit Risk, Interest Rate Risk, the said amount, equalling TL calculated based on the said report. will come into force during 2015. Stress Tests to be Used in Capital 160,038,409.32, was paid on 14 As a result, TL 35 million in actual Based on these communiqués, and Liquidity Planning, Credit August 2013. The Bank filed a notice tax plus overdue interest thereupon draft guides have been published Management and ICAAP Report. of appeal with the Administrative were paid, and the judicial process and distributed for feedback from Liquidity and Concentration Risk Court of Ankara against the said regarding this issue has been banks, which are concerned with guides were published as a draft in decision in September 2013 and the finalized. application and validation processes 2014 and their final versions have proceedings are still pending. The detailed information for banks wishing to calculate been published and enacted in During 2014, payments made regarding the fines incurred during capital adequacy using those March 2015. for administrative fines imposed the reporting period is available on internal approaches. The process Garanti Bank will continue by regulatory and audit authorities page 126 of the 2014 Annual Report. of preliminary negotiations with to efficiently manage the risks against the Bank amounted to

52 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 53 Sustainability Committee G4-27

Garanti Bank believes that the In addition, this structure ensures ○○ WG focusing on managing concept of sustainability must be that all efforts are consistent Environmental impact of embedded throughout its decision- with internal policies and related operations, Any concerns that relate to sustainability are making mechanisms and business regulations. The Sustainability raised with the Sustainability Committee where processes to create value for its Committee’s role is to agree on ○○ WG focusing on Communities, appropriate action is then taken, which includes stakeholders and, as a consequence, strategic direction and action plans undertaking specific initiatives and making has integrated a Sustainability for the Bank. The Committee has ○○ WG focusing on Stakeholders, policy recommendations. The critical concerns Committee structure with met a total of 17 times since its raised during the Committee meetings are listed Committee Members representing inception in 2010 and met four ○○ WG focusing on Human below: all major lines of business times in 2014. The Sustainability Resources, throughout its organisation. Committee meets to review and The Sustainability Committee, take decisions on recommendations ○○ WG focusing on Corporate established in 2010 to coordinate raised by the Sustainability Team and Sustainability Governance. Table 5: Critical Concerns Raised by Key Stakeholder Groups and the Bank’s Response the entire Bank’s activities in terms functional representatives regarding The Committee ensures the of sustainability, is the highest sustainability-related topics. integration of all material aspects committee that formally reviews and In addition to this high-level and environmental and social factors approves the Bank’s activities related committee, Garanti Bank has besides economic criteria into the Stakeholder Group that raised the Garanti’s response to Critical to sustainability and is chaired by formed the following 7 working Critical Concern Bank’s operations, products and Critical Concern Concern a Board member. Its composition groups (“WG”) based on the Bank’s services, and decision-making was amended on 10 February 2014 Sustainability Policy: mechanisms. and the current membership of the Based on their feedback, Garanti Bank Committee is as follows: ○○ WG focusing on Customers Lack of a transparent developed its Human Rights Declaration, through Sustainable Finance ESG rating agencies The Sustainability Committee Human Rights Policy which was approved by the Sustainability meets regularly in order to monitor (Retail and SME Banking), Committee and published in 2014. the progress on and to provide input to all sustainability efforts. ○○ WG focusing on Customers through Sustainable Finance Garanti Bank has started to support its The Committee is deliberately subsidiaries in developing their own ESG structured to integrate sustainability (Corporate and Commercial policies and risk management systems. concerns and opportunities into all Banking), operations, products and services. As a result of this, Garanti Factoring put its own Environmental and Social Loan Policies in place. Lack of a Responsible Top Management Investment Strategy Garanti Moscow has published its own Human Rights Declaration. Table 4: Sustainability Committee Members Garanti Asset Management has Sustainability Committee Member Title started implementing the first step of its environmental and social risk Dr. M. Cüneyt Sezgin Independent Board Member and Committee Chair management process after creating its Responsible Investment Policy. Adnan Memiş EVP, Support Services The Bank got its Scope 1 and 2 Emissions Need of assurance for Scope 1 and ESG rating agencies Ebru Dildar Edin EVP, Project and Acquisition Finance and Sustainability assured by an independent third party for 2 GHG emissions Top Management 2013 and 2014. Erhan Adalı EVP, Loans

Murat Mergin EVP, Strategic and Financial Planning The Bank’s Sustainability Committee was restructured in early 2014, as explained in Lack of efficiency in Sustainability Top Management the Sustainability Committee page in this Nafiz Karadere EVP, Corporate Brand Management and Marketing Communication, SME Banking Governance across the Bank section, to allow effective coordination of all the Bank’s sustainability concerns. Osman Tüzün Human Resources Coordinator

54 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 55 Stakeholder Group that raised Garanti’s response to Sustainability Team Critical Concern the Critical Concern Critical Concern

Garanti Bank has signed the Women’s In 2012, Garanti Bank established As noted in the preceding Empowerment Principles which was a full-time Sustainability Team section, the Sustainability developed together by the United Nations which resides in the Project and Governance structure at the Bank Top Management Global Compact and United Nations Entity Acquisition Finance Department. was restructured following the end Supporting the empowerment for Gender Equality and Empowerment Non-Governmental Organizations This team was formed in order of the reporting period and is as of women Media of Women (UN Women). Additionally, to enhance the efficiency of currently shown in Figure 2. Community the Bank established the Woman Steering Committee in 2015 to expand the activities its organizational structure for With that in mind, the in the Bank to support the empowerment sustainability. Consisting of Efficiency Team within the Bank’s of women. five members in total including Construction Department is in the Sustainability Manager of charge of coordination between the team and the Senior Vice the Sustainability Team and the President responsible for Project Branches, Regional Departments Garanti Bank has decided to support the and Acquisition Finance and and Units. The Efficiency Team is CDP Water Program and CDP Water was Sustainability, the Team included responsible for implementation of launched in Turkey with Garanti as the three environmental engineers the Environmental Management Reducing the impact of water from Top Management main sponsor in 2015. To reduce the water amongst its members as at the end System and collecting industrial and agricultural activities Non-Governmental Organizations impacts of agricultural activities, Garanti of 2014. environmental data from started offering a new loan product for The Sustainability Team is relevant service points. financing efficient agricultural irrigation responsible for the coordination of systems in 2015. all sustainability-related activities at Garanti Bank on a day-to-day basis. The Team, which reports to In 2014, Garanti Bank introduced the Sustainability Committee on a new items related to compliance with Improving the Occupational Health and Top Management regular basis, works in cooperation the Occupational Health and Safety Safety precautions in the projects financed Media with the Bank’s other units Regulation and improved the respective by the Bank Community during the implementation of the terms in the general loan and project decisions taken by the Committee. finance contracts. Monitoring the Bank’s sustainability targets and performance on a weekly basis, the Team ensures In 2014, Garanti Bank, with the help of a the consolidation of sustainability- ESG rating agencies Making the processes in the Bank about consultant, started working on making all related data coming from across the Investors ethical matters publicly available of its processes related to ethical matters Top Management Bank and evaluates such data in line publicly available. with the Bank’s targets. The Team is also responsible for the coordination of the process of collecting information from other departments. By the end of 2014, Garanti Bank had 1,080 Sustainability Representatives, who are responsible for working in coordination with the Sustainability Team to collect data and support the implementation of the decisions taken by the Sustainability Committee within their own departments, from headquarters, regional directorates and branches.

56 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 57 Figure 2: Sustainability Governance at Garanti following the Restructuring in 2014

Sustainability Committee

Erhan Adalı Ebru Dildar Edin Nafiz Karadere Member Member Member

Dr. M. Cüneyt Sezgin Chairman

Adnan Memiş Murat Mergin Osman Tüzün Member Member Member

58 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 59

“Sustainability Award for Environmental and “Global Green Award” by Social Performance” Association Otherways for its comprehensive Management & Consulting. environmental social risk assessment system by Sustainability EBRD27 in 2014. Team

“Best Bank in Sustainability” award by the Turkish Green Working Building Council at the 3rd Groups International Green Building Awards Summit.

Sustainable Finance (Retail and SME)

Sustainable Finance (Corporate and Commercial)

Environmental Impacts of Operations

Communities

Stakeholders

Human Resources “Best Bank in Sustainability in Turkey” award from World Finance for practices “CDP Turkey 2014 Climate Corporate Sustainability Governance regarding sustainability and Disclosure Leadership” environmental performance. award.

27 European Bank for Reconstruction and Development.

60 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 61 Focusing on Importance of Customer Customers Experience and Satisfaction

Garanti is the Listening to customers, identifying their needs and addressing areas where they are through first Turkish not satisfied are the cornerstones of Garanti bank to have its Bank’s customer experience process and an important element of its sustainable economic Complaint performance. These unstinting efforts Sustainable Management contribute towards further enhancing the level System of customer satisfaction. The Bank uses a five-pillar methodology certified at to improve the experience it delivers. First,

Finance Leader international it listens to customers in order to get insight in wind power and collects customer feedback via various with a share of standards. channels: complaint reports, customer experience research, exit surveys, mystery 52.3% shopping, social media, customer hotline and via its employees. As a second step, analyses are conducted to better understand the root Key Highlights: ○○ 12 projects were evaluated in causes and define pain / passion points. Thirdly, depth in line with the Bank’s the improvement areas are defined according Environmental and Social Impact to the results of root cause analysis. According ○○ 52.3% share* in Turkey’s total Assessment Model in 2014. to improvement areas, different projects are installed capacity of wind power designed where task forces, including all the among Turkish Banks (35% share ○○ 7 cities were visited as part of related parties, work on developing a better among all Banks). Garanti Anatolian Meetings in customer experience. The final step of the 2014. closed loop methodology is to measure the ○○ Loans totalling TL 1.4 billion were projects delivered. provided to the agriculture sector ○○ Launched new product for To ensure that all parties in Garanti are including TL 798 million to small financing of solar power projects aware of Customer Experience Management farmers*. under 1 MW for SMEs. (CEM) issues and participate in the resolutions, a Customer Experience Platform is built. The * As of 31 December, 2014. ○○ The first bank to make the Customer Experience Platform is responsible financing of farmers in the fields for bringing all customer experience related Garanti Bank aims to embed possible with issues into one place. It has participants from sustainability through the entire 4 Agricultural Banking Mobile various customer related departments and customer service cycle and has Branches. is sponsored by the Bank’s Executive Vice already developed numerous Presidents. ○○ In collaboration with the sustainability products and services, The ISO 10002:2004 Complaint European Investment Fund ranging from SME banking to Management System certificate, awarded oriented towards Entrepreneurs, retail banking and project finance. to the Customer Satisfaction Department by 6,000 entrepreneurs received In order to offer the best service the British Standards Institution (BSI) in 2006 “Start Up Package” loans worth experience to its customers and to and renewed every year, makes Garanti Bank TL 173 million. ensure their continuous satisfaction, the first Turkish bank to have its Complaint Garanti Bank is committed to Management System certified at international ○○ The Bank of Many Firsts in sustainability to generate long-term standards. The Bank has the following customer Payment Systems, Internet, added value. satisfaction initiatives in place: Mobile and Social Banking Platforms.

62 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 63 Table 6: Customer Satisfaction Initiatives Segment-Specific Initiative Explanation Programs that Contribute to

The causes of dissatisfaction with products, services and processes are identified Root Cause Analyses through root-cause analyses which are aimed at obtaining insights and finding the Sustainability main factors that lead to complaints on the customers’ side.

Customers are compensated in the event they suffer financial loss due to the Bank’s Customer Compensations products, services or processes.

The Bank adds value to the lives of its Having started owners, places the education of the children The project aimed to redesign the agents’ communication with customers and customers by offering segment-specific programs under guarantee with securities. On top of this, Customer-Centric approaches for the most frequent complaint subjects. At the end of the project, for customers of all ages such as; the renovation smart piggy banks that are gifted to children who Communication Project according to a preliminary survey, customer satisfaction level and satisfaction with the solution offered had increased. of its branches are saving with the Garantili Gelecek Account ○○ Bonus Genç (Bonus Young), help them gain a habit of saving. and Paramatik Garanti takes a sustainable approach to ○○ Retirement Banking, The system provides a tracking facility for our customers whose messages cannot be ATM networks its initiatives aimed at disabled individuals resolved by the first contact point. The customers are given a message number, which and seeks to increase the accessibility of its Status Tracking System in 2012, Garanti can then be used to track the status of the messages via IVR, SMS or the related web ○○ Garantili Gelecek (Guaranteed Future) for Kids. banking services in daily life. Having started the pages. provides renovation of its branches and Paramatik ATM Garantili Gelecek (Guaranteed Future) is a networks in 2012, Garanti provides training to program that features advantageous savings and training to its employees and aims to make the life of an education insurance for parents who want to After-service surveys measure the satisfaction level of the customers delivering its employees increasing number of disabled customers easier. secure the futures of their children from today. After-Service Customer messages to the Customer Satisfaction Department through various channels. In With the Agricultural Banking Mobile Bonus Genç program was launched in 2013 and aims to Satisfaction Surveys the surveys, the satisfaction level of customers regarding the service given, solution Branches, farmers can get access to banking offered and the manners of customer representatives are assessed. and offers products and services that aim to cover make the life services they need in the fields or facilities, the banking needs of young people, especially reducing their time and expenses. university students. One offering of the Program of disabled is a credit card without annual management fees. Garanti Bank conducts market research to listen to customer opinions, track their customers Another product offer, the Allowance Account needs closely and receive feedback on its products and services. easier. (“Harçlık Hesap”), enables young people to Other than scheduled periodic research, ad hoc market research to receive detailed interact with fundamental banking products such information about certain services or products is also conducted. as internet banking, current account deposits and Paracard. Furthermore, it provides the means Market research conducted in 2014 included: for parents to give their children allowances automatically and without incurring banking fees. ○○ Open Market Net Promoter Score studies were conducted to understand our The aim of the Bank’s Retirement Banking competitive position, identify gaps with competitors and get insight about the new Program aims to be the private bank of retirees. trends in the market. The activity in question for 2014 was conducted with Retail Elderly customers who receive their government Upscale, Retail Mass, SME -Small Business and SME-Micro- customers. The activity Customer Experience Research pension payments via Garanti Bank are able to is planned to be repeated by including other sectors in the coming years. withdraw their pensions from ATMs with a single

○○ Customer experience research was conducted with the users of the KonserVe push of the button and are provided various application, which was developed for sending out notifications about music and advantages such as special pricing in personal sports events that are sponsored by Garanti. loans and exemptions from account management fees. ○○ An adhoc research was conducted with SME Small Business customers that stopped Under the scope of the program, other working with Garanti to understand why they stopped working with the Bank and family members apart from the parents can also what affects their loyalties. contribute to the savings for children with the Garantili Gelecek Account. Savings that are ○○ Mystery Shopping research is conducted twice a year to find out if the branches are allocated from accounts or credit cards gain value offering services that are up to the established service standards. in the fund. Garantili Gelecek Insurance, which is made available with a discount to account

64 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 65 Financial Health and Inclusion

Garanti Bank Garanti Bank, while offering a wide variety of and customers can apply to products ranging transactions, getting notifications when these Garanti Bank, Support for Financial Planning products, processes and services, also plays an from personal loan to insurance directly without limits are exceeded. is the first and important role in helping its customers manage leaving the Facebook platform. Therefore giving Cash Flow: In this section, our customers can while offering a In the current volatile markets, which may only financial their finances. The Bank provides information the customers the chance to save time and see their liabilities, pending payments and income wide variety of reflect increased uncertainty, customers institution on its customers’ financial status, while also increase product accessibility. from previous terms. Customers can also use the products, increasingly need expert opinions and support providing guidance on their needs as outlined balance moving feature to see how their balance in order to plan their financial future. As a result, that provides below. ○○ 30,000 customers apply for personal loans from will be affected by reduced debt in the future. processes and Garanti Bank offers financial planning services to 24/7 customer Facebook, where they can learn the results of services, also its Retail and Private Banking customers. instant evaluation. As part of this service, customers are classified care on social Financial Health Mobile Personal Finance Management plays an into specific risk groups and the Bank provides platforms such ○○ Garanti Bank also allows customers to apply important role portfolio recommendations suitable for each risk Research studies indicate that customers are for a NET Hesap – savings account which The Bank provides many options to allow its group. Accordingly, customers can gain access as Facebook seeking financial balance because of the effects encourages customers to make savings – on customers to manage their personal finances on in helping its to professionally prepared investment proposals and Twitter. of increasing consumption and may sometimes Facebook. Facebook applications comprise %18 their mobile phones including the following. customers and can choose the proposals that best fit their experience difficulties in maintaining their of all digital applications received. Money Bar: Based on previous spending, risk-reward profiles. Likewise, a wide array financial health. income and payments of the user and scheduled manage of alternatives is offered for personal pension In order to support the Bank’s customers’ ○○ Pension Application form on Facebook is transactions, the approximate balance that will their finances. funds as part of the Bank’s special pension financial sustainability under the current global created for pensioners to ease their pension remain in the account for the current month is services. These alternatives offer customers the and national market conditions, Garanti Bank account transfer to Garanti Bank easier. Users estimated. Moreover, suggestions are provided opportunity to draw up the best pension plan for began to offer products and services that will help could leave lead to Bank directly from Facebook for users to save money or to borrow money if themselves and thus help them look to the future the Bank’s customers; to carry their accounts. needed. with confidence. Cash Tank: Maximum and minimum limits are Full Support Platform: Garanti Bank’s Full ○○ Manage their financial lives through personal ○○ Garanti Bank is the first and only financial determined for users’ credit cards and spending Support Program offers an array of flexible interaction; institution that provides 24/7 customer care on accounts. In this way, users are notified when they options to help customers deal with fluctuations social platforms such as Facebook and Twitter. exceed their limits with a notification that is sent in personal income, through practices such as ○○ Develop a tendency to save; and Suggestions and complaints of customers are to their mobile phones. postponing the number of, or reducing, the replied via GarantiyeSor (Ask Garanti) within Spending: With “My Spending”, all the number of instalment payments. These options ○○ Realize their short- and long-term targets. two hours in order to provide continuous and expenditure made from Garanti Bank account or have been welcomed as a positive step towards high quality customer care service. On average card can be listed and easily tracked. Specific protecting the future creditworthiness of 5,500 complaints and requests are processed categories on spending are shown and users are customers that run into financial difficulties. On-line Banking Personal Finance monthly by GarantiyeSor. warned before they exceed their limits. Users also Products that Promote Saving: Garanti Bank Management arrange their limits based on their spending goals. undertakes efforts to raise the number of savings The Bank also provides many options to allow Filter and Graphs: With the filter option, products in a bid to raise the propensity to save The Bank offers a need-oriented personal finance its customers to manage their personal finances users can change their spending criteria in order in Turkey. Within the scope of these efforts, management service with personalized content, on the internet via the Internet Banking website28. to analyse their financial situations in detail. the Bank offered the following products in the which makes it easier for the customer to track Assets and Liabilities: This section lists the Moreover, each spending are categorized and reporting period: financial status and have full control over their assets and liabilities of our customers in product each category can be visualized by graphs. finances as well as making the communication groups. Our customers can review the details of Mobile Banking Notifications: Within Mobile ○○ “Net Savings Account”, which allows a between the Bank and the customer more their products and check the relative performance Banking and iGaranti applications, there is a flexible start-up to saving for customers transparent. of all their assets in graph view. system working which triggers push notifications who have difficulty saving but are seeking to Garanti Bank receives applications for Income and Expenditures: In this section our to be sent, as well as SMS and e-mail, when the acquire the habit; 9 different banking products directly from customers can list their income and expenditures credit card payment date approaches or money is Facebook in order to ease individual customers’ by term and product groups. In addition, they can received. ○○ “Spend and Save” product which offers reach to financial instruments. Garanti followers set spending limits for products or by tagging In the iGaranti app, depending on users’ excess customers the chance to turn credit card usage of monthly limits, warning notifications are expenses into savings; sent. Moreover, users can be reminded of current 28 Garanti Internet Banking web-site: campaigns through notifications. ○○ Deposit Accounts. http://www.garanti.com.tr/en/personal_banking/delivery_channels/internet_banking.page

66 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 67 Financial Inclusion: Solutions for the Gold Branches and Gold Service Point unbanked population Jewelleries Renewable According to World Bank Global Financial Our clients’ physical scrap gold is accepted in Inclusion data, 2.5 billion of the world’s Gold Branches and Gold Service Point Jewelleries Energy population do not have access to financial so that the assets can be registered in the services offered by financial institutions. In banking system and in the economy as a whole. Turkey, where 42% of the adult population are The Gold Branches in Turkey accept clients on without access, Garanti offers its products and Tuesdays and Saturdays whereas Gold Service services to customers as well as to non-customers Point jewelleries serve clients every day of the without access to financial services. week. Clients can easily perform gold account Unbanked to Unbanked Remittance: transactions through their TL or US$ accounts. Unbanked to unbanked remittance, which is a Our clients can access their Gold Accounts 24 first in Turkey, is a fast way of transferring money hours a day through Garanti Online Banking, where the sender and the receiver do not have Garanti ATMs, via Alo Garanti line 444 0 333 and to be the Bank’s customer. The sender can send from Garanti Branches. the money via the cardless transactions section Gold Time Deposit Account: The Gold Time of Garanti ATMs by entering the Turkish ID and Deposit Account allows clients to earn interest mobile phone numbers of the receiver. on their gold investments in gold terms. Clients CepBank Money Withdrawal: CepBank who wish to make their investments in gold terms, Geycek Wind Power Plant, Money Withdrawal was developed to capture preserve their gold investments and earn interest the largest wind power standalone transactions of customers in can create an account with a minimum of 100 gr plant in Turkey. a convenient way and to allow immediate of gold. withdrawal from any Garanti ATM without the Gold Saving Account: With the Gold Saving need for a credit or debit card. Afterwards, the Account, clients can regularly save the amount of aim is to turn them into real banking customers, gold they want to by making payments with their credit cards or through their accounts. thus so that they can be included including them Garanti Bank considers have a total installed capacity of Nearly half in the financial system. financing of renewable energy 2,149 MW once all commissioned In 2014, over 3 million money withdrawal projects a critical part of enabling (Table 8), and of the funds transaction was made. Garanti customers as well Turkey to reduce its greenhouse provided as non-customers can perform their transactions gas emissions. The Bank gives ○○ US$ 128 million to geothermal by Garanti without credit or debit cards through ATMs. most support to wind energy power plant projects which will Number of cardless transactions in 2014 was over projects because of their minimal have a total installed capacity of Bank to energy 15 million. Below, a few examples of cardless environmental and social effects 112 MW once all commissioned projects have transactions are explained. and the positive contribution they (Table 9). Cardless Bill Payments: Close to 90 thousand make to the current account deficit been allocated bills from hundreds of companies ranging from of Turkey. Garanti Bank’s share in Nearly half of the funds provided to renewable utilities to mobile credit top ups are paid cardless Turkey’s total installed capacity of by the Bank to energy projects have through ATMs. wind power among Turkish Banks been allocated to renewable energy energy Cardless Money Deposit to an Account: is 52.3%. As of December 2014, projects. projects. Depositing money into a Garanti account is the total emission reductions of As the biggest supporter of possible with only an account number as this operational wind and hydroelectric wind power investments in Turkey, can be done cardless at an ATM. The card owner power plants that were financed by Garanti Bank provided the financing can deposit money into their account as well as Garanti Bank has been 3.2 million of US$ 191 million to Geycek WPP, another person’s Garanti account. tCO2e regarding based on using the largest wind power plant in Furthermore, Garanti started its Golden the average emission factor from Turkey, with an installed capacity of Tuesdays practice and offered its“Gold Time electricity generation in Turkey. As 168 MW. In addition, Garanti Bank Deposit Account” product that targets financial of 31 December 2014, Garanti Bank also financed the largest wind power inclusion of those who keep their gold under had allocated: portfolio in Turkey. Borusan EnBW’s their mattress which is an old habit of a high 180 MW wind farm portfolio was inflationary environment in Turkey and the total ○○ US$ 1.96 billion to wind farm financed by Garanti with a US$ 211 gold savings under mattress is estimated to be projects which will have a total million financing facility. around US$ 150-200 billion. installed capacity of 1,696 MW once all commissioned (Table 7),

○○ US$ 1.53 billion to hydroelectric power plant projects which will

68 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 69 Table 7: Total Installed Capacity of the Wind Power Portfolio by Year (Cumulative) Garanti Bank and SMEs 2006 2007 2008 2009 2010 2011 2012 2013 2014

MW 70 220 385 540 626 874 1,216 1,223 1,696

Loan Limit 84 281 502 694 806 1,138 1,511 1,526 1,962 SMEs account for 75.8% of total employment (US$, million) in Turkey, as well as 63.3% of total sales and 53.2% of total investments in Turkey. Garanti Bank offers a wide array of tailor-made products Table 8: Total Installed Capacity of the Hydroelectric Power Portfolio by Year (Cumulative)29 and services to SMEs, which are the beating heart of the Turkish economy. As well as its own 2007 2008 2009 2010 2011 2012 2013 2014 resources provided as loans, Garanti Bank also extends long-term and cost efficient resources from international financial institutions to SMEs. MW 54 118 211 882 1,962 2,080 2,149 2,14930 These resources provide a positive contribution to domestic trade, export and tax volumes, while also playing a key role in the creation of new employment opportunities in Turkey. Loan Limit (US$, million) 60 107 277 627 1,350 1,481 1,550 1,534

Table 9: Portfolio of Total Installed Geothermal Power Plants by Year (Cumulative)31 KOBİLGİ SME Informative Meeting, 2014.

