2016 SUSTAINABILITY REPORT

www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Value for the Future

Having laid its foundations with “Homeland Funds”, Ziraat Bank has led the society for a better future since the day it was founded. It gained strength by providing value for the production and supporting the farmers, and it maintained and further increased this strength by protecting people and environment and adding value to the future. As providing confidence, Ziraat Bank has become a preference and companion of many investors and entrepreneurs of various sizes.

Thus, Ziraat Bank became more than a Bank and turned into a world brand guiding the future with the power of the past.

2016 SÜRDÜRÜLEBİLİRLİKSUSTAINABILITY REPORT RAPORU

2 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

CONTENT

6 Message from the CEO 10 Ziraat Finance Group

18 Our Sustainability Policy 24 Ziraat Bank from Past to Today 26 Our Awards

30 Our Priorities 36 Corporate Management 42 Value Produced for the Turkish Economy 46 Happy Client Strong Ziraat Bank

62 Competent and Qualified Human Resource 72 A More Livable Environment 82 Sustainable Supply 86 Ziraat Bank in Touch with the Society

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Message from the CEO

Ziraat Bank provides a wide range of domestic financial services such as banking, participation banking, insurance and individual pension scheme, investment, portfolio management, financial leasing, real estate investment trust and financial technology and together with the branches abroad, continues its activities as a financial group and keeps producing value for the future based on the work model designed with sustainable determination and proficiency principles and the consciousness of being a corporate citizen.

HÜSEYİN AYDIN BOARD MEMBER AND CEO

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Message from the CEO

Ziraat Bank provides a wide range of domestic financial services such as banking, participation banking, This year, agricultural loans provided from the own resources of our Bank has reached TRY 42 billion and insurance and individual pension scheme, investment, portfolio management, financial leasing, real we have achieved a loan provision strategy mainly directed to producers by extending loans for 600 estate investment trust and financial technology and together with the branches abroad, continues thousands clients. its activities as a financial group and keeps producing value for the future based on the work model While performing our activities, our future vision is shaped under the light of our responsibilities towards designed with sustainable determination and proficiency principles and the consciousness of being a our country and our world as a corporate citizen. I would like to express that we are always reviewing our corporate citizen. processes with a view to keeping environmental effects of our activities on the minimum level. We made lots of studies for development of deposit accounts, the most important subject of this year Offering services as “the only financial service provider” in about 400 districts and towns, our Bank and our main funding source, and we tried persistently to diversify our resources in order to offer facilitates financial access of the locals therein and contributes to increase of their financial savings. sustainable support to the national economy. We continued acquiring significant gains for provision of Furthermore, it supports development of sports through sponsorship activities and besides sponsoring non-deposit resources. Renewing our syndication loan of US$ 1,1 billion, we realized a new Eurobond Turkish Football Cup, provides contribution to volleyball in Turkey Men’s Volleyball League. export of US$ 500 million. We tried to meet financing needs of investors from all scales through the resources over US$ 300 million obtained from international organizations and banks. As Ziraat Finance Group, which provides services in 19 different countries with 28 thousands employees and in 18 different languages, we believe that there are many steps to take. Ziraat Finance Group is Hence, our balance sheet made important contributions to not only the balance sheet of the Bank but building an intercontinental bridge for commercial relations, and feeling the enthusiasm of leaving a also that of our country as in recent years. This year, like previous years, our Bank has recorded a credit sustainable heritage to the future and I would like to extend my sincere regards and greetings to all. growth ahead of the sector. Total assets of the Bank reached TRY 357,8 billion and our contribution to the economy with total loans including non-cash loans became TRY 312 billion.

In the meantime, attaching particular importance to financing of agriculture sector, our Bank is addressing the agriculture from an industrial perspective, and involving all stages, from cropland to the table, in the financing model. HÜSEYİN AYDIN BOARD MEMBER AND CEO

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ZİRAAT FINANCE GROUP

Banking services in With over one and a half-century experience and knowledge and without 19 countries compromising on the foundation mission Ziraat Bank is increasing the financial and operational performance focused on sustainability by closely following the developments in the international banking system and thus improving the corporate management approach. Ziraat Bank has a wide domestic and foreign participation portfolio in the 1.919 Branches fields of banking, insurance, individual pension scheme, investment services, participation banking, portfolio management, financial leasing, real estate investment trust and financial technologies. Global existence of the Bank covers 99 service points in 19 countries. Focusing on providing effective and rapid services for our entrepreneurs in other countries too under the light of modern international banking vision, Ziraat Bank is offering extensive financial services to its clients in the relevant geographies. Our Bank has a service network in 19 countries, comprising of 8 international 28.187 employees subsidiary banks, 28 foreign branches and 1 representation office. Ziraat Finance Group is providing services with 1.814 branches, 6.985 ATM and 28.187 employees.

6.985 ATM

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ZİRAAT FINANCE GROUP 1.919 BRANCHES 6.985 ATM

Domestic Subsidiaries Ziraat Katılım Bankası A.Ş. Ziraat Sigorta A.Ş. Ziraat Hayat ve Emeklilik A.Ş. Ziraat Finansal Kiralama A.Ş. Ziraat Yatırım Menkul Değerler A.Ş. Ziraat Portföy Yönetimi A.Ş. Ziraat Teknoloji A.Ş. Ziraat Gayrimenkul Yatırım Ortaklığı A.Ş.

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WE ARE AT YOUR SERVICE WITH 1.830 DOMESTIC BRANCHES

Branches of Ziraat Katılım Bankası A.Ş. are also included in the number of domestic branches.

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1863Value yılından bugüneproduced üretilen as of değer1863 1863While yılından making bugüne numerous insan achievements, yaşamına değer as of 1863,katan adding sayısız value başarıya to the human imza atarken, life, we always her triedzaman to create farkındalık awareness ve farkand difference.yaratmak içinThis is whatçalıştık. made Bizi us bir more bankadan than a bank. daha Becausefazlası yapan future da bu oldu.is worthy Çünkü ofher everything. şey geleceğe değer.

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Our objective is to provide banking products and services to all our clients in practical, understandable and accessible formats and enrich the sector with new model practices. Our Sustainability Policy

Our sustainability vision

To use the unrivalled experience and knowledge • As a business partner, our relationships with • We attach importance to having a presence that we have built up over a century and a half for • In our decision-making processes, we take a suppliers are grounded in the principles of and playing an active role in multilateral the benefit of the economy, the environment, and careful and thoughtful approach whendealing mutual respect, responsibility, and fairness sustainability initiatives and collaboration the community; to produce enduring value for our with environmental and social issues and the and we are committed to developing them platforms at both the national and international stakeholders; to be a globally-competitive bank potential risks associated with them in the accordingly. We support our suppliers’ success levels. through the principles of sustainable profitability management of our resources and our service through cooperative projects that we carry out and efficiency. infrastructure. together.

Our sustainability goal • We regard environmental sustainability • We are committed to continuously developing Taking the foregoing fundamental tenets as our including climate change and the transition to a and implementing projects whose aim is to point of departure, we are focused on promoting, To further develop both the bank’s strong position low-carbon economy–as an important item on integrate universally-accepted sustainability developing, and maintaining sustainability in the domestic market and its global competitive our agenda. principles into our business model. throughout our value chain. strength by increasing the medium- and long-term leverage effect of the Change and Transformation • As an employer, we believe in the importance Project through corporate sustainability practices to of humane working conditions. In our business be implemented under this Sustainability Policy. model we give importance to equality of opportunity among all of our employees: Our sustainability structure Our sustainability approach we regard diversity in our workforce as a component of Ziraat Bank’s richness and Our sustainability plan is structured under the aegis of the Ziraat Bank Board of Directors. Its implementation is therefore we support it. informed by a straightforward and effective organizational structure. Our sustainability approach is shaped in light of our responsibilities as a financial services provider, • As a service provider, we regard customer of our obligations to the environment and the • Sustainability practices at Ziraat Bank are conducted under the guidance of the Bank’s General Manager. focus and customer satisfaction as being community, and of our duties as an employer. • The Ziraat Bank Strategic Steering Committee is responsible for the coordination of sustainability efforts. fundamental to everything. Our goal is to offer banking products and services to all of • Sustainability activities are monitored by the Organization Department. • Ziraat Bank is a strong, leading, and trusted our customers in formats that are practical, bank. We desire to perpetuate our existing intelligible, and accessible and also to enrich success in economic sustainability into the banking industry through innovative and the future by supporting it with long-term exemplary practices environmental and social sustainability Ziraat Bank is a strong, leader and confiding bank. We wish to perspectives. carry our success in the field of economic sustainability to the future by supporting it with long-term environmental and social sustainability perspective.

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We believe in open communication with our stakeholders based on mutual respect.

Our dialogue with our stakeholders

Ziraat Bank’s long-term success depends on its • We engage with our customers on a variety stakeholders’ trust and continued goodwill. The of collaboration and awareness platforms. We sustainability projects we undertake play a role in regard efforts to increase financial literacy and further strengthening stakeholder confidence and awareness of sustainability as an essential part loyalty. of our social responsibility.

• Employees make up one of our most crucial • Developing mutually beneficial relationships stakeholder groups. We support our employees with our suppliers is another of our priorities. in their efforts to proactively identify with We regard it as important that our suppliers Ziraat Bank’s sustainability approaches and recognize and abide by universallyaccepted commitments. sustainability principles and we accordingly encourage them to do so. • We regard the training and development of our employees as an important element of • We believe in mutually frank and respectful the progress that we seek to make in the area communication with our stakeholders. In of sustainability. Constantly changing and stakeholder communication, we focus on the transforming ourselves as we move forward, transparent disclosure of our progress on we continue to invest in training that will environmental and social matters as well as of contribute to the steady advancement of our our economic performance. human resources. • We believe that the success of corporate • Our customers are the essential justification sustainability practices will enhance the bank’s for our existence. Our goal is to perpetuate sustainability index performance. and amplify customer satisfaction and loyalty by supplying high-value products and services under globally competitive conditions through all of Ziraat Bank’s distribution channels.

Our target is to provide products and services of strong value through all service channels of Ziraat Bank under global competition conditions and continue developing client satisfaction and loyalty.

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Having proved, in its over 150-year history, that it is more than a bank, the Ziraat Bank has natural harmony with sustainability principles, which arises from its passion to enrich our country and the world.

Ziraat Bank and Environment Ziraat Bank and the Community Our products and services

As one of the biggest employers in the Turkish As a company which employs about 25 thousand In the processes of satisfying evolving customer needs and expectations, of supplying the right product and banking industry and the hub of its most extensive people, which helps millions of individuals to service to the right customer at the right time, and of productively exploiting new business opportunities physical service network, our goals are to curb make their dreams come true, and which supplies presented by markets, Ziraat Bank always takes environmental and social issues into account as well. To this our direct and indirect environmental impact, financial products and services at locations all over end: to effectively manage that impact by means of the country, in more than 400 of which it is the appropriate strategies and technologies, and only such service provider, Ziraat Bank contributes • We continue to support the agricultural sector, which was the core of our original mission in 1863, to constantly improve our performance in this to the community in many different ways. We through sophisticated financing methods. We are involved in and will continue to support agribusiness direction. To this end: continue to create value for society and to take because we believe it to be vitally important to the success of our country’s agricultural sector. multidimensional approaches in support of social • We engage in ongoing efforts to quantify the development through efforts capable of maximizing • In the conduct of our business as a bank, we provide products and services with the potential to be greenhouse gas emissions generated by our their socially beneficial impact. environmentally and socially benign such as renewable energy project finance, loans to improve energy service processes and to reduce them. efficiency, and financing packages for small- and medium-sized businesses and entrepreneurs.

