SUSTAINABILITY REPORT 2015 SUSTAINABILITY REPORT 2015

Garanti Sustainability 2015 Report 3 CONTENTS

7 8-9 10-11 12-15 16-19 20-31 32-35 38-45 About this Vision, Mission Key Sustainability Sustainability Message from Garanti in Brief Milestones Focusing on Report and Values Highlights Strategy and the CEO Stakeholders -Key Facts -Garanti’s Sustainability- Policy - Key Stakeholder -Our Vision -Garanti Bank in Numbers Related Indicators -Sustainability Strategy Groups and Engagement -Our Mission -Group Structure -Sustainability Policy Platforms -Our Strategy -Corporate Profile -Sustainability Principles -National and International -Our Core Values -Garanti’s Products and Memberships Services -Approach to Materiality -Garanti’s Integrated Subsidiaries

46-65 66-97 98-113 114-130 131-135 136-137 138-163 165-208 Focusing on Focusing on Focusing on Focusing on Focusing on Assurance Appendix GRI G4 Corporate Customers Managing Human Resources Communities Report Content Index Sustainability through Environmental -Appendıx 1: Key -Human Resources and the -Garanti Bank’s Corporate Stakeholder Groups And Governance Sustainable Impact of Business Environment Social Responsibility Engagement Platforms -Equality of Opportunity and Policy -Board of Directors and Finance Operations -Appendıx 2: Environmental Diversity -Education And Social Impact Senior Management -Importance of Customer -Environmental Policy -Occupational Health and -Supporting the Assessment Model (Esiam) -Committees Experience and Satisfaction -Garanti Bank’s Environmental Safety (OHS) Participation of Disabled -Appendix 3: Sustainability -Risk Management, -Segment-Specific Management System -Child Care Individuals in Social and Collaboration With Internal Audit and Control Programs that Contribute to -Supply Chain Management -Security Measures Economic Life International Financial Functions Sustainability -Climate Change Management -Good Work Life Relationship -Support for Culture and Organizations -Disciplinary Committee -Financial Health and Inclusion at Garanti Bank (“IYI”) Program Cultural Heritage -Appendix 4: -Policies and Principles -Renewable Energy -Climate Change Mitigation -Health and Nutrition -Community Investment Whistleblowing Channel -Anti-Fraud Policy -Garanti Bank and SMEs -Energy Efficiency Projects -Career Opportunities Goals -Appendix 5: Anti-Fraud -Garanti Code of Conduct -Sustainability Collaboration -Waste Management Program Policy -Whistleblowing Channel with International Financial -Water Management -Promotion Opportunities -Appendix 6: Activities of -Transaction Monitoring Institutions -More Sustainability Initiatives -Compensation and Rewards The Bank’s Compliance -Prevention of Conflicts of -Garanti Bank Supports from Garanti Bank -Fair and Transparent Department Interest Women Entrepreneurs Premium Models -Appendix 7: Role of the -Implementation of Basel -Supporting Rural -Garanti Bank Pension Fund Disciplinary Committee Regulations Development with Foundation -Appendix 8: Garanti’s -Sustainability Committee “Agricultural Banking” -Learning and Development Integrated Subsidiaries -Sustainability Team Products -Raising Awareness on -Appendix 9: Climate -Efforts to Expand the Sustainability Change Position Statement Informed Customer Group -Gelecek (Future) Meetings and Action Plan -Environmental and Social -4 Season Meetings -Appendix 10: Ungc and Risk Assessment Process -Garanti Managers Summit Weps Principles Analysis -Management of Indirect -Employee Satisfaction Against Gri G4 Content Water Footprint -Suggestion and Idea Platforms ABOUT THIS REPORT

This fourth sustainability report from T. Garanti Bankası A.Ş. (‘Garanti Bank’) represents the Bank’s performance on the issue of sustainability as determined in parallel with the feedback of its stakeholders for the 12 month period ending 31 December 2015. Where relevant, the Bank has also included data from the previous reporting period for comparative purposes.

Scope 1 and Scope 2 greenhouse gas (GHG) emissions, water consumption, energy consumption, renewable energy portfolio and Environmental and Social Impact Assessment Process (ESIAP) data in this report as defined in “Customers through Sustainable Finance” and “Managing Environmental Impacts of Operations” sections were selected to be independently audited. KPMG provided a limited level of assurance on the selected information in this report.

The report has been prepared in accordance with Global Reporting Initiative’s (GRI) G4 reporting guidelines to comprehensive option and also includes application of the G4 Sector Disclosures Financial Services sector supplement.

There is a comprehensive index according to GRI G4 principles presented in the annexes.

Garanti Sustainability 2015 Report 7 Our Core Values OUR VISION “Our customers...” Continuous progress

is to be the best bank in Europe. »Are at the center of all our operations and efforts. »We sustain our quality through continuous »We always strive to satisfy our customers above improvement. and beyond their expectations. »Investing in our people and technology to »Towards our customers, we are always clear, achieve continuous progress is an inseparable courteous, helpful, solution-oriented and pleasant. element of our policy. »Our approach to improving quality is proactive; we aim to identify the needs and expectations of OUR MISSION “Garanti Bank and its employees have high moral our customers even before they are voiced and values” strive to provide solutions.

is to continuously and noticeably increase »We conscientiously follow rules and regulations the value we create for our customers, without exception. Our environmental and social responsibilities shareholders, employees, the society and the »Clear individual and organizational conscience is environment by utilizing our influence, agility of paramount importance. »We undertake every effort to be beneficial to the and organizational efficiency. society, the environment and humankind. »We believe the environmental and social values “The most important element for us is the Garanti creates for its stakeholders will set an human factor” example not only for the banking sector but also for the entire economy and provide significant »We continuously invest in our utmost valuable contributions to our national development. OUR STRATEGY human resources. »Our quality is driven and ensured by our is to always approach our customers in employees. Teamwork a “transparent”, “clear” and “responsible” »We put emphasis on delegating responsibilities manner, improve customer experience and encourage our employees to take initiative. »We believe in effective teamwork and open lines continuously by offering products and services »We notice and value the recognition of good of communication. that are tailored to their needs, maintain work and exemplary behavior. »We work in collaboration towards common goals sustainable growth by creating value for all »We are energetic, we support each other, we and produce results. our stakeholders. share information and experience. »We are opposed to strict layers of hierarchy. »We are excited about our work and leaders in »To realize our vision, we work as a single-heart our field. and a single-mind. »We are always well-mannered and respectful in our speech and behavior among each other.

8 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 9 KEY 34% share in Turkey’s total operational SUSTAINABILITY installed wind wind power capacity 12 examined projects HIGHLIGHTS in accordance with ESIAM 150 IN 2015 disabled-friendly branches

»The only Turkish company to Case for Responsible Corporate »Disclosed its Climate Change »Supported the European »Examined 12 projects »Organized 100 meetings in 68 be selected for the Dow Jones Adaptation: Strengthening Position Statement & Action Plan Bank for Reconstruction and thoroughly in accordance with provinces with nearly 31,000 Sustainability Emerging Markets Private Sector and Community Development (EBRD) 2015 Environmental and Social Impact SMEs with Garanti Anatolian Index. Resilience”. »Successfully qualified for Energy Efficiency Finance Forum Assessment Model (ESIAM). Meetings. 12 the second year in a row for and declared a new commitment »First bank in Turkey to sign the »The only Turkish company the Borsa Istanbul (BIST) on energy efficiency. »Achieved an increase of 32% in »Total loans provided to United Nations Global Compact’s that was included in the CDP Sustainability Index as 1 of the 29 the amount of recycled waste. renewable energy investments (UNGC) Business Leadership Global Leaders Report by Turkish companies that qualified. »6,662 people attended the since 2006 exceeded US Dollar Criteria on Carbon Leadership. being selected to the highest Women Entrepreneurship »Supported two workshops for 4 billion. performance band (A) and was »Obtained limited assurance for Meetings, which have been held responding companies by being »First Turkish bank to join the awarded with the CDP 2015 its water consumption, energy in 31 provinces since 2008. the main sponsor to CDP Turkey »Share in Turkey’s total “Caring for Climate” (C4C) Climate Performance Leadership consumption, renewable energy Water Program. operational installed wind power initiative, which supports the award. portfolio and Environmental »Provided 2.8 billion TL loans capacity was 34%. stance of the business world and Social Impact Assessment to women entrepreneurs by the »Established the Woman against climate change. »Obtained the highest score Process (ESIAP) for the first end of 2015. Steering Committee to among the companies included time for GRI G4 Comprehensive empower women socially and »First Turkish bank to become in the Carbon Disclosure Sustainability Reporting, in »Share of women employees economically. a member of “WeConnect Leadership Index and became addition to Scope 1 and Scope was retained at 57%. International”, a global initiative, 1 of the 5 companies that were 2 greenhouse gas (GHG) »Continued its support for which is aimed at including included in the top 10% of emissions. »300 women received disabled customers with 150 women entrepreneurs in the the index and won the CDP certificates in 5 provinces disabled-friendly branches, 33 supply chain. Turkey 2015 Climate Disclosure »Increased the number within the scope of the Women orthopedically impaired-friendly Leadership award. of facilities covered by its Entrepreneurs Executive School. ATMs, 422 visually impaired- »The only Turkish Bank and one Environmental Management friendly ATMs, 147 visually and of only two Banks in the world »Attended the “Energy System (EMS) to 1,013, covering »Started to support HeforShe orthopedically impaired-friendly to be included as a case study Efficiency Global Movement” 100% of its employees. initiative that emphasizes men’s ATMs and 11,721 employees who in the UN components’1 report panel organized by the Lima- support for women’s right and completed disability-friendly named “The Business Paris Action Agenda (LPAA) gender equality. training. during COP212 as a speaker.

1. United Nations Global Compact (UNGC), United Nations Framework Convention on Climate Change (UNFCCC) and United Nations Environment Programme (UNEP). 2. The twenty-first session of the Conference of the Parties.

10 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 11 SUSTAINABILITY SUSTAINABILITY POLICY STRATEGY AND POLICY Overall Sustainability Vision

Sustainability issues are gaining social impacts, and sharing long- and successfully deliver its importance within Turkish term values with its customers, sustainability objectives. SUSTAINABILITY STRATEGY society, and are increasingly staff, shareholders and the impacting the banking sector. communities it operates in. Furthermore, Garanti Bank is In April 2014, Garanti Bank officially approved a new sustainability strategy and Garanti Bank strongly believes aware of the need to collaborate policy in order to acknowledge the importance it places on conducting its business that operating sustainably is Garanti Bank aspires to and engage with its peers and activities in a responsible manner and strengthen its vision to be the best bank in a key driver to the long-term achieve its aim of sustainable suppliers at a global level to Europe and its mission of increasing the value it creates for its stakeholders. success of the Bank, and aims banking through technological identify new opportunities, to be the leader in introducing innovations, managing the capture emerging best practices For more information about our Sustainability Strategy, please visit the webpage: and implementing sustainable environmental footprint of its and products and remain a http://www.garanti.com.tr/en/our_company/sustainability/sustainability_ banking to Turkey. operations and developing sustainability leader in Turkey. approach.page sound environmental and social Building on the Bank’s Core risk assessment as part of its Values, Garanti Bank defines risk management framework. Sustainability as a commitment The Bank also recognizes the to building a strong and importance of an effective successful business for the organizational structure and future, while minimizing strong corporate governance to negative environmental and maintain ongoing development

Responsibility for Sustainability Policy Framework

The Board of Directors is ultimately responsible for the approval of any changes to the Bank’s Sustainability Policy. The monitoring, amendment, improvement, implementation and enforcement of the Policy are under the direct responsibility of the Sustainability Committee. All changes and amendments should be subsequently approved by the Board of Directors, then published internally and made public through the Bank’s website.

12 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 13 SUSTAINABILITY PRINCIPLES

Garanti Bank focuses on improving the basics of banking by integrating sustainability into its operations.