2010 2011 2012 2013 2014

MW 75 75 75 95 112

Table 10: Garanti’s Bank’s Priorities and Progress Regarding SMEs

Loan Limit 70 70 70 90 128 (US$, million) Target Progress Target Progress

The increasing impact of are looking to reduce operational To offer new products Start Up Package: With the support To support the digital To make SMEs’ lives easier in climate change necessitates the expenditure through self-generation. and services that of the European Investment Fund transformation of SMEs the new age and speed up their timely transition to a low carbon Accordingly, Garanti has intensified simplify and help (EIF), to date, Garanti has provided in order to ensure they digitalisation process, Garanti economy. This urgency is reflected its efforts to provide its customers guarantee the TL 173 million funding to 6,000 can effectively use commenced a new project and in the efforts of policy-makers, the with sufficient financing support commercial lives of entrepreneurs who had difficulties information technology founded the Ambassadors of Digital needs of our clients and priorities and appropriate loan products to SMEs providing collateral during the Transformation, comprised of Garanti reporting period. of society. Recent regulatory allow them to make the necessary Customer Relations Managers who serve SMEs. The Ambassadors of changes, making it possible to build investments and refurbishments. Farmers’ access to financing was Digital Transformation attended the unlicensed renewable projects up Garanti started working on a loan made easier through the Bank’s trainings at the Future Digital SMEs to 1 MW, have rendered PV-based product for PV systems in late 2013 Agricultural Banking Mobile Summit held in collaboration with electricity generation a viable option and has rolled it out in 2014. Branches. Google, Microsoft and Turkcell. for investors as well as SMEs that Garanti Bank led the way by supporting a licenced warehouse 29 G4-22: Restated for year 2011. system in Turkey and providing credit 30 Includes corporate loans allocated to small-scale HEPPs. by receiving physical crop vouchers 31 G4-22: Restated for years 2010-2012. as guarantee.

70 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 71 Table 10: Garanti’s Bank’s Priorities and Progress Regarding SMEs Target Progress Target Progress

To undertake efforts to With Garanti Anatolian Meetings, Providing SME CRMs “Future is Digital SME” summit was assist the development Women Entrepreneurs Meetings, with training related organized in collaboration with Target Progress of SMEs in cities that KOBİLGİ SME Informative Meetings to SMEs’ digital Google, Microsoft and Turkcell, currently lack sufficient and similar gatherings, the Bank transformations to assist the digitalization process financial support from strives to help SMEs, the backbone of of the SMEs by training Digital To ensure SMEs Şirketkur: An application for Expert Videos: Garanti Bank has banks the economy, move forward. Transformation Ambassadors team have easier access entrepreneurs to choose the most launched short videos that provide of Garanti Customer Relationship to information by appropriate company type (publicly information on various topics to Garanti Anatolian Meetings were Managers. designing information limited, limited etc.) for their plans as SMEs. The videos are accessible by started 13 years ago and in 2014 the and consultancy well as information regarding types the public on the Bank’s website Bank visited 7 cities, getting together services of expenses and average foundation under the SME tab and include with 1,835 SMEs. The KOBİLGİ costs was rolled out in 2014. After information on various tax and meetings, started in 2011, consist of the form, which is accessible from regulatory issues such as Q&A on tax a series of seminar on subjects such the Garanti Bank website, is filled, it advantages of rental revenues and as the developments in regulations, is reviewed by consultants and the how life changes for SMEs under the marketing and sales and have been customer is notified via e-mail. 1,300 new Turkish Commercial Code. attended by approximately 2,000 applications have been submitted to people. date. OHS Trainings: Garanti Bank, in conjunction with the Turkish Human Women Entrepreneur Executive Management Association (PERYÖN), School (WEES): Garanti initiated started giving trainings to SMEs on the WEES in September 2012 in Occupational Health and Safety collaboration with Boğaziçi University (OHS). These trainings support the Lifelong Learning Center (BULLC). SMEs in realizing their OHS processes WEES provides training to women in the best way possible by going Garanti Partners entrepreneurs free of charge on through the technical and legal subjects including innovation, changes in the OHS law. 3 trainings Garanti Bank started offering the Our doors are wide open to entrepreneurs sustainable governance, customer were provided in 2014. OHS trainings GarantiPartners service in conjunction with the who dream of establishing their own businesses, relations and institutionalization. are to be continued in 2015. In Boğaziçi University Business Angels (BUBA) Angel but cannot find the courage or capital; do The trainings last approximately 1 addition to this, “Occupational Health Investors Platform. not know the proper channels or resources to month. During the reporting period, and Safety Guidelines for SMEs” was GarantiPartners, which is open to anybody realize their dreams. We invite entrepreneurs 369 women in 4 cities received prepared with the collaboration of who successfully passes the evaluation process to GarantiPartners, which add values to all certificates. two organizations. The guideline is whether they are a bank’s customer or not. With stakeholders. accessible here (in Turkish): the knowledge of Boğaziçi University and the 374 entrepreneurs applied to GarantiPartners Supporting Family Establishments http://www.garanti.com.tr/tr/kobi/ support of the bank, not only capital, but also so far. Under the scope of the program, 136 in Agricultural and Rural kobilere_ozel/hizmetler/is_sagligi_ experience is passed on. entrepreneurs were interviewed one on one; 18 Development: Under the scope ve_guvenligi_kilavuzu.page of this training programme in The biggest goal of the project is speeding up ventures were reviewed in review boards and 9 of conjunction with FAO and BULLC, entrepreneurship with the help of the platform. them were accepted. 131 family establishments in Alaşehir GarantiPartners also takes on missions such as https://www.garantipartners.com/ province received training support on making sure every item necessary is reached 11 different subjects. through this structure. It makes it possible to strategize together with the entrepreneur and prepare a comprehensive business plan to realize the projects and contribute to sustainable growth. It will be possible to provide technical support Nafiz Karadere (EVP at to entrepreneurs and their solution partners that Garanti Bank), Awards are developing products in an R&D focus while Ceremony of the 7th also making sure adequate testing and feedback Women Entrepreneurship are given to the product or service before it is Competition. released into the market. Early development ventures will be presented with an incubation center (working environment/office) opportunity. The online and mobile marketing support as well as banking services that are necessary for the ventures are going to be presented with advantageous conditions.

72 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 73 Easier banking for disabled customers Table 12: Assistance to Disabled Customers and Future Targets In 2012, branches and the ATMs of Garanti were started to be made disabled-friendly. In 2014, Garanti Bank continued initiatives to ease the access of disabled customers to banking Target Explanation Progress and Future Target services. Garanti also trains employees on critical points of services provided to disabled people. Disabled-Friendly (DF) ○○ Rendering teller counters and 96 branches had been transformed Branches branch entrances wheelchair- into DF branches by the end of 2014. accessible

○○ Applying surface features on branch floors to guide visually- impaired customers Table 11: Assisting the Mobility Impaired at ATMs and Branches

Initiative Progress in the Reporting Period

Garanti Bank has introduced disabled-friendly ATM machines alongside its existing machines and put them into service. These machines have lower screens and Disabled-friendly ATMs keyboards that are easily visible for disabled people and can be approached easily by Target Explanation Progress and Future Target them. Also visually disabled customers have the opportunity to perform transactions on these ATMs with the help of audio guidance. Disabled-Friendly ○○ Ensuring that visually-impaired 62 orthopedically-disabled, 144 ATMs customers can carry out audio visually-disabled friendly ATMs In disabled-friendly branches, the Bank ensures that: transactions at ATMs and in addition to these 117 both orthopedically and visually disabled ○○ branch entrances are accessible to the orthopedically-disabled customers; ○○ Easy-to-use ATMs for friendly ATMs had been made orthopedically-disabled customers available by the end of 2014. ○○ the visually impaired are guided by floor surface features; The Bank’s target for the next period ○○ priority is given to disabled customers in the Qmatic queuing system, if information is to continue opening DF branches, related to their situation is kept in the Bank’s records; or transforming existing branches into DF formats, in micro-markets ○○ counters have lower tellers for serving orthopedically-disabled customers. where our disabled customers are Disabled-friendly branches concentrated. Training is provided to Bank employees to create higher awareness regarding disabilities. In addition, how to communicate with customers with disabilities has been an integral part of the Bank’s disabled-friendly banking program. Garanti has created ‘experience standards’ to highlight important points in communicating with disabled customers, to ensure standardized and increased quality services to our disabled customers. All employees that communicate directly with customers have received the training, as did volunteers from head-quarters. Target Explanation Progress and Future Target Garanti Bank has also commenced designing a web-based training program for sign language, which will be made available to its employees after the reporting period. Distance learning Distance learning programs to ensure The Bank’s targets are to train programs for Bank that branch personnel provide a its employees to create higher personnel better service to disabled customers awareness on disabilities and on how Garanti Bank’s internet branch is transformed to render it accessible to visually- to communicate with customers with impaired customers, enabling them to perform audio transactions by listening to the disabilities. internet branch menu. By the end of 2014, 12,271 employees Internet branch and credit card transactions Internet banking and mobile banking branches have been enhanced with voice assist were registered for the distance for the visually-impaired customers programs so they can be listened by visually impaired customers. learning program with 7,165 having completed (completion rate 58%). The Bank is planning to send text message notifications to visually-impaired customers regarding their credit card transactions in 2015. Design works for Sign Language trainings are completed and are going to be rolled out in 2015.

74 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 75 Target Explanation Progress and Future Target Sustainability Collaboration

Give priority to Keeping information related to All customers recorded as disabled in disabled customers in disabled customers in the Bank’s the branch and call center database with International Financial branch transactions records and giving them priority in are given priority in the Qmatic the Qmatic queuing system. system. Institutions

Garanti Bank offers long-term funds to SMEs Garanti Bank by working in cooperation with international financial institutions on projects connected offers long- with energy-efficiency and renewable energy, term funds as the Bank views these projects as having a to SMEs by Target Explanation Progress and Future Target significant opportunity to reduce Turkey’s GHG emissions. For example, Garanti has provided working in favored lending to small and medium-sized cooperation Help visually-impaired Implementing the necessary Internet banking and mobile banking energy efficiency and renewable energy through customers carry out improvements in the internet branch branches have been updated to make the Turkey Sustainable Energy Financing with their transactions to ensure that visually-impaired them readable by reading programs Facility (Tur-SEFF) and Mid-Sized Sustainable international through the internet customers are able to perform audio for visually impaired customers. Energy Financing Facility (Mid-SEFF), both of branch transactions. which are supported by the European Bank for financial Reconstruction and Development (EBRD). institutions Examples of sustainability collaboration with international financial institutions are on topics such Women in Business, EIB, KfW, Mid-Seff and as renewable similar programs. Please refer to Appendix 3 for detailed information. energy and Garanti signed the goodwill letter for the women. “Financing and Consulting Support Program for Establishments Managed by Women” that was initiated by the European Bank for Reconstruction and Development (EBRD), European Union Turkish Delegation, Republic of Turkey Ministry of Labor and Social Security and Target Explanation Progress and Future Target Turkish Business Council. With this program, Garanti is involved in a € 300 million loan package that will be given to establishments Inform visually- Informing visually-impaired No progress in the reporting period managed by women. impaired customers of customers of credit card transactions but a pilot is targeted before the end Garanti signed the “Protocol for Guarantee their credit card through audio SMS notifications of calendar year 2015. Support to Women Entrepreneurs of Garanti” transactions with the Credit Guarantee Fund (KGF) to provide a solution to the guarantee problems women entrepreneurs face when applying for loans.

76 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 77 Garanti Bank Supports Women Entrepreneurs Women Entrepreneurs

Garanti Bank sees supporting Meetings and Turkey’s women entrepreneurs as a major responsibility Women Entrepreneur for Turkey’s social and economic development. Competition Apart from extending funds to women entrepreneurs, the Bank also supports Table 13 summarises some of activities encouraging the Bank’s recent successes. entrepreneurship and Since 2006, loans extended educational projects. by Garanti Bank to women entrepreneurs had reached Garanti Bank also organises TL 2.1 billion by the end of Women Entrepreneurs 2014. Meetings in collaboration with the Women Entrepreneurs Association of Turkey (KAGİDER) to Table 13: Progress in Women’s Entrepreneurship Programs further support women entrepreneurship. In 2014, the Turkey’s Women Entrepreneur Competition that we initiated in cooperation with the Ekonomist magazine and KAGİDER was held for the Progress eighth time and meetings Target Explanation and Future were held in five cities across Target Turkey with the participation of almost 1,000 women.

Women The Program was In 2014, 4 new Entrepreneur aimed to be rolled provinces were Executive out to 4 new achieved. School (WEES) provinces in 2014 4 more provinces to be added in 2015 education program for women entrepreneurs to create a sustainable business

78 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 79 Family Farming farmer families that are producing Supporting Rural grapes for exporting in Alaşehir In light of 2014 being announced province of the city of Manisa were as the Year of Family Farming, provided. Some of the trainings Development with Garanti Bank, in collaboration given by FAO and BULLC experts with BULLC and FAO, launched include: the “Supporting Farmer Families TL 1.4 billion “Agricultural Banking” in Agricultural and Rural ○○ “Visionary Identity and Spirit of allocated to agricultural Development” training program. Entrepreneurship”, development In this program, a total of 33 hours Products of training on 11 subjects relating ○○ “Sustainable Agricultural to agricultural production and Applications”, marketing, financing of agriculture and personal development to ○○ “Food Management from Field to the Dinner Table”,

The Bank’s “Agricultural and Agricultural Irrigation ○○ “Organization in Rural Areas” and Rural Development Strategy”, Systems Loan ○○ “Management of Human which targets helping the sector Resources”. meet its financial needs both To support Turkey’s battle during the agricultural production against climate change and Collaborations were made period (primary production) and providing solutions to risks like with NGOs and public institutions the processing and marketing drought, Garanti Bank offered an throughout the program and 131 obtained after production “Agricultural Irrigation Systems of our farmers were awarded with (secondary production) in Turkey. Loans” in the first quarter of certifications at the end of the Through these initiatives, the 2015. The agricultural sector, in Turkey’s largest solar training program. Bank continues to stand with the which “wild” irrigation is still the powered irrigation agricultural establishments with dominating type of irrigation, is system financed by its “Supporter of Agriculture, responsible for 70% of total water “Supporting Guarantee of Producer” slogan. consumption. Farmer Families in Garanti Agricultural and Rural In order to offer permanent By offering these loans, the Development” training financing to the agricultural sector, target is to meet the needs of program, 2014. Garanti Bank offers financing establishing sustainable irrigation with appropriate grace periods systems and the automation on harvest schedules. In addition of these systems where water to providing credit to agricultural taken from the source into field is facilities, the Bank’s intention is distributed by drip, sprinkler, and to become a solution partner that micro sprinkler irrigation. provides for the needs, advice and Payments of the loans which consulting services in the sector. are mortgage-secured and have a As of 31.12.2014 the amount of grace period of up to 60 months affecting soil and water resources. credit provided to the agriculture can be planned in 3 or 6 months In this regard, the financing of sector was approximately TL 1.4 depending on the harvest periods Turkey’s largest solar powered billion, out of which TL 798 million or yearly. irrigation system with 800 m2 solar was allocated to SME segmented With this loan, Garanti is making panels and 65 kWp installed power 23,000 agricultural facility. access to financing easier for was supported in the first quarter Trainings delivered to As part of the European water sensitive investments and of 2015. With this investment, Commission’s IPARD program, attracting attention to CDP Water, irrigation and crop diversity of 131 farmers 450 decares of large land was Garanti Bank provided a total of which was launched in Turkey in 2014 31 enterprises with a credit letter in collaboration with Sabancı sustained. and financed TL 9 million to 4 University Corporate Governance enterprises in 2014. In addition Forum where Garanti is the main Garanti Bank became the first in sponsor. Turkey by supporting a licenced In addition, the Bank supports Turkey’s largest solar warehouse system and providing solar power as an innovative powered irrigation credit by receiving physical crop solution for high electricity costs system vouchers as guarantee. in agricultural irrigation without

80 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 81 Efforts to Expand the Informed Customer Group

Garanti Bank organizes and international conferences seminars, conferences and sector- organized by international based information meetings in institutions like Euromoney. The order to raise its customers’ level Bank, in cooperation with fund of knowledge and to bolster their providers, has also offered various loyalty to the Bank. The Bank opportunities to its customers has also organized foreign trade – who plan to invest within the training sessions, information scope of the efficiency projects – seminars regarding the new Turkish to receive technical consultancy Trade Code and conversation services. meetings with economists. The Bank has further encouraged its customers to attend domestic

Environmental and Social Risk Assessment Process Port of Kuşadası

Banks, in particular, face risks as arising from climate change, Assessment Process to help drive additional measures to mitigate Assessment System to its external Garanti associated with financing activities not only as critical to its success similar improvement across its loan negative impacts. stakeholders via a variety of received that could be associated with but also as one of its most portfolios. Garanti Bank received platforms. For example, Garanti adverse impacts on the environment essential duties to its stakeholders. Garanti Bank ensures that the the “Sustainability Award for communicated its environmental “Sustainability and society such as flashpoint issues Through its effective approach projects it finances satisfy the Environmental and Social and social risk assessment Award for capable of generating significant to sustainability embedded social and environmental standards Performance” for its comprehensive process to all its main external negative publicity, such as an oil throughout its organisation, required by legislation and the environmental social risk stakeholder groups using real life Environmental spill. Failure to address these risks Garanti Bank monitors its resource Bank’s policies, which an impact assessment system from the case studies through a presentation and Social in a timely and appropriate manner consumption, takes steps to assessment is undertaken by the European Bank for Reconstruction in the Environmental, Social and may result in reputational damage reduce it, raises the awareness project owner(s), if necessary, that and Development (EBRD) in 2014. Governance seminar held by Performance” and consequently a loss of investor of employees and collaborates prescribed measures are taken Garanti contributes to raising Boğaziçi University in 2015. from EBRD support and customer loyalty, with suppliers. Moreover, to by the project owner(s) and that awareness regarding non-financial among other challenges. extend its work to a larger scale, project owners have effective risks in the non-financial and Garanti Bank sees its proactive Garanti has also developed an internal audit systems. When financial sectors by explaining its management of these risks, such Environmental and Social Risk necessary, the Bank suggests Environmental and Social Impact

82 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 83 Garanti For example; under the new Environmental Impact Assessment identifies and regulation that was published on manages the 25 November 2014, significant changes that can impact the E&S risks of assessment process are identified. the greenfield Please refer to Appendix 9 for projects over these changes. In addition, in light of increased US$20 million questions about the applications through its of occupational health and safety (OHS) precautions in our country, internally additional precautions have been developed inserted into the ESIAM. Examples of these precautions include: Environmental & Social Impact ○○ General Loan Contracts now have to comply with the occupational Assessment health and safety regulations in Model. addition to compliance with the ESIAM.

○○ In Project Finance loan contracts, in addition to actions necessary as a result of ESIAM, more comprehensive regulations about OHS began to be sought.

○○ During the loan period, records and accounts of proceedings of OHS precautions (for construction Geycek Wind Farm and operation) have to be notified and the project should be followed by field review.