• We strive to structure the physical components We encourage • We regard expanding this line-up of environmentally and socially benign products and services through of our service network in line with the principle collaboration with international financial institutions as an essential elementof our sustainability vision. of making efficient use of energy and all other our clients and suppliers to natural resources. increase their awareness Summing Up about the environment • Aspiring ourselves to achieve full compliance Having been proving that it is more than just a bank for a hundred and fifty years, Ziraat Bank’s innate with all mandatory environmental standards and spread the studies compatibility with sustainability principles springs from its passion to create value for the country and for in Turkey, we also encourage the proliferation that will add value to the the world. Given the general framework encompassing its sustainability policy, Ziraat Bank is committed of globally-recognized best practices and to pursuing and maintaining sustainably profitable and efficient growth as a competitive, strong, high- benchmarks pertaining to such matters by environmental sustainability. market-value, and globally-integrated bank. Constantly improving our bank’s sustainability performance engaging in an ongoing, multidimensional in keeping with the principles of transparency, accountability, compliance with the law, ethical behavior, dialogue with our stakeholders. and risk management, we remain on course as a financial institution that is more than a bank in the area of sustainability as well. • We regard it as important that our customers and suppliers have a greater awareness of environmental issues and we encourage them to make a greater effort for the sake of environmental sustainability.

22 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT Assets of Ziraat Bank reached Ziraat Bank from Past to Today TRY 357.761 million in 2016, which yielded to net profit ofTRY 6.576 million.

Taking its power from the roots of • A branch of Ziraat Bank was agricultural receivables of Ziraat • “Self Service Banking” application pursuant to the Law no 4603 • Ziraat Bank Azerbaycan ASC the past, Ziraat Bank proved in its opened in Baghdad and Basra. Bank into installment. was started. With Foreign dated 25 November 2000. started its activities. over 150-year history that it is more • Loans were given to the farmers Currency Conversion Machines, • Fin@rt project which centralized • Ziraat Bank was elected as the 1964-1988 than a bank. who were suffering from the Self Service Information Terminals the software of the Bank became 2nd most powerful bank of the consequences of the earthquake. • Hamburg Representation Office and Audio Message Systems, widespread. Western Europe.

1863-1888 was opened. besides ATMs, this project became • Ziraat Bank opened Athens and • Ziraat Bank Montenegro AD 1914-1938 • Nicosia, Gazimagusa and an initiative which was operated Gumulcine branches in Greece. started its activities. • On 20 November 1863, Mithat • Commercial loan transactions Guzelyurt branches were opened as the first “Unmanned Electronic • Ziraat Bank announced the • In 2015, Ziraat Bank announced Pasha created the “Homeland were launched. in Cyprus. Branch” and providing services on highest profit obtained by a the highest profit of the Turkish Funds” which laid the foundations • The first seed loan was provided. • New York Representation Office 24 hour basis. Turkish company up to 2009 with banking sector with net profit of of the current Ziraat Bank in • The first collective delay was was turned into a branch. • Ziraat Bank Moscow, net profit of TRY 3.511 million. TRY 5.162 million in line with the Pirot town.Ülkemizde ilk kez introduced for commercial Representation offices were Kazkommerts Ziraat International • Bagdad, Erbil and Jeddah sustainable profitability principle. teşkilatlı kredi sistemi mevzuatı receivables. opened in Duisburg, Berlin, Bank (KZI Bank), Turkmen Turkish branches started their activities. oluşturuldu. 2016 • Following opening of the Grand Munich, Stuttgart and Rotterdam. Commercial Bank (TTC Bank) • Ziraat Bank purchased royalty of • Organized loan system legislation National Assembly of Turkey in • Under Bank 86 Project, and Uzbekistan Turkish Bank Turkey Cup. • Marneuli branch was opened in was prepared for the first time in Ankara, management of branches automation environment was (UT Bank) were established and • Ziraat Bank started the change Georgia and Bahreyn branch was Turkey. and funds located in the areas started in 7 branches of Ankara started their activities. and transformation project with opened in Manama/Bahreyn. • General Directorate of Ziraat Bank under the sway of GNAT were and Istanbul in order to adapt • Ziraat Bank got the 202nd place the slogan of “Altogether toward • Ziraat Real Estate Investment started its activities. handed over to the Ankara the developing technology to the in “the first 500 banks” listed by the Better”. Trust participated in the Ziraat 1889-1913 Branch. banking services and offer more Euromoney magazine and 41st • Ziraat Bank celebrated the 150th Finance Group family and started • Izmir organization and Istanbul rapid and productive services of its activities. • The first loan was given to the in the field of net profit, 1st in anniversary of its establishment organization were affiliated to higher quality. • Assets of Ziraat Bank reached Treasury. the field of return on equity and with the staff. Ankara. • Ziraat Bank got the 452nd place in TRY 357.761 million in 2016, which • Crop needs of the immigrants 12th in the “fastest developing 50 • Sustainability Policy which “the first 500 banks according to yielded to net profit of TRY 6.576 and locals were provided with the 1939-1963 banks of the world”. summarizes the sustainability equity size” listed by Euromoney million. loan of Ziraat Bank in Izmit due to • Sofia branch was opened. vision, target and approach of • Regulation of Ziraat Bank of the magazine. drought. • Representation offices of Ziraat Bank and defines position Republic of Turkey, which was • Studies were conducted to Stuttgart, Hannover, Frankfurt of the Bank in environment, referred to in the Law no 3202 1989-2015 purchase agricultural equipment and Duisburg were turned into society and product/service axis and consisted of 198 articles, were • Banking School started its from abroad with the capital of branches. Software development was adopted and announced by completed and entered into force. activities in order to train the Ziraat Bank. of the Bank facilitated the the Executive Board of the Bank • Ziraat Bank became a member of qualified staff needed by the • Funds of Ziraat Bank were created presentation of new products and on 30 September 2014. the International Confederation Bank. in Kerek, Ipek, Prizrin, Tmasvar services. • Ziraat Bank issued the first for Agricultural Credit (CICA) • The Frist Investment Fund (Fund and Karacasu. • Turkish-Ziraat Bank Bosnia sustainability report on GRI A+ which was established to I) was established. • Those who were going through D.D., obtained VISA and EURO standard. represent the agricultural credit • Gold sales were started under difficult conditions due to drought PAY license and started, for • Ziraat Bank became the highest organizations and institutes in the name of Ziraat Gold. The first in Kosovo were enabled to get the first time, “VISA acquiring” corporate tax payer in 2014. international arena and carry out consumer loan was provided. The loan from Ziraat Bank. and “Issuing” transactions in • Ziraat Participation Bank started any activities found beneficial for first credit card was given. Bingöl- • A branch of Ziraat Bank was Bosnia-Herzegovina under the its activities. agricultural credit. Muş Rural Development Project opened in Medina. coordination of Ziraat Kart A.Ş. • Branches were opened in Kosovo/ • Law no 7052 enabled to split the was started. • Bank became an Incorporation Pristine. 24 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Our Awards

• The Best Bank of Turkey in Turkey Youth Awards Yeniköy-Kemerköy Thermal Power Plants Privatization Project • Golden Award in 2015 Sustainability Report LACP design competition and Ranking among the The Best Privatization Finance of the Year (Europe-Middle East-Africa Region) first 50 Reports Category • Bronze Award in 2015 Sustainability Report Mercury Pearl Anniversary 2016/17 Kayseri Integrated Health Campus Project • Golden Award in commercial banks category in 2015 Sustainability Report LACP design competition The Best Public-Private Partnership Project Finance of the Year (East and Central Europe) • 7 awards to Ziraat Bank from EMEA Finance: Gebze-Izmir Highway and Gulf Passage Project

Ziraat Bank was elected as the “Best Project Financing Organization” of EMEA and CEE Regions. 1. The Best Infrastructure Finance of the Year (Europe-Middle East-Africa Region) 2. The Best Transport Infrastructure Finance of the Year (East and Central Europe) Under the EMEA Finance Awards 2016 organized by EMEA Finance, one of the leading finance publications of Europe, Middle East and Africa, Ziraat Bank won 7 awards with 4 big projects it provided financing. • Silver Award in Stevie Awards “Company of the Year-Banking” category • First Prize in People’s Choice Voting for Stevie International Business Awards Istanbul New Airport Project • First Prize in bank category according to results of Turkey’s Lovemarks 2016 research

1. The Best Project Finance of the Year (Europe-Middle East-Africa Region) 2. The Best Public-Private Partnership Project Finance of the Year (Europe-Middle East-Africa Region) 3. The Best Infrastructure Finance of the Year (East and Central Europe)

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It is worth the future taking its culture form the traditions On these lands, power of the change have added value to the future for years. Today, while producing to meet the requirements, we are also saving by ensuring the minimum consumption.

We are creating a chain of values by converting the power of change into production and without consuming the future.

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Elements which are of top priority for Ziraat Bank and its stakeholders were determined and order of importance was established and matrix of priorities for 2016 were created accordingly. Our Priorities

Perspective of internal stakeholders was found These are: While defining the prioritized areas, Ziraat Bank out with a comprehensive survey conducted on made use of: department managers and staff of the Bank. • Market and client centeredness, wide range of banking products and services, client 1. The comprehensive survey conducted on 3. Outputs of the meetings held with international Perspective of external stakeholders was addressed satisfaction, increased brand value and department managers and staff of the Bank, finance and rating agencies, during the meetings held with the representatives international recognition, geographical who represent the internal stakeholders, of the departments under the service cycle. Such prevalence and high client access, diversified 4. Results of the desk-based works of the Ziraat meetings focused on the findings in articles 2 and basic deposit structure, which closely 2. The analysis obtained from the feedbacks of Bank Sustainability Project Team. and 3 of the list above, which were discussed interest the future economic performance and external stakeholders in 2016 through different with the relevant stakeholders (clients, suppliers, competitiveness of Ziraat Bank. channels, international stakeholders, etc.). • Supporting agricultural sector in line with the Following the prioritization analysis, elements foundation mission of the Bank. Ziraat Bank Sustainability Priorities 2016 which are of top priority for Ziraat Bank and its stakeholders were determined and order of • Protecting data of the clients. importance was established and matrix of priorities Market and client-centeredness Banking products and services for 2016 were created accordingly. • Corporate management and risk management Increased international recognition Client satisfaction Increased brand value Corporate management and risk management including sustainability management. • Sustainability management HIGH Diversified deposit structure • Being fair Ziraat Financial Services Group Geographical prevalence-high client access Verification study • Transparency Diversified product line • Being reliable Second and third category elements of the Supporting agricultural sector • Abidance by the legislation and regulations Protecting data of clients • Tax payment Verification study concerning the prioritization prioritization analysis are the issues which have • Preventing finance of terrorism different level of importance and priority for • Fighting with bribery and corruption analysis and the relevant process were carried out • Preventing money laundering successfully by the project team in 2016 as well. different stakeholder groups. These are:

Framework of the element • Services directed to SMEs and entrepreneurs, Business model- Long term value which are critically important for Turkish provision economy, have priority for Ziraat Bank. Managerial salary system Access to services Financial solidity of clients BT infrastructure Elements which are laid down following the Assessment of suppliers Participation in legislation Renewable energy Alternative distribution channels Human rights development process Variety and equal working conditions Services directed to the segment of prioritization analysis 2016 are divided into three Business model- Short term value Preventing financial crimes and money SMEs and entrepreneurs categories based on the importance and influence • Development of BT infrastructure and provision laundering Alternative Distribution Channels through new Occupational health and safety area. Issues included in the first category have the highest level of importance in terms of current and investments are very important for Zİraat Bank future performance of Ziraat Bank. and clients while its importance is relatively low for the external stakeholders. Payments to suppliers Participation of the staff Waste and energy Welfare of the staff • Participation, welfare, training, development Energy use Paper consumption Relations with regulatory authorities Staff salary system Local employment Representation of women and men in Training and development Equal payments for women and men and salary system, etc. of the staff are managerial bodies Importance Importance of the component for the stakeholders of Ziraat Bank important for the staff, who represent one of the most significant stakeholder groups, while it remains in the lower section of the LOW prioritization list of the external stakeholders. HIGH Effect of the component on the current and future performance of Ziraat Bank

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Stakeholders of Ziraat Bank Stakeholder Frequency of Group Communication Communication Channels

Shareholders, staff, clients and suppliers are included in the main stakeholder group Employment process, training programs for the of Ziraat Bank. The Bank is conducting stakeholder communication based on mutual Staff Daily – under business staff, performance assessment meetings, internal interaction and communication in order to assess demands and expectations of its cycle communication areas, manager deliberation and main stakeholders effectively. Besides the main stakeholder group, Ziraat Bank is information/share meetings communicating with regulatory authorities, international banks, investors and rating Clients 7/24 under service cycle Branches of Ziraat Bank, digital channels (ATM, agencies, media, sectoral unions and organizations as well as other segments of the Main internet banking, mobile banking, call center), client society based on transparency and mutual respect. Stake- relations representatives, client visits. holders Suppliers Daily – under business Purchasing process of all externally procured goods cycle and services of Ziraat Bank.