The following principles highlight how the Bank will achieve its sustainability vision:

Focusing on Customers through Sustainable Finance

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

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14 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 15 Dear Stakeholders, by 22% and reached 4 million digital customers. Our online branch has a 51% market share and our MESSAGE FROM I am delighted to present our 3rd Sustainability mobile banking a 29% market share in non-cash Report prepared in accordance with the GRI G4 financial transactions. In the upcoming period, Sustainability Reporting Guidelines of the GRI to digitalization will accelerate and we will witness comprehensive option covering the 12-month period digital channels taking a more prominent role in THE CEO to 31 December 2015. increasing operational efficiency. Contrary to optimism at the beginning of 2015, it 2015 has also been a year with important was a challenging year. Global markets needed to developments in the field of sustainability. For deal with a burdensome agenda including the FED’s example, the 2030 Agenda for Sustainable rate hike decision, increased turmoil in Syria, growth Development, including the UN Sustainable pressure on developed economies, an economic Development Goals, was agreed by over 150 slowdown in China and the plunging price of oil. world leaders. These global goals comprise a In Turkey, it was a year when foreign currencies total of 169 targets under 17 main topics such as We believe in the peaked due to the two elections and the uncertainty poverty, hunger, environment, gender equality and in global markets. justice and have helped us ensure our activities importance of and existing commitments are aligned with the Turkey’s banking sector was affected by rising global agenda. The Climate Agreement that was carrying out our uncertainty; growing at a lower rate compared to reached by 195 countries on limiting an increase previous years. Fee rebates and regulatory limits to in temperature by 2 degrees as a result of the both consumer loans and the number of credit card 21st Conference of the Parties in Paris. All these banking activities in a payment installments lowered the sector’s income developments show that sustainability is among the and banking sector post the lowest profitability most important issues at a global level today. As responsible manner levels of the last decade. As Garanti, despite the one of the largest companies in Turkey, we believe challenging circumstances of 2015, we continued in the importance of carrying out our banking to deliver the highest profitability ratios among activities in a responsible manner and recognize and recognize our the private banks by leveraging our dynamic our responsibilities in contributing to sustainable business model and innovative technology. While growth as our country has jointly committed to in responsibilities maintaining our commercial loan-driven growth, the agreement. we strengthened our position as the leading private bank in the consumer loans. We have built our The way we manage indirect impacts on the in contributing to growth strategy on prioritizing risk return balance environment and society from our lending activities and we have been successful. Today, we are the is a core component of our approach to responsible sustainable sector’s strongest private bank in terms of common banking. In this context, we strive to manage risks in equity Tier-1 ratio and this strength puts us in a the value chain by implementing our Environmental position to support consistent growth. and Social Impact Assessment Process in our growth. financing activities. In addition, we help promoting In a year of fierce competition in TL deposits that green investments via marketing attractive reflected on prices, our demand deposit base financing solutions. Due to its critical importance expanded by 20%. Demand deposits currently in the transition to a low-carbon economy, Garanti correspond to nearly one quarter of our deposits, continues to prioritize the financing of renewable which shows us that Garanti is the preferred bank energy investments. By the end of 2015, the total for customers. loans we had provided to renewable energy investments exceeded US$ 4.0 billion. As a result of As Garanti Bank, with nearly 20 thousand these investments, Garanti maintained its leading employees, we serve almost 14 million customers position as the bank with the highest share in via various channels. We closely follow the changing Turkey’s total operational installed wind capacity. world and emerging technology trends. In 2015, We also became the only Turkish bank to establish we increased the number of our digital customers an expert team under the

16 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 17 Project Finance Department for reviewing global population, is considered as another As part of our commitment to empower women, year Garanti proved that our success is sustainable unlicensed solar power projects that will be the material environmental issue. As the main sponsor Garanti became the first bank to sign the United and maintained our IIP Gold standard. key tool to develop Garanti’s foothold in the of the CDP Water Program in Turkey, the Bank Nations Women’s Equality Principles (UN WEPs) in As Garanti, our achievements in managing our renewable energy market further. helped increase the awareness of many large Turkey. One important component of this initiative sustainability related risks and applications which corporations through its support of this initiative. is to ensure that the ratio of women in the decision maximize adding value to society, our active At the same time, we continue our efforts We also introduced the Agricultural Irrigation making process is at least 30% in a company. As an stakeholder engagement processes and our to monitor, measure and manage our direct Systems Loan at the beginning of 2015, which indicator of Garanti’s performance in this area, women successful work in the field of sustainability to date impact on the environment. Our Environmental will help to increase investment in more water comprised around 41% of our top and middle level underscore how seriously we take sustainability. Management System (EMS), certified to ISO14001 efficient irrigation systems. This can be important management teams, and 57% of our total workforce Garanti, as the only Turkish company to qualify for in 2012, covers all our facilities around Turkey given that at present 74% of our country’s total in 2015. We also established our Woman Steering the global Dow Jones SustainabilityTM Emerging by the end of 2015. As a result, we remain the water consumption is for agricultural irrigation and Committee to help widen our efforts to empower Markets Index in 2015, has continued to prove that bank which has implemented this system most 94% of irrigation is done via extremely inefficient women socially and economically at Garanti. we are successfully integrating this issue across our extensively among Turkish banks. traditional surface irrigation. With our holistic activities and banking operations. As Garanti, we approach to managing water-related risks and As another example of our commitment to continue to strive to fulfil our responsibility towards We view climate change as one of the most opportunities, Garanti is the only Turkish bank and empowering women in the workplace, we our stakeholders in supporting the global effort for important issues facing the Bank and the one of only two banks worldwide to be included became the first Turkish bank to be a member of building a sustainable future. international community. As a result of this as a case study in the UN components’ report WeConnect International – a global organization approach, Garanti Bank continued to commit “The Business Case for Responsible Corporate that aims to include women entrepreneurs within I would like to extend my thanks to all our significant resources in seeking to manage its Adaptation: Strengthening Private Sector and the supply chain. In 2015, Garanti kept to organize stakeholders for their valuable contributions, and climate change performance and recorded many Community Resilience”. the Women Entrepreneurship Meetings, in which their unfaltering trust and support of Garanti. new achievements during the year. For example, we reached 6,662 women in 31 provinces since With the continued unwavering commitment from the Bank published its Climate Change Action Plan This year we extended the scope of the external 2008. Through the Women Entrepreneurs Executive our employees, coupled with the feedback and which represented our support of this subject in assurance of our sustainability data, which we share School that we support, 300 women received guidance received from other stakeholders, we will four main areas; carbon pricing and prioritizing publicly in every platform considered to be material, certificates in 5 provinces. During the year, Garanti continue to pursue our mission to create value for renewable energy investments; helping to to cover information relating to water withdrawal, also started to support the HeforShe initiative, our employees, customers, shareholders and all of decrease deforestation; helping to manage water energy consumption, our renewable energy portfolio through which men commit to support women’s our stakeholders. risks associated with climate change adaptation and data relating to our Environmental and Social rights and gender equality. and design and implementation of green office Impact Assessment Process in this report. We also Sincerely, standards. The Bank also became the first Turkish obtained external assurance of our Scope 1 and 2 Our “Disabled-Friendly Banking” program continue bank to sign the UN Global Compact’s Business GHG Emissions for the third time. to be one of the key components of our financial Leadership Criteria on Carbon Pricing in 2015 inclusion initiatives. For example, by the end of the as well as becoming the first bank in Turkey to As Garanti Bank, we continue to prioritize SMEs, year, we increased the number of our disabled- ratify the Caring for Climate (C4C) statement, an as they collectively make up more than 74% of friendly branches to 150 and disabled-friendly ATMs initiative aimed at advancing the role of business the total employment in Turkey, in recognition to 602. In addition, the number of employees who in addressing climate change. In addition to these of their importance to financial inclusion and as had completed disability-friendly training reached Ali Fuat Erbil, initiatives, Garanti was named a CDP Climate a cornerstone of sustainable economic growth. 11,721 by the end of the reporting period. Garanti President & CEO Disclosure Leader in Turkey in 2015 and was also By the end of 2015, we organized 100 meetings also made our Internet Banking and Mobile Banking the only Turkish company that achieved an “A” in 68 provinces that we reached nearly 31,000 platforms accessible to visually impaired customers performance in CDP 2015. Thereby was listed SMEs as part of the Garanti Anatolian Gatherings. with the use of screen reader software. as one of only 113 companies on the Climate Loans provided to women entrepreneurs, which As Garanti Bank, we believe sustainable growth Performance Leadership Index for the year. we consider as a special customer segment in our is only possible through investing in our human SME Banking platform, amounted to TL 2.8 billion capital. Garanti is the first Turkish company to be The management and abatement of our extended by the end of 2015. recognized by “Investors in People” (IIP), which water footprint, which is adversely affected by is the only international standard in the world to trends like climate change and the increasing certify the quality of companies’ HR practices. This

18 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 19 GARANTİ Branches

POS Terminals* IN BRIEF 1-2 983 600,989 Cash and Non-Cash Loans3

75.9US Dollar billion Number of Customers 13,863,933 ATMs 4,504 Number of Employees Presence in Cities 19,692 81

Total Assets

Share of Digital Channels in Transactions US Dollar 96.2 billion Market Capitalization 91% US Dollar 10.2billion

3. US Dollar/TL Exchange Rate: 2.9080 * Includes shared POS

20 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 21 GARANTİ Number of Women Entrepreneurs that Received Certificates from WEES4 in 2015 IN BRIEF 2-2

300 Market Share in Turkey’s Operational Credit Cards Installed Wind Power Capacity 9,706,572 34% Volume of Loans Supplied to Renewable Energy Projects, (cumulative) Digital Banking Customers**

Ratio of Employees Working in 3,982,065 US Dollar 4billion ISO14001 Certified Facilities

Number of Teachers Reached with ‘No Limits in Teaching’ Program 100%

Share of Women Employees Working in 102,507 Senior/Middle Level Management Positions Mobile Banking Customers**

Total Amount of Loans Subjected to 41% 5 2,504,845 ESIAM in 2015

Number of Garanti Anatolian Meetings US Dollar1,621million

Note: Numbers are based on the consolidated Banking Regulation and Supervision Agency (BRSA) financials as of December 2015. Market Capitalization figure is as of December 31, 2015. 100 ** Active customers only 4. Women Entrepreneur Executive School. 5. Environmental and Social Impact Assessment Model.

22 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 23 Selected Consolidated Financial Market Shares* (%)

Indicators of Garanti Bank (TL billion) 31.12.2014 31.12.2015

Total Performing Loans 11.9 11.8 31.12.2014 31.12.2015 TL Performing Loans 10.6 10.7 Cash Loans 144.0 171.8 FC Performing Loans 15.3 14.0 Non-Cash Loans 37.7 48.9 Credit Cards – Issuing Volume (Cumulative) 18.3 19.2 Total Assets 247.1 279.6 Credit Cards – Acquiring Volume Cumulative) 19.8 20.6 Shareholders’ Equity 26.6 31.2 Consumer Loans** 13.8 14.3 * For sector comparison, BRSA Total Deposits 133.4 156.1 unconsolidated financials are used in Total Customer Deposits 11.7 11.6 market share calculation. Sector data is Profit before Taxes 7.0 7.4 based on BRSA, commercial banks only. and Provisions TL Customer Deposits 9.9 9.6 ** Includes consumer credit cards.

Profit before Taxes 4.8 4.7 FC Customer Deposits 14.8 14.2

Net Profit 3.7 3.6 Customer Demand Deposits 14.0 13.6

Mutual Funds 10.8 10.4

Garanti Bank in Numbers Key Financial Ratios (%) 31.12.2014 31.12.2015

31.12.2014 31.12.2015 Branch Network 1,005 983

Average Return on Equity 14.8 12.8 + Domestic 994 971

Average Return on Assets 1.6 1.4 + Abroad 11 12

Non-Performing Loans Ratio 3.0 3.2 Personnel 19,036 19,692

Capital Adequacy Ratio 13.9 (Basel III) 13.5 (Basel III) ATM 4,152 4,504

Total Customers 13,075,181 13,863,933 Note: Figures are based on the December 2015 consolidated financials. Internet Customers*** 3,264,206 3,982,065

Mobile Banking Customers *** 1,547,579 2,504,845

Credit Cards 9,379,003 9,706,572

Debit Cards (Paracard) 8,020,023 8,640,478 *** Active customers only

24 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 25 corporate governance rating process with JCR In addition, by virtue of the fact that the Bank’s Eurasia Rating in 2015, as a result of which compliance score is above the threshold score of GROUP STRUCTURE Garanti’s Corporate Governance Rating score has 7, Garanti continues to be included in the Borsa been increased to 9.20 over 10, from 9.14 over 10 Istanbul (BIST) Corporate Governance Index. for its superior compliance with Capital Markets Garanti Bank’s Ownership Structure and Share Holdings: Board Corporate Governance Principles as specified in the report published on 10 December 2015. Number of Shares Nominal (TL) Share (%) Banco Bilbao Vizcaya Argentaria S,A, (BBVA) 167,580,000,000 1,675,800,000.00 39.9000 Doğuş Grup 42,000,715,584 420,007,155.84 10.0002 GARANTİ BANK’S CREDIT Others 210,419,284,416 2,104,192,844.16 50.0998