○○ If an OHS accident is identified during the loan period despite Environmental and Social Loan to the ESLP; projects which do During the reporting period, all environmental impacts. The Bank’s ○○ ensure project owners reduce the precautions taken, detailed Policies (ESLPs) not comply with the policies are loan requests received by the Bank decisions are based on the risk identified impacts to an information in standardised rejected. The ESLP, applied on all were subjected to the ESLPs. rating calculated in accordance acceptable level; formats are requested from Garanti Bank initially set up loans without a threshold, is based with the model, which enables the investors and reviews for ESLPs in order to minimize the on the following principles: Garanti bank to: ○○ effectively monitor the ESMP indirect impacts of loans granted Environmental and Social prepared by customers (project preventing future accidents and additional precautions are by the Bank and put them into ○○ maximizing the environmental Impact Assessment Model ○○ determine and evaluate all owners) in order to help monitor requested. practice in 2011. These policies and social benefits in financing (ESIAM) environmental and social and improve their compliance constitute the environmental and projects considering their impacts of projects in a with the Bank’s environmental and More detailed information about social principles governing the environmental and social impacts; Garanti Bank subjects systematic way in accordance social policies. the ESIAM is given in Appendix 2. extension of loans at Garanti Bank loan requests for significant with ESIAM methods; through which the Bank runs the ○○ protection and management of investments, which it defines as “Environmental and Social Impact natural biodiversity - taking into new projects with an investment ○○ ensure projects are sustainable Updating ESIAM Assessment Process” (ESIAP). consideration the measures which value of more than US$ 20 million, from an environmental and social ESIAP, designed with the support will protect biodiversity and the to the Bank’s ESIAM. With this perspective; During 2014, the Environmental of an independent consulting firm, natural habitat in project internal model, projects are and Social Impact Assessment Model also includes the “Environmental financing; categorized and graded according ○○ ensure that financed projects has been updated and continued to and Social Impact Assessment to their characteristics, size, and all associated processes be applied while having regard to the Model” (ESIAM). ○○ increasing energy efficiency and sensitivity, location and their and policies pursued by the changes in local and international Loan requests received by the transition to a low carbon possible social (including with Bank comply fully with national regulations, standards and issues Garanti Bank are first subjected economy. respect to human rights) and legislation and regulations; brought by our stakeholders.

84 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 85 34 ESIAP Results in 2014 ○○ which are rejected due to non- Table 15: Assessment Results for Greenfield Investments which are Subjected to ESIAM in 2014 compliance with ESLPs without During the reporting further assessment; Number of period, all loan requests ○○ which fall under the scope of Projects were subjected to the ESLPs ESIAM and assessed as per the regardless of the loan type ESIAM; Category A 3 and size. 6 loan requests were directly rejected due to non- ○○ which are out of the scope Category Category B 9 compliance with the ESLPs, of ESIAM, but still evaluated according to the basic criteria Category C 0 without further assessment. of ESIAP due to their potential In Table 14, the breakdown environmental and social risks 2 of greenfield investments; are provided for the project R1 finance portfolio during the reporting period. Risk R2 0 Rating R3 10

Table 14: Breakdown of Greenfield Investments which are R4 0 Subjected to ESIAP in 201432

Loan requests which are rejected as per the ESLPs - 6

Following the ESIAM process, Garanti If a project does not satisfy the Bank may request from the project owners environmental and social criteria under Loan requests which are assessed as that a detailed Environmental and Social ESIAM, the Bank may reject the request per the ESIAM and which fall under Management Plan (“ESMP”) is prepared, for the project, or may ask additional the scope of ESIAM applied and with regular reporting required precautions, tracking of specified impacts (>US$ 20 million) for projects with higher risk ratings. and may request detailed and continuous 1,234 12 The results of the assessment of reporting of these impacts. environmental and social impacts are shared Some examples from projects that with the Credit Committee and the limit require additional precautions are for total investment amount, policies and provided on pages 88-89. Loan requests33 which are approved the assessment process may be revised with conditions after a basic or updated, if deemed necessary by the evaluation despite being out of the Sustainability Committee. scope of ESIAM (

32 Includes only projects evaluated in 2014. Loan Limit Number of 33 These projects are not subjected to (US$, million) Projects ESIAM, but evaluated according to a set of basic environmental and social criteria which are beyond the scope of ESLPs. 34 Includes only the loan requests which fall under the scope of ESIAM, i.e. greenfield investments exceeding US$ 20 million monetary threshold.

86 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 87 Table 16: Reporting to Senior Management for Environmental and Social Risk Assessment at Garanti Bank

Cumulative Impacts Cumulative impact analyses of many energy projects were requested including wind, hydroelectricity and thermal power plants, even though it is not required by law. In hydroelectric power projects, environmental water released in riverbeds is tested with relevant research, and where necessary, sufficient environmental flow which is higher than the limits required by regulations has to be released. In a thermal power plant project, for the continuity of natural life in the riverbed in Impacts on Flora and Prevention of the vicinity of the project site, an additional Deforestation investment was made to collect cooling water from the sea rather than the riverbed. To mitigate carbon emissions and Consequently, the water along with the flora impacts of deforestation, forestation plants and fauna in the riverbed were protected. that cover the items below are requested from investors and implemented: Impacts to Groundwater In geothermal power projects, 100%

○○ Planting 1 million trees a year from the reinjection of water collected from commencement of commercial operations groundwater was achieved. until the end of the payback period of the Project and Acquisition Finance and Sustainability Department loan; and Project Emissions In a thermal power plant project, Corporate and Commercial Loans Unit ○○ Planting and care of 4-5 trees for every desulphurisation design changes were tree that is cut down. requested in order to make sure the

project complies with European SO2 Resettlement Projects emission standards. For example, for a In addition to regulatory requirements newly established type of plant, European related to expropriation payments, a emission standards are 150 mg/Nm3, while Current Loan Portfolio ESIAM Results of Sustainability Committee rehousing plan was applied that covers job Turkish standards are 200 mg/Nm3. E&S Performance Tracking New Loan Requests (four times in a year) placement and affordable housing prices for Process people who were displaced both physically and economically because of the project.

Stakeholder Engagement Process Monitoring and Reporting In an infrastructure project, stakeholder Garanti Bank has conducted 29 site engagement plans such as community EVP and SVP Responsible Credit Committee EVP Responsible for Project visits in 2014 in order to be able to identify participation meetings, publishing of for Project and (once every week) and Acquisition Finance and the current environmental and social project reports and complaints mechanisms Acquisition Finance and Sustainability conditions at the project sites. These visits were requested from an investor and were Sustainability (once every two months) were organized with attendance from later put into action. (once every week) the SustainabilityTeam along with other Impacts on the Fauna technical and loan personnel. Reporting In wind power projects, the impacts to senior management with regard to the of the project area on the bird population findings from these visits, along with the and the migration routes of birds were corresponding ESIAM results is conducted minimized by scientific reviews. through the following process:

88 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 89 Garanti Bank does not finance activities that are banned or restricted by national legislation With the implementation of Loans not subject to ○○ Loans provided to a project and/or international agreements to which Turkey ESIAP, set up in accordance the ESIAM that is already operational is a party. with international practices, The following types of loan (provided these projects The Bank also does not finance the activities, the Bank has achieved are not subject to the Bank’s do not create an additional projects or companies listed below, without significant progress towards ESIAM: impact), and carrying out any environmental and social impact compliance with the Equator assessment and applying any limits. Principles, which are ○○ Acquisition and privatization ○○ Refinancing loans for internationally recognized by loans, ongoing projects (provided the financial sector. these projects do not create Appendix 2 includes ○○ Construction loans an additional impact). Activities not financed by Garanti Bank detailed information on the (excluding mass housing Bank’s ESIAM. projects), The reason for excluding the above-mentioned loans from ○○ Projects for which the ESIAM is that Garanti’s aim is 1 Companies involved in the production of weapons of mass destruction and landmines Bank provides consultancy to evaluate environmental and services, social impacts on previously undeveloped sites and ○○ Loans that do not include the therefore considers greenfield 2 Individuals or companies found to employ child labor or who violate human rights realization of any project, investments and projects with potentially material environmental and social Individuals or companies that deal with the production and trade of asbestos fibers or impacts. radioactive substances (excluding healthcare equipment, quality control devices and 3 situations in which use of radioactive substances is extremely limited or insignificant, or in situations where there is sufficient protection)

4 Fishing activities which are deemed to constitute overfishing Table 17: Progress in Environmental and Social Risk Assessment

5 Forestry activities which cannot be sustainably managed

Target Explanation Progress and New Target

Individuals or companies involved in the production, warehousing, transport and trade 6 of hazardous chemicals (petroleum and petrochemical products) in large quantities Review of ESIAP Garanti Bank has reviewed Garanti Bank is planning to according to their industrial scale its ESIAP based on the present the updated version improvements in national and of ESIAP to Sustainability international environmental Committee and the BoD in 2015. and social standards in 2013 and Activities carried out in wetlands defined as RAMSAR (Convention on Wetlands of 2014. 7 International Importance) areas

Individuals or companies involved with products and/or activities that fall under the scope 8 of CITES Target Explanation Progress and New Target

Drafting plans to lower the In 2013, the Bank drafted plans These plans are decided to be Activities that threaten the cultural heritage qualifications of sites classified as UNESCO monetary limit for ESIAP to lower the US$ 20 million limit submitted for the consideration 9 World Cultural Heritage. designated for projects subject to of the Sustainability Committee the ESIAP in response to changes in 2015, instead of 2014 as in the Equator Principles (EP III). previously targeted.

90 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 91 Table 17: Progress in Environmental and Social Risk Assessment (continued) Management of Indirect Water Target Explanation Progress and New Target Footprint Expanding the Environmental and During 2013, Garanti has targeted In 2014, Garanti Factoring put its Social Risk Assessment System to to expand its E&S Risk Assessment own Environmental and Social Subsidiaries System to at least three of its Loan Policies in place and Garanti subsidiaries by the end of 2014. Asset Management has started implementing the first step of its environmental and social risk management process after creating In order to manage our indirect its Responsible Investment Policy. water footprint, we ensure, request In addition, Garanti Moscow has and monitor that appropriate established its Human Rights measures are taken to minimize Declaration in 2014. environmental impacts and to reduce the consumption of water Garanti aims to continue expanding and other resources, ensure its environmental and social recycling is undertaken and that risk assessment approach to the negative impacts on water quality remaining of its subsidiaries in the are minimized. coming years. One of the first issues we consider when determining whether to provide financing is whether the project is located in a RAMSAR Target Explanation Progress and New Target area. In accordance with our Environmental and Social Loan Policies, Garanti Bank does not Expanding the EMS to Customers By the end of 2015, Garanti Bank will The target is in progress. finance projects and or activities review its loan portfolio and will draft that are in RAMSAR zones, without plans to expand the Environmental any monetary limitations or Management System (EMS) to its undertaking any further E&S impact customers for the following years. assessment. Niksar Hydroelectric Furthermore, based on our Power Plant ESLP, we pay regard to the environmental and social impact of the projects we finance and ○○ Choice of location and project works, studies to measure and the maximization of their positive area: Location of the project assess the quality and properties impact. Accordingly, we consider with respect to protected areas of water in the project location are projects’ impact on water sources under international or national requested. Based on the finding of in our credit processes and request regulations, important water these studies, preventive and/or Turkey’s GHG Emissions requirement will start in 2016 and to have an indication of its indirect various measures towards the sources, shores and ground minimization measures regarding Legislation most of the companies in Turkey greenhouse gas emissions from its minimization of water use and water operations are assessed. project impact are implemented. do not yet calculate and monitor loan portfolio. impact on water quality, efficiency Projects located in RAMSAR The Regulatory Framework all of their GHG emissions on a in water resource consumption and areas are not financed by Garanti ○○ Impact on ground water: on ‘Monitoring GHGs Emissions’ regular basis, it is not currently re-use/recycling, all of which are Bank. Furthermore, if the project Negative impacts of projects was published by the Ministry of possible for Garanti Bank to gather customized based on the sectors location is found to be in close on ground water during the Environment and Urbanization reliable CO emissions data for 2 in question. Furthermore, we proximity to residential areas, construction and operation in the Official Gazette on 17 May all activities which it finances. prioritize projects where energy sensitive wetlands, protected phases are assessed. In case 2014. The regulation will require Nevertheless, Garanti Bank is and water conservation is taken into areas and the like, re-locating the of any negative impact, use of companies from energy-intensive developing an inventory that consideration. project may be requested. alternative water sources would sectors to monitor, report and covers energy-intensive sectors Issues that are considered as be considered. verify their CO emissions. such as iron and steel and fossil 2 part of our credit processes are as ○○ Current properties of water: Prior However, since the reporting fuel-based power plants in order follows: to commencement of construction

92 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 93 ○○ Furthermore, minimizing the In 2014, impact on the ecosystem of water consumption during construction Garanti Bank and operational phases is a has decided material issue. Garanti Bank requests alternative methods to to support CDP obtain water. Water and the

Geothermal Power Projects Program was launched in ○○ In order to preserve groundwater equilibrium, reinjection would be Turkey required in geothermal projects. with Garanti

Mining Projects as the main sponsor ○○ Water management strategies are prioritized. Reduction in 2015. measures regarding project water requirements as well as recycling and re-use components are assessed. Prevention of acid rock drainage needs to be assured through a water management plan.

Other Projects

○○ In industrial projects, management plans are necessary for industrial effluent water discharge. Best Available Technologies (BAT) are preferred with respect to treatment facilities. Projects Port of İskenderun which enable efficient usage, recycling and re-use are prioritized.

In 2014, Garanti Bank has decided to support CDP Water and the ○○ Impact on surface water: During Each sector can have different and that environmental flow is changes, excavation in the water Program was launched in Turkey the construction and operation effects on water sources in terms sufficient to sustain the basin source, dredging and sediment with Garanti as the main sponsor phases of hydroelectric power of consumption and quality. ecosystem and preserve river accumulation due to possible in 2015. Through extending its plant projects, adverse changes to Accordingly, Garanti Bank has hydrology is realized. The adverse downstream effects. support for CDP Water, Garanti flow rate, drainage and flow are developed specific provisions in its adequacy of environmental flow During the operation phase, Bank aimed to help increase building assessed. Preventive measures are Sectoral Principles and monitors water amounts in the project environmental water flow rates the capacity of private sector in requested for occurrences such and manages project impacts based design is considered in this light are periodically monitored. Turkey, especially large corporates, as flow direction and flow rate on these principles. The following and additional studies may be about the business risks associated changes, excavation in the water section gives some examples: requested. Furthermore, based on Thermal Power Plant Projects to water. source, dredging and sediment the results of these studies, the accumulation due to possible Hydroelectric Power Plants Bank may request that the project ○○ Discharge of cooling and process adverse downstream effects. technical design to be amended. water is one of the critical ○○ Environmental flow water is issues for projects of this type. ○○ Water quality: Effluent water regarded as one of the critical ○○ Adverse changes to flow rate, Accordingly, Garanti Bank should be treated in treatment issues in hydroelectric power drainage and flow are assessed. requests cumulative impact facilities. Furthermore, treatment projects. Garanti Bank places Preventive measures are studies regarding discharge, systems should comply with emphasis on ensuring that requested for occurrences such particularly with respect to discharge limits. basin water rights are observed as flow direction and flow rate projects in coastal areas.

94 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 95 Focusing on Environmental Policy

Managing Garanti Bank’s Environmental ○○ To enable and promote the world to future generations Policy is based on the following efficient usage of all resources; by constantly improving principles: environmental performance; ○○ To keep the direct ○○ To monitor and comply environmental impacts caused ○○ To contribute to the awareness Environmental strictly with all environmental by in-house operations to a and development of all legislation; minimum; stakeholders by encouraging multi-channel communication. ○○ To monitor and analyse carefully ○○ To evaluate loans extended Impact of Operations national and international under “Environmental and sustainability programs; go Social Loan Policies” and beyond the mere fulfilment of their associated indirect obligations under the programs environmental impacts and to joined and maximise the value keep to a minimum; added regarding sustainability; 605 service ○○ To develop eco-friendly products and services; points covering ○○ To respect the environment, Key Highlights: embrace and spread environmental responsiveness; ○○ To bequeath a sustainable ○○ 11% reduction in electricity %70 consumption and 12% of employees certified to reduction in total energy ISO 14001 consumption per employee (MWh/FTE).

○○ Pendik Technology Campus is up to 39% more energy efficient compared to Garanti Bank’s conventional buildings.

○○ Ratio of non-travelling Environmental e-learning hours to total training hours throughout the Bank was 18%. Management System

○○ 605 service points covering 70% of employees certified to ISO 14001. In 2012, Garanti Bank requirements in all stages of its ○○ 42% increase in amount of established an ISO 14001 banking activities, Garanti Bank waste sent to recycling. Environmental Management also began providing training to System (EMS) with the support its employees. These training 15% of two independent consultant sessions also aim to keep the firms in order to manage its Bank’s employees informed of the reduction direct and indirect environmental latest regulatory developments, in total Scope 1&2 impacts in an effective and initiatives and customer feedback emissions systematic way. The procedures regarding the environment. As were aligned with the Bank’s with all the Bank’s sustainability ISO 9001 Quality Management initiatives, the EMS is managed System’s Procedures. To ensure by the Sustainability Team compliance with the EMS in collaboration with the

96 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 97 Efficiency Team within the Bank’s ○○ EMS Internal Audit Procedure ○○ Service Procedure Construction Department under Supply Chain the leadership provided by the ○○ EMS Review and Sustainability ○○ Social Platforms Management Sustainability Committee. Procedure Procedure Garanti Bank’s Handbook ○○ Environmental Dimensions ○○ Learning and Development Management demonstrates how it fulfils the Assessment and Control Procedure standards set out in ISO 14001 and Procedure its related strategies, policies and ○○ Waste Control Procedure procedures that include: ○○ Environmental Impact Assessment and Loan Following its ISO 14001 Garanti Bank’s supply chain is the cleaning services and cleaning ○○ Bidding (Tender) Procedure Procedure accreditation in 2012, the Bank extensive, with a large number chemicals are purchased locally. started to determine targets for ○○ Corporate Brand and Marketing of suppliers providing goods and During 2014, Garanti Bank paid ○○ Human Resources Procedure energy consumption and other Communication Procedure services to support the Bank’s a total of TL 106.2 million to its environmental impacts in order operations. suppliers located throughout ○○ Investor Relations Procedure ○○ Corrective and Preventive to improve its environmental Garanti Bank meets the daily Turkey (2013: TL 94.2 million) Activities Procedure performance. needs of its branch network by with the main expenditure ○○ Logistics and Purchase By the end of 2014, Garanti Procedure for Social Purposes means of procurement from local groups shown in Table 19. During ○○ Customer Satisfaction Bank had 605 service points suppliers. However, the Bank buys the reporting period, Garanti Procedure certified to ISO 14001, following ○○ Procedure to Determine and in bulk purchases, the products Bank conducted all its direct Keep Track of Environment- the audits of an independent audit and services with price advantage procurement from suppliers in ○○ Document and Data Control Related Legal Requirements and agency. With this result, Garanti from a single supplier. The Turkey. Procedure Other Requirements is still the first and only bank Purchasing Department located at that operates an Environmental the Bank’s Istanbul head-quarters ○○ Emergency Environmental ○○ Quality Records Procedure Management System in such a Impact Procedure ensures that nearly all (95%) of large area and context in Turkey. Pendik Technology Campus to be certified with LEED

Table 18: Progress in Environmental Management System

Table 19: Main Supplier Groups35 Target Explanation Progress and New Target

Estimated annual value Contract Renewal Increasing the coverage of EMS The Bank has continued to effectively In 2014, Garanti Bank had 605 service Function of provider Details of Provider apply the EMS and expand its scope. points certified to ISO 14001 with a of payments (million TL) Date 133% increase compared to 2013. 8 companies in İstanbul and The number of locations subject Garanti targets to certify 100% of its 80% on 02.01.2015 Cleaning other local companies all 32.62 to the EMS was aimed to be service points to ISO14001 by the end 20% spread out through 2015 increased to a minimum of 600 of 2015. around Turkey. in 2014. In line with this target, the The Bank has also targeted to increase Car rental 1 company 32.60 Evergreen the number of its internal auditors for EMS in 2014. Transportation, portage and 3 companies 20.51 01.07.2015 shipment Target Explanation Progress and New Target Printed paper and stationary 25-30 firms 9.63 No contract

Improving the data collection for EMS The Bank’s data collection system In 2014, Garanti Bank has been Consumable materials for 2 suppliers 7.64 02.01.2015 was aimed to be improved in 2014 in working on new software that will computers order to better monitor the amount of be used to collect environmental Vehicle maintenance and waste produced. data such as fossil fuel consumption, 34 companies 3.23 No contract electricity consumption and recycled repair costs waste generated in ISO 14001 certified facilities.

The new software for environmental 35 This table represents centralized procurement excluding energy purchase. Service points may undertake ad-hoc independent data collection is planned to be procurement of goods and services where necessary. Energy consumption data is separately reported in Table 21: Energy Consumption launched Q1 2016. within the Organization.