Shareholder General Assembly and General Assembly (annually). Ziraat Bank is also Society whenever required trying to enlighten the public over Investor Relations Sectoral Union and Organizations Department and Financial Reporting an Budget Media Management Department. Activity reports and other International Banks and Regulatory Authorities presentations as well as the statements made to Investors Public Informing Platform are included. Suppliers Shareholders Regulatory Whenever required – Reporting, correspondences and relevant meetings Authorities under business cycle held as per the legislation. Staff Clients International Daily – under business Meetings and interviews made with World Bank, Banks and cycle European Investment Bank, foreign funds, investment Investors banks, wealth management companies, etc. with which Ziraat Bank is working in cooperation.

Other Sectoral unions Daily – under business Meeting, presentation and daily communication Stake- and organizations cycle works. holders Media Whenever required – Works to enlighten the public in a transparent and under business cycle fast approach (press meetings, press releases, interviews, replying the directed questions, etc.)

Society Under the social Corporate social responsibility projects and donation responsibility projects activities

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Ziraat Bank takes into account the following criteria for definition of the stakeholders: Some of the initiatives that Ziraat Bank is a member or supporter

• THE BANKS ASSOCIATION OF TURKEY (TBB) www.tbb.org.tr

Based on Stakeholders who are dependent on Clients, staff, etc. • FOREIGN ECONOMIC RELATIONS BOARD (DEIK) www.deik.org.tr dependency Ziraat Bank today and tomorrow • INTERNATIONAL CHAMBER OF COMMERCE NATIONAL COMMITTEE OF TURKEY (ICC)

Stakeholders who are effective on http://icc.tobb.org.tr/index.php Based on effect performance of Ziraat Bank today Clients, staff, suppliers, etc. • CREDIT REGISTRY OFFICE (KBB) www.kbb.com.tr and tomorrow • TBB RISK CENTER www.riskmerkezi.org

Institutions and organizations • ECONOMIC RESEARCHES FOUNDATION www.iav.org.tr Stakeholders who cooperate with Based on performing corporate social Ziraat Bank in any issue regarding • INTERNET FRAUD INFORMATION SHARE SYSTEM (IFAS) participation responsibility projects, sustainability consulting firms, etc. • ASSOCIATION OF NATIONAL DEVELOPMENT FINANCE INSTITUTIONS IN MEMBER COUNTRIES OF THE ISLAMIC DEVELOPMENT BANK (ADFIMI) www.adflmi.org

Stakeholders towards whom Ziraat Shareholder, regulatory • INSTITUTE OF INTERNATIONAL FINANCE-IIF www.iif.com Based on liability Bank has/will have financial and legal agencies, international banks • INTER-BANKS CARD CENTER (BKM) www.bkm.com.tr liabilities today and tomorrow and investors, etc. • INVESTOR COMPENSATION CENTER http://www.ytm.gov.tr

Stakeholders who have the most • IPFA-INTERNATIONAL PROJECT FINANCE ASSOCIATION http://www.ipfa.org Based on affinity intense and long-term relations with Clients, suppliers, etc. • THE TURKISH CAPITAL MARKETS ASSOCIATION www.tspb.org.tr Ziraat Bank • CALL CENTERS ASSOCIATION www.cagrimerkezleridernegi.org

Stakeholders with whom Ziraat Based on Bank interacts under regulatory Sectoral unions and representation mechanisms or market/society organizations, media, etc. formations

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Corporate Management

Members of the Executive Board of Ziraat Bank Executive Board of Ziraat Bank consists of 9 Director-General is, in the widest sense, fully Ziraat Bankası’nın TTK ve Bankacılık Kanunu ile ilgili Member Duty members who are elected for a maximum term of 3 authorized and responsible for management, diğer hükümler uyarınca oluşturduğu komiteler: years. The number of the Board members enables Muharrem KARSLI Chairman administration and coordination of daily activities effective organization of the business activities. at Ziraat Bank. There are 7 Deputy Directors General • Credit Committee Duties of Chairman of the Executive Board Yusuf DAĞCAN Vice Chairman and Member responsible for specified areas in the Bank. Director • Audit Committee and Director-General are executed by different General and Deputy Directors General constitute the • Corporate Management Committee and Hüseyin AYDIN CEO and Member persons. Chairman of the Executive Board does Senior Management of Ziraat Bank. • Pricing Committee not have an executive function. All members of the Mehmet Hamdi YILDIRIM Member Executive Board have the minimum qualifications Election procedures of the Executive Board, the The Bank is fully applying the “Regulation on required for Executive Board Member election Feyzi ÇUTUR Member highest governance organ of Ziraat Bank, and the Corporate Management Principles of Banks” as indicated in Capital Market Board Corporate committees acting in the Bank were laid down in published by BDDK (Banking Regulation and Metin ÖZDEMİR Member Management Principles. Furthermore, the majority chapter 3 of the Articles of Incorporation. Besides Supervision Agency) and Corporate Management of the members of the Executive Board have the Mustafa ÇETİN Member the Members of the Executive Board of Ziraat Bank, Principles determined based on the Turkish qualification of independent member. a part of the professional directors constituting Commercial Code. The Bank is follower and Cemalettln BAŞLI Member senior management of the Bank are undertaking applier of the Corporate Management Principles the functions of Member of the Executive Board published by Capital Market Board. Corporate Salim ALKAN Member in subsidiaries of Ziraat Finance Group. Principles Management Committee was established in regarding assignment of the Members of the 2012 in order to monitor compliance with the Executive Board of Ziraat Bank outside the Bank corporate management principles and introduce are compliant with the Banking Law, Turkish improvements to this aim. Commercial Code and other relevant legislation. The only shareholder of the Bank was Ziraat Bank established the following committees Undersecretary of Treasury of the Republic of as per the relevant provisions of Turkish Commercial Turkey but all shares of the Bank were handed over Code and Banking Law: to the Turkey Wealth Fund with the Cabinet Decree of 24 January 2017 and no 2017/9756. Chairman and Members of the Executive Board, Members of the Audit Board and Director-General and Deputy Directors-General do not have shares in the Bank.

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Ziraat Finance Group is continuing the relevant studies Innovative Practices in the field of Internal Audit, to establish the sustainability policies. Internal Control and Risk Management

Innovative Practices in the field of Activities on prevention of laundering of Internal Audit crime revenues and financing of terrorism

Branch audits of Ziraat Bank are carried out within It is targeted to extend the internal assessment At Ziraat Bank, activities on prevention of environment and social risk management process the framework of client-centered audit model. on compliance activities throughout the foreign laundering of crime revenues and financing of and development of environment and social risk branches and subsidiaries and deal with our terrorism are carried out under the policy shared management tools. After the completion of the study in 2017, branches activities about the prevention of laundering of with the public on website and according to the to be audited will be determined effectively and crime revenues and financing of terrorism as a legislation in force. rapidly and optimal distribution of duties will whole in the Ziraat Finance Group. For the Information Policy, see . http:// continue. Time/cost effectiveness will be provided Implementation of the Compliance Program created www.ziraat.com.tr/tr/Bankamiz/YatirimciIliskileri/ when the risk score is calculated over the system. Innovative Practices in the field of Risk as per the “Regulation On Program of Compliance Documents/BilgilendirmePolitikasi.pdf Management with Obligations of Anti-Money Laundering Web-based Audit Model study is ongoing to ensure and Combating the Financing of Terrorism” and For the Policy on Prevention of Laundering audit of the subsidiaries and foreign branches of Through the credit risk calculation project based the duties, powers and liabilities specified in of Crime Revenues and Financing of Ziraat Bank. This model will provide conclusion of the applicable legislation belong to the Audit on internal rating approach which is planned to be Terrorism, see http://www.ziraat.com.tr/ the audits in the same/convertible report format Committee. initiated in 2017, Ziraat Bank will reflect the internal tr/Bankamiz/YatirimciIliskileri/Documents/ to the extent possible. Moreover, a model has been rating rules and plans to make positive contribution AMLPolitika.pdf started to be prepared in order to perform the to various areas such as capital adequacy ratio, Information Systems Process Audit of the Bank over client analysis, pricing and portfolio management. Policies valid at Ziraat Bank The following issues are included in the HR the system. It is considered that these studies will make Sustainability Policy see page 18 legislation which is accessible for all staff on decisions, transactions and applications of the intranet of Ziraat Bank: Innovative Practices in the field of Internal Bank more rational and transparent and provide In line with our aim to extend the sustainability Control and Compliance important contributions to the investor relations in policy applications of Ziraat Bank throughout • Human Resources international markets. the Ziraat Finance Group, it is intended that our • Pricing The project on preparation and follow-up of the subsidiaries also constitute their sustainability • Compensation control programs issued in 3-month periods policies and put them into practice. Policy making • Prevention of Bribery and Corruption regarding control activities of the domestic procedures will be completed in 2017. branches and departments over the system was completed. At Ziraat Bank, “environment” is addressed under the Sustainability Policy. It is targeted to initiate In 2017, it is aimed to integrate the reports of the a project on development and implementation control activities abroad into the system. process of the Corporate Social Responsibility Policy that will be applied to the investment loans in 2017. The project stipulates reinforcement of the managerial organization for implementation of

38 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Ethical Principles

Ziraat Bank adopted the ethical principles prepared Investor Relations Department The Bank was promoted to the domestic and foreign and published by the Banks Association of Turkey investors and analysts during local and international (TBB) according to Banking Law no 5411. In this Ziraat Bank has not been Investor Relations Department is working to conferences and their visits to the Bank. regard, the Bank adopted the followings as opened to the public yet. manage the relations with the shareholders and permanent targets: However it meets a great ensure transparency required by the legislation in Corporate Website case of a potential public offer. The department • Directors and staff of the Bank should comply part of the requirements plays and effective role in protection and use of the Corporate website available in www.ziraatbank.com. with the ethical rules; of Corporate Management shareholders’ rights. In this regard, even if the Bank tr plays an important role in providing the updated • Such principles should be adopted by the is not open to the public, it carries out the relevant information to the public. Ziraat Bank has not been members of the Bank; Principles and provides the actions like a company with public offering. opened to the public yet. However it meets a great • All activities of the Bank should be carried out relevant documents in Turkish part of the requirements of Corporate Management based on such principles. and English on its website. International conferences were attended to provide Principles and provides the relevant documents in information for the investors and analysts. Moreover, Turkish and English on its website. With a view to protecting the rights and interests meetings were organized at the Directorate-General of the account holders, providing trust and stability with various investor companies, analysts and in financial markets, operating deposit, credit rating firms. Presentations were prepared regarding and payment systems effectively and preventing financial results of the Bank in trimesters and shared transactions and applications that may result in with the investors on the website. big economic damages as well as protecting social benefit and environment, Ziraat Bank takes into account the following principles in its activities within the framework of the adopted ethical rules:

• Honesty • Impartiality • Reliability • Transparency • Social Benefit and Environmental Impact • Fighting with laundering of crime revenues and finance of terror • Prevention of information abuse

40 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Value Produced for the Turkish Economy

Direct contribution of Ziraat Bank to the economy covers a wide range from salary of the staff to supplier payments, from taxes paid to the government to the dividend payments of the shareholders.