Total 420,000,000,000 4,200,000,000.00 100 RATINGS 1-2 Standard & Poor’s ( August 07, 2015 ) Garanti Bank initially offered its shares to the The Garanti Bank share (GARAN) is the most public in 1990 and became the first Turkish traded stock with an average daily turnover of TL company to offer its shares on international 836 million and had a market share of 22% of the Negative BB+ BB+ bb+ markets in 1993. Garanti’s depository receipts BIST 100 turnover in 2015. With a total foreign are listed on the London Stock Exchange Main transactions turnover of US Dollar 33.7 billion, a Market and are traded on the International Order weight of 9.5% in the BIST 100 and 11.4% in BIST 30 Book (IOB) service for international shares. In makes GARAN the most traded stock by foreign 2012, Garanti participated in the prestigious tier investors. Outlook Long Term FC ICR Long Term TL ICR Stand-alone of the U.S. Over-The-Counter (OTC) market, Credit Profile (SACP) OTCQX International Premier, where companies During 2014, Garanti Bank lent support with the traded must meet high financial standards and an coordinated efforts of its Sustainability Team effective disclosure process. Having qualified in and Investor Relations Department, to the rating 2014 to join OTCQX® ADR 30 Index launched by process carried out by EIRIS, the international OTC Markets Group Inc. in cooperation with the independent research company that Borsa Istanbul Bank of New York Mellon, Garanti has established collaborated for the launch of the Sustainability Moody’s (September 28, 2015) itself among the top 30 Depository Receipts Index. Based on the rating of Garanti’s approach traded on the OTCQX marketplace, which are to sustainability according to a number of criteria selected based on their market capitalization, volume including the environment, biodiversity, climate Negative Baa3 Baa3 P-3 P-3 and liquidity. In addition, in 2015, Garanti was named change, human rights, structure of the board of in the 2015 OTCQX® Best 50, which is a ranking of directors, anti-bribery, Occupational Health and 50 top performing companies traded on the OTCQX Safety (OHS), Garanti earned a place among the marketplace. With its superior performance in 2014, 15 BIST 30 companies that qualified for the Borsa Garanti stands as the only Turkish company among Istanbul Sustainability Index on 4 November 2014. Outlook Long Term Long Term Short Term Short Term the best 50 companies of OTCQX. In 2015, when the Index was expanded to the BIST FC Deposit TL Deposit FC Deposit TL Deposit 50, Garanti was 1 of the 29 Turkish companies that Garanti Bank has a market capitalization of TL 29.9 qualified. ba1 baa3 Aa3.tr TR-1 billion (US Dollar 10.2 billion) as of the end of 2015 and is the most valuable company in Turkey. With a In addition to Borsa Istanbul Sustainability Index, free float ratio of 50.02% and TL 15 billion floating Garanti became the only Turkish company to market capitalization, Garanti also has the highest qualify for the Dow Jones Sustainability TM free float in the BIST 100. Emerging Markets Index and proved once again Baseline Credit Adjusted BCA National Scale NSR that it successfully integrated sustainability into all Assessment - BCA Rating (NSR) Short Term Garanti’s Depository Receipts program reached a of its activities and banking operations. Long Term Deposit size of 116 million shares as of 2015 year-end. Garanti Investor Relations also managed the

26 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 27 GARANTİ BANK’S CREDIT GARANTİ BANK’S CORPORATE RATINGS 2-2 GOVERNANCE RATINGS

Fitch (July 31, 2015) JCR Eurasia Rating (December 10, 2015)

Stable BBB F2 BBB Main Sections Weight Score Convergence Level Notch Degree Outlook

Shareholders 25% 9.07 AAA (Trk) (aa) Stable (Distinctive) (Superior) Outlook Long Term FC IDR Short Term FC IDR Long Term TL IDR Public Disclosures 25% 9.25 AAA (Trk) (aa) Stable and Transparency (Distinctive) (Superior) F2 bbb- 2 AAA(tur) AAA (Trk) (aa) Stable Stakeholders 15% 9.23 (Distinctive) (Superior)

35% 9.25 AAA (Trk) (aa) Positive Board of Directors (Distinctive) (Superior) Short Term TL IDR Viability Rating Support National Long-term Corporate - 9.20 AAA (Trk) (aa) Positive Rating Governance (Distinctive) (Superior) Overall Score JCR Eurasia (May 20, 2015)

BBB BBB+ AAA (Trk) A-3 (Stable) (Stable) (Stable) (Stable)

Long Term Long Term Long Term Short Term International FC International TL National International FC

A-2 A-1 +(Trk) (Stable) (Stable) 1 A

Short Term Short Term Sponsor Support Stand Alone International TL National

28 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 29 CORPORATE PROFILE GARANTİ’S PRODUCTS MILESTONES

the Netherlands, Russia and entities, Banco Bilbao Vizcaya AND SERVICES With its dynamic Romania. Argentaria S.A. (BBVA) and Doğuş Group with shares of Garanti facilitates life for its millions of customers with its rich As of December 31, 2015, 39.9% and 10.0%, respectively. business model and product range and the following section summarizes our main 2015 Garanti provides a wide range of Having shares publicly traded products and services. For a detailed description of Garanti Bank’s Became the only Turkish financial services to more than in Turkey, depositary receipts in products and services, please see pages 48 to 101 of the 2015 Annual company to be listed in the superior technology 13.9 million customers with 19.7 the UK and the USA, Garanti has Report. Dow Jones SustainabilityTM thousand employees through an an actual free float of 50.02% in Emerging Markets Index. extensive distribution network Borsa Istanbul as of December integrated to its https://www.garantiinvestorrelations.com/en/images/pdf/Garanti- of 971 domestic branches; 7 31, 2015. Bank-2015-Annual-Report.pdf foreign branches in Cyprus, one innovative products in Luxembourg and one in Malta; With its dynamic business 3 international representative model and superior technology and services, Garanti offices in London, Düsseldorf integrated to its innovative and Shanghai with 4,504 ATMs, products and services, Garanti continues to an award-winning Call Center, continues to differentiate GARANTİ’S INTEGRATED internet, mobile and social itself and facilitate the lives banking platforms, all built on of its customers. Its custom- differentiate itself and cutting-edge technological tailored solutions and wide infrastructure. product variety play a key facilitate the lives role in reaching US Dollar SUBSIDIARIES Moving forward to maintain 75.9 billion cash and non-cash 2014 sustainable growth by creating loans. The high asset quality A list of Garanti’s subsidiaries and their respective shareholdings are »Became the first of its customers. value to all its stakeholders, attained through advanced provided in Garanti Investor Relations website. bank to adopt Garanti builds its strategy risk management systems and 2010 the Women’s on the principles of always established risk culture place https://www.garantiinvestorrelations.com/en/about-garanti/detay/ »Established its Empowerment approaching its customers Garanti apart in the sector. Garantis-Integrated-Subsidiaries/18/27/0 Sustainability Principles (WEPs) Established in Ankara in 1946, in a “transparent”, “clear” Committee. developed by Garanti Bank is Turkey’s second and “responsible” manner, Building on the Bank’s Core For a detailed descriptions of the different subsidiaries, please see the United Nations. largest private bank with improving customer experience Values, Garanti Bank defines pages 82 to 93 in the 2015 Annual Report. consolidated assets of US Dollar continuously by offering sustainability as a commitment 96.2 billion as of December 31, products and services that to build a strong and successful https://www.garantiinvestorrelations.com/en/images/pdf/Garanti- 2015. are tailored to their needs. Its business for the future, Bank-2015-Annual-Report.pdf competent and dynamic human while minimizing negative 2011 Garanti is an integrated financial resources, unique technological environmental and social services group operating in infrastructure, customer-centric impacts, and sharing long- »Became a member of United every segment of the banking service approach, innovative term values with its customers, Nations Environment Program sector including corporate, products and services offered staff, shareholders and the Finance Initiative (UNEP FI). 2013 commercial, SME, payment with strict adherence to quality communities it operates in. »Obtained external assurance systems, retail, private and carry Garanti to a leading Garanti further strengthens its on its Scope 1 and 2 GHG investment banking together position in the Turkish banking sustainable banking approach emissions reported to CDP for with its subsidiaries in pension sector. through community investment the first time. and life insurance, leasing, programs in a variety of factoring, brokerage, and Following the best practices in topics ranging from sports to 2012 asset management besides corporate governance, Garanti education, arts to nature and »Joined the WWF Green Office Program. international subsidiaries in is controlled by two powerful informing the business world.

88830 Garanti SustainabilitySürdürülebilirlik 2015 2015 Report Raporu GarantiGaranti Sürdürülebilirlik Sustainability 2015 2015 Raporu Report 88831 Garanti Sustainability 2015 Report 32 Since the Bank’s inception in 1946, 2015 2014 2013 2012 2011

»Became the only Turkish businesswomen around the world »Garanti’s model and research on »Within the Disabled-friendly »Signed the “Energy Efficiency in »Full-time “Sustainability Team” building women’s wealth »Became a member of United Garanti has had company to be listed in the Dow together. support for women entrepreneurs Banking project scope, online Buildings” manifesto developed established under the Project worldwide. Nations Environment Program Jones SustainabilityTM Emerging was shown as a case study in the training design consisting of by the Turkish Business Council Finance department. Finance Initiative (UNEP FI). a long and proud Markets Index. »Increased the number of facilities international context from a report comprehensive video and for Sustainable Development »Became the first and only covered by its ISO14001 certified by the International Finance applications for the use of (BCSD Turkey). »Signed the UNGC. institution in Turkey to be »Launched its Environmental and history of leading »Became the only Turkish Environmental Management Corporation (IFC). employees who require “Sign deemed worthy of the Investors Social Loan Policies (ESLPs). company that was included in System to 1,013, covering 100% of Language” has been completed. »Increased the number of service »First bank in Turkey to become in People (IIP) certificate in the the CDP Global Leaders Report its employees. »Qualified for the BIST points which are included in the a member of the Turkish “Gold” category. »Established its Environmental and the way in banking in by being selected to the highest Sustainability Index and BIST »Started “Join the Workforce EMS to 260. Business Council for Sustainable Social Impact Assessment Process performance band (A) and was »Became the first bank in Turkey Corporate Governance Index. Join Life” project oriented at the Development BSCD Turkey. »Launched the Sustainability (ESIAP). Turkey and awarded with the CDP 2015 to sign the UNGC’s Business »Became the first bank to adopt employment of disabled people »Launched an e-learning program E-Learning Program that is open Climate Performance Leadership Leadership Criteria on Carbon the Women’s Empowerment under the leadership of Ministry about its Environmental and »Received the “Carbon to all Bank employees. »Construction of the Pendik award. Leadership. Principles (WEPs) developed by of Family and Social Policies in Social Risk Management for its Performance Leadership” award Technology Campus started - to be has achieved the United Nations. October 2014. employees involved in lending from CDP Turkey by receiving »Joined the “HP Planet designed according to the LEED7 »Obtained the highest score »GarantiPartners, an operations. the best score among 32 Partnership Program” for criteria. many firsts. among the companies included in entrepreneurship fast-track »Became the first bank in Turkey »Engaged in a strategic responding companies. the disposal of used printer the Carbon Disclosure Leadership program that supports SMEs to prepare a sustainability partnership with BUBA, which »Became the first Turkish Bank cartridges. »KOBİLGİ (SME Information) Index and became 1 of the 5 that have investment and growth report in accordance with the brings together entrepreneurs to declare an A level for its »Joined the WWF Green Office seminars started. For a detailed list of key companies that were included potential and start-ups from of all comprehensive option of the new seeking financing and angel Sustainability Report according to Program. »Agreed to make Executives milestones in the Bank’s history, in the top 10% of the index and sectors and sizes with mentorship GRI G4 Sustainability Reporting investors seeking ventures with GRI (Global Reporting Initiative) Summit and Future Meetings »Established “SALT”, an please see pages 12 to 13 of the won the CDP Turkey 2015 Climate and funding, became the first Guidelines covering the 18-month high growth potential. Guidelines. »Set up its EMS and carbon-neutral. important milestone in the Bank’s 2015 Annual Report. Disclosure Leadership award. platform where a bank and an period to the end of 2013. Environmental Policy. longstanding support for culture investor network comprising angel »Recognized as the “Best Bank for »Launched efforts to facilitate and the arts. https://www. »Became the main sponsor for investors (BUBA) came together. »Received “CDP 2014 Turkey Sustainability in Turkey“ by World »In achieving its ISO14001 disabled customers’ access to garantiinvestorrelations.com/ CDP Turkey Water Program to Climate Disclosure Leadership” Finance Magazine. certificate, became the Turkish financial services. »Received acknowledgment in the en/images/pdf/Garanti-Bank- increase awareness to water »Became the first Turkish bank to award by getting the highest bank with an EMS implemented CDP Project Global 500 Report 2015-Annual-Report.pdf scarcity and published its first become a member of “WeConnect score among the 42 companies »Awarded by IAIR6 with the “Best in the highest number of »Started its first initiative for an 2011. CDP Water Report. International”, a global initiative, evaluated in the “Carbon Bank for Sustainability – Europe” buildings and to the broadest environmentally supply chain Table 1 provides examples of which is aimed at including Disclosure Leadership Index”. award. extent. by including a binding provision »Share in operational Wind Energy the Bank’s key sustainability »Started offering an Agricultural women entrepreneurs in the concerning full compliance with Power Plants in Turkey increased milestones since 2010. Irrigation Systems Loan in the supply chain. »Became the first bank to receive »Joined the pilot program of the »Women Entrepreneurs Leaders Garanti Bank’s EMS in supplier to 40%. first quarter in 2015 to support a Green Office diploma from International Integrated Reporting School initiated with women contracts. Turkey’s battle with climate »“Women Entrepreneurs WWF Turkey by successfully Council (IIRC). entrepreneurs to basic business, change and provide solutions to Research” towards profiling of completing the WWF Green which aims to provide expertise »“Rotaban” project brought into risks such as droughts. women entrepreneurs, which Office Program launched at its »Obtained external assurance on in the management and practice aiming to reduce fuel the Bank believes will guide the Headquarters. its Scope 1 and 2 GHG emissions marketing trainings. consumption of Garanti Bank’s »Supported HeforShe, an initiative roadmap and research in women’s reported to CDP for the first time. personnel service buses in emphasized on men’s support for entrepreneurship was produced »Added 6 more buildings to its »First bank in Turkey to be Istanbul. Table 1: Selection women rights and gender equality. in collaboration with Prof. Dr. WWF Green Office Program. a member of the Global 2010 Yıldız Ecevit, Head of Middle Banking Alliance for Women »Launched Disability-Friendly »Established the Woman Steering East Technical University (METU) »Increased the number of service (GBA), the world’s leading Banking initiative. »First submission of its GHG of Key Sustainability Committee to empower women Gender and Women Studies points which are included in the international consortium of emissions and climate change socially and economically. Department. EMS to 605. financial institutions and other strategy to CDP. organizations interested in Milestones »Became a member of the »Became the main supporter »Released 4 training videos on »Established its Sustainability Professional Women’s Network of the W20 initiative that was investment and financing processes 6. International Alternative Investment Review, the first-ever magazine that emphasizes Committee. (PWN), a network organization established first time in the scope of unlicensed electricity generation since 2010 sustainability from the perspective of the global economy. aiming to bring senior level of Turkey’s G20 Presidency. with solar power systems. 7. Leadership in Energy and Environmental Design is a green building certification program, »Established “Atölye” (Workshop) - developed by the United States Green Buildings Council (USGBC). project-based innovation platform.