98 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 99 In 2012, Garanti Bank started platforms such as one-to-one the protection of workers. Such to include a requirement for meetings and teleconferences. As provisions give Garanti Bank the Climate Change compliance to Garanti Bank’s a result of this process, supplier right to terminate any contract Environmental Management contracts representing 6.4% of which is deemed to be in violation System (“EMS”) in supplier total procurement were revised of worker protection regulations. Management at contracts. New catering and to include specific provisions During the reporting period, cleaning services contracts thus regarding compliance with Garanti Garanti Bank was not aware of any became compliant in 2012. In 2013, Bank’s EMS by the end of 2013. supplier with which it was working Garanti Bank suppliers operating in sectors In 2014, in order to expand the that was under investigation for with a relatively higher footprint scope, Garanti Bank continued any issue related to human rights. and constituting a substantial to work comprehensively on its In addition, each year, Garanti component (44%) of the Bank’s supply chain’s environmental Bank’s internal auditors inspect a total procurement were requested management. selection of the Bank’s suppliers Climate change continues to change is a strategic issue that As summarised in Table 22, in to provide information on how While supplier contracts on a sample basis in order to be one of the biggest challenges merits full integration with all 2014, Garanti Bank’s total Scope 1 they manage their environmental contain provisions pertaining assess their compliance with facing the world today, as a global business processes and decision- and 2 GHG emissions decreased impact. to environmental issues, they its EMS. In the event a supplier threat that may affect each and making mechanisms. by 15% to 66,077 tCO2e as a result After reviewing their suppliers’ currently do not have any clauses is found to be non-compliant, every aspect of our civilization. Accepting that the first step to of emission reduction activities, respective management strategies, pertaining to auditing for and they are given a grace period to The risks for the banking industry be taken in tackling climate change whereas total revenue grew the Bank communicated its criteria reporting human rights’ violations. improve their performance and in particular vary from rising is to determine the greenhouse gas by roughly 9.9% over the same for suppliers’ environmental They do, however, make reference the Bank provides assistance when operating costs to the uncertainty emission profile, Garanti has been period. Emissions included within performance and compliance to laws and regulations (including necessary. surrounding the legal framework measuring its carbon footprint the boundary were from Garanti methods through a variety of the Labor Law) pertaining to governing the issue. However, and implementing an array of Bank, Garanti Mortgage, Garanti banks that successfully manage initiatives since 2009 in order to Technology and Garanti Payment these risks will not only be in a manage it. Assessing the risks and Systems. The Bank’s carbon position to minimize these costs opportunities imposed by climate intensity decreased by 23.8% in but will also benefit from various change on its activities, Garanti 2014 and is defined as total Scope Table 20: Progress in Environment-Friendly Supply Chain opportunities such as being able Bank reports all of its efforts to 1 and 2 emissions divided by to address changing customer tackle climate change to the CDP. total assets for 2014. The bank’s profile expectations and meeting In 2014, Garanti was awarded Scope 3 emissions indicated in the financing needs of “green” the “CDP Turkey 2014 – Carbon Table 22, i.e. 3,709 tonnes of Target Explanation Progress and New Target investments. For this reason, Disclosure Leadership” award by CO2e, relate to emissions from Garanti Bank believes that climate CDP. business flights only. Beginning Environment-Friendly Supply Chain Increase the number of suppliers In 2014, Garanti has continued to from 2013, Garanti Bank has also who apply the sustainability criteria add EMS article in supplier contracts started to disclose its Scope 3 that were included in the Bank’s which are renewed or newly signed. emissions associated to activities purchasing procedures in the such as purchased goods and short term. Supplier contracts representing 50% services, employee commuting, of total procurement is targeted to transportation and distribution include specific provisions regarding and paper consumption, in compliance with Garanti Bank’s EMS addition to the indirect emissions by the end of 2016. associated with business travels. These are disclosed on an annual basis through the CDP reports36 published every year.

36 http://www.garanti.com.tr/en/our_company/sustainability/developments/reports.page?gbid2=202122

100 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 101 Table 21: Energy Consumption within the Organization Climate Change Mitigation

Total Consumption Total Consumption Energy Source (2013) (2014)

Electricity (MWh) 130,388 116,010 By the end of 2014,Garanti

Natural Gas for Heating (m3) 2,435,783 2,341,128 was able to 11% achieve its Natural Gas for Heating 24,176 23,236 greenhouse (MWh) reduction gas emission in total electricity Diesel for Heating (litre) 296,219 172,276 goal to reduce consumption total emissions Diesel for Heating (MWh) 3,091 1,798 by 3% per total assets under Coal for Heating (ton) 152 159 management Cıngıllı Solar Farm compared to its Coal for Heating (MWh) 530 555 2013 baseline.

Diesel Consumption in 1,198,84237 1,108,205 Vehicle Fleet (litre)

Diesel Consumption in 12,510 11,564 Vehicle Fleet (MWh)

Gasoline Consumption in 29,85538 2,885 and data management this year. reduction targets for Scope 3 in Vehicle Fleet (litre) While Garanti Bank’s direct emissions are lower than the Additionally, Garanti has received addition to Scope 1 and 2 emissions. limited assurance for the second In 2014, most of Garanti Bank’s Gasoline Consumption in emissions of many companies that 284 27 Vehicle Fleet (MWh) operate in other sectors, it has an time from a third party for its 2014 total Scope 1 and 2 emissions were important role to play in helping Scope 1 and Scope 2 GHG emissions indirect emissions from purchased Total Energy Consumption its clients across many sectors that were reported to CDP in 2015. electricity (87%). The other main 170,979 153,191 (MWh) to reduce their environmental These improvements have given components of the Bank’s carbon footprint. By the end of 2014, us better confidence in our 2014 footprint included its consumption 12% Garanti was able to achieve its Scope 1 and Scope 2 GHG emissions of fossil fuels from stationary and greenhouse gas emission goal to data, against which we decided mobile sources such as natural gas reduction reduce total emissions by 3% per to benchmark our 2015 emissions. from boilers burnt for heating and total assets under management Therefore, Garanti has set a new petrol consumed in company-owned in total energy by 2014 compared to its 2013 short-term target to reduce Scope 1 or leased vehicles respectively and consumption per baseline. In 2014, Garanti Bank’s and Scope 2 GHG emissions by 5% from some of the refrigerants (13%) employee Environmental Management System per total assets under management used in air conditioners. continued to be expanded reaching by 2015 compared to 2014 During 2014, the Bank continued a total of 605 centers that covered emissions. Garanti will continue to to develop projects to reduce its nearly 70% of the Bank’s employees. effectively apply its Environmental emissions by carefully evaluating Being the first Bank with such a Management System, expand its its greenhouse gas profile and the comprehensive Environmental scope and set new targets in the continued focus was on energy Management System in Turkey, coming years. This will include efficiency projects that will also help Garanti has reached a certain level improving the data collection and reducing its operating costs. 37 G4-22: Restated based on a methodology update in 2015. of maturity about its knowledge reporting process for Scope 3 GHG 38 G4-22: Restated based on a methodology update in 2015. and capabilities on GHG monitoring emissions, and as such setting GHG

102 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 103 39 Table 22: GHG Emissions (tCO2e)

8,698 9,307 15,568 16,981 14,108

Scope 1 (tCO2e)

57,378 68,459 73,994 70,351 67,599

Scope 2 (tCO2e)

3,709* 3,701* 3,017 2,632 2,685

Scope 3 (tCO2e)

66,077 77,765 89,562 87,332 81,707 Total tCO2e (Scope 1&2)

% Change in Total Scope -15.03% -13.17% 2.55% 6.88% 1.40% 1&2 emissions compared to previous year

267 351 498 534 597 Intensity Figure

(tCO2e/Total Assets)

2014 2013 2012 2011 2010

*Includes Scope 3 emissions originating from business flights only.

39 Garanti calculated its GHG emissions according to the Principles of the “WBCSD/WRI – The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (Revised Edition)”. For further detail on calculation, please refer to Garanti Bank’s CDP reports at: http://www.garanti.com.tr/en/our_company/sustainability/developments/reports.page?gbid2=202122

104 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 105 Table 23: Energy Efficiency Indicators Table 24: Progress in GHG Reduction Target

Target Explanation Progress and New Target

Setting New GHG Reduction Target By the end of 2014, the Bank aimed to Garanti Bank has been able to achieve reach its target of reducing the ratio its GHG emissions reduction target Total Energy Consumption per 9.19 8.11 of total Scope 1 & 2 greenhouse gas by the end of 2014. By the end of

Employee (MWh/FTE) emissions (equivalent to tCO2) in its 2015, the Bank aims to reduce the total assets by 3%. ratio of Scope 1 & 2 greenhouse gas

emissions (equivalent to CO2) in its total assets by 5%.

Total Scope 1 & 2 GHG Emissions per Employee 4.18 3.50 (tCO e/FTE) 2 Energy Efficiency Projects

Technological Solutions that Renovation of Energy and ○○ focus on maximising the use of Reduce Travelling Lighting Systems daylight (natural lighting) in new

or renovated branches as this Total Scope 1 GHG Emissions 0.50 0.46 During 2014, the Bank continued Garanti Bank has launched a reduces energy expenses and per Employee (tCO e/FTE) 2 to focus on using technology to number of practices to save energy provides a healthier working reduce its environmental impacts. in its lighting systems including: environment, In 2014, the ratio of nontravelling e-learning hours to the total training ○○ Increased efficiency through ○○ installing heat insulation at its hours throughout the Bank was 18%. using hanging lights in lighting branch fronts where feasible to systems. Garanti Bank estimates prevent energy losses, that these have achieved energy Server Virtualization in Data savings of 156,562 kWh per ○○ commitment to improving the energy efficiency of its head Centers annum, office building and obtaining its Total Scope 2 GHG Emissions 3.68 3.04 The highest carbon emissions ○○ LED lighting systems for energy performance certificate. per Employee (tCO2e/FTE) per m2 in Garanti Bank’s physical band lighting at ATMs and in service buildings are derived advertising boards at branches, from the use of servers. In 2007, ○○ Astronomical time clocks, Garanti Bank began to virtualize adjusted according to sunrise servers in its data centers, resulting and sunset times, are used in in an efficient use of server the outer fronts of all ATMs and capacity as well as reductions in branches, the electricity consumption and

cooling requirement of the servers, ○○ LED lighting in new or compared to physical servers. As a Type of Indicator renovated branches where result, Garanti Bank has saved 4.25 feasible have achieved energy 2013 2014 million kWh of electricity per year, savings of 323,487 kWh per corresponding to 2,102 tCO e per 2 annum, year.

106 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 107 Use of R410 Gas and Switching to Energy- Use of the new systems, which improve Efficient Air-Conditioning efficiency by up to 40% through A+ class air-conditioning units, reduces total energy In recently opened or renovated branches, consumption by 10% in a typical branch. In Garanti Bank has started using air-conditioning 2014, a total of 1,237 new air-conditioning units units that use R410 gas, as it does not were installed at service points and ATMs, contribute to ozone depletion like R22 used saving about 807,812 kWh of energy in the year, previously. The Bank is replacing old air- compared to business as usual. conditioning units with new generation Moreover, the recently opened or renewed energy efficient air-conditioning units in a bid branches began to use heat recovery devices to increase energy efficiency in its recently (working with plug fans) that consume less opened or renewed branches. electricity.

Table 25: Progress in Environmental Measures Undertaken During Construction and Renovation of Garanti Bank’s Facilities Pendik Technology Campus to be certified with LEED

Target Explanation Progress and New Target

Usage of Environment Friendly The Bank launched efforts to use In 2013 and 2014, Garanti Bank Target Explanation Progress and New Target Materials and Equipment renewable, recyclable and nontoxic reviewed the list of materials and materials during opening and equipment which were used during Switching to environmentally friendly Garanti Bank has started switching to Garanti Bank’s target is to replace the renovation of branches, while using branch renovations and construction refrigerants A+ type air conditioners using R410 old air conditioners with materials that offer the possibility of of new branches. As a result of the in either renovated or newly opened A+ type air conditioners using R410 recycling and reuse at the end of their feasibility assessments, Garanti facilities, in order to gradually change refrigerant in existing branches as lifespan. With this approach, the Bank Bank has decided to switch to more over to environment-friendly cooling previously targeted, even though aimed to minimize its environmental environment-friendly products for systems for the past few years. those branches are not within the impacts in the selection and use of some of the materials and equipment scope of refurbishment program, materials. that were reviewed. in the coming years. This will accelerate the process of transition In 2015, Garanti Bank will draft to environment-friendly cooling plans to expand the scope of systems in all branches. environmentally friendly materials and equipments used during branch renovations and construction.

Target Explanation Progress and New Target

Energy Efficiency in Lighting The Bank aimed to complete Garanti has increased energy feasibility studies on the replacement efficiency through using hanging of lighting fixtures in branches to lights and switching to LED systems be opened and renovated with low in some of its facilities during the energy consumption LED fittings. reporting reporting period, resulting in

Likewise, projects will be undertaken a reduction of 477 tCO2e per annum to ensure the maximum use of compared to business as usual. Garanti daylight. has also taken into consideration of the maximum use of daylight in branch designs where possible during the construction of new branches.

In 2015, Garanti will continue to ensure energy efficiency in lighting systems through the usage of LED systems and other methods in branches that are renovated or newly constructed.

108 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 109 Amount of Waste Recycled Waste Management Table 27: Recycled Waste40 As Garanti continues to increase the coverage of its ISO 14001 certified Environmental Management System (EMS), The Bank’s Environmental Management the total number of offices System envisages the re-use of waste where that recycle and monitor their possible and, wherever not, recycling or, waste is also increasing. Garanti where this is not appropriate, its disposal by an Bank is targeting extending its authorized disposal company. The table below EMS, which is audited by an 172.5 287.4 406.9 summarises this approach. independent accredited third party every year, to all service points by the end of 2015. Once all offices are covered by EMS, Garanti will be able to monitor its total waste generated and set targets to reduce it. 2012 2013 2014

Table 26: Waste Management Approach Recycled Waste (tons)

Method Explanation Method Explanation

1. Re-use The re-use of waste is the first 2. Recycling Beginning with buildings subject to Water Management priority. Computers that are broken the EMS, the Bank began to deliver or redundant are delivered to Garanti recyclable waste to authorized Technology which examines their recycling and disposal facilities. potential scope for re-use. Repaired Recyclable paper, plastic, metal and computers are then donated to glass are delivered to whichever Although the most significant Water consumption41 from daily water consumption under schools in need if deemed to be municipality the service point is impacts and opportunities for the Bank’s facilities in 2014 is control through the use of new usable. located in or to a licensed recycling reducing water consumption are in estimated as 0.381 million m3 faucets with a lower flow rate. The firm, where they are recycled. 3 Materials that are no longer in use the Bank’s loan portfolio (i.e. indirect (2013: 0.331 million m ; 2012: 0.222 Bank also treats and collects the 3 3 due to Branch/Department/Unit water footprint), the Bank is also million m ). 0.074 million m out rainwater from the roof of the head renovations and concept changes are striving to reduce consumption and of the total amount is withdrawn office building, using it in landscape delivered to warehouses belonging improve performance in its offices in the following three facilities: irrigation. Furthermore, mains water to the Construction Department. and branches throughout Turkey. Zincirlikuyu Head Office, Güneşli is treated and used as drinking Furniture that is no longer needed is As an example of the seriousness Operation Center, Learning & water at the head office building, donated to institutions in need. with which the Bank takes water Developmet Center. After increasing which is not a widespread practice In addition, furniture that is in usable management, the Bank opted to the quality of data collection in Turkey where most drinking water shape is kept in our warehouses become the sponsor of CDP Water process and establishing a robust is purchased. As a result, the Bank’s for servicing and sent to branches/ in Turkey and will be one of the base-line, Garanti Bank plans to set initiative at its head office building departments/units when the needs arise. very first companies responding to reduction targets for water use. eliminates use of plastic bottles the CDP Water Program in Turkey Measures aimed at saving water and the greenhouse gas emissions in 2015. In addition, the Bank has have been implemented at the caused by their transport. started a process for collecting Bank’s existing service points, as more accurate water withdrawal well as its new branches. In this Method Explanation Method Explanation data from its offices in Turkey. context, Garanti Bank aims to keep

3. Management of Hazardous waste that is produced by 4. Excavation Waste Excavation waste and debris left over Hazardous Waste the Bank is collected in accordance during branch openings or renewal 40 The calculation was made by multiplying the average waste recycled per employee by the total number of employees working at with determined rules and delivered is removed to disposal areas as ISO14001 certified buildings. to authorized recycling and disposal designated by the municipality. 41 Here the term “water consumption” refers to “water withdrawal” which is defined as “the sum of all water drawn into the boundaries facilities. of the organization from all sources (including surface water, ground water, rainwater, and municipal water supply) for any use over the course of the reporting year”.

110 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 111 More Sustainability Focusing on Initiatives from Garanti Bank Human Resources

Garanti was the Key Highlights: Garanti’s most valuable asset is its human resources and the Foundation for the Protection LEED Criteria Compliant Garanti Bank, first Turkish of Nature (WWF–Turkey) Buildings ○○ 57% of employees are women. Bank views its human resources as the main company to be as the guarantee of its sustainable ○○ 16,200 employee suggestions With construction work having sponsor for 22 and efficient growth. The Bank awarded the and ideas collected. continued to invest heavily in its begun in August 2011, Pendik years of WWF Technology Campus is a sustainable “Gold” people in 2014 and total training ○○ 40% of senior and middle level hours per employee was 44 hours. project with its architectural and Turkey, is certificate, an managers are women. engineering solutions. During making a major accolade project design and construction ○○ On average, 44 hours of training work, LEED criteria such as the contribution to given to per employee delivered in 2014. building’s compatibility with the the sustainable land, the reduction of energy and only 2.6% of ○○ 1,297 hours of Sustainability Garanti Bank, as the main water consumption, selection of use and companies E-learning program trainings sponsor for 22 years of WWF environmentally-friendly materials conservation delivered. 42 holding the Turkey , is making a major and waste management in contribution to the sustainable use construction work are taken into of our nation’s ‘Investors in ○○ The First Institution in Turkey awarded with “IIP Gold and conservation of our nation’s account. According to the US Green natural People’ natural resources, through “Garanti Building Council, LEED buildings Certificate”. for Nature”. Due to its long-term typically save 18-39% of total energy resources, (IIP) certificate support for WWF Turkey’s nature use than comparable buildings and through around the conservation projects, Garanti thus Garanti’s new campus will make “Garanti for was recognized in 2008 for the a significant contribution to energy world. second time with the Golden Panda reduction. Nature”. award and remains the only Turkish During the reporting period, company to have won this award. In Garanti has also continued working 2012, Garanti Bank joined the WWF on a project in order to certify its Human Resources and green office program with the aim of Zincirlikuyu Head Office according ensuring increased energy efficiency to LEED criteria for existing in its headquarters and being pro- buildings. the Business Environment active in the fight against climate change and qualified to receive WWF Green Office Certificate for its Headquarters in 2014. Garanti professional talents and aims to get WWF Green Office Garanti’s corporate target is to maintain a modern business competencies. This continuous Certificate for 6 new buildings in cycle of training and personal 2015. environment where human rights are respected. Aiming to be a and professional development is sustainable employer, Garanti’s one of the essential promises of HR strategy is based on the Garanti to its employees. fundamental consideration of offering its employees the best financial opportunities under the prevailing market conditions while encouraging them to continuously 42 WWF Turkey is part of WWF, the world’s largest environmental organization. develop their personal and

112 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 113 Equality of Opportunity and Table 29: Employee Breakdown per Age and Gender for 2014 Diversity

1,781 3,557 2,955 1,558 982 Garanti views equality of As a result of the importance serve an increasingly wide range Women opportunity and diversity as a it gives to gender equality and of customers across Turkey. In fundamental value and a driving the strengthening of women, Garanti’s overseas operations, local force of its corporate culture. In Garanti Bank was one of the first to talent is also hired at various levels line with this purpose, Garanti implement the Equal Opportunities of the organisations. encourages its employees to Model43 (FEM) and was recognized The following tables show think differently and improve in 2012 with the awarding of its information regarding Garanti’s their personal and professional certificate. workforce during the reporting competencies while supporting Garanti Bank is focused on period. diversity in the workplace. One attracting, supporting and retaining Men 938 2,525 2,184 1,307 1,249 of the clearest indicators of local talent, and actively improving successful diversity at Garanti is the diversity of its team. The the comparatively higher number of senior management including the female employees (57% overall at 31 CEO, EVPs and Coordinators are December 2014 and 40% in senior/ Turkish. Consequently, the Bank middle level management). is better able to understand and

Total 2,719 6,082 5,139 2,865 2,231

Table 28: Composition of Governance Bodies: Average Seniority per Gender (Years) for 2014

18-25 26-30 31-35 36-40 41+

7.3 7.3 7.3 %57 of employees are women Men Women Average 1,297 hours of Sustainability E-Learning program trainings

43 Equal Opportunities Model (FEM) is a certification program initiated by Women Entrepreneurs Association of Turkey (KAGİDER) delivered with the support of the World Bank, aiming to provide equal opportunities in business life by identifying inequalities in areas such as recruitment procedures, internal training programs, and career planning and development processes, and subsequently presenting companies with egalitarian practices as a solution. More information can be found here: http://www.kagider.org/?Dil=1&SID=727

114 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 115 Table 30: Employment Type and Employment Contract by Gender in 2014 Table 32: Total Number of Joiners and Leavers During the Reporting Period by Age

2014 Type Men Women Total Grand Total

Full Time 8,187 10,755 18,942 Joiners 1,525 904 161 46 31 2,667 Employment 19,036 Type Part Time 16 78 94

Permanent 7,986 10,408 18,394 Employment Leavers 698 1,000 393 148 155 2,394 19,036 Contract Temporary 217 425 642

2014 18-25 26-30 31-35 36-40 41+ Total

Table 31: Total Workforce, Employees Hired and Number of Leavers Broken Down by Region in 2014 Table 33: Total Number of Joiners and Leavers During the Reporting Period by Gender Employees Number of 2014 Workforce Hired Leavers

Aegean 1,396 120 139

Central Anatolia 2,303 236 262

Eastern Anatolia 368 38 32 Joiners 1,434 1,233 2,667 Eastern Black Sea 399 31 33

Marmara 5,174 271 425 2014 Mediterranean 1,020 86 103

Southeastern 463 55 59 Anatolia

Western Black Sea 356 49 35 Leavers 1,153 1,241 2,394 Garanti Bank TRNC 69 9 10

Branchless Banking 11 - -

Other 7,477 1,772 1,296

Total 19,036 2,667 2,394 2014 Women Men Total

116 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 117 Table 34: Parental Leave Health, Safety & Well-Being

Metric Result OHS Management System An OHS risk modules on office ergonomics, The number of 6.8% (72) of female employees emergency management, detox, 44 assessment employees who who took parental leave during the According to local regulations , stress management, breathing returned to work after reporting period did not return to employers must either form a process has techniques and meditation. parental leave ended, by work. specialized unit or obtain the An OHS risk assessment gender services of a third party for OHS been designed process has been designed and Return to work data is not tracked for Management to cover areas such as and specialized specialized teams have started the male employees. compliance with legal requirements. teams have implementation for all locations. In addition, the establishment Garanti Bank’s OHS System of an OHS Committee is a legal started the is attached as an annex to its requirement in Turkey to help ensure Construction Department’s general Metric Result implementation effective management of these service contracts. The Construction issues and is required to cover the for all locations. Department’s agreement procedures The number of A full year has not yet passed since following representatives: have been updated and the employees who the period covered by this report respective adjustments made to returned to work ended (to 31 December 2014). ○○ The employer representative the Employment Contract, Terms after parental leave Therefore we are able to provide only (i.e. management); of Reference, Technical Terms of ended who were still the following rates: Reference, OHS Procedure, Risk employed twelve ○○ Human Resources; Assessment Procedure, Disciplinary months after their The total number of female Regulations, Worksite Occupational return to work, by employees who took parental leave ○○ at least one employee Safety, Appointment Declaration, gender during the reporting period was representative; 1,055. As of 31st of December, 2014, Supplier Employment Form and 45 93.1% (983) of these employees were ○○ OHS specialist and physician. PPE Ledger. still employed by the Bank. The total Metric Result number of female employees who Garanti Bank formed OHS units were still employed, i.e. 983, includes at locations with more than 50 both employees who returned to The return to work Since a full year has not yet passed employees. At present, 17 locations work and the ones who are still on and retention rates from the end of the period covered are subject to these units, including parental leave during the reporting of employees who by this report (to 31 December 2014), period. returned to work after we are not yet able to provide the the Zincirlikuyu Head Office, leave ended, by gender return to work and retention rate for Güneşli Operation Center, Learning Return to work data is not tracked for employees that left to go on parental & Development Center and some of male employees leave in 2014. the regional offices. A specialized OHS software is adapted to Garanti Bank operations. Training modules on OHS issues are prepared and organized by the cooperation of the Learning and Development and OHS service. For example, “Occupational Safety and Health Training” is a training module delivered to all new starters and all employees once every three years. Other OHS-related training delivered to employees include