As of its foundation, Ziraat Bank maintained its Direct contribution of Ziraat Bank to the economy In 2016, Ziraat Bank’s credit growth became faster growth by contributing to the local employment. covers a wide range from salary of the staff than the sector. Total assets of the Bank increased Ziraat Bank produced value With the growing business volume, Ziraat Bank pays to supplier payments, from taxes paid to the by 18% and reached TRY 357,8 billion. Cash credits tax on the level of TRY 2.223,1 million and employs government to the dividend payments of the increased by 25% and accounted for 65% of this not only with its product and 25.015 persons. In brief, Ziraat Bank produced value shareholders. figure and non-cash credits grew by31% . service portfolio but also with not only with its product and service portfolio but also with its tax payer and employer identity, and it its tax payer and employer Having reinforced its operational and financial supported the Turkish economy with the expenses identity, and it supported the borne under the supply chain. infrastructure and used this power to contribute to the Turkish economy, Ziraat Bank increased its cash Turkish economy with the credits to TRY 233 billion and size of total credits expenses borne under the reached TRY 312 billion including non-cash credits. supply chain. Direct economic value produced by Ziraat Bank in 2016 (TRY million)* Information on distribution of credit portfolio of Ziraat Bank is detailed in Activity Report 2016 under NET OPERATING INCOME OF 2016 17.217,0 the chapter of “Assessment of 2016: Strategies, Development and Targets for the Future”. SHARED VALUE IN 2016 Other Operation Expenses* 2.666,7 Staff Expenses 2.286,8 Tax 2.223,1 Dividend, Donation and other supports 280,3 Equity TRY 38.382 million

Tax (TRY Million)** Deposit TRY 223.019 million Tax paid by Ziraat Bank as a tax payer 2.223 Cash credits TRY 232.644 million Tax collected at source by Ziraat Bank from its staff on behalf of the public 431 Total of assets TRY 357.761 million Tax collected at source by Ziraat Bank from its clients on behalf of the public 3.458 Return on equity 18,7% * It is the amount of Other Operating Expenses except for staff, tax and donation expenses ** According to the financial statements approved in the independent audit of 31 December 2016

42 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT A value from past to future:

Since the day it was constructed, the building The building which witnessed the long history Historical Building in Ulus has protected its authenticity and spatial of Ziraat Bank and our country will be turned characteristics. Its construction was completed into a museum and become a more easily with great sacrifices despite the limited accessible and lively center for the visitors and The structure known as the Building of Ziraat Bank Headquarters was designed resources of the Republic period and achieved the concept of “a museum living side by side by Guilio Mongeri. Located on Bankalar Caddesi in Ankara, this precious building to preserve the integrity. the Headquarters” will be created. is near the other bank buildings which are the examples of the 1st National New annexes built in 1967 created the Architectural Movement. Each stage, from design to application, was planned current appearance of the building on which and detailed carefully and the building constructed meticulously is standing like restoration activities are still ongoing. a document.

44 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Happy Client, Strong Ziraat Bank

Ziraat Bank is providing special services to its clients with high geographical distribution and client access and free from piled and intense load of procedures

Ziraat Bank is providing special services to its clients Support to SMEs Loans Provided by the International Loans of the World Bank with high geographical distribution and client access Financing Organizations for the SMEs and free from piled and intense load of procedures. Our support to SMEs is continuing in line with With the loan agreement of US$ 67 million signed our renewed organizational structure and our Ziraat Bank continued, in 2016, to provide funds with the World Bank in 2013, it was aimed to finance Having adopted corporate, entrepreneurial and understanding of banking prioritizing more support from the international financing organizations for the energy efficiency investments. As a requirement individual client segmentation, Ziraat Bank to the reel sector. We have assigned Entrepreneurial the finance of SMEs or firms of bigger scale. Each of of the project, Ziraat Bank cooperated with a considerably increased client satisfaction and credit Client Relations Official providing special services the executed agreements includes special conditions consulting firm in order to provide technical support assessment qualification through the transformation to our entrepreneur clients regardless of their on environmental and social control criteria and in to its clients in energy efficiency investments and project. sector in all our branches and we have established general, compliance with the Turkish environmental loan provisions continued in 2016. an organization structure offering tailored services legislation is stipulated. The agreements also include Corporate Identity Works for each client. Pursuant to the protocol signed the lists of the sectors that are sensitive to the Provision of US$ 300 million source to the leasing between the Bank and KOSGEB (Small and Medium environment or need to be excluded. companies under the “Access of SMEs to the Ziraat Bank is conducting regular studies in order Enterprises Development Organization), we provide Financing” Project signed in 2013 with the World to ensure use of the corporate identity according to interest discounts up to 20% for the loans of the Bank continued in 2016 as well. This program the Bank standards, provision of correct perception entrepreneurs and up to 100% for the banking Environmental and Social Supervision supported growth plans of SMEs and encouraged of the brand image by the clients, integration services. financing of the investments with the leasing and of the corporate identity standards into the all As per the relevant loan agreements, an annex thus contributed to access of the Turkish leasing relevant environments and prevention of erroneous New Domestic Machine Equipment Loan is now is signed besides the general loan agreement of sector to the medium and long-term resources. applications. In this regard, audit procedures are provided for the SMEs acting in the manufacturing Ziraat Bank in sub-loans of SMEs, thereby the client performed in all branches. sector and purchasing new and domestic machine. commits to comply with the environmental and Zeor-Interest Operation Loan is provided for the social conditions required by the relevant financing Loans of the European Investment Bank Ziraat Bank in Social Media SMEs included in the entrepreneur segment. organization. International financing organizations Securities provided both with the support of with which Ziraat Bank is in cooperation occasionally Ziraat Bank continued, in 2016, the financing through Treasury and from the own equities of the KGF (Loan Social media accounts of Ziraat Bank reach to a carried out supervisions to the Bank and loan clients the resources provided by the European Investment Guarantee Fund) are increasing. great number of followers with their satisfactory during reporting period. Bank and based on the agreement executed during contents. Knowing that social media is the new and the same year, it started use of €100 million. Thus, it Pursuant to the protocol signed between TOBB most important communication channel of this era, Information on nature and target group of the contributed to increase of production, efficiency and (Union of Chambers and Commodity Exchanges the Bank maintains its support to culture and art loan agreements concluded with the international employment of the relevant firms and supported of Turkey), KGF and our Bank, “Breath Loan” is through Ziraat Art Facebook, Twitter and Instagram financing organizations are summarized below. their growth. pages and meets with art-lovers. now offered for the financing of operating capital of the members of Chambers and Stock Market under suitable conditions. Under the “Microloans Confidential Client Study to PGS Micro SMEs” project signed with KGF, loans of the Micro SMEs were guaranteed and in this Confidential Client Study is performed on such context, loan of TRY 52,2 million was given to 950 issues as compliance of the staff with the set clients. Pharmacy Support Package directed to the business goals and specified standards, adequacy of pharmacists was revised based on the new financial their efforts in gaining clients and reflection of the requirements and advantageous loan and other product information to the clients, and the relevant banking products were offered. departments are informed about the results.

46 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Ziraat Bank and European Investment Bank signed IPARD loan agreement of €100 million in 2014 for the financing of rural development projects

IPARD Loan Loans of French Development Agency (AFD) Ziraat Bank and European Investment Bank signed Through the source of €100million signed in 2014 IPARD loan agreement of €100 million in 2014 for between the Bank and French Development Agency, the financing of rural development projects. it was aimed to meet the financing needs of the SMEs which process food in agricultural sector. Provision of IPARD loan continued in 2016 and contributed to resources of the SMEs and firms Loans of Council of Europe Development of bigger scale and supported elimination of the challenges in access of the rural regions to the Bank (CEDB) financing. In 2014, a loan agreement of €100million was signed between the Bank and CEDB. Target of SEP (Saudi Export Program) the package was to increase the ability of the enterprises of micro, small and medium scale For import of the goods of Saudi Arabia-origin, to create employment and protect their current financing of US$ 50 million was provided from SEP employment. The project also aims to create in 2013 and the relevant uses continued in 2016. positive social effect and support the leasing sector. Financing was provided for the clients who import Besides the €50million obtained in 2015, another many products from the said country except for €50milion was received from CEDB and the suitable crude oil. projects continued to be financed with the loan of €100million in total. Loans of German Development Bank (KfW) Ziraat Bank aims to continue, in 2017, provision of loan packages made available from the international Within the framework of the loan agreement of finance organizations. Within the framework of €150million signed in 2014 between the Bank and the loan projects executed in cooperation with the German Development Bank for SMEs included in international financing organizations, there are not rural section or agricultural value chain; financing special clauses on human rights. However, the loan was provided for the clients in micro, small and agreements concluded with the World Bank include medium scale segment acting in the prioritized provisions stipulating that the financed subprojects areas and other regions stipulated by the agreement should not cause involuntary displacement of and inter-regional development differences were people. tried to be reduced.

48 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Financing of the Agricultural Value Chain Agricultural loan of TRY 42 billion for the Besides the loans of fixed-interest tractor, combine In 2017, Ziraat Bank maintained its financing support producers harvester, agricultural mechanization, second-hand for establishment and modernization of enterprises Ziraat Bank is the most rooted representative of self-propelled agricultural machinery which aimed which would contribute to the economy and agriculture in Turkey and provides operating and Agricultural loans provided from the own resources to increase the agricultural mechanization level and equipped with new technologies in line with the investment loans to meet agricultural production of Ziraat Bank have reached TRY 42 billion and the modernization of our clients; Small Equipment Loan agricultural policies and strategies of Turkey, and and other financing needs of the clients acting in number of the clients with loan reached around 590 was made available to increase the mechanization it aims to provide support also for the enterprises agricultural sector. Considering the agriculture as thousands. Increase in agricultural loans became level of the small-size enterprises. which produce products with high added value and a whole, Ziraat Bank maintains its support in the 26% when compared with the end of the previous may become exporter by increasing competitiveness financing of agricultural value chain by providing year. On the other hand, Young Farmer Loan was offered in foreign trade. loans for Agricultural Credit Cooperative, enterprises to the producers in order to ensure sustainability in involved in agricultural input and product trade, Balance of the loans which are provided from the agriculture, support entrepreneurship of the young agriculture-based and agricultural industry funds allocated by the various public organizations farmers, increase income level, generate alternative enterprises and agricultural service sector in addition for the financing of the agricultural sector reached income resources and support agricultural to those directly provided for producers. TRY 2,1 billion and the number of the producers production projects contributing to employment benefitting from such loans exceeded 81 thousands. of the young rural population and with a view to In order to provide liquidity power for the clients supporting the Young Farmer Project implemented who continue their agricultural production activities by the Ministry of Food, Agriculture and Livestock, and at the same time, cannot make the loan Low interest application creating enterprises with more suitable economic repayments in timely manner or have difficulty in scale and higher capacity of obtaining income and meeting the capital needs of such enterprises. repayment due to disruption of cash flow arising Ziraat Bank provided loans with varying interest from such reasons as natural disaster, cost increase- rates between 0% and 8,25% per year for the clients revenue reduction; Ziraat Bank structures the loan acting in the sector under the subventions specified debts in long-term and also provides additional on production basis. Ziraat Bank made available operating loan to help them maintain their loans of TRY 19,4 billion for agricultural 320.758 agricultural production activities. producers and firms in 2016 over the discounted interest rates. Ziraat Bank facilitates loan access of the producers who market their agricultural products through the In order to provide convenience for the clients, Ziraat union/cooperation of which they are a member or Bank enables use of ‘Başakkart’ for the loans of partner by using the guarantee, equity and pricing agricultural sector. In 2016, 246 thousands producers advantages and thus encourages the producers to used TRY 5,6 billion of the agricultural loan limit of become a member of an agricultural organization TRY 7,2 billion through ‘Başakkart’. Furthermore, and enable marketing and storage of the agricultural Ziraat Bank mediated in; products for better prices.