33 Garanti Sustainability 2015 Report 34 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 35 31.12.2014 31.12.2015

Ratio of Technology Based Learning Hours to the 18 16 GARANTİ’S SUSTAINABILITY- Total Training Hours (%) RELATED INDICATORS Total Paper Consumption (x1,000 tons) 1.68 1.80 Water Consumption (x1,000 m3) 381 270*

Corporate Governance and Economic *Externally assured by KPMG, see assurance report on page 136 31.12.2014 31.12.2015 Market Value (US Dollar billion) 16.71** 10.23 Customers Rank Among Publicly-Held Companies at BIST (by Market Capitalization) 1 1 31.12.2014 31.12.2015

Rank Among Private Banks (by Asset Size) 2 2 Number of Cities visited within the Scope of GAM9 7 3

Rank Among Private Banks (by Loan Volume) 2 2 Number of SMEs visited within the Scope of GAM 1,835 1,000

Non-Performing Loans (%)* 2.98 3.21 Volume of Loans supplied to Renewable Energy projects 3.5 4.0 (cumulative, US Dollar billion) Earnings Per Share (TL)* 0.87 0.85

Net Income (TL)* 3,678,881 3,615,114

Number of Meetings of the Sustainability Committee 4 3 Human Resources

* Based on BRSA consolidated financials. 31.12.2014 31.12.2015 **G4–22: restated for 2014 Ratio of Women Employees to Total Employees (%) 57% 57% Environment Number of Women Employees in Senior Management (number of women managers/total number of managers) 21/75 23/75 31.12.2014 31.12.2015 Average Seniority (years) Fossil Fuel Consumption (MWh) 37,180 48,482* 7.3 7.6 Average Age of Employees Electricity Consumption (MWh) 116,010 115,693* 32.6 32.9

Average Training Duration per Employee (hours) 44 44 Scope 1 Emissions (1,000 tCO2e) 8.7 11.8*

8 Scope 2 Emissions (1,000 tCO2) 57.4 63.9*

Scope 3 Emissions (1,000 tCO2e) Social Responsibility associated with Business Travel 3.7 3.6 31.12.2014 31.12.2015

Reduction in annual GHG Emissions caused by Operational Number of new teachers reached 14,597 122,249 Renewable Energy Projects financed by the Bank 3.2 5.7* through the ÖRAV10 (million 1,000 tCO2e) Number of people reached through “SALT”.11 1,129,111 1,638,107 Ratio of Scope 1&2 GHG Emissions to the Bank’s Total Assets (tCO2e/TL billion) 274.1 270.5

GHG Emissions Caused by Business Travel 0.20 0.18 9. Garanti Anatolian Meetings. 10. The total number of the “High School-Learning Leader Teacher”, “Solution-Oriented Communication”, “The Chemistry of Teaching” (tCO2e/number of employees) and “Development Program for Education Executives” (EYGEP) programs alongside with the “No Limit in Teaching” project that 8. For 2015 Scope 2 emissions calculation, the grid emission factor based on 2014 TEİAŞ data - the most recent available official data_ continued under the title “Learning Leader Teacher”. was used 11. SALT numbers are given as cumulative since the year 2012.

36888 Garanti SürdürülebilirlikSustainability 2015 2015 Report Raporu GarantiGaranti Sürdürülebilirlik Sustainability 2015 RaporuReport 88837 Stakeholders which are identified using the management during project due diligence. above-mentioned criteria are prioritized based Through this engagement process, the Bank aims FOCUSING ON on their ability to influence Garanti Bank and the to contribute to its customers’ environmental level of the Bank’s impact on stakeholders. and social risk management capacity building as well as raising awareness on the impact of Based on the outcome of this assessment, Garanti sustainability issues in the business world. To that Bank has identified its main stakeholders, as end, the Bank communicates with customers STAKEHOLDERS its customers, employees, top management, through various means including bilateral shareholders, investors, suppliers and finance meetings to present the Bank’s approach, sector. Garanti Bank proactively monitors, sectoral conferences where real and financial Dimensions used to identify stakeholders are: empowers and cooperates with these sector representatives are brought together Garanti Bank has stakeholders in order to make sure the impact on to discuss sustainability issues and ongoing both Garanti Bank and its stakeholders is positive. consultations with project owners during project development, implementation and operation identified its main Garanti Bank uses the feedback to determine the phases. Ongoing consultations in particular are G4-24, G4-25, G4-26, G4-27, strategically important issues with stakeholders critical to establishing an open and positive stakeholders, as and also to focus on the most relevant dialogue with our customers and enable our sustainability subjects for the Bank and its expert team to transfer knowhow on regulatory its customers, stakeholders. and technical issues to our customers who are in the process of undertaking various investments. Stakeholder engagement helps; For those stakeholder groups where high impact employees, top is not reciprocal Garanti Bank informs, consults, »to improve economic performance, negotiates and undertakes proactive monitoring management, of these groups. For example, Garanti started »to minimize and manage risks, studies to keep its interests in line with the new trend on the effects of carbon pricing on shareholders, »to understand stakeholder demand and investment decisions after a meeting with several expectations, stakeholder groups and desktop research in a investors, suppliers workshop organized by an ESG12 rating agency By dependency: »to be aware of developments and innovations of in London in May 2015. After these studies, and finance sector. Stakeholders that are most dependent on Garanti e.g. customers goods and services, Garanti became the first Turkish bank to sign the who are dependent on Garanti’s products and services for their UNGC’s Business Leadership Criteria on Carbon financial health and planning »to manage environmental impact, Leadership. After signing the criteria, Garanti also declared its Climate Change Position Statement & By influence: »to shape community investment activities. Action Plan at the link below. Stakeholders who are, or in future may be, able to influence the https://www.garantiinvestorrelations.com/ ability of Garanti to meet its objectives Garanti Bank interviewed numerous strategic corporate customers in order to understand their en/images/pdf/climate_change_position_ By willingness to engage: expectations from the banking sector, how banks statement_action_plan_v6_081015.pdf is the individual stakeholder/stakeholder group willing to engage should improve and the current sustainability with Garanti on a certain sustainability issue challenges they face. Based on the feedback Similarly, Garanti also supported the EBRD Energy received from customers, the Bank updated Efficiency Finance Forum in 2015 and declared a By responsibility: its sustainability strategy to include actions to new commitment on energy efficiency. Stakeholders to whom Garanti has, or in the future may have, educate customers on sustainability and become financial, operational or legal responsibilities a trusted advisor in supporting its customers in Garanti held a workshop on Management of minimizing their own environmental footprint. Environmental and Social Risks in the Energy and By proximity: Infrastructure Sectors on October 9, 2015 for its Stakeholders that Garanti interacts with most, those Garanti Another key component of Garanti Bank’s 22 customers in the energy and infrastructure depend on in day-to-day operations, those Garanti has engagement with customers is maintaining sectors based on feedback from corporate longstanding relationships with etc. open and collaborative communication on clients in previous years. In addition to Garanti, issues relating to environmental and social risk executives from EBRD, an expert on responsible By representation: Stakeholders that are through regulatory structures or culture/ tradition entrusted to represent other individuals e.g. representatives 12. Environmental, Social and Governance of consumer organizations, trade union representatives

38 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 39 While certain investing, an academic from a variety of topics including Boğaziçi University and 2 what Garanti is undertaking KEY STAKEHOLDER GROUPS AND representatives from an to increase its sustainability stakeholder international consultancy firm performance. Similarly, Garanti gave presentations during gave a presentation on women’s ENGAGEMENT PLATFORMS the training. In the scope role in the business world and groups do not have of the training, customers Garanti’s strategy to support were informed on local and women’s empowerment to a high impact, the international regulations on students from MEF University. Garanti Bank informs, consults, negotiates and In addition to the above, Garanti attended and environmental and social issues, proactively monitors the expectations of its participated as speaker to many conferences on best practices on these issues, Garanti gave a presentation on stakeholders with regard to its sustainability sustainability in 2015, including the 21st UNFCCC Bank nevertheless good and bad examples on how its activities on women’s performance through a range of different Conference on Parties (COP 21) in Paris; UN the issue of sustainability and empowerment intersects with its engagement channels, such as the banking WEPs meeting, which is held in New York every considers it an the environmental and social brand strategy during “People service process, strategic collaborations, one-to- March; 12th United Nations Convention to Combat standards of banks. Additionally, Make the Brand”, Turkey’s first one meetings, conferences, seminars, workshops, Desertification (UNCCD) in Ankara, W20 Summit, important Garanti provides one-on-one employer branding conference focus group studies, surveys and similar platforms. UNGC +15 and Boğaziçi University Center for informative meetings on where Garanti is the main Key Stakeholder Groups and Engagement Platforms Research in Corporate Governance and Financial sustainability for its customers sponsor. With this presentation, are provided in Appendix 1 of this report. Regulation’s “Sustainable Financial Innovation and responsibility to and other banks in other Garanti’s goal was to raise Leadership Workshop Series: Environmental & countries like Russia. awareness to the contribution Critical issues raised by key stakeholder groups Social Risk Management” workshop were among passively monitor the women’s empowerment and the Bank’s replies on these issues are these conferences. While certain stakeholder adds to companies’ long term available in Table 5. For more information, please groups do not have a high sustainability performance. examine Appendix 1. these stakeholder impact, the Bank nevertheless considers it an important As part of this ongoing groups due to their responsibility to passively stakeholder engagement monitor these stakeholder program that formed a direct groups due to their possible input to the preparation of this possible significance significance outside the GRI G4 report, the bank applied Bank as well as in order the GRI principle of ‘stakeholder outside the Bank as to be able to engage in inclusiveness’ for defining productive collaborations when report content, reviewed its appropriate. For example, stakeholder engagement well as in order Garanti Bank has identified program and undertook specific that universities fall under additional engagements to be able to engage this category. As a result, the where further information was Bank gave training to students required to ensure that it fully from The London School understood the priorities of its in productive of Economics and Political most important stakeholders Science’s (LSE) Executive Global based on their interest in, collaborations when MSc Management Program and influence over the Bank’s during the reporting period activities. appropriate. about economic developments in Turkey, the project finance sector and the Bank’s strategy to integrate sustainability to its main operational activities.