44 The Law on Occupational Health and Safety No. 6331 (“Law No.6331”), which governs the health and safety standards to be adopted by employers in Turkey and was published on 30 June 2012. 45 Personal Protective Equipment

118 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 119 Work-Related Accidents

In the reporting period, there 2010 2011 2012 2013 2014 were 118 work-related incidents of Organizational injury; and no work-related deaths Structure or diseases. Total Working for OHS 3,773,646 3,802,207 3,922,082 4,211,526 4,722,806 Days Total Lost Working Days Change % -0.91% 0.76% 3.15% 7.38% 12.14% The total lost working days were 43,265 days for women and 17,319 Total Lost 21,771 27,832 33,407 36,088 47,337 days for men in 2014. The total lost Days days data is collected on the basis of medical reports of sickness leave Change % -1.64% 27.84% 20.03% 8.03% 31.17% and injuries and is shown in the table adjacent. % of Lost Human Days in Total 0.58% 0.73% 0.85% 0.86% 1.00% Resources Working Days Coordinator

Human Resources, Payments and Child Care Operation Manager

Employees who are nursing are childbirth expenses. Our employees granted flexible time for nursing who become parents are supported until the infant is 1 year old and in child development and can attend can take 2 hours off every day in courses at the Mother-Father-Child Workplace this first year. Alternatively, they Academy. H&S Expert Doctor can elect to use this leave each A new orientation program H&S day (or combine the hours into is planned in 2015 for women one additional day of leave each employees who are returning Garanti Bank Coordination week, or aggregate all days and from maternal leave to ease their H&S Management Management extend their maternity leave by adaptation to work life and duties. Team approximately one month). In order to support employees giving birth, Garanti offers additional insurance guarantees for

Health & Workplace Health Care Personnel Safety Doctors

17 Locations in Turkey = 30 people

120 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 121 Security Measures

In order to provide a safe and The procedures that need In addition to the regulatory secure working environment for to be followed by the security training, Garanti Bank further its employees, Garanti Bank has personnel of the Bank are governed requires its security personnel to established robust safety and under the relevant Security complete on-the-job training for emergency procedures. Procedure and published in the 15 days as well as 2 day in-class As per the Bank’s Ethical Bank’s intranet. As per applicable training. Security personnel also Principles, employees are required regulations, all private security receive ad hoc training on various to know the emergency plan and personnel employed by the Bank subjects during their employment. emergency procedures of the Bank are required to complete 120 hours and the duties to be carried out of training and satisfy minimum by them in a state of emergency. testing requirements. The training Ebru Dildar Edin (EVP at Emergency plans and procedures is overseen and monitored by the Garanti Bank), having a are available on the Bank’s intranet. Ministry of Internal Affairs. speech at Pembe Suare, 2014.

participate in Photography, against women. This board, available to all employees and In 2015, Garanti Underwater Sports, Sailing, which was filled with female their family members. Experts Bank has Good Work Life Hiking, Classical Turkish employees’ handprints, was in various fields including Music, Turkish Folk Music, exhibited in Zincirlikuyu Head medical, legal, psychological organized Social Responsibility, Office in the following weeks, and financial provide support a gathering Relationship (“IYI”) Running, Movie and in a bid to draw attention of to callers 24/7. As part of Theatre, and Winter Sports male employees to the same the assistance program, called clubs where they can topic. These activities were callers may be referred to “Pembe Suare”, Program develop their hobbies and followed by an email sent to psychologists and counsellors attend activities. the entire staff by the CEO for 6 sit-down sessions free of which aimed in order to explain Garanti charge. to inform ○○ Garanti Women’s Club: Bank’s ongoing activities and A platform found in 2012 future plans about women’s ○○ Green Shuttle: The routes of female to support women’s work shuttle services provided to In addition to special trainings ○○ Motivational meetings: ○○ IYI Entertainment: To liven empowerment and ask male employees and measures to foster employees’ Regional (Four Season the social lives of Garanti life balance, where they employees to demonstrate the Headquarters employees health and well-being, Garanti Meetings) and departmental employees, discounted tickets can get together and share their support for HeforShe are automatically adjusted by about the Bank has launched the Good Work meetings to enhance employee for concerts, shows, and social experiences. initiative. a software to make it more gender-equality efficient. Life Relationship (“IYI”) program. motivation and improve internal activities and invitations for In 2015, Garanti is planning and women’s IYI was set up in 2012 as a result communications. cultural and sports events the In 2015, Garanti Bank has to open a hot line for support ○○ SadeMail: This is a new of an intensive Employer Value Bank is a corporate sponsor of organized a gathering called on legal, psychological and empowerment mailing system to increase the Proposition program to enhance ○○ IYI Talks: Talks with top are offered. “Pembe Suare”, which aimed other matters for female quality of internal and external initiatives employee satisfaction and ensure management and subject to inform female employees employees who are victims of e-mails and to decrease a richer working experience by experts to support institution ○○ IYI Courses: Hobby or personal about the gender-equality domestic violence. undertaken unnecessary emailing, thus being able to share opinions and ownerships of Garanti development courses that and women’s empowerment decrease the time loss and by Garanti suggestions on a wide variety of employees and work-personal employees can attend with initiatives undertaken work stress. subjects such as the strengthening life developments. co-workers for different by Garanti Bank. In this Services Bank. of women’s social and work lives. experiences apart from work, meeting, Garanti Bank has ○○ IYI Treats: Surprise treats to where most of the fees are also placed a wallboard, on ○○ Employee Assistance lighten the office mood and covered by the Bank. which the women employees Program: Garanti Bank make sure employees take a were asked to leave their has started to provide all short break and enjoy pleasant ○○ Hobby Clubs: Garanti handprints, in order to raise employees with call center moments with co-workers. employees with hobbies can their awareness on violence support, i.e. a hotline

122 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 123 Health and Nutrition Compensation and Rewards

There are sports centers and awarded ones. The chairs can ergonomics in the work place and Compensation and rewards these values in all salary-related information about Garanti Bank’s internal nutritionists present in be adjusted according to sitters’ in life. are the other building blocks of practices. Garanti Bank goes to Compensation Policy is available our Zincirlikuyu and Güneşli Head posture and 95% of the materials The Bank has also recruited Garanti’s HR policies. In line with great lengths to ensure that its on-line: Offices. Additionally, Garanti agrees used in the chairs are recyclable. a food engineer to keep track of its target of being the employer compensation system is always: https://www. with local sports centers for special The furniture, as well as the chairs, compliance with quality, taste of choice, the Bank applies a garantiinvestorrelations.com/ deals for its employees. has been designed taking the and hygiene of food provided at competitive, market-sensitive ○○ fair; en/corporate-governance/ Garanti has implemented employees’ physical comfort into Headquarters. salary system, which aims to Compensation-Policy/ ○○ transparent; many innovations to its working consideration. improve employees’ quality of life. Compensation-Policy/100/411/0 environment for its employees. The Bank has recently started At Garanti Bank, the compensation ○○ measurable and based on The Performance Management The chairs used in Zincirlikuyu and working on an application that system is essentially based on balanced performance targets; process is applicable to all Güneşli Head Offices have been can work on smart phones performance and it is totally gender- employees who have been employed replaced with more user-friendly, and computers which informs neutral. In addition to individual ○○ encourages sustainable success; within Garanti Bank for at least ergonomic, certified and design employees on exercise, nutrition and performance, the Bank keeps a close three months. During the reporting view of general macroeconomic ○○ complies with the Bank’s risk period, 99% of those employees circumstances, the current inflation management principles. who had completed 3 months rate in Turkey and trends in the of service at Garanti Bank were sector in order to apply a proper At Garanti, the salary package deemed eligible for performance and fair policy on salaries of its comprises various components and career development evaluation. employees. including the monthly salary, bonus Career Opportunities Program In implementing its compensation payments and premium payments policy, the Bank takes into account each year, meal vouchers, foreign the values set forth by this policy as language payments and other approved by the Board of Directors. benefits with variations depending Every employee, including senior upon level of seniority or scope of work and location of service. More Employees have priority of intranet. Candidates who believe managers, meticulously upholds consideration for open positions they are suitable for these positions at Garanti. Open positions may apply without obtaining and required qualifications are approval from their managers or The First Institution announced to employees through any other individual. Candidates in Turkey in-house job postings and the who fit selection criteria notify their Career Opportunities Bulletin, which managers and are invited to the awarded with is shared with employees over the selection process. Fair and Transparent “IIP Gold Certificate”. Premium Models Promotion Opportunities

Garanti Bank employees are awarded with premiums based on a system that measures success Promotion at Garanti Bank may the performance level. Careers at assessed in terms of performance based on balanced and objective be vertical or horizontal. Authority Garanti are not limited to positions and career opportunities. The criteria such as the realization of comes with responsibility and higher in banking. Transfer within Garanti development of managers’ financial targets, risk management pay. Knowledge and experience are subsidiaries is also possible. During managerial competencies is a key and customer satisfaction. Results necessary requirements to move the reporting period, 99% of all element of Garanti’s HR policies. are shared with the employees to a higher position. However, the personnel, who have been working themselves and their managers most important factor is always at least 3 months at the Bank, were periodically and transparently.

124 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 125 Garanti Bank Pension Table 35: Communication Technology Used by the Bank Fund Foundation Technology Description Technology Description

GET Kurs (Course) Web-based training sessions that GET Sınıf (Classroom) Web conference system set up within When employees join Garanti Bank, they include video, animation, text and the Bank which facilitates audio and automatically become members of the Garanti visual content video remote Bank Pension Fund Foundation, which was founded in accordance with temporary article no. 20 of the Social Securities Law no. 506. A health certificate is issued for employees, their spouses and children. Technology Description Technology Description

Simulation Branch Allows participants to view critical GET TV Live broadcast portal allowing issues concerning customer customers to quickly access experiences in real life and to information experience possible risks in advance in a safe environment

Technology Description

Learning and Development GET Video Video sharing website aimed at enhancing the learning process via experience sharing

In a bid to create the best human the sector. Along these lines, there “Garanti Learning Technologies” and resource in the financial services are training options diversified they are accessible anywhere, any sector and to ensure continuous according to each job family. In time through mobile devices. development, Garanti provides addition to those, employees also Determination of business regular training programs on an participate in programs related partners is a key performance ongoing basis so as to fortify the with Garanti’s service culture indicator in all these activities. expertise of its people. and leadership concept for their Distinctive and current information Employee expertise is backed development. Garanti Leadership is captured and disseminated to with five main faculties: “Loans”, Academy, in particular, offers long- employees via business partners “Leadership”, “General Banking”, lived and varied opportunities for such as the designers in each “Investment” and “Sales”. While this getting equipped for the future. faculty, fulltime internal trainers, structure helps them build on their Furthermore, coaching, best ICF-certified professional/full- existing competencies, additional practice sharing, project work and time coach, reputable training support is also offered for their experiential learning have long been companies, universities, and development in various interest in use. business schools abroad. Moreover, areas. The training programs are cooperation is established with the Need analysis are performed designed with world-class standards academic world so as to familiarize with one-to-one interviews, and innovative methods. Speed and the universities with the business workshops or inventories for all accessibility are provided by various world. units. Units are expected to gain platforms including live broadcasts, internationally recognized expertise simulations, videos, e-library and and to become global leaders of mobile learning under the heading

126 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 127 Table 36: Average Training per Employee During the Reporting Period Raising Awareness on Sustainability

54 44 Average Training per Employee Garanti Bank is aware that the orientation training, spelling out its exhibitions (e.g. artwork from effectiveness of its environmental expectations of employees on this electronic waste of the Bank) and an management system (EMS) cannot issue. online sustainability platform on the be taken for granted without the In 2013, Garanti has created intranet. support of its employees. The Bank an internal communications Additionally, Garanti has 46 41 Average Training is also aware of the importance of strategy and training program identified and selected sustainability per HQ Employee embedding sustainability into its for sustainability, including the representatives from all bank culture and organizes numerous environmental initiatives, with the departments and all of the regional training programs on sustainability aim of increasing the awareness directorates and branches to to ensure this. The Sustainability among our employees regarding the support all sustainability efforts E-Learning program was designed environmental issues and build their as needed. Those representatives 57 46 for all bank personnel as a result of capacity on specific topics such receive Environmental Management Average Training the Bank’s commitment to raising as climate change, carbon trading trainings and became auditors after per Branch Personnel the awareness of its employees, who and environmental and social risk their election. They play a key role form its most precious stakeholder management. in disseminating their knowledge mass. The Bank also added its view The awareness raising program to their colleagues in their of the concept of sustainability to its included informative e-mails, videos, responsibility areas. 53 44 Average Training per Employee (Women) Table 37: Progress in Awareness Raising Activities

54 44 Average Training Target Explanation Progress and New Targets per Employee (Men)

Share of Learning The target was to incorporate 26% of all training In 2014, 18% of all training sessions incorporated Technologies sessions with learning technologies by the end learning technologies. of 2014. Average Training 49 38 However, the new target for learning technologies per Employee is 25% by 31 December, 2015. (Management Positions)

Target Explanation Progress and New Targets

Average Training per 54 44 Increasing Employee In 2013, Garanti created an internal In 2014, Garanti has continued this awareness Employee (below Awareness communications strategy and training program for raising and capacity building activities through Management Level) sustainability. various activities. For instance, Garanti Bank developed training videos for financing of solar The awareness raising program included power projects in 2014. informative e-mails, videos, exhibitions (e.g. artwork from electronic waste of the Bank) and an The Bank plans to increase the number of elective online sustainability platform in intranet. social responsibility trainings, which aim to Hours Garanti Bank will continue to update and improve increase employees’ quality of life in 2015. 2013 2014 its employees’ awareness and knowledge about the Bank’s sustainability approach through various The Sustainability E-Learning Programme will be methods like remote training programs. revised in 2015.

128 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 129 Gelecek (Future) Meetings Garanti Managers Summit

Garanti Bank holds Gelecek have been held in a “carbon neutral” Garanti Bank Held annually, the Garanti Managers Summit (Future) Meetings that allow setting; measures were taken to holds Gelecek brings together managers of Garanti Bank and strategies for the new period to be minimize carbon emissions from its subsidiaries and is a special sharing and a discussed with a joint approach meetings and the remaining carbon (Future) common learning platform. The theme of the after the Bank’s senior management emissions were offset by either Meetings that summit is determined particularly in accordance undertakes an evaluation of supporting sustainable energy with the priorities of the Bank and the latest the previous year’s results with projects or planting trees. allow strategies global developments and trends, financial employees. These meetings for the new projections, cultural changes and consumer reflect a corporate culture based behaviour. on teamwork, joint thinking, period to be sustainability and social benefit discussed in which employees are able to comfortably express their thoughts with a joint and suggestions on different approach platforms. Since 2012, meetings after the Bank’s senior Employee Satisfaction management undertakes an evaluation of the previous Measurement and systematic Bank employees to evaluate the Through follow-up of employee satisfaction service they have received and to surveys held year’s levels are important in terms of offer their suggestions. The survey results with the success and sustainability of includes questions on such criteria every year, the Garanti Bank’s HR strategy, policies as accessibility, teamwork, customer Bank listens to employees. and practices. Through surveys approach, communication, service held every year, the Bank listens quality and openness to criticism. its employees’ to its employees’ opinions and The 360 Degree Feedback opinions 4 Season Meetings gathers information concerning their Survey aims to contribute to requests and expectations. Surveys managers’ development by and gathers held annually at Garanti Bank are determining their competencies, information explained in the following section. as well as their strengths and areas The Employee Engagement open to development. The findings concerning Survey is carried out to gather gathered from the surveys are Garanti Bank has been organizing regional their employees’ opinions concerning shared with senior management and 4 Season Meetings since 2009 with the aim of the working environment at managers and used in the proper requests and increasing employees’ motivation, improving Garanti Bank so as to create a design of development plans in employee relations, and achieving communication expectations. better and more efficient working accordance with employees’ needs. more effectively within the Bank. 4 Season environment, taking into account Meetings create an opportunity for branch feedback from its employees. employees in a certain region to get together and The scope of the survey includes socialize in an informal environment. basic employee-related subjects, such as the performance system, salaries, work/private life balance, job satisfaction, the working environment, development facilities and managers. Garanti Employees from 4 Season Meetings The Internal Customer Satisfaction Survey allows Garanti

130 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 131 Suggestion and Idea Platforms Focusing on

Garanti Bank Garanti Bank attaches Communities considerable importance to its uses the employees’ contributions to ‘Önersen’ and innovation processes. For this ‘Atölye’ idea purpose, Garanti Bank uses the ‘Önersen’ and ‘Atölye’ idea platforms Key Highlights: These Community Investment Community platforms in in order to collect the employees’ programs, which generate a significant amount of added value Investment order to collect various suggestions regarding ○○ ‘No Limits in Teaching’ program the improvement of the products, had reached a total of 92,932 for society, range from programs programs, the employees’ services or processes. teachers across 80 cities by the for sports to education, the arts, which generate various end of 2014. nature and also to informing the Önersen business world. a significant suggestions ○○ With the ‘Join the Workforce, amount of regarding the Önersen is an idea gathering Join Life’ project, 108 disabled platform which encourages all people were joined to the added value for improvement employees to submit their ideas or Garanti Volunteering workforce with their mentors’ society, range of the products, recommendations about the Bank’s Activities help. products, processes or operations. from programs services or There is also a category ○○ Number of students who for sports to processes. dedicated to environmental received basketball trainings performance under Önersen. With from 12 Giant Men Basketball education, the its mission as to continuously and this category for environment, School during the reporting significantly increase the value arts, nature all employees can submit period was 3,114. that it produces for the community their suggestions related to and also to and the environment through environmental performance directly ○○ Number of people who visited its effectiveness, sensitivity and informing the to the Sustainability Team. The Salt Beyoğlu, Salt Galata and harmony. Sustainability Team consolidates the Salt Ulus free of charge reached business world. The employees design and suggestions, determines the ones 1,129,111 between 2011 to the end execute numerous projects under that are feasible and presents them of 2014. the roof of Volunteer Clovers Club, to the Sustainability Committee. and ensure voluntary participation Garanti Bank views its Once the Committee’s approval is of all managers in these projects systematic and long-term efforts, taken, the Sustainability team starts by organizing activities during the which it conducts within the to work with relevant departments Future Meetings. In November 2014, scope of Community Investment, to implement the suggestions. two schools in Beldibi, Antalya were as an essential element of its

repaired and given a makeover sustainability approach. Atölye with the voluntary participation “Atölye” is a project-based idea of employees in an effort to platform, active since 2010, which contribute to the education and collects innovative ideas from social development of the children. employees during the projects. By In addition, Volunteer Clovers the end of 2014, 7 projects had been gave support to the distribution completed. of food and clothing items given away in Soma in cooperation with Volunteer Clovers the Food Banking and Basic Needs Association (Gıda Bankacılığı ve Having carried out many valuable Temel İhtiyaç Derneği - GBtider). projects since its establishment, Under the ongoing Our Book Box Volunteer Clovers (Gönüllü project, Volunteer Clovers donated Yoncalar) Corporate Social books to more than 18 schools in Responsibility Club has defined different cities across Turkey.