• Agricultural support payment of TRY 10,1 billion, • Product cost payment of TRY 2.944 million by Soil Products Office, • Sugar beet advance/cost payment of TRY 1.050 million by Sugar Factories of Turkey.

50 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Financial Awareness Agricultural insurances

Ziraat Bank attended the sectoral activities in 2016 Concerning agricultural insurance premiums too and supported the studies to increase the in 2016, the number of TARSİM (agricultural financial consciousness and develop awareness. insurance) policies reached 1.444.277 with an Apart from taking part in 8 different expos, the increase of 5% and premium production reached Bank sponsored 12 activities of various unions TRY 1.299.986.301with an increase of 35%. For and cooperatives. Meetings were organized for protection of agricultural sector against agricultural around 3.000 persons in different time periods at risks, Ziraat Bank is working in cooperation with the agricultural unions, presentations were made Ziraat Sigorta A.Ş. (Ziraat Insurance Co.) which is and thus contributions were made to develop the the leading company in the field of agricultural financial literacy. insurances. Specifically premium production increase of around 65% in plant production made the highest Preparations were started to guide the contribution to the sectoral growth. Ziraat Sigorta entrepreneurs and investors acting in the agricultural A.Ş. made 49,55% of the total TARSİM premium sector, lead them to the correct investment areas production on its own. and provide financial consulting services. This service is planned to be offered through the website Project financing of the Bank. In return for the project financing requests, either In 2016, there was not any situation that could Financing support is provided for renewable energy “EIA Positive Decision” is obtained if the relevant not meet those criteria. In the agreements issued The Bank is trying to develop cooperation with projects in addition to such infrastructure projects projects are subject to EIA or “EIA is not necessary” by Ziraat Bank, representations and warranties universities, non-governmental organizations and as airport, highway and bridge that make great decision. There is not any projects with cancelled EIA are obtained regarding environmental and social public institutions in order to provide added value contributions to the national economy and increase report in 2016. Moreover, permit-license and other issues based on the laws and legislation binding for agricultural production and producers in Turkey. employment. documents required by the relevant institutions on the clients and also non-compliance with the Under the Ziraat Bank project financing, special loan project basis are requested and examined. If such relevant representations and warranties are agreements are executed and environmental and documents cannot be obtained, information is considered as a default. Warranties of the clients are social risks are assessed. provided in the relevant report and it is underlined regularly observed through the periodic reports of that it must be paid attention during loan decision environmental consultants or investor. Change Rate of Premium Amounts in Agricultural Insurances and Number of Policies in Turkey phase. As of the end of 2016, “Environmental Consultant” is involved in 14 active projects. As of the end of 2016, 3 projects undertook to plant trees. In this regard, a project committed to The net number of Net amount of premiums (TRY) Under the project financing works of Ziraat Bank, plant trees in an area of 5000 hectare under the policies issued Sectoral share of premiums IFC performance standards and Ecuador Principles Environmental and Social Action Plan (minimum Sector Ziraat Insurance Sector Ziraat Insurance compliance commitments are added to the loan 10 million trees). Another project aims to plant agreements in the consortiums financed by IFC minimum 500.000 trees per year throughout the Change Change Change Change or EBRD. In such circumstances, abidance by the loan term, which makes a total of 5 million trees at End of 2015 End of 2016 (2015-2016) (2015-2016) (2015-2016) (2015-2016) relevant criteria is observed through the reports the end of the first 5 years and 10 million trees at prepared by the Technical and Environmental the end of 10 years around the influence area of the %46,16 %49,55 %34,61 %44,47 %5 %19 Consultants. facility. In another project, it was engaged to afforest an area of 2.940 hectare and 3.381.000 trees were planted.

52 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Environmental and social risks Housing acquisition support payments

Under the firm assessment system, availability of Ziraat Bank made housing acquisition support such applications in “Good Agricultural Practices” payment of TRY 635 thousands in 2016. and “Organic Agriculture” criteria is scored in agricultural models and if positive, risk note of the Saving incentive payments of the staff client is affected positively. In manufacturing firms, the following restriction is available in “Conformity Ziraat Bank made saving incentive payment of TRY of the Facility with the Subject of Manufacturing”: 219 thousands in 2016. “In case the firms acting in the sectors requiring availability of ecological treatment unit and filter insert, etc. or legally requiring such units do not have Social security payments these, they will be given a negative score under the Ziraat Bank cooperates with public institutions and relevant criteria.” mediates in income/salary payments. Furthermore, income/salary payment of TRY 79 billion and €336 Such criteria as environmental effects of production/ million, public salary payments of TRY 13 billion, manufacturing process, appropriateness of the TRY 7,4 billion for Credit and Dormitories Agency project location are examined in agriculture and and other payment of TRY 729 million were made in manufacturing sector. Necessary actions are started 2016. for the projects not abiding by the relevant criteria.

Value produced for the public institutions

Positioned as the main distribution channel in social policy applications of the public, Ziraat Bank mediates ten millions payments of many public institutions during every activity period.

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Services for the individuals Ziraat Mobile Branch, Mobile ATM Special Projects for Private Clients Steps to increase financial access of the disabled clients Aiming to meet requirements of the different client Trying to provide services to its clients whenever Ziraat Bank continued to develop special projects groups with the most suitable solutions, Ziraat they need, Ziraat Bank is offering services, with 5 for private clients in 2016. Among these projects, the Ziraat Bank is carrying out systematic works to Bank provides individual services with an extensive Mobile Branches and 1 Mobile ATM, especially in followings are included: facilitate access of the disabled clients to the distribution network making use of such different areas with seasonal population density. products and services. Within the scope of the channels as ATMs, internet banking, mobile banking • Activation of Pre-approved Consumer Loan, Accessible Banking, the followings were completed; and call centers. In 2016, more than 1,5 million Lifelong Banking • Application of Dowry Account under State personal loans corresponding to around TRY 39,2 Subsidy and Housing Account under State • Perceivable surface application for the visually billion were provided. Within the scope of lifelong banking, the following Subsidy in particular to increase TRY impaired people in inner and outer grounds of client programs were created and activated with investments of the young population, 600 branches; call button to be used by the Users of the internet banking increased by 54%, various campaigns. • Application of Bag-Kur (Pension Fund for Self- disabled people in order to request assistance compared with the previous period, and reached Employed) Premium Debt Loan. when they enter the bank branches; information 9,7 million while the number of the active clients of • Gain of the Teeny is at Ziraat, board in Braille Alphabet to be affixed on the mobile banking increased by 104% and reached 2,1 • Gain of the Young is at Ziraat, outer gate; million. • Gain of the Employed is at Ziraat, • Gain of the Retires is at Ziraat. • Disabled lifts in 13 branches. Within the framework of our studies to offer the digital banking services to our clients through every Following activation of the special client programs It is targeted to extend measures in all branches in channel possible, we activated the “Ziraat Tablet” on the Bank’s website; products, services and order to ensure easy access of the disabled clients to application prepared for the tablets. campaigns provided based on the Lifelong Banking the branches, ATM and internet banking services. segments were started to be shared with the clients. At Ziraat Yatırım A.S., a domestic subsidiary of Ziraat Bank, internet branch was restored to facilitate Furthermore, within the framework of the transactions of our clients on capital markets and cooperation established with the leading firms also launched the ZBorsa mobiel application in order of various sectors, we also offered discounts and to contribute to literacy on capital markets. advantages to our clients in non-financial areas as well. Ziraat Hayat ve Emeklilik A.S., on the other hand, started a mobile branch application enabling viewing and making transactions on agreements regarding life/personal accident policies and Perceivable surface, call button and Braille individual retirement system. applications are available in 600 branches. Studies concerning needs and trends of the different personal banking segments, client centered activities, process improvements and efforts to comply with the legal regulations continued in 2016 with success. Different loan packages were created considering the differences detected in product choices of the pensioners and other clients receiving their salary through Ziraat Bank.

56 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT

Ziraat Bank aims to contribute to the learning, awareness and development of the children through the e-trainings prepared to raise their awareness about the savings.

Financial Literacy Financial Awareness with e-Trainings Marketing Communication Principles of Sponsorship-centered marketing Ziraat Bank communication Ziraat Bank believes that awareness should be raised Ziraat Bank aims to contribute to the learning, in all segments of the society about financial literacy awareness and development of the children through Ziraat Bank pays attention to ensure that; Under the marketing communication works, Ziraat to ensure sustainable development of our country the e-trainings prepared to raise their awareness Bank sponsors the activities that have social and carries out special awareness works for its staff about the savings. • The advertorials are legal and comply with the benefits. During the reporting period, there has and services besides developing client-friendly rules of competition, not been observed any case concerning non- products and services. Sales departments in charge The following e-trainings are available on the compliance with the regulations and voluntary of the branches make branch and client visits at website of the Bank, which provides information for • Marketing communication is realized with an rules in marketing communication studies including certain intervals and continue providing training to the children concerning money and bank relation, accountable approach and based on honest advertisements, promotions and sponsorships of the branch staff and clients about financial literacy. operation of the banks, internet and telephone competition principles, Ziraat Bank. banking, loan and credit card and economic use of all resources from money to electricity and water: Special Notifications for Crafts and • Marketing communication does not contradict Artisans with the generally accepted rules and practices • Money-Bank Island of the relevant country and culture; Ziraat Bank is carrying Ziraat Bank attended the Council of Crafts and • Saving Island • Loan and Credit Card Island Artisans – Loan and Financing Commission meetings • Marketing communication is designed in a out financial awareness • Budget Island as a member of the Banks Association of Turkey manner not to abuse trust of the clients or studies for the staff and (TBB). In this regard, details of the training services benefit from their lacking experience and Within the framework of the e-training works, provided by TBB for SMEs were stated and internet knowledge, clients. site containing product information of Ziraat Bank awareness trainings are provided for the farmers in a wide range of areas from modern irrigation was shared. • Products and services that may affect techniques to agriculture insurance. Furthermore, purchasing decision of the clients are correct e-training program was prepared for all clients about and do not give misguiding messages and they Sponsorship Support for Generalization of “How does the Credit Card System Function?” Financial Literacy are conveyed in a manner and time that would be perceived by the clients. Marketing Communication Ziraat Bank takes part in publications aimed to raise awareness of the individuals about financial issues Having adopted the marketing communication and also provides sponsorship support in activities. based on fair competition as an indispensable Within this framework, product advertorials principle, Ziraat Bank primarily aims to provide are placed in various economy magazines correct, updated and impartial information to and publications, also sponsorship support is the clients in all marketing communication and provided for many TV economy programs. Senior promotion works. Management of Ziraat Bank attended numerous activities in 2016 as speaker or panelist and via their interviews with the newspapers and magazines, they helped spread of financial literacy messages to the large masses.