Many experts from Economic Research, Investor Relations, Project Finance and Sustainability Teams gave presentations to students on

40 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 41 NATIONAL AND Table 2: Initiatives and Organizations Supported by Garanti Bank INTERNATIONAL Initiative/Organization Date of Adoption Participation Status MEMBERSHIPS Caring for Climate (C4C) 2015 Voluntary UN Global Compact Carbon Pricing Champion 2015 Voluntary

Garanti Bank has joined numerous reporting for gender equality initiated by United Nations ‘HeforShe’ 2015 Voluntary initiatives and is working with many organizations Entity for Gender Equality and Empowerment of in the field of sustainability. Women (UN) Women and emphasizes on men’s CDP Water Program 2015 Voluntary support for women rights and gender equality. In Working in close cooperation with its stakeholders addition, Garanti became a member of the PWN, a Professional Women’s Network (PWN) 2015 Voluntary to fully integrate sustainability, Garanti closely network organization aiming to bring senior level follows national and international developments businesswomen around the world together. Integrated Reporting Business Network 2015 Voluntary and engages in knowledge sharing with the financial sector through various platforms. Garanti During the reporting year, Garanti also became Women’s Empowerment Principles (WEPs) 2014 Voluntary supported the Environmental and Social Risk first Turkish bank to sign the Business Leadership Assessment Program whose content was set by Criteria on Carbon Pricing with the “Caring for Global Reporting Initiative (GRI) 2013 Voluntary the UNEP FI in 2013 and III. Sustainable Finance Climate” (C4C) initiative, which supports the stance Forum that was organized in 2015 by co-operation of the business world against climate change. WWF Green Office 2013 Voluntary of BCSD Turkey, UNEP FI and UNGC Turkish Local Network in 2013. Having the objective of spreading this approach Turkish Green Building Association (ÇEDBİK) 2013 Voluntary across all of its stakeholders, Garanti continued Additionally, Garanti supported the “Sustainable to cooperate with its integrated subsidiaries International Integrated Reporting Council (IIRC) – Pilot program 2013 Voluntary Finance Meeting”, held by BCSD Turkey on March during 2015. In 2015 Garanti Pension and Garanti 30, 2015 in the English Consulate. The meeting Securities also started working on relevant UN Global Compact 2012 Voluntary brought together approximately 80 people and topics. After Garanti Pension established a the goal was to increase the awareness of financial sustainability team, it signed the UNGC and UN Business Council for Sustainable Development Turkey 2012 Voluntary organizations other than the banking sector on the WEPs in September 2015. In addition to these importance of sustainable finance. developments, the firm also started working HP Planet Partners 2012 Voluntary with a consulting firm to establish an ISO14001 As Garanti Bank, we were the first bank in Turkey Environmental Management System Equal Opportunities Model (FEM) 2012 Voluntary to become a member of WeConnect International, a global organization which aims to include women Garanti intends to continue to support activities and United Nations Environmental entrepreneurs in the supply chain. We aim to training programs that bring together the finance Program Finance Initiative (UNEP FI) 2011 Voluntary train, support and unite women entrepreneurs in sector with others, enabling them to collaborate in our customer portfolio and to include them in the the field of sustainability in the coming years. The CDP Climate Change Program 2010 Voluntary supply chain to empower them by WeConnect initiatives that Garanti Bank subscribes to are listed International membership which is supported by below with the date of adoption. These are mostly The Banks Association of Turkey 1958 Mandatory many international companies. internationally-adopted initiatives which have been developed with the participation of a wide range of In 2015, Garanti also extended its support to stakeholders though Garanti was not involved in their HeforShe initiative that is a solidarity campaign development.

42888 Garanti SürdürülebilirlikSustainability 2015 2015 Report Raporu GarantiGaranti Sürdürülebilirlik Sustainability 2015 RaporuReport 88843 APPROACH TO MATERIALITY Figure 1: Garanti Bank’s Materiality Matrix for Sustainability Issues13 G4-18

In order to be able to identify and prioritize risks The following figure summarizes the results of %120 and opportunities to Garanti, the Bank places great the Bank’s materiality analysis for GRI G4. As

importance on listening to the views of its key part of the G4 materiality analysis, the Bank Technology & Water Bribery& Corporate stakeholder groups as part of this process. During assessed the topics relevant to our organization Innovation Scarcity Corruption Governance the reporting period, Garanti Bank undertook a and to our stakeholders making use of a variety %100 detailed critical assessment of its existing GRI G4 of sources such as the Bank’s commitments, Customer E&S Risk Ethical Sales Climate Economic Centricity Management Change & Cond. & materiality assessment to ensure its continued media searches, questionnaires and surveys and Energy Fin. Perf. HIGH PRIORITY Philanthropy and Sponsoring relevance and completeness of material issues for comparison against peer companies nationally and Activities its GRI G4 reporting. internationally. The Bank then linked these issues %80 to the corresponding GRI G4 aspects having Career Management and Promotion Responsible Products of Employability and Services As part of the materiality assessment for this regard to whether the aspect was material within Environmental Footprint Human & Labour Reporting & Sustainability Report, the Bank applied the GRI our organization, outside the organization, or both. of Suppliers Rights Transparency Principles for Defining Report Content and Quality Topics were prioritized based on their significance Stakeholder so as to identify information to be reported and by of impact – their potential influence on Garanti %60 Engagement paying regard to the Bank’s activities, impacts, and Bank’s ability to deliver on its vision and strategy MEDIUM PRIORITY the substantive expectations and interests of our as well as their potential influence on the decision- Environmental Leveraging Sustainable Degradation main stakeholder groups. As part of this process, making of the Bank’s main stakeholder groups. Practices the Bank considered the main feedback received Significance of impact was determined based on Financial Education & Health %40 from its principal stakeholder groups during the applying the following criteria: GARANTİ TO MATERIAL reporting period and applied the Principle of Forced and Child Labour Materiality by ensuring that the issues regarded as »potential financial gain or loss, most important were addressed and prioritized in »severity of occurrence and scale of the risks and Fair remuneration & LOW PRIORITY Non-Discrimination this report. Examples of the impact on this report’s opportunities, %20 »reputational impacts Social Impact content and prioritization of issues of applying the of Suppliers Principle of Materiality are included in the following »level of stakeholder interest Urbanization section. »relevance to Banking sector Indigenous Rights

The method for how the GRI Principle of The results of this prioritization process, which Stakeholder Inclusiveness was applied is explained were approved by the Executive Vice President for in the section on Stakeholders in this report. Project Finance and Sustainability, and a member %0 %10 %20 %30 %40 %50 %60 %70 %80 %90 %100 of the Sustainability Committee, determined the The Bank applied the Principle of Sustainability focus and level of detail provided for each topic in MATERIAL TO STAKEHOLDERS Context by having regard to the latest trends in this report. In addition, disclosures of management sustainability in Turkey and internationally, which approaches to each single material aspect are also helped us cross-check the completeness of documented in the GRI G4 Index to this report. issues covered by this report. The review of the report’s content by our sustainability experts and top management also helped us ensure that the report was materially complete and accurate and that we had applied the GRI Principles such as for Sustainability Context, Completeness, Materiality and Stakeholder Inclusiveness.

13. As a result of 2015 assessment, no major changes observed in the data used for materiality assessment in 2015 in comparison to 2014.

44 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 45 FOCUSING ON Table 3: Garanti Board Members Board Member Role Gender Age Group CORPORATE Ferit Faik Şahenk Chairman Male 30-50 Süleyman Sözen Vice Chairman Male 50+ SUSTAINABILITY Ergun Özen Board Member Male 50+ Ali Fuat Erbil* CEO and Male 30-50 Board Member

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

Maria Isabel Goiri Lartitegui** Board Member Female 50+

Jaime Saenz De Tejada Pulido Board Member Male 30-50

Javier Bernal Dionis** Board Member Male 50+

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

Sema Yurdum Independent Female 50+ Board Member

Note: With the Board of Directors Resolution dated June 4, 2015, it was resolved that the resignation of Ángel Cano Fernández and Manuel Castro Aladro be accepted. * After Ergun Özen left the CEO position, Ali Fuat Erbil started his duties as CEO and Member of the Board of Directors as of September 2, 2015. ** As of July 27, 2015, Ahmet Kamil Esirtgen resigned from the Board of Directors; Maria Isabel Goiri Lartitegui and Javier Bernal Dionis were assigned as new members to the Board of Directors.

BOARD OF DIRECTORS The principles adopted by compliant with the Banking Law, of Directors and senior Garanti Bank regarding whether Turkish Commercial Code and management, please see pages there are rules and restrictions other relevant legislation. 105 to 112 of the 2015 Annual AND SENIOR MANAGEMENT on Board members assuming Report.14 duties outside of the Bank have For more information been developed to be fully about Garanti Bank’s Board The Chairman and the CEO have different roles at Garanti Bank. The Chairman chairs the Board of Directors whilst the CEO’s duty is to lead and manage the Bank’s operations. This clear distinction establishes a balance between authorities and powers within the scope of the Bank’s corporate structure, drawing the lines of decision-making capacity of each position. On the other hand, the Board and the senior management cooperate to determine the Bank’s strategic targets, in a manner which promotes synergy.

Garanti Bank’s Board of Directors seats 10 members with the following composition as of December 31, 2015 with 8 male and 2 female board members. 14. https://www.garantiinvestorrelations.com/en/images/pdf/Garanti-Bank-2015-Annual-Report.pdf

46 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 47 COMMITTEES DISCIPLINARY COMMITTEE

Garanti Bank has numerous committees and a »Ensuring efficiency and productivity within the Please refer to the following website for the role and activities of the Bank’s Disciplinary Committee Discipline Board Presidency, which are the basic framework of acceptable risk parameters, https://www.garantiinvestorrelations.com/en/corporate-governance/detay/Disciplinary- elements of the Bank’s corporate management »Implementing the Bank’s corporate strategy by Committee/787/3228/0 structure. aiming to comply fully with all legal requirements,

For detailed information regarding committees »Observing full compliance with ethical and such as committee name, number of attendees, corporate values, ratio of women, etc. please refer to: POLICIES AND PRINCIPLES http://www.garanti.com.tr/en/our_company/ »Maintaining a balanced and integrated sustainability/sustainability_approach/ performance economically, socially and Garanti Bank has established strong systems »Compensation Policy committees.page environmentally. and processes in light of legal requirements, which serve to guarantee the Bank’s long-term »Employee Compensation Policy Joint targets of the Bank’s committees include: For more information about Garanti Bank’s sustainability and strength when it comes to committees, please see pages 117 to 123 of the generating added value. Garanti Bank has set out »Sustainability Policy 15 2015 Annual Report. a number of policies and principles on issues from customer satisfaction to legal compliance that »Environmental Policy include: »Environmental and Social Loan Policies RISK MANAGEMENT, INTERNAL AUDIT »Risk Management Policies »Climate Change Position Statement & Action Plan AND CONTROL FUNCTIONS »Garanti Code of Conduct17 Some of the above-mentioned policies are »Declaration of Human Rights available on Garanti Bank’s website in Turkish and in English. All policies listed above are accessible At Garanti Bank, risk management, internal the board members are submitted to the approval »Disclosure Policy in Turkish by employees through the Bank’s audit and control functions are performed by of the shareholders. intranet. teams that report to the Board of Directors and »Dividend Distribution Policy carry out their responsibilities in compliance For more detailed information on the Compliance, The following section gives details on some of with applicable legislation and independent of Anti-Fraud Monitoring, Internal Audit and Control »Human Resources Policy the main policies in force at the Bank. For further executive functions. departments, please see pages 126 to 128 of the 2015 Annual Report. The details operations of information please see pages 126 to 135 of the »Anti-Money Laundering Policy 2015 Annual Report.18 As part of its risk management strategies, which Compliance Department are provided in Appendix 1. are vitally important for sustainable performance, »Donation and Contribution Policy Garanti Bank systematically monitors and Please see pages 128 to 131 of the 2015 Annual measures its risk exposure through methods Report to find more information on the compliant with international standards and in line Management of Market Risk, Interest Rate Risk with its framework of written risk policies. in the Banking Book, Liquidity Risk, Credit Risk, Operational Risk, Reputational Risk and Other As per general industry practice and relevant Risks.16 articles of the Bylaws on Procedures and Principles of General Assembly of Shareholders of Türkiye Garanti Bankası Anonim Şirketi, the performance of the Board of Directors is evaluated by the shareholders during the annual general assembly meetings where the release of

15. https://www.garantiinvestorrelations.com/en/images/pdf/Garanti-Bank-2015-Annual-Report.pdf 17. The Whistleblowing Channel is in the scope of Garanti Code of Conduct. 16. https://www.garantiinvestorrelations.com/en/images/pdf/Garanti-Bank-2015-Annual-Report.pdf 18. https://www.garantiinvestorrelations.com/en/images/pdf/Garanti-Bank-2015-Annual-Report.pdf

48 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 49 GARANTİ CODE OF CONDUCT ANTI-FRAUD POLICY