132 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 133 Garanti Bank’s Corporate Social Responsibility Policy

The Bank’s Corporate Social ○○ To create institutions that are ○○ To become an organization, Since 2012, Garanti Bank Since 2012, Garanti supports Since 2010, Garanti Bank has Responsibility Policy is based on the open to social interaction and of which all our stakeholders - has been providing support to Tohum Autism Foundation that been sponsoring the Young Life following principles: that will set an example in their including our employees – are the UNICEF initiative for the serves with the mission of early Foundation Anatolian Teacher operating areas; to address proud to be a part, with our development and execution of diagnosis of children with autism High Schools Social Events and the ○○ Driven by the importance we our stakeholders’ needs and community-oriented activities, school development plans to bring and generalized development related “Renk Çemberi” (Colour attach to the added value we expectations by building a that we have been conducting primary schools into alignment with disorders, and of reintegration Circle) Project and has reached 22 offer to our country, society permanent structure with these with Community Investment the Primary Schools Standards with of these children with a special high schools and 3,150 students so and individuals, to constantly organizations and by aiming to awareness. projects such as ‘Now We Have a education. Within this context, it far. monitor our country’s and produce long-term benefits for School’. intends to offer teachers of autistic Garanti Bank is the main society’s needs and establish larger masses. children in Istanbul a theoretical corporate sponsor of TOG our Community Investment and practical inclusive training. In (Community Volunteers Foundation), efforts. addition, Garanti ensures that the which is a transformation project training portal prepared by Tohum that aims to turn the energy of Autism Foundation for autistic youth into social benefit. TOG youth children and their families is kept up has been active developing social to date. With this effort, it targets sustainability projects based on to increase the number of users and the needs identified in the groups, to popularize the portal that has social clubs and societies in their Education 12,543 members. universities. Supporting the Participation of analytically, are self-confident, care In this period, ÖRAV supported about the continuity of personal the development of 99,692 development, adopt universal values educators in 80 cities in total, with Disabled Individuals in Social and able to protect the cultural the “High School-Learning Leader heritage of the country. Teacher”, “Solution-Oriented Communication”, “The Chemistry and Economic Life of Teaching” and “Development Program for Education Executives” (EYGEP) programs alongside with the “No Limits in Teaching” project Seeking to support the participation of improvable qualities within the scope of Following the completion of that continued under the title disabled individuals in social life, Garanti the project. the Bank’s preparatory work, The “Learning Leader Teacher”. Today, Bank began sponsoring women’s, men’s With the “supported employment” Teachers Academy Foundation 79,615 registered active users visit and juniors National Wheelchair Basketball model that was implemented for the first (ÖRAV) was established in August the “e-Campus” web site that was Teams and the Wheelchair Basketball time in Turkey, disabled individuals are 2008 by Garanti, in order to developed as a continuing education Leagues in April 2013. supported in matters such as choice of contribute to the personal and and information sharing platform to In October 2014, the ‘Join the employment according to their qualities, professional development of The first and only NGO in Turkey complement ongoing projects. Workforce, Join Life’ project was initiated skills and preferences, and adaptation to teachers, who will contribute to that focuses on this area, ÖRAV with the Ministry of Family and Social work environment and social life. After a raising young generations aware reached 92,932 teachers in 80 Policies. The project aims to make training under the guidance of 60 business of their individual and social cities at the end of 2014 with its disabled individuals without a vocational coaches a total of 300 disabled individuals responsibilities, who research and first project “No Limits in Teaching” education gain professional skills in are hired. question, who are able to think started in May 2009. accordance to their competences and

134 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 135 Support for Culture and Community Investment Goals Cultural Heritage

Garanti Garanti Bank considers systematic and long-term social reserved TL investment responsibility projects SALT was formed by 25.3 million for as the basic component of its restructuring cultural organizations its corporate sustainability approach. Garanti that operated within Garanti as an reserved TL 25.3 million for its independent entity in 2011. responsibility corporate responsibility activities’ From 2011 until year-end 2014, activities’ fund fund in 2014. Salt Beyoğlu, Salt Galata and Salt These initiatives which added Ulus in Ankara hosted 51 exhibitions, in 2014. significant value to society are 44 events in conjunction with implemented in different areas the exhibitions, and 137 guided including sports, education, art, exhibition tours and workshops for nature and even raising awareness students, as well as publishing 14 Since 2005, Garanti has in the business world. Through comprehensive publications. The supported the training program these initiatives, Garanti Bank aims number of people who visited Salt of Istanbul Modern, which is to help raise added value to society Beyoğlu, Salt Galata and Salt Ulus Turkey’s first and only museum of and its stakeholders in a sustainable manner. totaled 1,129,111 during the same contemporary art. The program period. aims to play a central role in helping SALT Beyoğlu In addition, Garanti has organized develop creative and inquisitive the first film festival for children in individuals who are skilled and Turkey in conjunction with Turkey able to participate actively in Cinema and Audiovisual Culture the arts as well as in supporting Foundation (TURSAK) annually classroom education. By the end of since 2004. This festival is called 2014, 541,684 children and young the Garanti Children’s Films Festival. people had been trained on Istanbul Through the Festival, around 78,000 Modern educational programs with children from thirteen cities in the support of Garanti. Turkey with a more limited access As a corporate supporter of to cinema, including Kars, Ordu, SAHA Association, which aims Mardin, Konya, Aksaray, Mersin, to increase the recognition and Table 38: Progress in Community Investment Target Adana, Erzurum and Rize, found the awareness of contemporary art opportunity to experience the art of in Turkey, Garanti is helping to cinema. develop training places and creative environments for artists, curators, Target Explanation Progress and New Targets art historians and art critics and to improve their interaction with SALT Galata international networks. By the end of 2014, Implementing a new system that will report, assess An improvement project was carried out with an Garanti Bank’s target and evaluate corporate responsibility investments impact analysis of people cooperating on a current was to extend the and the social impacts of these investments program in 2014. Through this project, the program impact assessment was transformed into two sub programs that will system to all projects appeal to two different target audiences. with a holistic approach, thereby A community investment project which is material allowing comparative for the finance sector is planned by the end of 2015. analysis of impact return and more efficient improvement works.

136 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 137 Appendix

138 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 139 Appendix 1: Key Stakeholder Table 1: External Stakeholders Frequency of Stakeholder Evaluation of Engagement Stakeholder Group Engagement Platforms Groups and Engagement Engagement in the Reporting Period Public authorities/ Regulatory -Systematic reporting Varies from daily to once every Garanti Bank demonstrates the Platforms institutions three years depending on the utmost care in complying fully -Meetings, forums, conferences type of engagement with the law and regulations in all of its activities. The Bank -Periodical Audits is in regular contact with the BRSA – the regulatory authority -Press releases of the Turkish banking industry – as well as with Table 1: External Stakeholders -One-to-one meetings SDIF46 . The Bank is in contact with the Undersecretariat of Frequency of Stakeholder Evaluation of Engagement Stakeholder Group Engagement Platforms -Public Disclosure Platform the Treasury, Central Bank Engagement in the Reporting Period of the Republic of Turkey, the Capital Markets Board of Turkey, respective ministries, other institutions and agencies Customers -Banking service process Continuous interaction by email, Garanti Bank engages with as required by laws and (Branches) social media accounts telephone its customers as part of the regulations. and through branches. banking service process. -Customer experience and Customers are able to submit In order to increase its support market research Ad hoc meetings as needed. their feedback concerning for sustainable development, the Bank’s environmental and the Bank takes advantage -Customer Care Line social performance, as well of any opportunities for as its products and services cooperation that arise with -“Contact Customer to Garanti Bank through a such platforms as TBCSD, Representative” Icon in internet number of channels, including UNEP FI and the UN Global banking platform the Customer Care Line, Compact, of which the Bank which is a specialized line is a member or through -www.garanti.com.tr for receiving feedback from direct engagement. Garanti customers who have raised Bank’s activities for ensuring -Social media complaints. Through this compliance with laws and line, Garanti Bank assesses regulations are explained in the -www.facebook.com/Garanti its customers’ problems and section ‘Focusing on Corporate improves itself accordingly to Sustainable Governance’. -https://twitter.com/garanti serve them better.

-https://plus.google. Garanti Bank considers its com/+garanti customers the focus of all its activities. Please refer to -Social customer care (“Garanti’ye the section on ‘Focusing Suppliers -Daily business cycle Continuous as general course of Garanti Bank is committed to Sor”) through customers through business (e.g. by email) addressing the environmental sustainable finance’ for details -Meetings impact caused by its suppliers, -Seminars, conferences and of developments concerning Meetings as required in addition to the direct sector-based information the Bank’s relationships with -E-mail communication environmental impacts meetings its customers, as well as its resulting from its internal products and services. -Ongoing relation during EMS47 operations. In 2012, the Bank -Communication activities (ISO14001) started to include a new article to supplier contracts -Activities within the scope of requiring new suppliers, social responsibility projects especially in cleaning and catering, to comply fully with -One to one meetings Garanti Bank’s ISO 14001 Environmental Management -Teleconferences System.

-feedback received via [email protected] 46 The Savings Deposit Insurance Fund 47 Environmental Management System

140 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 141 Table 1: External Stakeholders Table 1: External Stakeholders

Frequency of Stakeholder Evaluation of Engagement Frequency of Stakeholder Evaluation of Engagement Stakeholder Group Engagement Platforms Stakeholder Group Engagement Platforms Engagement in the Reporting Period Engagement in the Reporting Period

Non - governmental -Sponsorships Minimum once every three Sharing with the communities Community -Garanti Anatolian Meetings Varies depending on the type of Garanti Bank transparently organizations months in which it operates is one initiative, minimum once every announces all events – -Strategic collaborations of the core values of Garanti -Support for Women three months. organized within the scope Bank’s corporate culture. Entrepreneurs (Meetings with of its strategic collaborations -Events Offering its expertise and Women Entrepreneurs, Women’s with NGOs – with all of knowhow to the service of Entrepreneur Contest) its stakeholders at Garanti -Regular Meetings the community and future Takvim’s website generations, the Bank provides -UNICEF –Now We Have a http://www.garantitakvim.com support to NGOs in Turkey School (Şimdi Okullu Olduk) and regarding social, economic and http://www.garanti.com.tr/en/ environmental issues as well as -Tohum Autism Foundation our_company/sustainability/ carrying out joint projects with (Tohum Otizm Vakfı) corporate_responsibility.page them. website. -Community Volunteers Please refer to “Focusing on Foundation (Toplum Gönüllüleri The www.ogretmeninsiniriyok. Communities” section for Vakfı) website also provides further activities. com information concerning the -Join the Workforce, Join Life “No Limits in Teaching” project, (İşe Katıl Hayata Atıl) of which the Bank is the main sponsor within the scope - KOBİLGİ (SME Informative) Media -Press conferences Varies depending on the type of Garanti Bank is in a transparent of the Teachers’ Academy Meetings initiative, minimum once every relationship based on mutual Foundation. -Press releases three months respect with the media. Garanti - ÖRAV (The Teachers Academy Bank establishes dialogue with For detail on these activities Foundation) -Interviews national and international please refer to the sections media and undertakes efforts ’Focusing on Communities’ - Genç Hayat Foundation (Young with the objective of raising and ‘Focusing on Customers Life Foundation) awareness about the Bank and through Sustainable Finance’. its operations, and answering - 12 Giant Men – Basketball questions forwarded to the Schools (12 Dev Adam Basketbol Bank in the swiftest and most Okulları) Project straightforward manner. - SALT

- SAHA Foundation

- Garanti Children Film Festival

- Istanbul Modern Education Program

- BUMED Business Angels

- Entrepreneurship Foundation (Girişimcilik Vakfı)

- WWF

142 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 143 Table 2: Internal Stakeholders Table 2: Internal Stakeholders

Frequency of Stakeholder Evaluation of Engagement Frequency of Stakeholder Evaluation of Engagement Stakeholder Group Engagement Platforms Stakeholder Group Engagement Platforms Engagement in the Reporting Period Engagement in the Reporting Period

Employees -Talent Management Study Varies depending on the type Garanti Bank’s most important Top Management -Sustainability Committee Varies depending on the type of The Sustainability Committee, of engagement, minimum driving force is its human Meetings engagement, minimum once which is chaired by a Board -Assessment and Development once every three months for resources. Garanti Bank is a a week. Member, convened several -E-mail Communication Center trainings. In addition, we leading and model company in times during the reporting liaise with our employees the finance sector in terms of -Periodically published period, assessing a range -Garanti Leadership Academy on a continuous basis via training and support it provides informative publications (Annual of sustainability issues and e-mail from the sustainability to its human resources. A and Interim Reports; Weekly opportunities. -360 Degree Feedback Process e-mail account. network of Sustainability and Quarterly Stockwatch Representatives has been Publications, semi-annually Moreover, through the -Internal Customer Satisfaction established to maximize the published Garanti Corporate Sustainability Meetings held Survey positive contribution of the Profile Booklets, weekly and at least once a week, the Bank’s employees to Garanti’s quarterly newsletters) Executive Vice President -Employee Engagement Survey sustainability performance. of Project and Acquisition Önersen and Workshop -Sustainability Meetings with Finance and Sustainability, -Suggestion and Idea Platforms Platforms aim to encourage the Executive Vice President who is also a member of the “Önersen” and “Atölye” all employees to produce and Responsible for the Project and Sustainability Committee, is submit recommendations Acquisition Finance Department kept informed, thus ensuring -Career Opportunities Bulletin about the Bank’s environmental -Sustainability Representatives that senior management and social performance. Network provides regular guidance -4-Season Meetings Training sessions are organized and support. For details of the to ensure employees’ active -Future Meetings Organizational Structuring at -Sustainability Representatives participation. Please refer to the Garanti Bank, please refer to the -Garanti Managers Summit Network section ‘Focusing on Human section ‘Focusing on Corporate Resources’ to learn more about Sustainable Governance’. -Future Meetings the progress of Garanti Bank in the area of human resources. -Garanti Managers Summit

-WWF Survey Shareholders, analysts and -Ordinary General Shareholders’ Varies depending on the type of The Bank, which is in constant investors Meetings engagement, minimum once communication with its [email protected] -Meetings with analysts and a month. shareholders and investors through various channels, -Interviews investors carried out all required -Phone calls/teleconferences, information disclosures during webcasts and e-mail the reporting period in line communication with analysts with applicable regulations and investors and paid utmost care to -Public Disclosure Platform keeping domestic and foreign -Periodically published investors informed in the most informative publications straightforward and transparent (Quarterly newsletter Stockwatch, manner. Semi-annually published Corporate Profile, CDP, Based on a proactive approach Sustainability Report, Annual to the development of its Reports, Earnings Presentation, understanding of sustainability, Operating Budget Plan Garanti Bank surveys its Presentation and Interim Reports investors’ assessments – interactive or printed) and reshapes its routine communication practices to -Social media ensure maximum contribution -Perception Analysis Survey from its stakeholders regarding -Investor Feedback Mechanism sustainability. -Shareholder Identity Analysis -Roadshows

144 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 145 Table 2: Internal Stakeholders Appendix 2: Environmental and Frequency of Stakeholder Evaluation of Engagement Stakeholder Group Engagement Platforms Engagement in the Reporting Period Social Impact Assessment Model

International Financial -Meetings Minimum on quarterly basis. The Bank collaborates with Institutions -Periodically published international financial (ESIAM) informative publications (CDP, institutions on topics such Sustainability Reports, Annual as renewable energy, energy Reports) efficiency, supporting women entrepreneurs and financial -Phone calls/teleconferences, services offered to SMEs in e-mail communication order to meet Turkey’s financial The ESIAM comprises of the following three stages: 2- Determination of a needs for sustainable growth. Project’s Risk Rating 1 - Category Selection Questionnaires have been designed The project is assigned to the most appropriate of the for each sector listed below in three categories in the table below based on the impact order to determine the project’s risk assessment and then held subject to the ESIAM. rating: Finance Sector -Member of the Banks Minimum once every two The Bank engages in working Association of Turkey months. groups with other banks in ○○ Cement, Glass, Ceramics Sector numerous organizations -Member of the United Nations through its membership of Category Explanation Environmental Programme initiatives such as UNEP FI and ○○ Foodstuff, Beverage, Feed and Finance Initiative (UNEP FI) TBCSD. Agricultural Products Sector Category A ○○ Projects defined as subject to ANNEX-I of the -Member of the Turkish Garanti Bank has actively Environmental Impact Assessment (EIA) Regulation, ○○ Geothermal Power Plants Business Council for Sustainable participated in the “Role of the Development (TBCSD) Financial Sector in Sustainable ○○ Projects carried out in or around sensitive areas defined ○○ Hydroelectric Power Plant Growth Workgroup” of the in ANNEX-V of the EIA Regulation, Projects -Member of the United Nations Banks Association of Turkey. ○○ Projects where there is strong public or NGO Global Compact (UNGC) ○○ Metallurgy/Machine/ opposition. Please refer to page 41 for Petrochemicals/Chemicals -National and international details of Garanti Bank’s Industry conferences national and international Category Explanation memberships. ○○ Mining Industry

Category B ○○ Projects defined in ANNEX-II of the EIA Regulation ○○ Nuclear Power Plants (projects subject to the selection-elimination criteria and that require project introduction files), ○○ Paper-Cellulose Sector

○○ Projects attracting either strong interest or opposition ○○ Petroleum and Natural Gas from the public or NGOs, Industry

○○ Projects which are exempt from the EIA. ○○ Solar Power Plants

Category Explanation ○○ Textiles and Leather Sector

○○ Thermal Power Plant Projects Category C ○○ Projects included in ANNEX-I or ANNEX-II of the EIA Regulation, ○○ Tourism/Healthcare/Mass Housing/Mall Sector ○○ Projects where there is no adverse interest in, or opposition from, the public or NGOs. ○○ Transport/Infrastructure Sector

○○ Waste Utilization and Disposal Sector

○○ Wind Farms

146 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 147 These questionnaires assess a Environmental project’s environmental and social Risk Rating Explanation and Social Impact impacts such as: Sustainability Assessment Process Committee ○○ Is the project carried out in and areas protected by national or Sustainability international legislation? R1 High Risk Team ○○ Are cumulative impacts of other plants already in operation taken into account during the impact assessment? R2 Medium Risk

○○ Are there any economic, social or physical losses associated with the land purchases (expropriation) or resettlement R3 Low Risk in the project? Project

○○ Are environmental and social

factors taken into account in Project Finance Loans R4 Very Low Risk the master plan or during the evaluation of alternatives in the feasibility study? Environmental and Social Loan Policies Not Complying with ○○ The ultimate risk rating of the (ESLP) Policies, Reject project is determined from R1 R2 R3 R4 an evaluation of the question Category A 1 1 2 3 Not Complying with responses using an algorithm prepared with the support of a US$ 20 Million Financial Sectoral Principles, Category B 1 2 3 3 Limit Sectoral Principles Reject consulting firm. Category C 2 3 3 3

3- Determination of Risk Group Project Categorization (A,B,C) Projects are classified according to their risk rating and category, by using a risk matrix created Risk Group Action by the Bank and finally their risk Environmental and Social classes are identified based on 1 The Bank asks an independent consultant firm to prepare a Impact Assessment Risk Rating this evaluation. Garanti Bank comprehensive report regarding the project’s environmental Model (ESIAM) R1, R2, R3, R4 demands specific actions to be and social impacts and also to prepare, apply and regularly taken depending on this risk report an ESMP48. evaluation. Risk Group 1 Independent Environmental Risk Group 2 Risk Group 3 Consultancy + ESMP ESMP Optional ESMP 2 The Bank requests that the project owner(s) prepare, apply and regularly report an ESMP. The Bank expects a detailed ESMP reflecting the project’s scale and risk level.

Credit Committee

3 Actions are dependent on the decision of the Credit Committee.

Reassessment Reject Approval 48 Environmental and Social Management Plan

148 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 149 Appendix 3: Sustainability collaboration with International Financial Organizations

Garanti Bank is supporting women in business in Turkey by providing a US$ 60 million credit line in cooperation with EBRD. (Sustainable Financial Instrument) - another loan program The funds have been entirely dedicated to female owners or mediated by Garanti Bank for SME’s is SUFI. SUFI was designed Women in managers of SMEs. For detailed information regarding the SUFI to enhance industrial activity in the Ankara OSTIM and Business facility, please visit http://www.ebrd.com/work-with-us/projects/ Konya clustering regions, bolster the competitive strength of psd/garantibank-women-owned-and-managed-smes-credit-line. enterprises carrying out R&D activities and support production. html

(Small Tourism Enterprise Program) - Garanti Bank continues Garanti Bank has secured a € 75 million loan from the European to extend loans to SMEs through the STEP program, which is EIB Investment Bank (EIB). The six-year facility will give the bank STEP designed to enhance sustainability and the competitive strength new funds to lend to small and medium-sized businesses. of hotels and bed and breakfast accommodations in the tourism sector.

(Turkey Agribusiness SME Financing Facility) - Garanti Bank supports agricultural enterprises that operate in development Garanti Bank signed a loan agreement worth € 20 million with priority regions through TurAFF loans to SMEs in cooperation 4 years maturity as part of the second phase of Small Enterprise with EBRD. The process of supplying the € 40 million loan Loan Programme (SELP II) initiated by the European Union, TurAFF package is still under way. For detailed information regarding KfW and implemented in cooperation with the Turkish Treasury, the Council of Europe Bank (CEB), KfW – Entwicklungsbank. The the TurAFF loan program, please visit http://www.ebrd.com/ loan will be used to finance SMEs in 49 regions in Turkey. work-with-us/projects/psd/turkey-agribusiness-sme-financing- facility-(turaff).html

Supported by the European Bank for Reconstruction and Garanti Bank secured financing from Proparco of € 50 million Development (EBRD) and the European Investment Bank (EIB), with a tenure of 12 years in December 2011. Proparco is a Mid-SEFF the facility covers mid-size investments in renewable energy, Proparco subsidiary of the French Development Agency (AFD) that waste-to-energy and industrial energy-efficiency. provides funds for private investments in developing countries with a focus on supporting clean energy projects.