58 www.ziraatbank.com.tr A value from past to future: Value for the Future 2016 SUSTAINABILITY REPORT Ownership of the historical building passed In line with the restoration works, ground to Ziraat Bank in the early 1940s. On the reinforcement and improvement were made; Karaköy Building southeast face of the structure, there are two ground floor and mezzanine were designed human figures – one woman in the west and as the branch while the upper floors were Having been constructed according to the architectural understanding of one man in the east – on both sides of the designed as working offices, meeting room, 1910-12, the historical Karaköy Building faces to the Rıhtım Caddesi and concrete guard rails of the terrace. exhibition and fair area. Areas which lost their Karaköy Caddesi and has a neo-classical style. It was constructed as the authenticity will be reorganized based on the Having surface of 2.380m2, the building authentic design principles and restitution Austrian Bank and it is donated with various colors reflecting historical values consists of basement floor, ground floor and 6 project by using the available technical of the period. normal floors. The annex, on the other hand, opportunities. consists of basement floor, ground floor and 6 normal floors and has surface of 1.655 m2. The historical Bank building has additional area of 375 m2 and it was restored to meet the current requirements but by remaining loyal to the historical appearance.

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We are acting together, like a family, with all our directors and staff Competent and Qualified Human Resource

Ziraat Bank has the highest number of staff with M.Sc. and PhD degree in banking sector of Turkey.

Our Bank is aware that it owes its exclusive Individual Performance Management Main indicators of individual performance Executive candidate program position in the sector to the high-level human System assessment system resource who are donated with unrivalled market Individual Performance Management System is Trainings provided under the Executive Candidate knowledge and experience and present right value a system which measures personal success and • As of the last quarter of 2016, ratio between Program aiming to meet the executive needs of recommendations to the clients at right time and ranking of the staff with objective and measurable the total number of the staff and the staff Ziraat Bank continued and around 300 staff were from the right channel. Having the most extensive data at certain intervals. The system was designed who is subject to the individual performance sent to the Executive Candidate Pool following service network in Turkey, Ziraat Bank – besides in two main dimensions as numeric-based and assessment is 77,3%. the organized programs. It is aimed that staff who providing advantageous employment conditions qualification-based. • Considering the field staff subject to individual become successful in the programs of 2017 will for the young professionals - supports the local performance assessment during the 4 terms of be appointed as directors at the branches and employment and thus produces significant added Indicators of client centeredness, profitability, 2016 activity period; 53% of the staff is working departments of the Directorate-General if required. value for the Turkish economy. productivity and risk management have in marketing group while 47% is working in considerable effect on performance score. Individual operation group. 51% of the field staff working Promotions • The total number of the staff is 25.015. performance premium is paid to the staff at in the operation group is men while 49% is • 807 persons were employed in 2016. trimesters. The system is marketing-weighted in line women. 64% of the field staff working in the Within the framework of promotional activities in • 87% of staff have associate degree, B.Sc., M.Sc., with the bank strategies and targets, and it enables marketing group is men while 36% is women. 2016, 23% of the staff took the written examination and PhD degree. distribution of the premiums in a way that staff who so as to be promoted. 20% of all staff got title/duty • Average of age is 34,8 and average of service contributes more obtains more revenues. Qualification-based performance promotions. year is 10,5. management • Ziraat Bank has the highest number of staff Ziraat Bank aims to motivate and increase corporate Pricing Committee and staff with M.Sc. and PhD degree in banking loyalty of the staff and award the individual sector of Turkey. Within the framework of the qualification-based achievements complying with the corporate performance management works, two applications Pricing Committee is responsible for monitoring and strategies, and it makes effort to include the supervision of the pricing applications on behalf The need for new recruitments is reviewed on yearly were made in 2016. New applications will be studied departments of the Directorate-General in the of the Executive Board. The Committee evaluates basis. All staff are liable to sign the Ziraat Bank in 2017 in line with the results of the relevant performance management system in force. the pricing policy and applications based on risk Ethical Principles Contract. processes, and it is aimed, in the coming periods, to evaluate the qualification assessment results management in order to ensure compliance of together with the individual performance system the pricing policies with the ethical values and and career management. strategic objectives of the Bank and shares its recommendations with the Executive Board. Under the human-centered human resources policy, Ziraat Bank attaches importance to assignment Salaries of the members of the Executive Board and of the staff to the positions fitting with their Director-General are decided during the General qualifications and obtaining job satisfaction. In line Assembly of the relevant year. with the horizontal organizational structure in the Bank, duty position application is maintained in career management. Besides the titles indicating professional level of the staff, a duty position is determined according to the executed duty, addressed client segment and marketing-operation separation.

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Salary Applications

Salaries of the staff and directors are reviewed at the expenses are not deducted from the staff and their end of each year for the following year. Provisions relatives, and discount is applied for the deduction of the Collective Agreement are taken into account of fund operating fee. for salary increases. Personal and monetary rights of the staff are established according to title and duty Overtime position without sex discrimination. The system activated to follow up the overtimes was Collective Agreement also used effectively in 2016 and it was focused to reduce the overtimes. Collective Agreement was signed for 2-year period as of 1 January 2017 between Ziraat Bank and Öz Health Benefits and Applications Finans-İş Trade Union. In this regard, some leave rights were provided apart from the additional In addition to the health services provided by the monthly payments for the members of the union. Social Security Institution to the staff, who are Collective Agreement also included the notification subject to special law provisions of Ziraat Bank, periods to be applied in case of termination of the and their family members, treatment benefits are employment contract by the staff or employer. provided from; Syndication level is 88,08% at the Bank and salary adjustments were made according to the Collective • the budget of Ziraat Bank based on the Agreement in 2016. authorities received from the Executive Board of the Bank; Individual Retirement • the budget of Fund based on the authorities received from the Executive Board of the Fund Within the framework of the Group Retirement for the members of the Health Support Fund with Employer Contributions, the Bank continues (Fund). paying contributions – on condition that it will not exceed 3% of the gross salary and it will not be The Bank also executes special agreements with the less than TRY 100 – for the staff who pay monthly health service providers in order to offer healthcare contributions by 3% of the gross salary and services for the staff and announces this. minimum TRY100 as per the individual retirement agreement under Ziraat Hayat ve Emeklilik A.S. Leave

In 2014, the Bank started paying employer Annual leave periods of the staff of Ziraat Bank are contributions of TRY 50 per month without the regulated according to the provisions of Labor Law necessity to pay contributions for the staff and then and necessary amendments/arrangements are made this amount was increased to TRY 100. On the other in the HR legislation of the Bank based on the legal hand, within the framework of Group Retirement regulations. Plan under Bizbize Group, BES (individual retirement system) policy registration fee and management

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Training • “Legal Obligation Trainings” arising from the Internship Professional Trainings in line with the legislation, Legislation Ziraat Bank provides permanent professional and In every activity period, Ziraat Bank provides • “Licensing/Certificate Trainings” in order to personal development opportunities for the staff, professional skill training and internship Ziraat Bank also organizes systematic training prepare for national and international licenses and classroom training and e-training of average opportunities for many high schoolers and activities for prevention of laundering of crime and certificate exams. 36,86 hours was provided for 25.015 staff in 2016. undergraduates in order to train the bankers of revenues and financing of terrorism. the future. Ziraat Bank provided Professional Ziraat Bank closely monitors the developments in Training activities provided for the staff in 2016 are Skill Training for 1.187 high schoolers and 38 99.55% of the staff attended the trainings held the field of training technologies and organizes as follows: undergraduates and internship opportunity for 2.853 under supervision and coordination of the e-training programs. 226.942 persons attended the undergraduates in 2015-2016 education period. Compliance Officer in 2016. • “Banking School and Orientation Trainings” in e-trainings organized by the Bank in 2016. order to familiarize the newly recruited staff of Ziraat Bank about the Bank, adapt them to the Ziraat Banking School corporate culture and provide necessary basic knowledge and skills, Ziraat Banking School has become a corporate brand in the field of banking training and maintains to train • “Executive Candidate Trainings” to prepare young bankers according to the vision and strategies the staff, who are working in authorized of the Bank. Assistant experts who were trained and duty positions, for director/branch manager graduated from the Banking School in 2016 started positions, their professional lives at the Bank.

• “Development Trainings” to meet the training requirements or transfer the new product/ service/ legislation information in line with the targets and strategies of the Bank, General information on the trainings organized in 2016 is available in the table below.

Men Women Hours of training Hours of training Number of person Number of person Duty positions per person on per person on in training* in training* average average Director 8.499 25,39 2.484 26,79 Other 39.007 19,07 20.550 12,59 Grand Total/ 47.506 19,82 23.034 13,34 Average

* Number of persons in training: In case one person attends 3 different training program, number of persons in training is calculated as 3 while the number of real person is 1. * Data only cover the classroom trainings.

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Main Human Resources Indicators Distribution of the staff in Ziraat Bank based on age group and education level is provided below.

Occupational Health and Safety Suggestion System Table 1 (Age group distribution) Ziraat Bank is acting in the banking sector Having developed mutual communication with Grand total DUTY/AGE 31-40 41-50 51+ assessed as “Slightly Dangerous Workplace” and its staff, Ziraat Bank aims to involve the staff in (person) carries out its work processes according to the decision-making mechanism, benefit from their DEPUTY DIRECTOR-GENERAL 6 3 9 Law no 6331 on Occupational Health and Safety. knowledge, encourage them to make research and Occupational Health and Safety Coordination Board further increase the productivity and quality in HEAD OF GROUP 1 6 5 12 was established to coordinate the procedures the services. In this regard, staff submitted 4.841 HEAD OF DEPARTMENT 9 28 4 41 of compliance with the said Law. Moreover, suggestions to the system in 2016 and necessary REGIONAL COORDINATOR 2 3 5 Occupational Health and Safety Board constituting actions were started for the suggestions. of Agent of Employer, Occupational Physician, REGIONAL DIRECTOR 3 33 6 42 Occupational Safety Expert, Representative of Transfer request system Grand Total 13 75 21 109 the Staff and Administrative Works Official was established. During certain periods, staff may state to the Table 2 (Distribution of education level) Directorate-General where they would like to work. Grand total During the meetings of Occupational Health and DUTY/AGE B.Sc.% M.Sc.% PhD% Directors also may recommend change of positions (person) Safety Board of Ziraat Bank, the following issues considering qualifications of the staff and contribute DEPUTY DIRECTOR-GENERAL 77,78 22,22 9 are discussed according to the duties and powers to their career development. Within this framework, described in the relevant Law: OHS and first out of 812 requests in December-January period HEAD OF GROUP 66,67 25 8,33 12 aid trainings, periodic health examinations, risk and out of 1.274 requests in June-July period, HEAD OF DEPARTMENT 60,98 34,15 4,88 41 assessment reports of the workplaces, drill and respectively 564 and 873 requests were realized and REGIONAL COORDINATOR 80 20 5 evacuation plans, periodic test and maintenance reached the end. of machinery-equipment and subcontractors. REGIONAL DIRECTOR 69,05 26.19 4,76 42 Meetings are repeated at least once in three months according to the relevant Law. Survey on loyalty of the staff Grand Total 66,97 27,52 5,5 109

Closely monitoring the requests and expectations of A total of 764 persons got occupational health and Distribution of the human resources in Ziraat Bank based on gender, age group and education level is safety training in 2016. the staff, Ziraat Bank conducted a Staff Satisfaction and Loyalty Search through an independent provided below. At Ziraat Bank, there was not a business day that research company and the results were shared Table 1 (Directorate-General/Region/Branch) remained idle in 2016 reporting period due to such with the relevant departments. A similar research is UNIT NUMBER % reasons as injury, occupational disease, strike, planned to be performed in 2017 as well. lock-out, natural disaster, destruction and collapse REGION 276 1,10 of building. Similarly, there was not an occupational DIRECTORATE-GENERAL 5.042 20,16 accident during the reporting period. Occupational BRANCH 19.614 78,41 Table 3 (Distribution of education level) health and safety provisions are included in the ABROAD 83 0,33 EDUCATION LEVEL NUMBER OF % collective agreement between the Bank and trade PERSONS union as per the Law no 6331 and applicable Grand Total 25.015 100 PHD 36 0,14 legislation. M.SC 2.072 8,28 Table 2 (Distribution of age group) B.SC 16.517 66,03 AGE NUMBER OF % ASSOCIATE 3.146 12,58 PERSONS DEGREE 30- 7.482 29,91 HIGH SCHOOL 3.210 12,83 30-50 16.385 65,50 SECONDARY 34 0,14 51+ 1.148 4,59 SCHOOL Grand Total 25.015 100 Grand Total 25.015 100 68 www.ziraatbank.com.tr Value for the Future 2016 SUSTAINABILITY REPORT Aiming to add value for the future with the Inspired from the Sultan’s Signature in sustainability policy, the Bank also targets to façade design, the building maintained its consume less from the nature with the new connection with its deep-rooted history and İstanbul Finance Center headquarters and obtain LEED (Leadership in also constructed with the latest technological Energy & Environmental Design) certificates means. Moreover, the building is characterized by designing the buildings based on the as a special architectural project reflecting past The structure is decorated with geometric symbols of the Ottoman patterns international environmental standards. & future connection of Ziraat Bank. and consists of two buildings of 46 and 40 floors. Having carried the power of Leadership in Energy & Environmental Design certificate is the green building certificate its deep-rooted past to the future, Ziraat Bank got its power from the history with the highest level of acceptability. It again while designing the new center in İstanbul and created a modern contributes to the nature and future with the construction environmentally friendly construction materials and nature friendly energy consumption systems.