Garanti Code of on the grounds of gender, race, age, nationality, The Bank’s “Anti-Fraud Policy” is designed to help policy also sets out the responsibilities of the religion, sexual orientation, disability, family origin, prevent corruption within the organization. senior management, Disciplinary Committee, language, political ideology, political or union Audit Committee, Anti-Fraud Committee, Internal Conduct defines affiliation or any other characteristic which is Tackling all types of corruption, including bribery Audit Department, Anti-Fraud Monitoring not related objectively with work conditions or and extortion, is a matter of the utmost priority Department, Human Resources, Learning and the responsibilities the consideration of which is prohibited for such for Garanti Bank. The Bank has necessary Development Department, Bank management purposes by the applicable legislation. mechanisms in place to carefully and closely and all other employees under a systematic and monitor this issue in all actions by its employees, comprehensive approach in order to establish, of employees Employee responsibilities towards business deals customers, and suppliers. develop and improve control systems with the with conflicts of interest, confidentiality, data purpose of preventing any potential incidences of towards customers, protection, media relations, retention of documents The primary purpose of the Anti-fraud Policy, in fraud against the Bank. and investment transactions titles. The section which such mechanisms are set out, is to ensure contains the standards of professional and personal prevalence of conditions for an honest and reliable The policy is applied uniformly and consistently other employees, behavior to ensure that employees behave with working environment by raising awareness of all without consideration of the duty, position or integrity and care with regard to Garanti. kinds of misconduct within the Bank. By defining seniority of any persons found to be responsible business and society. all types of misconduct, this policy aims to create for incidents of misconduct, be they are The context of the conduct towards society covers a common point of view and raise awareness employees or other stakeholders. All policies and anti-money laundering and prevention of financing with the aim of preventing potential incidences procedures are published on the Bank’s intranet In parallel to the Bank’s commitment to corporate terrorist activities, anti-corruption, commitment of misconduct, to identify them in the shortest and announced to employees. The types of issues governance principles and ethical values, and also in relation to Human Rights and environment, period of time, and to determine the measures covered by the Policy are explained in detail in considering the requirements of today’s working investment in society and commitment to political which need to be taken against misconduct. The Appendix 5. life, our existing ‘Ethical Principles’ document has neutrality sections. It is emphasized that Garanti been revised and “Garanti Code of Conduct” has does not tolerate any form of corruption or bribery been approved and entered into force at the meeting in any of the activities which it undertakes. Under of the Board of Directors on October 9, 2015. the title of commitment to political neutrality, it Being announced to the whole Bank via the CEO’s is declared that at Garanti business activities are message, the document is available for employees performed with respect for the political pluralism on the Intranet and also available to the public on the of the societies in which Garanti is present and also Investor Relations web page of the Bank.19 Garanti does not make contributions to electoral campaigns or donations to political parties. Garanti Code of Conduct defines the responsibilities of employees towards customers, The Ethical Sales Principles emphasize that other employees, business and society. “reputation” is the Bank’s most important value and set out the expected code of conduct, in detail, for The Code emphasizes employees’ responsibilities employees who engage in sales activities. towards customers, principles of transparency, non-discrimination and financial responsibility. It is In line with its ESLPs, Garanti Bank does not stated that employees should avoid any unjustified finance any activities which are restricted discrimination in relation to customers’ access to or banned under national legislation and/or our products and services. international agreements to which Turkey is a party. It also does not finance projects or activities Regarding responsibilities towards colleagues, of people or corporations which have been the Code stresses principles of working as a proven to employ child workers or violate human team, fostering a respectful working environment, rights. Garanti Bank rejects loan requests for such objectivity and health and safety issues. It is projects or activities without undertaking any stated that employees should not discriminate further social or environmental impact evaluation and or allow others to discriminate against people without any minimum limit on the size of the loan.

19. https://www.garantiinvestorrelations.com/en/images/pdf/Garanti_Bank_Ethical_Principles.pdf

50 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 51 WHISTLEBLOWING CHANNEL PREVENTION OF CONFLICTS OF INTEREST

The Whistleblowing Channel forms an essential identity of the person who raised the report is Garanti Code of Conduct covers situations where Under Turkish law, companies that are part of part of Garanti’s compliance system, as one kept confidential. The information is made known a conflict of interest occurs and where it might a holding group can engage in intragroup sales of the processes established to guarantee the only to those departments whose cooperation influence an employee’s professional conduct. of goods and services and are subject to the effective application of the procedures and is necessary for the investigation process. The inspection of the Thin Capitalization, Transfer standards of the Code of Conduct. The channel result of the investigation is communicated to A conflict of interest is assumed to exist when a Pricing and Offshore Income Groups Directorate is also a resource to assist the employees to the departments which need to take appropriate personal or family relationship or friendship, or of the Turkish Tax Inspection Board (TTIB). Such report transgressions that they observe or measures to mitigate or correct the transgression, any other type of outside circumstance, might transactions are also regulated and/or monitored which are reported to them by their team as well as to the person being reported and the affect professional objectivity and duty to act in by BRSA and Capital Markets Board (CMB). As members, customers, suppliers or colleagues. reporter, as appropriate. the best interests of Garanti and its customers. a consequence, all transfers between Garanti Communications through this channel include, Bank and its related parties are regulated and/ but are not limited to the reporting of suspicious During the investigation process, personnel are It is mentioned that if employees find themselves or monitored as per relevant regulations of the illegal conduct or professionally unethical expected to cooperate with the Compliance in a situation where a conflict of interest exists, or Ministry of Finance, BRSA and CMB and reported conduct. Department and other related parties, and where they think a conflict of interest might be to the related authorities. For further detail, please required to maintain confidentiality about their perceived, they should always communicate this see page 151 of our 2015 Annual Report. In case of an actual or suspected breach of involvement in the process and any information to their line managers and, if there is any doubt the Garanti Code of Conduct, the incident about the subject. about how to resolve it, consult with Compliance. Additional information on the mandates of board should be reported immediately via the members in different affiliates of Garanti Bank or Garanti Whistleblowing Channel, by e-mail on Nobody, who reports any facts or activities In all circumstances, employees should avoid other companies or associations are not subject [email protected] or by telephone on through the Whistleblowing Channel in good faith participating in decisions on matters affected by to restrictions and can be found through the +90 212 318 2375. will be the target of reprisals nor will they suffer the conflict of interest and influencing individuals Public Disclosure Platform website; any other adverse consequence as a result. responsible for making such decisions. It is The Compliance Department, responsible for realized that conflicts may arise subsequently and managing the Whistleblowing Channel, processes Developed in line with the Bank’s Anti-Fraud in such cases, the conflict should be communicated http://www.kap.gov.tr/en/companies/traded- all reports received carefully and promptly, Policy, the Whistleblowing Program covers the as soon as it occurs and the activity which it relates companies/all-companies/detail.aspx?sId=1081 ensuring that they are investigated and resolved, activities, processes and actions that are detailed to should be ceased immediately. in accordance with the Whistleblowing Channel in Appendix 4. management procedures. Information is analyzed It is emphasized that the conflict of interest objectively, impartially and confidentially. The management policies should be applied and, in particular, policies on conflict of interests on capital market transactions.

Any failure to comply with the Code of Conduct TRANSACTION MONITORING may give rise to disciplinary action in accordance with employment laws, in addition to any legal External fraud activities are monitored centrally and online actions are taken immediately to stop obligations which may be applicable. by the Anti-Fraud Monitoring Department with fraudulent activities and anti-fraud strategies are an enterprise fraud management perspective. updated rapidly and efficiently against constantly The Department monitors issuing, acquiring, changing fraud trends thanks to the Department’s online/telephone banking, demand deposit ever-growing experience and expertise and its account transactions and consumer loan/credit quick adaptation to new technologies. card applications across all channels on a 24/7 basis with using rule and score based software (FICO – Falcon Fraud Manager Tools). Real-time

52 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 53 IMPLEMENTATION OF BASEL REGULATIONS

Regulatory reporting in line Measurement and Evaluation In terms of the Internal Capital amounted to TL 89,989,700.75. For detailed information Garanti Bank with Basel II began in July of Capital Adequacy of Banks, Adequacy Assessment Process Based on the audit report regarding the fines incurred 2012. The Basel regulations Regulation on Equity of Banks (ICAAP) within the second issued by the inspectors of the during the reporting period continues to contribute to a stronger and Communique on Credit pillar of Basel II, the target Ministry of Customs and Trade please see page 134 of the and more powerful banking Risk Mitigations Techniques. is to construct and operate within the frame of the Law on 2015 Annual Report. industry. Risk Management In addition, for the third pillar an internal capital adequacy Consumer Protection no. 6502 efficiently manage Department continues to of Basel II, namely market assessment process that is (abolished Law no. 4077), the undertake the necessary discipline, BRSA published compatible with the Bank’s risk Provincial Directorate of Trade the risks it is coordination to ensure its Communique on Risk profile, activity environment of the Istanbul Governorship compliance with Basel Management Disclosures. All and strategic plans. The ICAAP has imposed an administrative requirements. revisions and new regulations report is prepared every year- fine against our Bank in the exposed to in line will come into force in March end. The Bank’s ICAAP and amount of TL 110,110,000. Our The roadmap for the 2016. ICAAP report studies are Bank has benefited from the with its strategy and implementation of Basel III coordinated by the Bank’s Risk outright payment discount requirements in Turkey has Regarding internal capital Management department. as per Article 17/6 of the Law been clarified with various adequacy calculation on Misdemeanors no. 5326, activities through regulations issued by the BRSA methods, the Communiqués Garanti Bank continues to paid the said amount as TL for compliance with these on calculation of credit efficiently manage the risks it 82,582,500.00 and filed a limits and audit requirements coming into risk with the internal rating is exposed to in line with its lawsuit for the annulment of force from January 1, 2014. based approach (IRB) and strategy and activities through the fine. The litigation is still As part of the Regulatory calculation of operational risk limits and audit activities, ongoing. activities, while Consistency Assessment with advanced measurement while complying with legal Program (RCAP), which is approach (AMA) came into regulations and overseeing Based on the audit report complying with legal conducted by the Bank for force in 2015. Based on these potential stress conditions. The issued by the Ministry of Labor International Settlements (BIS), communiqués, draft guidelines efficiency and adequacy of the and Social Security Labor regulations and Turkey’s compliance level with have been published and audit and risk management Inspection Board, Turkish Basel regulations is being distributed for feedback from systems are supervised by the Employment Agency Istanbul assessed as of the last quarter banks, which are concerned Board of Directors and the Provincial Directorate of Labor overseeing of 2015 and an assessment with application and necessary work concerning the and Employment has imposed report regarding Turkey’s validation processes for banks management of risks, which an administrative fine against potential stress compliance level with Basel wishing to calculate capital the Bank will be exposed to, will our Bank in the amount of TL regulations will be published adequacy using those internal be coordinated by the relevant 4,433,002. in 2016. BRSA published approaches. The year coming risk committees in 2016. conditions. some revisions and also will be an important period Our Bank benefited from the new regulations considering with intensive preparation Fines Incurred during outright payment discount as full compliance with Basel for all parties including the per Article 17/6 of the Law on regulations. BRSA published Board of Directors, senior the Reporting Period Misdemeanors no. 5326, paid revisions for some regulations, management and risk the said fine as TL 3,324,751.50 major ones are: Regulation management for those banks During 2015, payments made and filed a lawsuit for the on the Measurement and that will file applications for for administrative fines imposed annulment of the fine. The Evaluation of Leverage Levels IRB and AMA. by regulatory and supervisory litigation is still ongoing. of Banks and the Regulation on authorities against the Bank

54 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 55 SUSTAINABILITY COMMITTEE G4-27 Any concerns that relate to sustainability are raised Garanti Bank believes that the concept of The Sustainability Committee, established in sustainability must be embedded throughout 2010 to coordinate the entire Bank’s activities in with the Sustainability Committee where appropriate its decision-making mechanisms and business terms of sustainability, is the highest committee action is then taken, which includes undertaking specific processes to create value for its stakeholders and, that formally reviews and approves the Bank’s initiatives and making policy recommendations. The as a consequence, has integrated a Sustainability activities related to sustainability and is chaired by critical concerns raised during the Committee meetings Committee structure with Committee Members a Board member. Its composition was amended representing relevant lines of business and in 2015 and the current membership of the are listed below: departments throughout its organization. Committee is as follows: Table 4: Sustainability Committee Members

Sustainability Committee Member Title Table 5: Critical Concerns Raised by Key Stakeholder Groups Dr. M. Cüneyt Sezgin (Committee Chair) Independent Board Member

Ali Fuat Erbil (Permanent Member) CEO and Board Member and the Bank’s Response

Ali Temel (Permanent Member) EVP, Loans

Aydın Güler (Permanent Member) EVP, Finance and General Accounting Critical Concern Stakeholder Group that Garanti’s response to raised the Critical Concern Critical Concern Ebru Dildar Edin (Permanent Member and EVP, Project Finance and Sustainability Committee Secretary General) Action Plan against Investors In 2015 the Bank’s Climate Change Climate Change Top Management Action Plan was published. The full Nafiz Karadere (Permanent Member) EVP, SME Banking Non-Governmental Organizations text of the Action Plan can be found in Appendix 9. Osman Tüzün (Permanent Member) EVP, Human Resources and Support Services

The Sustainability Committee The Sustainability Committee »WG focusing on Managing meets regularly in order to meets to review and take Environmental Impact of Lack of a Responsible Investors Garanti Bank continued to support its monitor the progress on and to decisions on recommendations Operations, Investment Strategy Top Management subsidiaries in developing their own ESG provide input to all sustainability raised by the Sustainability »WG focusing on Communities, policies and risk management systems. efforts. The Committee Team and functional »WG focusing on Stakeholders, is deliberately structured representatives regarding »WG focusing on Human In 2015, Garanti Pension established to integrate sustainability sustainability-related topics. Resources, its own Sustainability Committee and concerns and opportunities »WG focusing on Corporate Department, initiated the process for into all operations, products In addition to this high-level Sustainability Governance. establishing ISO14001 Environmental and services. In addition, this committee, Garanti Bank has Management System and signed the structure ensures that all efforts formed the following 7 working The Committee ensures the UNGC and UN WEPs. are consistent with internal groups (“WG”) based on the integration of all material policies and related regulations. Bank’s Sustainability Policy: aspects and environmental The Sustainability Committee’s and social factors besides role is to agree on strategic »WG focusing on Customers economic criteria into the direction and action plans for through Sustainable Finance Bank’s operations, products and the Bank. By the end of 2015, (Retail and SME Banking), services, and decision-making the committee has met a total »WG focusing on Customers through mechanisms. of 20 times since its inception Sustainable Finance (Corporate in 2010 and met 3 times in 2015. and Commercial Banking),