150 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 151 Appendix 4: Whistleblowing Appendix 5: Anti-fraud Policy Programme

Examples of unethical and ○○ In addition, it is the directors of remediation of any internal control fraudulent activities, including the department or branch that mechanism deficiency identified all types of corruption, bribery, are in charge of designing and to ensure conformity with the The Bank’s Whistleblowing ○○ Theft or misuse of assets (see Appendix 7). Employees’ deception, embezzlement cases adopting an effective internal recommendations made in the Programme covers practices and belonging to the Bank, complaints are not used against and all other unlawful activities, control mechanism and having investigation report arranged by acts against the Bank’s Code of the complainant and are which are prohibited as part of the implemented the information the Audit Committee. Ethics including the following ○○ Sharing customers’ confidential addressed and resolved with due Bank’s Antifraud policy are listed security mechanism. According to the Ethical types of acts: information with 3rd parties importance. below: Principles, any breach of the code and unauthorized persons in the ○○ The Bank does not tolerate may be subject to Disciplinary ○○ Acts contrary to the bank, ○○ Acts of deception towards the fraudulent activities under any Committee enforcement including management principles, policies Bank’s staff, customers or other circumstance. All personnel are penalties such as “dismissal from and procedures or work ○○ Purchases in violation of the stakeholders expected to faithfully fulfill their job”. Employees also get special practices of the Bank, Bank’s procurement policies, duties as to be in conformity training programs regarding any activity with suppliers that ○○ Embezzlement of property with the Ethical Principles prevention of corruption, bribery, ○○ Acts that would tarnish the results in personal enrichment belonging to the Bank or to its Guide and personnel rules. forgery and fraud. In addition to Bank’s credibility, transparency and /or financial loss to the customers. the classroom trainings provided and image, Bank, ○○ All acts that are suspected, by the Learning and Development ○○ Using the Bank’s confidential attempted or proven are subject Department for branch personnel, ○○ Workplace practices contrary to ○○ Insider trading on the capital information to derive unfair to administrative and penal Garanti Bank conducts online public morality, work ethic and market, personal advantage. sanctions in accordance with training sessions that include sexual harassment actions, the rules, laws and regulations video, animation, text and visual ○○ Gambling addiction regardless ○○ Disclosure of confidential in force. content. An online training is ○○ Practices contrary to applicable of whether the gambling occurs information regarding the Bank. delivered to every new employee laws and regulations, at the workplace, ○○ Garanti Bank has 4 main on a mandatory basis, whilst ○○ Abuse of the performance and strategies in order to prevent all employees are required to ○○ Misuse and/or wasting the ○○ Selling any banking product or bonus system. fraudulent activities as follows: Bank’s resources, service to a customer without receive refresher training on an annual basis. This training module having explained the terms and ○○ Abuse of power and title to ○○ Ethical Principles and integrity includes an exam, which must be ○○ Fraudulent and dishonest acts, conditions, derive benefits for the individual culture completed with a passing grade in and their relatives. ○○ Deletion, forgery and tampering ○○ order to successfully conclude the Issuing a loan to ineligible ○○ Risk management and internal training. The Simulation Branch of documents, accounts and customers, for example due to ○○ Involvement in any types of controls system other records, their poor creditworthiness, by bribery including facilitation allows employees to view critical issues concerning customer manipulating the information payments. ○○ Awareness Raising and Trainings ○○ Misuse of assets belonging to used in the loan assessment experiences in real life and to experience possible risks in a safe the Bank or its clients for illegal process. ○○ All the Bank’s personnel are ○○ Review Process and Fraud Risk gain, responsible for contributing Matrix environment. For any of the issues listed to effective risk management ○○ False or misleading financial above, staff is required to against anti-fraud. The details of Any reports regarding issues reporting or recording of report issues on a timely basis. these responsibilities and duties of abuse are periodically reported banking transactions, All employees can contact the are listed in the Bank’s Anti- to the Audit Committee by the Compliance Department via fraud Policy. Internal Audit Department. ○○ Acts of bribery and corruption, a dedicated hot line or email Any sanctions against directly to report suspected ○○ Starting from the Bank’s top personnel found to be involved ○○ Deriving unfair advantage breaches. In the event that they management, all managers lead in abuse activities are decided from third parties by using an failed to do so or deliberately and encourage all personnel to by the Disciplinary Committee individual’s position in the Bank, misreported the situation, develop and apply an internal in accordance with the Bank’s or by accepting gifts over the the individual could also be control mechanism for anti-fraud personnel rules. limit specified in the Manual of subject to disciplinary action and help adopt a culture of anti- The relevant department Ethical Principles, by the Disciplinary Committee fraud throughout the Company. or branch is obliged to ensure

152 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 153 Appendix 6: Activities of the Appendix 7: Role of the Disciplinary Bank’s Compliance Department Committee

Organized to address two are responsible for overseeing developing policies and The roles and responsibilities The Committee is responsible for: Sanctions Process main fields of activities so as to compliance with local regulations procedures within this scope; of the Disciplinary Committee are achieve goals under the names at consolidated subsidiaries and executing risk management, as follows: ○○ Ensuring that employees are The Bank’s Sanctions of Compliance Controls Team branches abroad; monitoring and control activities In the event where acts committed to the Bank’s Ethical Process, including the roles and and Compliance Officer Team, and following up the results or practices that are not in Principles in their acts and responsibilities, is explained the Compliance Department is ○○ Carrying out necessary of internal audit and training compliance with laws, accepted actions; carrying out oversight in detail within the Personnel assigned with the following tasks: studies aimed at continuous activities; banking practices, the Bank’s duties with respect to such Communiqué and communicated improvement of the compliance ethical Principles, Personnel commitment; acting as the to employees through intranet. culture and awareness within ○○ Ensuring that the training Communique or other notices, advocate of the Bank’s Ethical Any individual violating the Compliance Controls Team Garanti Bank and consolidated program, approved by the procedures and communiques, Principles across the Bank and Bank’s rules or bringing the Bank subsidiaries and branches designated member of Board are identified, the role of the with respect to its employees. into disrepute would be subject The Compliance Controls Team abroad. of Directors on Prevention of Committee is to investigate such to disciplinary action regardless carries out the following tasks: Laundering Proceeds of Crime acts and practices on its own ○○ Taking precautions with of whether their acts resulted in and Financing of Terrorism is authority (or requesting such respect to all acts and practices financial loss to the Bank. ○○ Performing the compliance AML Compliance Officer carried out effectively; investigation from the Internal that may lead to the Bank’s The Disciplinary Committee is function with respect to Audit Department) and carrying reputation and image being authorized to give the following applicable laws and corporate An Anti-Money Laundering ○○ Looking into and evaluating out appropriate administrative harmed in view of laws, public penalties, based on the severity standards, against situations that Compliance Officer is employed information on potentially sanctions as set out in the opinion and customers and of the act committed: Written might lead Garanti Bank to suffer with an independent function set suspicious transactions that he/ Personnel Communique. announcing such precautionary Notice, Warning, Censure, financial losses, cancellation up under the Board of Directors she receives or becomes aware measures throughout the Bank. Aggravated Censure, Aggravated of authorization or loss of who reports directly to the of sua sponte; reporting any Censure with Loss of Title, reputation; designated member of the Board. transaction that he/ she deems ○○ Ensuring that appropriate Dismissal. Dismissal is applied in The AML Compliance Officer to be suspicious to the Financial measures are taken by relevant the following cases:any violation ○○ Coordination and supervision carries out activities within Crimes Investigation Board; departments to eliminate of the Bank’s Ethical Principles of existing control mechanisms the scope of the strategy for systematic problems or flaws in and Ethical Sales Principles, regarding the compliance prevention of laundering of criminal ○○ Managing relations with work flow processes or general of Garanti Bank’s ongoing activity proceeds and financing of relevant governmental or private practices, which are observed in ○○ Abuse of power; and future activities, new terrorism, in order to ensure that agencies. the cases that are on its agenda; transactions and products with the Bank complies with national directing relevant subsidiaries ○○ Bringing the Bank into laws, internal policies and rules, and international regulations. In performing the duties and and monitoring the measures disrepute; and Banking practices; The responsibilities of the AML responsibilities summarized above, taken. Compliance Officer at Garanti Bank Compliance Officer cooperates ○○ Causing significant financial ○○ Monitoring the need for revising are as follows50: with the Internal Audit Department, loss to the Bank; the processes according to Internal Control Unit, Learning and regulatory changes in legislation ○○ Carrying out all necessary Development Department and Legal ○○ Committing a criminal activity. and notification of such changes efforts to achieve Garanti Department, and meets at certain to employees; Bank’s compliance with the intervals with the relevant executives related laws and regulations and to review ongoing activities.For ○○ Forming its opinion on new providing necessary coordination more information please see page products and transactions before and communication with the 120 of 2014 Annual Report which can they are implemented; Financial Crimes Investigation be downloaded at Board (in Turkish: MASAK); https://www. ○○ Monitoring compliance risks garantiinvestorrelations.com/en/ arising from foreign legislation ○○ Ensuring that the compliance images/pdf/garanti_bank_annual_ via assigned employees who program is carried out and report2014.pdf

50 Responsibilities Regarding “Regulation on Program of Compliance with Obligations of Anti-Money Laundering and Combating the Financing of Terrorism” within the scope of Law No: 5549 on “Prevention of Launderıng Proceeds of Crime”

154 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 155 Appendix 8: Garanti’s Appendix 9: Changes to Integrated Subsidiaries the Environmental Impact Assessment Regulation G4-17

For information on activities of the Bank’s Subsidiaries, please see pages Old Regulation New Regulation 75 to 87 of the 2014 Annual Report. (October 2013)

Hydroelectric power plants Hydroelectric power plants Bank’s Share - Address (City/ Bank’s Risk Group EIA with installed power of 25 with installed power of 10 Subsidiaries if Different, Voting Country) Share (%) MWm and higher MWm and higher Rights (%) Hydropower Hydroelectric power plants Hydroelectric power plants with installed power between with installed power between Garanti Bilişim EIA not necessary (PID*) 1 Istanbul/Turkey 100.00 100.00 1-25 MWm 1-10 MWm Teknolojisi ve Tic

Solar power plants with Solar power plants that cover 2 Garanti Ödeme Sistemleri AŞ Istanbul/Turkey 99.96 100.00 installed power of 10 MWe EIA an area of 20 hectares or more and above Solar 3 Garanti Hizmet Yönetimi AŞ Istanbul/Turkey 96.40 96.40 Wind power plants with Solar power plants that cover installed power between 1 EIA not necessary (PID) an area of 2 hectares or more MWe - 10 MWe (excludes roof 4 Garanti Kültür AŞ Istanbul/Turkey 100.00 100.00 and exterior systems)

Garanti Konut Finansmanı Wind power plants with Wind power plants with 5 Istanbul/Turkey 100.00 100.00 Danışmanlık Hiz. AŞ EIA turbine numbers of 20 or installed power of 50 MWm more and above 6 Garanti Finansal Kiralama AŞ Istanbul/Turkey 100.00 100.00 Wind Wind power plants with Wind power plants with turbine numbers between installed power between 10 Garanti Faktoring EIA not necessary (PID) 7 Istanbul/Turkey 81.84 81.84 5 – 20 MWm - 50 MWm Hizmetleri AŞ

Garanti Yatırım Menkul Hospitals with a capacity of 8 Istanbul/Turkey 100.00 100.00 EIA − Kıymetler AŞ 500 or more beds

9 Garanti Portföy Yönetimi Istanbul/Turkey 100.00 100.00 Hospital Hospitals with a capacity − EIA not necessary (PID) between 50-500 beds Garanti Emeklilik ve 10 Istanbul/Turkey 84.91 84.91 Hayat AŞ Shopping malls with a covered Garanti Bank Amsterdam/The EIA construction area of 50,000 − 11 100.00 100.00 2 International NV Netherlands m or more Shopping Malls Shopping malls with a covered Projects with an area of 12 Garanti Bank Moscow Moscow/ Russia 99.94 100.00 EIA not necessary (PID) construction area between 50,000 m2 or more including 10,000 – 50,000 m2 closed parking lots

13 Garanti Holding BV Amsterdam/ Netherlands 100.00 100.00 *Project Introduction Document

156 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 157 GRI G4 Content Index

158 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 159 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures STRATEGY AND ANALYSIS ORGANIZATIONAL PROFILE

G4-1 Statement from the most Message from the CEO - No G4-3 Name of the Index. T. Garanti Bankası - No senior decision-maker page 16 organization. A.Ş. of the organization about the relevance of sustainability to the organization and G4-4 Primary brands, Garanti in Brief page 20 - No the organization’s products, and/or strategy for addressing services. Please also see: sustainability. http://www.garanti.com. tr/en/our_company/ about_us.page? G4-2 Description of key Message from the CEO - No impacts, risks and page 16 opportunities. Garanti in Brief page 20 G4-5 Location of G4 Index only. Nispetiye - No organization’s Mah. Aytar Cad. No: 2, Please visit pages headquarters. 34340 Levent-İstanbul 121-133 of the 2014 Annual Report to find more information on the Management of Market Risk, Interest G4-6 Number of countries Turkey. - No Rate Risk Resulting where the organization from the Banking operates. Garanti Bank operates Book, Liquidity Risk, in Turkey and serves Credit Risk, Operational through international Risk, Reputational subsidiaries in the Risk and Other Netherlands, Russia and Risks: https://www. Romania. garantiinvestorrelations. com/en/images/pdf/ Garanti in Brief page 20. garanti_bank_annual_ report2014.pdf Please also see: http://www.garanti.com. tr/en/our_company/ investor_relations/ corporate_information/ subsidiaries.page

160 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 161 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures ORGANIZATIONAL PROFILE ORGANIZATIONAL PROFILE

G4-7 Nature of ownership and Türkiye Garanti Bankası - No G4-11 Percentage of total G4 Index only. Garanti - No legal form. Anonim Şirketi was employees covered by Bank respects the established in Turkey by collective bargaining constitutional right the decree of Council agreements. to become a union of Ministers numbered member and for 3/4010 dated 11 April collective bargaining. 1946 and its "Articles of All employees are free to Association" was issued act of their own free will in the Official Gazette with respect to union dated 25 April 1946. With membership. an actual free float ratio of 49.95%, Garanti Bank's shares are traded on the Borsa Istanbul (BIST) G4-12 Organization's supply Supply Chain No under the "GARAN" - chain. Management on ticker. page 99, Focusing on managing Garanti in Brief page 20. Environmental Impact of Operations section page 96

G4-8 Markets served. Garanti in Brief page 20. - No

Please also see: G4-13 Significant changes G4 Index only. During No http://www.garanti.com. - during the reporting the reporting period, tr/en/our_company/ period regarding size, there were not any about_us.page? structure, form of changes significant ownership and supply at the Garanti Bank chain. level regarding its size, structure, ownership, G4-9 Scale of the reporting ‘Garanti in Brief’ section - No or its supply chain. organization. page 20. In addition, Nevertheless, since Garanti Bank’s financial Garanti Bank is a large and operational company with extensive performance is available operations there were on pages 21-22 of the still some changes 2014 Annual Report: affecting the Bank’s size in terms of number of https://www. physical locations as garantiinvestorrelations. well as organisational com/en/images/pdf/ changes to management garanti_bank_annual_ that are detailed on report2014.pdf pages 245 and 110 of the 2014 Annual Report respectively.

G4-10 Number of employees Focusing on Human - No by employment Resources page 113. contract, region and gender.

162 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 163 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures ORGANIZATIONAL PROFILE ORGANIZATIONAL PROFILE

G4-14 Explanation of Focusing on Corporate - No G4-16 Memberships of Memberships of - No whether and how the Sustainability associations (such as associations adopted precautionary principle Governance section, industry associations) and supported by is addressed by the page 44. Additionally, and national or Garanti Bank are listed organization. the pre-cautionary international advocacy on page 41. principle applies in all organizations. our business operations. Garanti Bank supports the precautionary principle under the UN Global Compact. Consistent with that principle, Garanti Bank implements a risk- based approach to its operations through extensive management systems.

G4-15 Externally developed Garanti Bank adopts - No economic, various reporting environmental initiatives and works and social charters, in cooperation with a principles, or other number of organizations initiatives, to which the with the aim of organization subscribes improving the reporting or which it endorses. of the environmental and the social impacts of its activities, and to promote communication with other stakeholders. The initiatives we subscribe to are listed on page 41 with the date of adoption included in parenthesis. These are internationally adopted initiatives which have been developed with the participation of a wide range of stakeholders. However, Garanti was not involved in the development process of any of these initiatives and we are not able to comment in detail. See Focusing on Stakeholders section, page 37.

164 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 165 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES G4-17 (a) List all entities Unless stated otherwise, - No included in the this Report focuses on G4-20 (a) Materiality of Aspects Appendix 9 on page 130 - No organization’s the operations of Türkiye within the organization of the 1 July 2012 – 31 consolidated financial Garanti Bankası A.Ş. December 2013 Garanti statements or only. The boundary for Bank Sustainability Report. equivalent documents. the Specific Standard (b) Entities included http://static.globalreporting. Disclosures in this Report in the organization’s org/report-pdfs/2014/4cefc consolidated financial such as for the sections on 2d080f91b05a0561f08a490 statements or equivalent the Bank's GHG Emissions 3f37.pdf documents are not is Türkiye Garanti Bankası covered by the report. A.Ş. plus the following subsidiaries: Garanti Konut Finansmanı Danışmanlık Hiz. A.Ş (Garanti Mortgage), G4-21 (a) Materiality of Aspects Appendix 9 on page 130 - No Garanti Ödeme Sistemleri outside the organization. of the 1 July 2012 – 31 A.Ş. (Garanti Payment December 2013 Garanti Systems) and Garanti Bilişim Bank Sustainability Report. Teknolojisi ve Tic. TAŞ http://static.globalreporting. (Garanti Technology). org/report-pdfs/2014/4cefc 2d080f91b05a0561f08a490 The economic indicator 3f37.pdf data in this report covers all the Garanti entities covered by the consolidated financial statements G4-22 (a) The effect of There have been - No reported on page 217 to the any restatements of restatements due to 2014 Annual Report and the information provided improvements in the full list of these subsidiaries in previous reports, and quality of the measurement is also shown in Appendix 8 the reasons for such methods used to calculate to this Sustainability Report. restatements. certain environmental data.

G4-18 (a) Process for defining Approach to Materiality - No These restatements affect the report content and section, page 42 prior year data in the report. Aspect Boundaries. (b) Restated data is highlighted How the organization in Tables 8 and 9 on page has implemented the 70; Table 21 on page 102 Reporting Principles and the table for Garanti’s for Defining Report Sustainability-related Content. indicators’ (Corporate Governance and Economic) Table on page 35 to this Sustainability Report. G4-19 (a) List of all the material Appendix 9 on page 130 - No Aspects identified in of the 1 July 2012 – 31 the process for defining December 2013 Garanti report content. Bank Sustainability Report. http://static.globalreporting. G4-23 a) Significant changes G4 Index only. There - No org/report-pdfs/2014/4cefc in the Scope and Aspect have been no significant 2d080f91b05a0561f08a490 Boundaries. changes in scope or aspect 3f37.pdf boundaries from the previous reporting period.

166 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 167 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures STAKEHOLDER ENGAGEMENT REPORT PROFILE

G4-24 (a) List of stakeholder Focusing on - No G4-28 Reporting period. G4 Index only. This - No groups engaged by the Stakeholders section on Sustainability Report organization. page 37. covers the 12-month period from 1st of January, 2014 to 31 December 2014. G4-25 (a) Basis for Focusing on - No identification and Stakeholders section, selection of stakeholders page 37. with whom to engage. G4-29 Date of the most recent G4 Index only. The - No previous report. previous Sustainability Report covers the 18-month period G4-26 (a) Organization’s Focusing on - No from 1 July 2012 to 31 approach to stakeholder Stakeholders section, December 2013. engagement. page 37.

G4-30 Reporting cycle. Recent sustainability - No G4-27 (a) Key topics and Table 5, page 55 in - No reports have covered concerns that Focusing on Corporate an 18-month period. have been raised Sustainability We have switched to through stakeholder Governance section a 12-month reporting engagement, and how period based on the organization has calendar year starting responded to those key with this report for 2014. topics and concerns, including through its reporting. G4-31 Contact point for Project and - No questions. Acquisition Finance and Sustainability Department, Sustainability Team, Ms Derya Özet Yalgı, Phone: +90 212 318 13 87, e-mail: DeryaO@garanti. com.tr

G4-32 GRI Content Index and Comprehensive Option, - No ‘in accordance’ option. About this Report, page 7.

168 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 169 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures REPORT PROFILE GOVERNANCE

G4-33 The organization’s G4 Index only. Although - No G4-34 Governance structure of Focusing on Corporate - No policy and current Garanti Bank has not the organization. Sustainability practice with regard obtained external Governance page 44 to seeking external assurance of the full assurance for the report. report, the Bank has obtained Limited Assurance on its Scope G4-35 The process for Sustainability - No 1 and 2 GHG Emissions delegating authority for Committee, Corporate "for the second time" sustainability topics Governance section, for calendar year 2014 page 54 that will be reported to CDP in the Bank’s 2015 response. In addition, all significant G4-36 Executive-level positions Sustainability - No sustainability data with responsibility for Committee, Corporate appearing in this report sustainability topics Governance section, was subjected to our page 54 comprehensive internal metrics systems through which we employ a variety of internal and external processes to G4-37 Processes for Sustainability - No bring assurance that consultation between Committee, Corporate our operations are stakeholders and the Governance section, transparent and the highest governance page 54 information we report body is accurate and truly reflective of our actual results. Garanti Bank’s G4-38 Composition of the Table 3, page 45, No financial performance - highest governance Focusing on Corporate is independently body and its committees Sustainability audited and some of the Governance. indicators presented in this report are checked Please also see pages by periodical audits. 99-116 of the 2013 Annual Report at: https://www. garantiinvestorrelations. com/en/images/pdf/ garanti_bank_annual_ report2014.pdf

170 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 171 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures GOVERNANCE GOVERNANCE

G4-39 Position of the chair of Focusing on Corporate - No G4-44 Evaluating board Focusing on Corporate - No the board of directors Sustainability performance with Sustainability Governance page 44. respects to sustainability Governance page 44. The Chairman of the topics Please see page 99- Board of Directors does 116 of the 2014 Annual not carry any executive Report at: duties. For further https://www. information please see garantiinvestorrelations. Corporate Governance com/en/images/pdf/ section pages 99-116 of garanti_bank_annual_ the 2014 Annual Report. report2014.pdf

G4-40 Nomination and Garanti Bank’s Corporate - No G4-45 The role of Board Focusing on Corporate - No selection processes for Governance Structure, of Directors in Sustainability the highest governance pages 99-116 of the 2014 the identification Governance page 44 body and its committees Annual Report and management of economic, environmental and social impacts, risks and opportunities G4-41 Avoiding conflicts of Focusing on Corporate - No interest Sustainability Governance page 44, Corporate Governance G4-46 The highest governance Sustainability - No Section of the Annual body’s role in reviewing Committee page 54, Report 2014 pages 99- the effectiveness of Corporate Governance 116 the organization’s section. risk management processes for economic, environmental and social topics. G4-42 The role of the highest Focusing on Corporate - No governance body and Sustainability senior executives in Governance page 44, setting purpose, values Corporate Governance G4-47 The frequency Sustainability - No and strategy Section of the Annual of the highest Committee page 54, Report 2014 pages 99- governance body’s Corporate Governance 116 review of economic, section environmental and social impacts, risks, and opportunities. G4-43 Measures taken to Focusing on Corporate No enhance the Board of Sustainability Directors’ collective Governance page 44. G4-48 The highest committee Sustainability - No knowledge of or position to formally Committee page 54, sustainability topics approve this report and Corporate Governance its materiality review section

172 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 173 G4 GENERAL STANDARD DISCLOSURES G4 GENERAL STANDARD DISCLOSURES General Standard General Standard Description Page Omissions External Assurance Description Page Omissions External Assurance Disclosures Disclosures GOVERNANCE GOVERNANCE

G4-49 Process for Sustainability - No G4-55 Ratio of percentage - We are not able to No communicating critical Committee page 54, increase with regards to declare this data since concerns to the highest Corporate Governance G4-54 it is not a business governance body section norm in the markets where we operate and is commercially sensitive.

G4-50 Nature and number Sustainability - No of critical concerns Committee page 54, communicated to the Corporate Governance highest governance section body

G4-51 Remuneration policies - We are not able to No for the Board of declare this data since Directors and senior it is not a business executives norm in the markets where we operate and is commercially sensitive.

G4-52 Process for determining Focusing on Corporate - No remuneration Sustainability Governance page 44, Corporate Governance Section of the Annual Report 2014 pages 99- 116

G4-53 Inclusiveness of Focusing on - No stakeholders’ views Stakeholders page regarding remuneration 37, Focusing on Corporate Sustainability Governance page 44

G4-54 Ratio of the annual total - We are not able to No compensation for the declare this data since organization’s highest it is not a business paid individual to the norm in the markets median annual total where we operate and is compensation commercially sensitive.