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A More Livable Environment

Ziraat Bank maintains its activities in different fields in order to contribute to the generation of a more livable environment.

Paper consumption

Through systemic send of the internal in electrical environment during decision making correspondences over a correspondence application, process of loan allocation. 2.413.556 pieces A4 papers were saved in 2016. Records of daybook and general ledger, which The multi-functional printers makes double-sided is an ordinary application, is made in electronic printing in the Bank and provides high-level of environment as of 2015. This change saved over paper saving. Carbon dioxide emission of the Bank 1.000.000 pieces A4 per year at Ziraat Bank. Under decreased by 683 tons by means of the double-side the project of sending collective bank statement printing in 2016. Additionally, faxes are sent and from the center, the bank statements are sent via received in electronic environment in the Bank. e-mail to the persons who require or request to receive bank statement, which helped to save huge With the virtual loan file project, Ziraat Bank aims amounts of paper. to system scan and generation of all documents provided and prepared during loan assessment, In order to reduce paper consumption and make proposal and use phases. Once the project is contribution to the nature, the studies continued to completed, all loan-related documents will be pass from the printed bank statement to the e-bank viewed over the system and this project saved about statement for the credit card holders and member 4,5 million pages paper in 2016. workplace clients.

The measures continued in 2016 in order to make sure that the documents obtained from the other institutions as per the legislation were received

DOUBLE-SIDE PRINTING PROJECT PREVENTED AMOUNT OF NUMBER OF PAGES SAVED FROM NUMBER OF TREES SAVED CARBON DIOXIDE (KG) CONSUMPTION

682.547 21.474.673 2.673

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Steps started in 2013 to send the invoices of the After generalization of e-invoice application, Ziraat communication service in electronic environment Finansal Kiralama A.Ş. started to send the leasing continued in 2016. In this regard, invoice payments invoices in electronic environment, which also of other institutions were transferred to electronic contributed to paper saving to a great extent. environment as well. According to data of 2016, electronic invoices provide huge gains in the field of In our subsidiary Ziraat Bank (MOSCOW) JSC; while paper saving considering 273.124 invoices per year. only one receipt was printed on an A4 paper, now 2 receipts are printed to save paper. Making correspondences outside the Bank over the registered e-mail system will also contribute to In our subsidiary Ziraat Bank International AG; paper saving. personal and department printer application was removed in 2014 and print-center was established on Within the scope of realizing mortgage release every floor and common central printer application procedures in electronic environment, 157.144 pieces was started. Thus, 0,8 million papers were saved per A4 papers were saved in 2016. year.

Under the project of Preparation of Audit and In Ziraat Sigorta A.Ş. & Ziraat Hayat ve Emeklilik Internal Control Reports over the System, all A.Ş.; studies were made to send all policies and branch reports were started to be issued over the agreements online. BES (personal retirement system, which greatly contributed to paper saving. system) agreements are sent to the clients via Moreover, apart from branches, audit reports of e-mail if they have an e-mail account. Moreover, the departments in Directorate-General and other all life policies are sent to the clients through SMS departments were prepared and followed over the and e-mail to ensure environmentally friendly system. Around 515.000 pieces A4 papers were management. saved per year following transfer of the audit and control reports into the system.

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Waste Management

Paper Wastes Other Wastes

Documents, upon expiration of their legal The faulty BT equipment in the departments and In order to contribute to prevent environmental Under the constant improvement works at physical preservation period, and paper wastes are sold to branches of the Bank are collected at the service damage of the waste batteries, waste battery service points; materials used in such construction the authorized firms for recycling purposes. In 2016, centers of the Bank and re-used after the necessary collection boxes available in the Directorate-General projects as installation, electrical system, equipment, around 1.400 ton waste papers were recycled. repairs and replacements. of the Bank are also extended to the branches. furniture, furnishing are reviewed under R&D and considering their functionality and recycling features In our subsidiary Ziraat Bank (MOSCOW) JSC; 648 The waste BT materials, sheet-weighted materials Waste battery collection boxes are used at Ziraat as well as their environmental effect, the relevant kg waste paper was sent to recycling in 2016. such as system cabin and air-conditioner, Sigorta A.Ş. & Ziraat Hayat ve Emeklilik A.Ş., concepts are chosen to minimize the damage. accumulator, GIM cabin and wreck ATMs are sold Ziraat Finansal Kiralama A.Ş. and Ziraat Porföy In Ziraat Sigorta A.Ş. & Ziraat Hayat ve Emeklilik to the companies holding transport and processing Yönetimi A.Ş., Ziraat Yatırım so as to prevent Within the framework of the sustainability concept A.Ş.; around 2.920 kg waste paper was sent to license from the Ministry of Environment. Thus, environmental damage of the waste batteries. at the Bank, 271 branches were restored in 2016. recycling in 2016. it is ensured that the wastes do not harm the environment and used as raw materials following In our subsidiary Ziraat Bank International AG; the recycling. papers are collected and sent to waste recycling center. The unused empty toners and drum units are disposed under the liability of the manufacturing In our subsidiary Ziraat Bank Azerbaycan ASC, firm. In 2016, a total of 21.240 kg waste products documents whose legal preservation period expires were accredited and eliminated by the recycling and waste papers are sent to recycling. companies.

Ziraat Finansal Kiralama A.Ş. also sends the unused empty toners to the recycling.

Through this application aiming toner saving, the number of points used for each character and optimum number of points are adjusted and points that cannot be possibly realized by the users are not printed, thus toner saving is provided by 20%.

While replacing chemicals of the expired fire tubes, the companies authorized to collect and dispose the relevant chemicals are involved.

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Energy Efficiency Other Environmental Applications

Ziraat Bank continues its activities to redesign and At our subsidiary Ziraat Bank Azerbaycan ASC, Having one of the most widespread ATM networks In 2016, our Bank provided modern pressurized structure the datacenters. Data Centers Project users are warned with e-mails to turn off the of Turkey, Ziraat Bank has completed the project irrigation systems loans of TRY 211 million for 4.279 and facility design, construction and installation of computers outside the working hours. During of using biometric systems at the entries of ATM persons. These loans enabled irrigation of the land Ziraat Finance Group data centers were completed. working hours, if computers are not used for cabins. Under the project, cabin temperature and of around 246 thousands decare with modern Transfers and transports of the BT systems are 10 minutes, monitors pass to the sleep mode energy consumption data are monitored from the pressurized irrigation systems. Water saving is ongoing. automatically and save energy. center and necessary adjustments are made based provided between 30% and 40% with drip irrigation on the relevant data and energy consumption level and sprinkler systems and the said loans contributed Upon completion of the Data Center Facility Project, At Ziraat Katılım Bankası A.Ş., under the energy is reduced. to save water. it is targeted to provide energy saving by 40% with efficiency applications, thermostatic valve is used In 2016 Ziraat Bank purchased 1.270 air-conditioning the renewed infrastructure and natural cooling and once the ambient temperature reaches a certain systems with high energy efficient inverter In procurement tenders, Ziraat Bank stipulates that methods. degree, energy consumption stops automatically technology, using R410A cooling gas not harmful for substances used for the cleaning of branches and and thus, it prevents unnecessary consumption. the ozone. In order to reduce the heating costs and departments do not include any chemicals harmful Within the framework of the applications aiming Another criteria applied by Ziraat Bank in order increase energy efficiency, the Bank supplied 365 of for the human health and environment. Cleaning energy saving and efficient use of the energy to minimize the probable environmental effects the said air-conditioners in compliant with the new tools and cleaning agents are provided by the resources, and in line with the Green IT applications of the banking activities is considering the fuel generation VRF system standard maximizing the supplier firm but their compliance is periodically optimizing the energy use of the computers; consumption level in purchasing/renting vehicles. energy saving and comfort conditions. controlled by the authorized officials of the Bank. warning messages are sent to the users at the Fuel consumption of the purchased/rented vehicles specified times outside the working hours for is evaluated within the ownership costs and criteria Ziraat Bank plans to construct the Ziraat Towers turning off the computers and in the absence of any encouraging less fuel-consuming vehicles are to be built in Istanbul International Finance response, computers are turned off automatically. included in tendering processes. Thus, it makes Center campus in Ataşehir in accordance with During working hours, if computers are not used indirect contribution to reduction of negative the international environmental standards and for 10 minutes, monitors pass to the sleep mode environmental effects and fossil fuel consumption in obtain LEED Certificate. Ziraat Gayrimenkul Yatırım automatically and save energy. Moreover, all IP the country. Ortaklığı A.Ş. targets to create sustainable and telephones pass to sleep mode as of 18:00. environment-friendly buildings with innovative Ziraat Bank has mounted LED lighting systems to design and architectural methods under the real Ziraat Finansal Kiralama A.Ş. carries out projects to the branches, lighting advertisement panels and estate development projects of 2017. ensure effective use of the energy resources and ATM concept. energy saving. In this regard, information system servers are activated in virtual environment and Generators are monitored from the remote and operated on few number of physical servers which center, and it is checked whether they are activated provides both energy and space saving. If not used in case of a blackout. Similarly, fuel conditions are for 5 minutes, computers and monitors pass to sleep checked from the remote and they are matched mode to save energy. Such peripheries as printers with uninterrupted power supplies in case of a and copier machines also pass to sleep mode for probable blackout. During blackouts, generator is energy saving. not activated directly but when feeding level of UPS accumulators drops to 30%, thus green gas emission is reduced.

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Scope 1 emissions of 2016 decreased by around 10% in comparison with 2015. Diesel consumption of vehicles ranked the first Energy Consumption with consumption level of 47% in 2016. Diesel is followed by natural gas and coal respectively with the percentages of 39 and 7.