56 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 57 Critical Concern Stakeholder Group that Garanti’s response to Critical Concern Stakeholder Group that Garanti’s response to raised the Critical Concern Critical Concern raised the Critical Concern Critical Concern

Need of assurance for ESG rating agencies The Bank’s 2015 Sustainability Report, Reducing the impact Top Management Garanti Bank decided to support the Scope 1 and 2 GHG Top Management prepared according to GRI G4, obtained on water resources Non-Governmental CDP Water Program and the program emissions, energy and external assurance from an independent due to industrial and Organizations was launched in Turkey with Garanti as water consumption audit firm. The scope includes renewable agricultural activities the main sponsor in 2015. energy portfolio, energy and water consumption, ESIAM20 data in scope of To reduce the impacts of agricultural our indirect effects and Scope 1 and 2 GHG activities on water resources, Garanti emissions. launched a new loan product for financing efficient agricultural irrigation Increasing Top Management The Bank has arranged a training course systems in 2015. stakeholder Employees for 22 of its customers from the energy and awareness about Investors infrastructure sectors to inform them about Improving the Health Top Management In 2015, Garanti Bank started to work on our sustainability its ESIAM and current Environmental Impact and Safety precautions Media a new rating system that will be used to activities. Assessment (EIA) conditions. in the projects Community rate the H&S performance of projects financed by the Bank financed. The Bank has supported UNEP-FI in translating their Sustainable Banking Manual to Turkish. Making the processes ESG rating agencies Garanti Bank, with the support of a Several half-day workshops with firms from in the Bank about Investors consulting firm, united all processes real economy and banks in other countries ethical matters Top Management related to ethics under one policy called were held to inform these organizations on publicly available the Garanti Code of Conduct and made Garanti’s sustainability experience and how it publicly available in 2015. they can tackle these issues themselves.

Additionally, Garanti supported the “Sustainable Finance Meeting”, held by BCSD Turkey on March 30, 2015 in the English Consulate. The meeting brought together approximately 80 people and the goal was to increase the awareness of financial organizations other than the banking sector on the importance of sustainable finance.

Supporting women’s Top Management Garanti Bank signed the Women’s empowerment Non-Governmental Empowerment Principles (UN WEPs) which Organizations was developed together by UNGC and UN Media Women in 2010. Garanti is in Mentoring & Community Support working group and is a member of the UN WEPs Support Team.

Additionally, the Bank established the Woman Steering Committee in 2015 to expand the activities in the Bank to support the empowerment of women.

20. Environmental and Social Impact Assessment Model. Please see Appendix 2 for details.

58 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 59 SUSTAINABILITY TEAM

In 2012, Garanti Bank established a full-time Coordination among the Branches, Regional Sustainability team which is based in the Directorates and Teams for the purposes of Project Finance Department. This team was the EMS is achieved via the Efficiency Team, formed in order to enhance the efficiency of established under the Construction Department. its organizational structure for sustainability. The Efficiency Team is comprised of 5 Consisting of five members in total including the members including the Senior Vice President of Sustainability Manager of the team and the Senior Construction Department. The Efficiency Team Vice President responsible for Project Finance, is responsible for the application of the EMS the team included three environmental engineers in the bank and ensuring the environmental amongst its members as at the end of 2015. sustainability of the Bank’s internal activities.

The Sustainability team is responsible for the Project Supervisors from the Construction coordination of all sustainability-related activities Department, Mechanical/ Electrical Engineers and at Garanti Bank on a day-to-day basis. The team, the Efficiency Team received ‘Managing Safely’ which reports to the Sustainability Committee training from the Institution of Occupational on a regular basis, works in cooperation with the Safety and Health (IOSH). The primary purpose Bank’s other units during the implementation of of IOSH, which is recognized by the International the decisions taken by the Committee. Monitoring Labor Organization (ILO), is to provide a more the Bank’s sustainability targets and performance secure, safe and sustainable business environment on a weekly basis, the team ensures the worldwide. consolidation of sustainability-related data coming from across the Bank and evaluates such data in line with the Bank’s targets. The team is also responsible for the coordination of the process of collecting information from other departments.

By the end of 2015, Garanti Bank had more than 1,000 Sustainability Representatives, who are responsible for working in coordination with the Sustainability Team to collect data and support the implementation of the decisions taken by the Sustainability Committee within their own departments, from headquarters, regional directorates and branches. As noted in the preceding section, the Sustainability Governance structure at the Bank was restructured in 2015 and is as currently shown in Figure 2.

60 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 61 Figure 2: Sustainability Governance at Garanti Following the Restructuring in 2015 SUSTAINABILITY COMMITTEE

Aydın Güler Permanent Member

Nafız Karadere Ali Fuat Erbil (CEO) Permanent Member Permanent Member

Dr. M. Cüneyt Sezgin Chairman

Ebru Dildar Edin (Committee Secretary General) Permanent Member

Ali Temel Osman Tüzün Permanent Member Permanent Member

62 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 63 SUSTAINABILITY TEAM AWARDS WORKING GROUPS »Became the only Turkish company to enter »Honored with the “Most Ethical Company the CDP Climate Change A list in 2015 and was Award” at Turkey Ethics Awards (ETİKA) by awarded the CDP 2015 Climate Performance Ethical Values Center Association (EDMER) for Leadership award. fulfilling more than 70 out of 80 criteria on issues such as corporate governance, corporate social »Obtained the highest score among the responsibility, leadership, innovation and legal Sustainable Finance (Retail and SME) companies included in the CDP Turkey 2015 compliance. Climate Disclosure Leadership Index and also won the CDP Turkey 2015 Climate Disclosure »Received the “Corporate Transparency Award” Leadership award. from Transparency International in Turkey’s first Transparency Awards with its Investor Relations »Received “Bank of the Year Award-Turkey” in website and iPad application two key components Sustainable Finance “Sustainability” category from ACQ Global Awards of the Bank’s proactive, transparent and consistent 2015 and became the “National Champion” at communication with stakeholders. (Corporate and Commercial) European Business Awards in the category of “Environmental & Corporate Sustainability”.

»Sustained its International IIP Gold standard, Environmental Impacts of Operations demonstrating its commitment in employee centric management and banking approach, its perfection standards and promise to invest in employees to achieve higher performance.

»Named as the “Silver Winner in Most Socially or Environmentally Responsible Company of the Communities Year” in Best in Biz Awards 2015 International. »Borusan Wind Bundle project, which Garanti has participated in financing, have been recognized as the “Best Sustainability Deal” in Europe, Middle Stakeholders East and Africa by EMEA Finance.

Human Resources

Corporate Sustainability Governance

64 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 65 FOCUSING ON IMPORTANCE OF CUSTOMER EXPERIENCE AND SATISFACTION CUSTOMERS THROUGH Listening to customers, identifying their needs To ensure that all parties in Garanti are aware of and addressing areas where they are not satisfied Customer Experience Management (CEM) issues are amongst the cornerstones of Garanti Bank’s and participate in the resolutions, a Customer SUSTAINABLE FINANCE customer experience process and an important Experience Platform is built. The Customer element of its sustainable economic performance. Experience Platform is responsible for bringing all These unstinting efforts contribute towards further customer experience related issues into one place. enhancing the level of customer satisfaction. It has participants from various customer related departments and is sponsored by the Bank’s Key Highlights: The bank uses a five-pillar methodology to Executive Vice Presidents. improve the experience it delivers. First, it listens »34% share* in Turkey’s total operational installed wind power to customers in order to get insight and collects The ISO 10002:2004 Complaint Management customer feedback via various channels: complaint System certificate, awarded to the Customer reports, customer experience research, exit surveys, Satisfaction Department by the British Standards »Loans totalling TL 5 billion had been provided to agriculture* mystery shopping, social media, customer hotline Institution (BSI) in 2006 and renewed every year, and via its employees. As a second step, analyses makes Garanti Bank the first Turkish bank to have »10 projects evaluated in depth in line with the Bank’s ESIAM in 2015; are conducted to better understand the root its Complaint Management System certified at causes and define pain / passion points. Thirdly, the international standards. The Bank has customer improvement areas are defined, insights are shared satisfaction initiatives in place that are explained in »3 cities visited as part of Garanti Anatolian Meetings in 2015; according to the results of root cause analysis Table 6. and according to improvement areas, different projects are designed to develop a better customer »First bank in Turkey to establish an expert team under Project Finance experience. The final step of the closed loop Department on licensed and unlicensed solar power projects. methodology is to measure the projects delivered.

*As of December 31, 2015.

Garanti Bank has already developed numerous products and services that support sustainable development, ranging across SME banking to retail banking and project finance. In order to offer the best service experience to its customers and to ensure their continuous satisfaction, Garanti Bank is committed to place sustainability at the center of its service cycle to generate long-term added value.

66 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 67 Table 6: Customer Satisfaction Initiatives

Initiative Explanation Initiative Explanation

Root Cause Analyses The causes of dissatisfaction with products, services and processes are Customer Experience Garanti Bank conducts market research to listen to customer opinions, identified through root-cause anlayses which are aimed at obtaining insights Research track their needs closely and receive feedback on its products and and finding the main factors that lead to complaints on the customers’ side. services.

Other than scheduled periodic research, ad hoc market research to Customer Customers are compensated in the event they suffer financial loss due to receive detailed information about certain services or products is also Compensations the Bank’s products, services or processes. conducted.

Status Tracking The system provides a tracking facility for our customers whose messages Market research conducted in 2015 included: System cannot be resolved by the first contact point. The customers are given a message number, which can then be used to track the status of the »Open Market Net Promoter Score studies (NPS) were conducted to messages via IVR, SMS or the related web pages. understand our competitive position, identify gaps with competitors and get insight about the new trends in the market. The activity in question for 2015 was conducted with Retail Upscale, Retail Mass, SME -Small Speech Analytics Speech Analytics is a technology that transcribes the recorded audio to Business and SME-Micro- customers as well as Digital Channels. For the System digital text. By using Speech Analytics Technology, the Customer Hotline Private Banking and Commercial segment, NPS with Garanti customers can reach the conversation texts and generate additional reports to are conducted. increase the customer satisfaction. »Customer experience research was conducted with the users of the Bottom-Up Net After Service Surveys are conducted both for branch services and for KonserVe application, which was developed for sending out notifications Promoter Score Studies Customer Hotline Services. about music and sports events that are sponsored by Garanti. (After Service Surveys) In the Customer Hotline Services surveys, the satisfaction level of »Customer experience research was conducted with the users of customers regarding the service given, solution offered and the manners @garantiyesor service which aims to receive feedback through Garanti of customer representatives are assessed. Bank’s Facebook and Twitter accounts.

In the Branches, we conduct After Service Surveys with customers who »Customer experience research was conducted with the users of our went through critical journeys. We reach customers within 48 hours after ‘TeşvikBul’ service, which aims to inform SMEs about the most convenient the interaction and collect their feedback in order to understand what we incentive program for their businesses. do well and what we need to improve. »Customer experience research was conducted with the users of our We plan to expand After Service Surveys to digital channels and Call ‘ŞirketKur’ service, which aims to inform entrepreneurs about the Center services for the years ahead. incorporation processes and legislations.

»Mystery Shopping research is conducted to find out if the branches are offering services that are up to the established service standards.