174 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 175 G4 GENERAL STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES General Standard External Description Page Omissions External Assurance Aspect DMA / G4 Indicator Page Omissions Disclosures Assurance ETHICS AND INTEGRITY ECONOMIC

G4-56 The organization’s Policies and Principles - No Economic DMA - Focusing on Customers through Sustainable - No values, principles, page 47, Focusing on Performance Finance page 62, Focusing on Corporate standards and norms Corporate Sustainability Sustainability Governance page 44 of behaviour, such as Governance, section, codes of conduct and Whistleblowing codes of ethics. Programme. http://assets.garanti. Economic G4-EC1 Direct economic Annual Report 2014, Section 6 Consolidated - No com.tr/assets/pdf/en/ Performance value generated and Financial Report, pages 249 to 347 distributed sustainability/anti_ fraud_policy.pdf

Economic G4-EC2 Risks and Index. Garanti’s efforts to manage climate - No Performance opportunities due to change related risks and opportunities can be G4-57 Internal and external Policies and Principles No - climate change classified into two categories, mechanisms for seeking page 47, Focusing on advice on ethical and Corporate Sustainability - asset level risks and opportunities which lawful behaviour. Governance, section, are associated with the loan portfolio and Whistleblowing company level risks and Programme. http://assets.garanti. - opportunities which are related to the com.tr/assets/pdf/en/ physical infrastructure and the human sustainability/anti_ resources of the Bank. fraud_policy.pdf

Economic G4-EC3 Coverage of Detailed information is given at pages 264- - No G4-58 Internal and external Policies and Principles No Performance defined benefit plan 265 of the 2014 Annual Report at: - obligations mechanisms for page 47, Focusing on https://www.garantiinvestorrelations.com/en/ reporting concerns Corporate Sustainability images/pdf/garanti_bank_annual_report2014. about unethical or Governance, section, pdf unlawful behaviour. Whistleblowing Programme. http://assets.garanti. Economic G4-EC4 Financial assistance G4 Index only. Garanti bank did not receive No com.tr/assets/pdf/en/ - Performance from government any financial assistance from Government sustainability/anti_ during the reporting period. fraud_policy.pdf

Market Presence DMA - Focusing on Customers through Sustainable - No Finance Page 62, Focusing on Corporate Sustainability Governance page 44

Market Presence G4-EC5 Entry level wage by G4 Index only. All Garanti bank staff are paid - No gender compared to more than the minimum wage minimum wage

176 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 177 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance ECONOMIC ENVIRONMENTAL

Energy DMA - Material aspects and boundaries on page - No Market Presence G4-EC6 Local hiring G4 Index only. The senior management - No 42, Focusing on Managing Environmental including the CEO, EVPs and Coordinators is Impact of Operations page 96, Focusing on Turkish. By doing this the Bank is better able Corporate Sustainability Governance page 44 to understand and serve an increasingly wide range of customers across Turkey. In Garanti’s overseas operations, local talent is also hired Energy G4-EN3 Energy Focusing on Managing Environmental - No at various levels of the organisations. consumption within Impact of Operations page 96 the organisation

Indirect DMA - Focusing on Customers through Sustainable - No Economic Finance Page 62, Focusing on Corporate Energy G4-EN4 Energy Focusing on Managing Environmental - No Impacts Sustainability Governance page 44 consumption Impact of Operations page 96 outside of the organisation

Indirect G4-EC7 Development Focusing on Customers through Sustainable - No Economic and impact of Finance Page 62 Energy G4-EN5 Energy intensity *Includes Diesel, Natural Gas, Lignite, Diesel - No Impacts infrastructure (mobile), Gasoline (mobile), Electricity within investments and Garanti Bank facilities in Turkey, Garanti services supported Mortgage, Garanti Payment Systems and Garanti Technology

**Includes Garanti Bank facilities in Turkey, Indirect Economic G4-EC8 Significant indirect Focusing on Customers through Sustainable No - Garanti Mortgage, Garanti Payment Systems İmpacts economic impacts Finance Page 62, Focusing on Communities, and Garanti Technology page 133

Energy G4-EN6 Reduction of energy Focusing on Managing Environmental - No consumption Procurement DMA - Material aspects and boundaries on page 42, - No Impact of Operations page 96. Practices Supply Chain Management section on Page 99, Environmental Management System on page 97 Energy G4-EN7 Reductions in Focusing on Managing Environmental - No energy requirements Impact of Operations page 96. of products and Procurement G4-EC9 Spending on local Supply Chain Management section on page - No services Practices suppliers 99, Focusing on Managing Environmental Impact of Operations page 97 Emissions DMA - Focusing on Managing Environmental - No Impact of Operations page 96, Focusing on Corporate Sustainability Governance page 44.

Emissions G4-EN15 Direct greenhouse Focusing on Managing Environmental - No gas (GHG) emissions Impact of Operations page 96. (scope 1)

Emissions G4-EN16 Energy indirect Focusing on Managing Environmental - No greenhouse gas Impact of Operations page 96. (GHG) emissions (scope 2)

178 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 179 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance ENVIRONMENTAL ENVIRONMENTAL

Emissions G4-EN17 Other indirect Focusing on Managing Environmental - No Environmental DMA - Focusing on Customers through Sustainable - No greenhouse gas Impact of Operations page 96. Compliance Finance Page 62, Focusing on Managing (GHG) emissions Environmental Impact of Operations page (scope 3) 96, Focusing on Corporate Sustainability Governance page 44

Emissions G4-EN18 Greenhouse gas Focusing on Managing Environmental - No (GHG) emissions Impact of Operations page 96. Environmental G4-EN29 Fines and sanctions G4 Index only. There have not been any - No intensity Compliance for non-compliance significant fines or incidents of non- with environmental compliance with environmental laws and regulations regulations during the reporting period. Emissions G4-EN19 Reduction of Focusing on Managing Environmental - No greenhouse gas Impact of Operations page 96. (GHG) emissions Transport DMA - Focusing on Managing Environmental - No Impact of Operations page 96.

Emissions G4-EN20 Emissions of ozone- Focusing on Managing Environmental - No depleting substances Impact of Operations page 96. (ODS) Transport G4-EN30 Significant Focusing on Managing Environmental - No environmental Impact of Operations page 96, Material impacts of Aspects and Boundaries on page 42 transportation Emissions G4-EN21 NOx, SOx, and G4 Index only. Garanti Bank does not report - No other significant air on this indicator as the disclosure is not emissions material to its business because the Bank’s business activities and operations do not Overall DMA - Focusing on Customers through Sustainable - No generate significant emissions of these finance page 62, Focusing on Managing substances. Environmental Impact of Operations page 96, Focusing on Corporate Sustainability Governance page 44.

Products and DMA - Focusing on Customers through Sustainable - No Services finance page 62, Focusing on Corporate Sustainability Governance page 44. Overall G4-EN31 Environmental Focusing on Managing Environmental - No expenditures and Impact of Operations page 96. investments

Products and G4-EN27 Mitigation of Focusing on Customers through Sustainable - No Services environmental finance page 62, Focusing on Corporate Supplier DMA - Focusing on Managing Environmental No impacts of products Sustainability Governance page 44. - and services Environmental Impact of Operations page 96. Assessment

Products and G4-EN28 Percentage of G4 Index only. This indicator is not material to - No Services products sold and the Bank since in the course of its operations Supplier G4-EN32 Percentage of new Supply Chain Management on page 99, - No their packaging it does not produce significant amounts of Environmental suppliers that were Focusing on Managing Environmental Assessment screened using materials that packaging materials. Impact of Operations page 96. are reclaimed by environmental category criteria

180 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 181 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance ENVIRONMENTAL SOCIAL: LABOUR PRACTICES AND DECENT WORK

Supplier G4-EN33 Significant Focusing on Customers through Sustainable - No Employment DMA - Focusing on Human Resources page 113 - No Environmental actual and finance page 62, Material Aspects and Assessment potential negative Boundaries on page 42. environmental impacts in the supply chain Employment G4-LA1 New employee Focusing on Human Resources, page 113 - No hires and employee turnover

Employment G4-LA2 Benefits provided to Focusing on Human Resources, page 113 - No full-time employees that are not provided to temporary or part time employees

Employment G4-LA3 Return to work and Focusing on Human Resources page 113 - No retention rates after parental leave

Labour/ DMA - Focusing on Human Resources page - No Management 113, Focusing on Corporate Sustainability Relations Governance page 44

Labour/ G4-LA4 Minimum notice Focusing on Human Resources page 113. - No Management periods regarding Garanti Bank makes every effort to avoid Relations operational changes redundancies. Whenever restructuring and/ or redeployment are unavoidable however, the Bank’s processes and guidelines seek to minimize the impact on those who may be affected

Occupational DMA - Focusing on Human Resources page - No Health and Safety 113, Focusing on Corporate Sustainability Governance page 44

Occupational G4-LA5 Percentage Focusing on Human Resources page 113 - No Health and Safety of workforce represented in formal joint management– worker health and safety committees

182 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 183 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance SOCIAL: LABOUR PRACTICES AND DECENT WORK SOCIAL: LABOUR PRACTICES AND DECENT WORK

Occupational G4-LA6 Type of injury and In the reporting period, there were 118 work- - No Learning and G4-LA11 Percentage Focusing on Human Resources page 113 - No Health and Safety rates of injury, related incidents of injury; and no work- Development of employees occupational related incidents of death. There were not any receiving regular diseases, lost days, work-related diseases. The total lost days data performance and and absenteeism, is collected on the basis of medical reports of career development and total number sickness leave and injuries. reviews, by gender of work-related and by employee fatalities, by region category and by gender The number of total lost days is reported on page 121.

Diversity and Equal DMA _ Focusing on Human Resources page - No Opportunity 113, Focusing on Corporate Sustainability Occupational G4-LA7 Workers with high Index. None of our employees are subject No - Governance page 44 Health and Safety incidence or high to a high risk of any serious diseases from risk of diseases the Bank's occupational activities. Our related to their Bank’s intranet contains readily accessible occupation information that is useful in dealing with a Diversity and Equal G4-LA12 Composition of Focusing on Human Resources page - No variety of subjects such as how to cope with Opportunity governance bodies 113, Focusing on Corporate Sustainability the flu. and employee Governance page 44 breakdown

Occupational G4-LA8 Health and safety G4 Index only. As per relevant regulations, - No Health and Safety topics covered in all employees are required to notify their Equal DMA _ Focusing on Human Resources page - No formal agreements employer upon their becoming a member of Remuneration for 113, Focusing on Corporate Sustainability with trade unions a union. The number of employees who had Women and Men Governance page 44 made such notification at the beginning of the reporting period was zero and no such notification has been made to Garanti Bank during the reporting period. Equal G4-LA13 Ratio of basic salary Garanti Bank’s compensation system is - No Remuneration for and remuneration of totally gender-neutral and based entirely on Women and Men women to men performance. Salary variations result from Learning and DMA - Focusing on Human Resources page - No relative experience levels of employees. For Development 113, Focusing on Corporate Sustainability instance, upper level male managers have Governance page 44 approximately 15% longer experience than upper level female managers.

Learning and G4-LA9 Average hours of Focusing on Human Resources page 113 - No Development training per year per employee by gender, Labour Practices DMA - Focusing on Human Resources page - No and by employee Grievance 113, Focusing on Corporate Sustainability category Mechanisms Governance page 44

Learning and G4-LA10 Programs for skills G4 Index only. When employees join - No Development management and Garanti Bank, they automatically become Labour Practices G4-LA16 Grievances about Focusing on Human Resources page 113. - No lifelong learning members of the ‘T. Garanti Bankası A.Ş. Grievance labor practices No complaints were lodged on any matter Mechanisms through Formal that support Memur ve Müstahdemleri Emekli ve Yardım pertaining to labour practices during the the continued grievance reporting period. Sandığı Vakfı’ (Garanti Bank Pension mechanisms employability of Fund Foundation), which was founded in employees and assist accordance with temporary article no. 20 of them in managing career endings the Social Securities Law no. 506.

184 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 185 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance SOCIAL: HUMAN RIGHTS SOCIAL: HUMAN RIGHTS

Investment DMA - Focusing on Customers through Sustainable - No Security Practices DMA - Material aspects and boundaries on page - No Finance page 62 42, Focusing on Corporate Sustainability Governance page 44.

Investment G4-HR1 Human rights 100% of all significant investment agreements - No screening or are assessed using the Bank’s E&S Impact Security Practices G4-HR7 Percentage of G4 Index only. The procedures required to - No clauses included Assessment Process that covers human rights security personnel be followed by the security personnel of in significant issues. Focusing on Customers through trained in human the Bank are governed under the relevant investment Sustainable Finance page 62 rights policies or Security Procedure and published in the agreements procedures Bank’s intranet. As per applicable regulations, all private security personnel employed by the Bank are required to complete 120 hours Investment G4-HR2 Employee training G4 Index only. Although no training was - No of training and satisfy minimum testing on human rights delivered that specifically focussed on Human requirements. The training is overseen and Rights, the Bank does provide numerous monitored by the Ministry of Internal Affairs. sustainability trainings to all its personnel In addition to the regulatory training, Garanti that incorporate material on some human Bank further requires its security personnel rights topics such as ethics. For example, the to complete on-the-job training for 15 days total duration of trainings on Sustainability as well as 2 days of in-class training. Security E-learning Program during the reporting personnel also receive ad hoc training on period was 1,297 hours. various subjects during their employment.

Non-discrimination DMA - Focusing on Human Resources page - No HR Assessment DMA - Focusing on Corporate Sustainability - No 113, Focusing on Corporate Sustainability Governance page 44, Material aspects and Governance page 44. boundaries on page 42

HR Assessment G4-HR9 Operations subject G4 Index only. No operations have been - No Non-discrimination G4-HR3 Actions taken Index. There were no incidents of - No to human rights subject to human rights reviews and/or in incidents of discrimination reported during the reporting reviews or impact impact assessments during the reporting discrimination period. assessments period

Freedom of DMA - Focusing on Human Resources page - No Association 113, Focusing on Corporate Sustainability Human Rights DMA - Focusing on Human Resources page - No Grievance and Collective Governance page 44. 113, Focusing on Corporate Sustainability Bargaining Mechanisms Governance page 44, Material aspects and boundaries on page 42

Freedom of G4-HR4 Supporting right G4 Index only. Garanti Bank respects the - No Association to freedom of constitutional right regarding unionization Human Rights G4-HR12 Grievances G4 Index only. No complaints were lodged on - No Grievance about human and Collective association and and collective labor contracts. All employees any matter pertaining to human rights during Mechanisms rights through Bargaining collective bargaining are free with respect to union membership the reporting period. in risk areas formal grievance and act of their own free will. During the mechanisms reporting period, Garanti Bank had no dealings with any supplier who, to the Bank’s knowledge, was in violation of their employees’ union rights, which is to say of their employees’ right to join or not to join a trade or labor union.

186 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 187 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance SOCIAL: SOCIETY SOCIAL: SOCIETY

Local Communities DMA - Focusing on Communities page 133, - No Anti-corruption DMA - Focusing on Corporate Sustainability - No Focusing on Corporate Sustainability Governance page 44, Material aspects and Governance page 44, Corporate Profile boundaries on page 42 page 30, Material aspects and boundaries on page 42 Anti-corruption G4-SO3 Total number and Focusing on Corporate Sustainability - No percentage of Governance page 44, Focusing on Customers Local Communities G4-SO1 Local community G4 Index only. The total amount of - No operations assessed through Sustainable Finance Page 62. Internal engagement, contributions and donations made by the for risks related to control monitoring activities are grounded impact assessments, Bank in 2014 was TL 17,186,001 (2013: TL corruption and the in predefined fraud scenarios which have significant risks and development 18,001,967). Based on its commitment to been formulated on the basis of early- identified. programs corporate social responsibility, the Bank warning signals that take the entire Bank into makes donations and contributions mostly to account. Virtually every headquarters unit is persons, non-governmental organizations, inspected at regular intervals by the Board societies or foundations, public entities and of Inspectors. The Bank’s Anti-Fraud Unit organizations that are engaged in the fields also continuously develops strategies which of education, culture, art, environment and are capable of identifying, controlling, and sports throughout all regions of Turkey. preventing instances of externally-sourced Donations can also be made to promote the fraud anywhere in the Bank. Bank’s corporate identity and to expand the coverage of banking activities. Amounts and Beneficiaries of the donations made in 2014 are disclosed on page 140 of the 2014 Annual Anti-corruption G4-SO4 Communication Focusing on Corporate Sustainability - No Report. and training on anti- Governance page 44, Focusing on Customers corruption policies through Sustainable Finance Page 62. and procedures

Local Communities G4-SO2 Operations with G4 Index only. There were no in-house - No significant negative operations with significant potential or actual Anti-corruption G4-SO5 Confirmed incidents G4 Index only. Investigation activities aim No impacts on local negative impacts on local communities - of corruption and at detecting/preventing fraudulent activities communities during the reporting period. On the other actions taken. and all applications, transactions and hand, Garanti Bank aims to control its attitudes contrary to policies, procedures and indirect impact on the environment and Ethical Principles of the Bank. Investigation society through ESLP and ESIAP. Focusing reports are evaluated and concluded by the on Customers through Sustainable Finance Disciplinary Committee. A criminal report is Page 62 made if necessary.

Local Communities FS-13 Access points in G4 Index only. Garanti Bank does not have - No low-populated access points in low populated areas. Anti-competitive DMA - Focusing on Corporate Sustainability - No or economically Behaviour Governance page 44 disadvantaged areas.

Local Communities FS-14 Initiatives to Focusing on Customers through Sustainable - No Anti-competitive G4-SO7 Total number of Focusing on Corporate Sustainability - No improve access to Finance Page 62 Behaviour legal actions for Governance page 44 financial services anti-competitive for disadvantaged behavior, and anti- people. trust and monopoly practices and their outcomes.

188 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 189 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance SOCIAL: PRODUCT RESPONSIBILITY SOCIAL: PRODUCT RESPONSIBILITY

Product and Service DMA - Focusing on Customers through Sustainable - No Marketing G4-PR6 Sale of banned or Focusing on Customers through Sustainable - No Labelling Finance Page 62, Focusing on Corporate Communications disputed products. Finance Page 62, Focusing on Corporate Sustainability Governance page 44 Sustainability Governance page 44. Garanti Bank complies with laws and regulations pertaining to the disclosure of information about the products and services that it Product and Service G4-PR3 Type of product and G4 Index only. Garanti Bank complies - No provides. The Bank also diligently strives to Labelling service informatıon with laws and regulations pertaining to the be in full compliance with the requirements required by the disclosure of information about the products of applicable laws and regulations in Turkey organization’s and services that it provides. To this end, the procedures for in the conduct of all of its marketing and bank supplies any and all manner of currently communication activities. Garanti Bank does product and service applicable information about the products information and not finance any activities which are restricted and services that it offers its customers labeling, and or banned under national legislation and/ percentage of both as may be required by law and as or international agreements that Turkey is significant product Garanti Bank believes may be necessary for a party to or the projects or the activities of and servıce consumers to make objective decisions. people or corporations which have been categories subject proven to employ child workers or violate to such information human rights. Garanti Bank rejects loan requirements demands for such projects or activities without holding them subject to any social and environmental impact evaluation and Product and Service G4-PR4 Total number G4 Index only. There were no incidents of - No without any limit on the size of the loan. Labelling of incidents of significant non-compliance reported during non-compliance or after the reporting period. with regulations and voluntary Marketing G4-PR7 Total number G4 Index only. There were no incidents of - No codes concerning Communications of incidents of non-compliance reported during or after the product and service noncompliance reporting period. information and with regulations labeling, by type of and voluntary outcomes codes concerning marketing communications, including Product and Service G4-PR5 Results of surveys For the Bank’s engagement with Customers No advertising, - promotion and Labelling measuring customer please see the section Focusing on Customers satisfaction sponsorship by type through Sustainable Finance though it is not of outcomes. customary in the Bank’s sector in Turkey to disclose information on survey results

Customer Privacy DMA - Focusing on Corporate Sustainability - No Governance page 44, Focusing on Customers Marketing DMA _ Focusing on Customers through Sustainable - No through Sustainable Finance page 62 Communications Finance Page 62, Focusing on Corporate Sustainability Governance page 44

Customer Privacy G4-PR8 Total number G4 Index only. There were no substantiated - No of substantiated complaints of breaches of customer privacy complaints reported during or after the reporting period. regarding breaches of customer privacy and losses of customer data

190 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 191 G4 SPECIFIC STANDARD DISCLOSURES G4 SPECIFIC STANDARD DISCLOSURES External External Aspect DMA / G4 Indicator Page Omissions Aspect DMA / G4 Indicator Page Omissions Assurance Assurance SOCIAL: PRODUCT RESPONSIBILITY SOCIAL: PRODUCT RESPONSIBILITY

Compliance DMA - Material aspects and boundaries on page - No Active Ownership DMA - Annual Report 2014, page 184, note 4.2.2. - No 42, Focusing on Corporate Sustainability Governance page 44

Active Ownership FS-10 Percentage Focusing on Managing Environmental - No Compliance G4-PR9 Monetary value Focusing on Corporate Sustainability - No and number of Impact of Operations page 96. The ESLP is of significant Governance page 44 companies held applied to 100% of the companies in Garanti fines for non- in the institution’s Bank’s portfolio. Additionally, Garanti Bank compliance with portfolio with applies ESIAM to projects with an investment laws and regulations which the reporting amount of more than US$ 20 million. concerning the organization has provision and use interacted on of products and environmental or services social issues.

Product Portfolio DMA - Corporate Profile page 30, Focusing on - No Active Ownership FS-11 Percentage of assets Focusing on Customers through Sustainable - No Customers through Sustainable Finance subject to positive Finance Page 62 Page 62 and negative environmental or social screening. Product Portfolio FS-6 Percentage of Corporate Profile page 30. See also Annual - No the portfolio for Report 2014, page 184, note 4.2.2 business lines by specific region, size (e.g. micro/SME/ large) and by sector.

Product Portfolio FS-7 Monetary value Focusing on Customers through Sustainable - No of products and Finance Page 62 services designed to deliver specific social benefit for each business line, broken down by purpose.

Product Portfolio FS-8 Monetary value Focusing on Customers through Sustainable - No of products and Finance Page 62 services designed to deliver specific environmental benefit for each business line, broken down by purpose.

Audit DMA - Focusing on Corporate Sustainability - No Governance page 44

192 | Garanti Sustainability Report 2014 Garanti Sustainability Report 2014 | 193 Legal Disclaimer

Türkiye Garanti Bankası A.Ş. (the “Bank”) expressly disclaims any and all liability which is based on the information and statements or any part thereof contained in (or omitted from) this Sustainability Report.

Contact

Sustaianability Team [email protected] Turkiye Garanti Bankası A.Ş. Levent Nispetiye Mah. Aytar Cad. No:2 Istanbul 34340 Turkey

Reporting Consultant EY

This report is printed on recycled paper. SUSTAINABILITY REPORT 2014

196 | Garanti Sustainability Report 2014