In the reports of the previous years, green gas national data activities. Global Warming Potential 2015 2016 % Direct green gas information was only available for the Directorate- coefficients used in calculations were received from Direct energy Direct green gas Direct energy Direct green gas emissions (Scope 1) Scope 1 change General while 2016 data included energy data of IPCC AR5 evaluation report. consumption MWh emissions (tCO2e) consumption MWh emissions (tCO2e) domestic branches and regions. In order to make Natural gas 36.302 7.353 42.389 8.586 16.77 comparisons with the previous years in sustainability Distribution of green gas emissions according to reporting, data of 2014 and 2015 were also resources are indicated below. Electricity-originated% Fuel Oil 6.043 1.693 4.708 1.319 -22.09 recollected and calculations were updated. emissions rank the first with 57% and it is followed Diesel oil (used in 4.840 1.299 3.808 1.022 -21.33 by emissions arising from company vehicles with buildings) Concerning the scope of green gas emissions, issues 17% and fuels of the buildings with 16%. A similar Coal 8.947 3.275 7.509 2.749 -16.07 defined in GHG Protocol and Scope 1 and Scope 2 distribution is visible in 2014 and 2015 but there Diesel 47.634 12.903 51.323 13.902 7.74 of ISO 14064-1:2006 standard were included. IPCC, may be a change in the ordering of fuels used in the TIER-1 Methodology was applied for green gas buildings and vehicles. Petrol 382 99 200 52 -47.71 calculations within specified limits and (electricity) F-gases 0 13.818 0 8.848 -35.97 TIER-2 Methodology was applied for the Total 104.148 40.441 109.936 36.478 -9.80

As can be seen in the table below, even though electricity consumption increased by around 1% in 2016, green gas emissions arising from electricity decreased. It is because of the fact that factor of electrical emission reduced due to increase of renewable resource rate in electricity generation of Turkey in 2016.

2015 2016 % Green Gas Emissions 2016 Indirect green gas Indirect green Indirect Indirect green Electricity 57% emissions (Scope 2) Indirect energy Scope 2 gas emissions energy gas emissions consumption change Vehicles 17% (tCO2e) consumption (tCO2e) Fuels used in buildings 16% Purchased electricity F-gases 10% 89,050,119 49,152 98,494,598 48,395 -1.54 (kWh)

Total 49,152 48,395 -1.54

Inventory of green gas was 84.873 CO2 in 2016, which decreased by 5,27% in comparison with the previous year. Green gas emissions of 2016 decreased by 20% in comparison with the previous year considering assets size of Ziraat Bank. It is targeted to support the relevant decrease in density of green gas with effective energy management applications.

Green gas Scope 1 Scope 2 Total tCO2e % change for total Density of green gas (tCO2e/ emissions (CO2e) (tCO2e) (tCO2e) (Scope 1&2) tCO2e TRY million turnover)

2016 36,478.0 48,394.7 84,872.7 -5.27 0.24

2015 40,441.0 49,151.6 89,592.6 17.31 0.30

2014 36,060.5 40,311.2 76,371.6 - 0.31

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Sustainable Supply

Issues having environmental and social aspects according to nature of Aiming to ensure full compliance with the law and such as not working with the relevant suppliers the purchased work/service are examined meticulously under the light of legislation in management of supply chain, Ziraat and banning them from the tenders, etc. During Bank regulates its supply agreements based on the reporting period, there was not any supplier, within technical specifications. law and legislation valid in Turkey and organizing the knowledge of Ziraat Bank, who was investigated the commercial life. While choosing the supplier, concerning human rights or environment. Ziraat Bank supplies products and services from and future needs of the Bank, Ziraat Bank takes into the Bank considers such issues as compliance with companies, institutions and persons under its account the following issues in its relations with the the laws/legislation on the basis of human rights, In addition to the general legal framework, Ziraat daily service cycle, from the consumables to the companies and pays visits to the suppliers. prevention of forced labor and abuse, prevention Bank observes relevant Regulations of BDDK in its cleaning services, from the catering services to of child employment, fighting with discrimination relations with the suppliers and audits the suppliers the staff transport services, from maintenance and and occupational health and safety. In case of periodically on the issues specified in the applicable repair services to the training and advertisement • Previous performance, if any contradiction with these generally accepted regulations. services needed by the branches and departments • Technological level universal criteria, the Bank applies some sanctions of Directorate-General. Moreover, it purchases • Financial situation (turnover, tax assessment, products and services in such fields as information etc.) services, card printing services, security services • Profile of the directors and expertise services that are critical and • Qualifications and education level of the staff indispensable for the performance of the core • Activity field/place/area banking works. Providing needs of the branch • Reliability network from the local suppliers in order to support • Its place in the market the local economy, Ziraat Bank may strategically • Machinery – equipment tool prefer to purchase the cost-favorable products • Environmental policies and applications and services from a single supplier in abundant • References amounts. • Ability of delivery • Certificates on service quality and quality In 2016, Ziraat Bank paid TRY 592 million to its management (like ISO) suppliers throughout Turkey and made all direct purchases from the local suppliers in Turkey. Issues having environmental and social aspects according to nature of the purchased work/service Managing the supplier chain with an attentive, are examined meticulously under the light of competitive and transparent approach, Ziraat Bank technical specifications. (clothes to be purchased chooses the suppliers of the purchased products for the cleaning staff should not contain azore and and services considering several parameters. carcinogenic substance; ATM and POS invoices should have thermal qualities; BT products should Aiming to purchase products/services from the consume little energy, etc.) suppliers who have the potential to meet current

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Why Miniature?

Having an important place among the Traditional Turkish Handcrafts, Miniature created a peculiar language of description by integrating cultural diversity of this geography with the soul of the art through the principles of expression and narration developed during centuries. Miniature kept up with every period it was performed; the embroidered components provided information on daily life, clothes and rituals of the relevant period and thus it became a historical document.

While preparing the Sustainability Report, Ziraat Bank made use of the art of Miniature to transfer the tradition to the future. We believe that the art of Miniature represents the deep-rooted bank of Turkey, Ziraat Bank in the best way, since Miniature, just like Ziraat Bank, adapts to the lines of the modern age without losing its rooted structure and evidences the importance it attaches to sustainability as all used materials are organic.

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Ziraat Bank in Touch with the Society 7 players were added to the national teams in 2015-2016 season under the Ten National Sportsmen in Ten Provinces Project.

• As the only financial service provider in around • Under the “Ten National Sportsmen in Ten 400 districts and towns throughout Turkey, we Provinces” Project, our volleyball club aims to are contributing to the society in different axis. popularize volleyball in all corners of Turkey and raise “Happy Children” through the free sports • Buying royalty of the Turkish Football Cup schools primarily launched in 10 provinces. during 8 seasons, Ziraat Bank made important Successfully completing the first phase of the contributions to the development of the Turkish project, our club could reach 650 children. We sports. Additionally, the Bank is providing raised our aim one step further and targeted to sponsorship for the sports club, in 2016/2017 add “Ten National Sportsmen in Ten Provinces” season, which successfully represents the Ziraat to the Turkish volleyball. By sending 7 players brand in Turkey Men’s Volleyball 1st League as to the national teams in the summer of 2015- of 2007-2008 season. 2016 season, our club made an important step towards achieving the targets set in the project. • Under the sponsorship activities of our subsidiaries, Ziraat Sigorta A.S. & Ziraat Hayat • The first banking museum of Turkey, the Ziraat ve Emeklilik A.S. and Ziraat Portföy Yönetimi Bank Museum, is located in Honor Room of the A.S. provided sponsorship support in Ziraat historical Directorate-General building in Ulus Turkey Cup 2016-2017 season and Ziraat Bank district of Ankara. Opened on 20 November Sports Club Men’s Volleyball League 2016-2017 1981, the museum enlightens the 153-year past season. Moreover, Ziraat Insurance became a of the Bank which personally witnessed almost platinum sponsor of International Agricultural every stage of the Republic. Many antic objects Insurances Symposium. ZIRAAT BANK BH dd. used in the banking system are exhibited in the sponsored some football and basketball teams museum in an historical atmosphere. in Bosnia-Herzegovina. • Ziraat Bank has supported the art and artists • Sportsmen playing in the youth setup of our since its foundation and supported, in 2016 too, volleyball club are continuing their education many artistic events. Putting Kuğulu, Tünel and life with 100% scholarship based on an Kızıltan Ulukavak Art Galleries at the disposal of agreement concluded with an educational the art and artists, Ziraat Bank hosted over 25 establishment. thousands art-lovers with 32 exhibitions in 2016. Reflecting its culture and art support in the field of theater as well, the Bank opened the Mithat Pasha Culture Center under the name of “State Theatres Ziraat Stage” and offered it to the theatre-lovers.

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As the only financial service provider in around 400 districts and towns throughout Turkey, we are contributing to the society in different axis.

• Ziraat Bank has one of the leading sculpture • Through the Z-Library Project of the Ministry of • Ziraat Bank supports seminar, conference • The Ziraat Bank Azerbaycan ASC subsidiary and painting collections of Turkey. The bank National Education, it was decided to establish and training works organized by the Higher contributed to sponsorship of “Turkish Movies shares the objects of the collection with the around 1000 Z-libraries in 81 provinces with the Education and Credit and Hostels Institution in Week – Baku” activity organized in Baku with public through the collection book and the support of Ziraat Bank in order to extend the order to make sure that the higher education the support of Ziraat Bankası Azerbaijan, organized comprehensive exhibitions. culture of reading, develop the libraries and students staying at the dormitories of this Ministry of Culture of Turkey, TIKA (Turkish ensure service provision and material support Institution become individuals who will guide Cooperation and Coordination Agency) and of sustainable quality, and 370 of them were the socio-cultural and economic development Yunus Emre Institute. established in 2016. of Turkey in the future and they gain consciousness on our cultural values and history • Kazakhstan Ziraat International Bank • We supported the book project named and literature. sponsored establishment of a technology class Recycling and We published by the with 14 students capacity in a state high school Environmental Protection Foundation in order • Ziraat Bank attended many culture art festivals located in Almaty city center. Believing that to develop the awareness on environment. and special nights in 2016. In this regard, the children are the biggest power of Kazakhstan Bank made contributions to many local and towards the development, Kazakhstan Ziraat • We supported the “International Turkish cultural festivals such as the World Environment International Bank plans to support the projects Festival” project of the Yunus Emre Institute Days, International Turkish Festival activities aiming to improve quality of education and Ziraat Bank Painting Collection includes around aiming to promote the Turkish language and and Golden Pen Economy Press Success Awards physical means of the schools. 2.500 works and it is extending with the new culture throughout the world. Ceremony annually organized by EKONOMİ works of the artists who exhibit their paintings reporters. • Concerning education-related issues, Ziraat at the galleries of Ziraat Bank. • Under the social responsibility project “Children Bank International A.G. chooses the projects on Holiday, Schools in Restoration”, schools • In Turkmenistan where our subsidiary Turkmen especially found suitable by the Turkish • Ziraat Bank has historically important buildings located in development priority regions are Turkish JCS Bank is located, we supported Embassy and Consulates and they provide in terms of Turkish architecture in many tried to be improved. In 2016, maintenance, to meet the costs of a park of 700 hectare support for the students. Furthermore, provinces besides Ankara and Istanbul and it repair and restorations works were supported in the south of Ashkhabad province. Again, internship opportunities which are primarily is working meticulously to protect and carry for schools in Kars Kağızman district and under deforestation project of Turkmenistan, offered to the students of Turkish origin also these buildings to the future. The Bank has 44 Provincial Directorate of National Education we planted 14.000 trees in 2017 in addition make a contribution in the field of education. registered buildings which were constructed of Van as well as Malatya Battal Gazi Hafiz to the 355.133 trees in the deforestation area after 1910 and used currently, and it is restoring Vocational and Technical Anatolian High School. of 454 hectare, with a view to reducing the the buildings in line with their original carbon emissions and using water resources architectural design in order to protect this of the country more effectively by establishing cultural heritage. drip irrigation system. Moreover, we provided support for Turkmenistan Children’s Foundation, Nursery for Children with Tuberculosis, Turkmenistan Foundation for Visually and Hearing Impaired People, Foundation for Protection of the Disabled People and Paralympic Committee as well as the disabled children, patients, staff and some social responsibility projects.

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Ziraat Bank Headquarters

Anafartalar Mahallesi, Atatürk Bulvarı, No: 8, 06050 Altındağ/ANKARA

Tel : (0312) 584 20 00 Fax : (0312) 584 49 63

[email protected] www.ziraatbank.com.tr

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