68 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 69 SEGMENT-SPECIFIC PROGRAMS FINANCIAL HEALTH THAT CONTRIBUTE TO AND INCLUSION SUSTAINABILITY

The Bank adds value to the lives pension payments via Garanti Garanti Bank, while offering a wide variety of »The “Notification Today Widget” for iPhones and The Bank adds of its customers by offering Bank are able to withdraw their products, processes and services, also plays an iPads enables our customers to access market segment-specific programs for pensions from ATMs with a important role in helping its customers manage information, locations of closest ATM/branches value to the lives customers of all ages such as; single push of the button and their finances. The Bank provides information on and exchange rate conversions, are provided various advantages its customers’ financial status, while also providing »Garantili Gelecek (Guaranteed such as special pricing in guidance on their needs as outlined below: »With the option of QR withdrawal, the possibility of its customers Future) for Kids. personal loans and exemptions of withdrawing cash without the necessity to from account management fees. Financial Health carry their debit and credit cards are offered to by offering »Bonus Genç (Bonus Young), customers. Under the scope of the program, Research studies indicate that customers are »Retirement Banking, other family members apart from »Since March 2016, money transfer without using seeking financial balance because of the effects internet or mobile banking is enabled through segment specific the parents can also contribute of increasing consumption and may sometimes Garantili Gelecek (Guaranteed to the savings for children with Money transfer via BİP messaging application. This experience difficulties in maintaining their financial way Garanti Bank customers can transfer money to programs for Future) is a program that the Garantili Gelecek Account. health. features advantageous savings Savings that are allocated from people who are unbanked also via this new channel. and education insurance for accounts or credit cards gain In order to support the customers’ of the Bank’s customers of parents who want to secure the value in the fund. Garantili financial sustainability under the current global and Online Banking Personal Finance futures of their children from Gelecek Insurance, which is national market conditions, Garanti Bank began Management all ages. today. made available with a discount to offer products and services that will help the to account owners, places the Bank’s customers; The Bank offers a need-oriented personal finance Bonus Genç (Bonus Young) education of the children under management service with personalized content, program was launched in guarantee with securities. On top »Manage their financial lives through personal which makes it easier for the customers to track 2013 and offers products and of this, smart piggy banks that interaction; their financial status and have full control over their services that aim to cover the are gifted to children who are finances as well as making the communication banking needs of young people, saving with the Garantili Gelecek »Develop a tendency to save; and between the Bank and the customer more transparent. especially university students. Account help them gain a habit »Realize their short- and long-term targets. One offering of the Program of saving. The Bank also provides many options to allow its is a credit card without annual customers to manage their personal finances on Agriculture Banking Garanti is working through all channels so that management fees. Another With the the internet via the Internet Banking website21 as Mobile Branches its customers have easy access to their financial product offer, Harçlık Hesap , farmers can explained by the following examples: (Allowance Account), enables get access to banking services statuses. In this context: young people to interact with they need in the fields or »Assets and Liabilities: This section lists the assets »Customers without access to the internet can fundamental banking products facilities, reducing their time and and liabilities of our customers in product groups. easily reach the Bank’s banking service and such as internet banking, expenses. Our customers can review the details of their products through the Alo Garanti channel, current account deposits and products and check the relative performance of all Paracard. Furthermore, it their assets in the graph view. provides the means for parents »Offers such as personalized loans and savings are easily communicated through dynamic offers and to give their children allowances »Income and Expenditures: In this section our systems such as IVN, automatically and without customers can list their income and expenditures incurring banking fees. by term and product groups. In addition, they can »Our Apple Watch application enables our customers set spending limits for products or by tagging to access market information, locations of closest The aim of the Bank’s transactions, getting notifications when these ATM/branches and exchange rate conversions, Retirement Banking Program limits are exceeded. aims to be the private bank of retirees. Elderly customers who receive their government 21. http://www.garanti.com.tr/en/personal_banking/delivery_channels/internet_banking.page

70 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 71 »Cash Flow: In this section, our customers can see their the best pension plan for themselves and thus help Gold Branches and Gold Service The Bank liabilities, pending payments and income from previous terms. them look to the future with confidence. Customers can also use the balance moving feature to see how Point Jewelers : provides many their balance will be affected by reduced debt in the future. Products that Promote Saving Our customers’ physical scrap gold is accepted in Gold Branches and Gold Service Point Jewelers so options to allow Mobile Personal Finance Management Garanti Bank aims to raise the number of savings that the assets can be registered in the banking products in a bid to raise the propensity to save system and in the economy as a whole. The Gold The Bank provides many options to allow its customers in Turkey. With this target, the Bank offered the Branches in Turkey accept customers on Tuesdays, its customers to manage their personal finances on their mobile phones following products in the reporting period: Wednesdays and Saturdays whereas Gold Service including the following: Point Jewelers serve customers every day of the to manage »“Net Savings Account”, which allows a flexible week. »Money Bar: Based on previous spending, income and start-up to saving for customers who have payments of the user and scheduled transactions, the difficulty saving but are seeking to acquire the Customers can easily perform gold account their personal approximate balance that will remain in the account for the habit, transactions through their TL or US Dollar current month is estimated. Moreover, suggestions are provided accounts. Our customers can access their Gold finances on their for users to save money or to borrow money if needed. »The “Spend and Save” product which offers Accounts 24 hours a day through Garanti Online customers the chance to turn credit card expenses Banking, Garanti ATMs, via Alo Garanti line 444 0 »Cash Tank: Maximum and minimum limits are determined for into savings. 333 and from Garanti Branches. mobile phones. users’ credit cards and spending accounts. In this way, users are notified when they exceed their limits with a notification that is »Investment Accounts Gold Time Deposit Account: sent to their mobile phones. The Gold Time Deposit Account allows customers to earn interest on their gold investments in »Spending: Financial Inclusion: Solutions for With ‘My Spending’, all the expenditure made from gold terms. Customers who wish to make their Garanti Bank account or card can be listed and easily tracked. the Unbanked Population investments in gold terms, preserve their gold Specific categories on spending are shown and users are investments and to earn interest can open a Gold warned before they exceed their limits. Users also arrange their According to World Bank Global Financial Time Deposit Account with a minimum of 100 gr of limits based on their spending goals. Inclusion data, 2 billion of the world’s population gold. do not have access to financial services offered »Filter and Graphs: With the filter option, users can change their by financial institutions. In Turkey, where 42% of Gold Saving Account: spending criteria in order to analyze their financial situations in detail. the adult population lack access, Garanti offers its With the Gold Saving Account, customers can Moreover, each spending is categorized and each category can be products and services to customers as well as to regularly save the amount of gold they want visualized by graphs. non-customers without access to financial services. by making payments with their credit cards or through their deposit accounts. »Mobile Banking Notifications: Within Mobile Banking and CepBank Money Withdrawal: CepBank Money iGaranti applications, there is a system which triggers push Withdrawal was developed to capture standalone notifications to be sent, as well as SMS and e-mail, when the transactions of customers in a convenient way and credit card payment date approaches or money is received. to allow immediate withdrawal from any Garanti Moreover, users can be reminded of current campaigns through ATM without the need for a credit or debit card. notifications.. Non-Garanti customers can perform their transactions without credit or debit cards through Support for Financial Planning Garanti ATMs as well as Garanti customers. A few examples of cardless transactions are explained below. In the current volatile markets, which may reflect increased Cardless Bill Payments: Close to 90 thousand bills from uncertainty, customers increasingly need expert opinions and hundreds of companies ranging from utilities to mobile support in order to plan their financial future. For this necessity, credit top ups are paid cardless through ATMs. Garanti offers financial planning services to its Retail and Private Banking customers. Cardless Money Deposit to an Account: Depositing money into a Garanti account is As part of this service, customers are classified into specific possible with only an account number as this risk groups and the Bank provides portfolio recommendations can be done cardless at an ATM. The card owner suitable for each risk group. Accordingly, customers can gain can deposit money into their account as well as access to professionally prepared investment proposals and another person’s Garanti account. can choose the proposals that best fit their risk-reward profiles. Likewise, a wide array of alternatives is offered for personal Garanti Bank aims to include people who make pension funds as part of the Bank’s special pension services. savings without benefiting from financial services. These alternatives offer customers the opportunity to draw up

72 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 73 RENEWABLE ENERGY Table 7: Total Installed Capacity of the Wind Power Portfolio by Year (Cumulative) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015*

22 Garanti Bank considers financing As of December 2015, the total MW 70 220 385 540 626 874 1,216 1,223 1,696 1,932 A new separate and of renewable energy projects a emission reduction of operational critical part of enabling Turkey wind power plants that were Loan specialised team to reduce its GHG emissions. financed by Garanti Bank was 5.7 Limit 84 281 502 694 806 1,138 1,511 1,526 1,962 2,134 (US Dollar, The Bank gives most support to million tCO2e based on the latest wind and solar energy projects available TEİAŞ data of electricity millions) was formed under because of their minimal generation in Turkey. environmental and social effects the Project Finance and the positive contribution As of December 31, 2015, Table 8: Total Installed Capacity of the Hydroelectric Power Portfolio by Year (Cumulative) they make to the current account Garanti Bank had allocated: Department in deficit of Turkey. Garanti Bank’s 2007 2008 2009 2010 2011 2012 2013 2014 2015* share in Turkey’s total operational »US Dollar 2.13 billion to wind installed capacity of wind power farm projects which will have a MW 50 118 211 882 1,962 2,080 23 2015 to provide among Turkish Banks is 34%. total installed capacity of 1,932 2,123 2,123 2,131 MW once all commissioned, Loan Limit financing and (US Dollar, millions) 60 107 277 627 1,350 1,481 »US Dollar 1.65 billion to 1,550 1,534 1,646 hydroelectric power plant support to solar projects which will have a total installed capacity of 2,131 MW energy once all commissioned, and Table 9: Portfolio of Total Installed Geothermal Power Plants by Year (Cumulative) 24 »US Dollar 204 million to projects. geothermal power plant projects which will have a total installed 2010 2011 2012 2013 2014 2015* capacity of 202 MW once all commissioned. MW 75 75 75 95 112 202

»US Dollar 21 million to solar Loan Limit energy projects which will have a (US Dollar, millions) 70 70 70 90 128 204 total installed capacity of 23 MW once all commissioned. *Externally assured by KPMG, see assurance report on page 136

More than half of the funding The increasing impact of climate change intensified its efforts to provide its customers with provided by the Bank to energy necessitates the timely transition to a low carbon sufficient financing support and appropriate loan projects has been allocated to economy. This urgency is reflected in the efforts products to allow them to make the necessary renewable energy generation of public institutions, the needs of our clients investments and refurbishments. Garanti started projects. and priorities of society. Recent regulatory working on a new loan product for PV systems changes, making it possible to build unlicensed in late 2013 and rolled it out in 2014. In order to renewable projects up to 1 MW, have rendered more effectively monitor processes in scope of PV-based electricity generation a viable option these new loan products, a new separate and for investors as well as SMEs that are looking specialized team was formed under the Project to reduce operational expenditure through Finance Department in 2015 to provide financing self-generation. In line with this, Garanti has and support to PV projects.

22. Includes corporate loans allocated to small-scale WPPs. 23. Includes corporate loans allocated to small-scale HEPPs. Was restated for years 2012-2014. Koru Wind Farm 24. G4-22: Restated for years 2010-2012.

74 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 75 GARANTİ BANK AND SMES Table 10: Garanti’s Bank’s Priorities and Progress Regarding SMEs

According to TUİK’s latest data which were released in 2015, SMEs account for 74.2% of total Target Progress in 2015 employment in Turkey, as well as 63.8% of total sales and 53.3% of total investments in Turkey25. Garanti Bank offers a wide array of tailor-made products and services to SMEs, which are the beating heart of the Turkish economy. As well as its own resources provided as loans, Garanti Bank also extends long- To support the digital »To make SMEs’ lives easier in the new age and speed up their term and cost efficient resources from international financial institutions to SMEs. These resources transformation of SMEs in digitalization process, Garanti commenced a new project and founded provide a positive contribution to domestic trade, export and tax volumes, while also playing a key role order to ensure they can the Ambassadors of Digital Transformation, comprised of Garanti in the creation of new employment opportunities in Turkey. effectively use information Customer Relations Managers who serve SMEs. The Ambassadors of technology Digital Transformation have attended the trainings at the Future Digital SMEs Summit held in collaboration with Google, Microsoft and Turkcell.

To ensure SMEs have easier »Teknosor: With this service introduced in December 2015, regardless access to information by of being a Garanti Customer, SMEs can get support on technical and designing information and technological issues which they frequently have problems with. consultancy services »Women Entrepreneur Executive School (WEES): Garanti initiated the WEES in September 2012 in collaboration with Boğaziçi University Lifelong Learning Center (BULLC). WEES provides training to women entrepreneurs free of charge on subjects including innovation, sustainable governance, customer relations and institutionalization. The trainings last approximately 1 month. During the reporting period, 300 women in 5 cities received certificates.

»Both occupational and personal thematic training programs in conjunction with UN Food and Agriculture Organization (FAO) and Boğaziçi University Lifelong Learning Center continued with 5 hours long training sessions held in Konya this year and 116 family establishments received training support.

To undertake efforts to »With GAM, Women Entrepreneur Meetings, KOBİLGİ SME Informative assist the development of Meetings and similar gatherings, the Bank works to help SMEs, the SMEs in cities that currently backbone of the economy, move forward. lack sufficient financial support from banks »GAMs began 13 years ago and in 2015 the Bank visited 3 cities, getting together with more than 700 SMEs.

KOBİLGİ Meeting »The KOBİLGİ meetings, which started in 2011, consist of a series of seminar on subjects such as the developments in regulations, marketing and sales and have been attended by approximately 2,000 people.

Providing employees of »3rd “Future is Digital SME” summit was organized focusing on the Bank with training our employees in collaboration with industry leaders, to increase related to SMEs’ digital awareness and efficiency in business life of the SMEs. transformations

25. http://www.garanti.com.tr/en/personal_banking/delivery_channels/internet_banking.page

76 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 77 Garanti Partners Table 11: Assisting the Mobility Impaired at ATMs and Branches Garanti Bank has started offering the also making sure adequate testing and feedback GarantiPartners service in conjunction with the are given to the product or service before it is Boğaziçi University Business Angels (BUBA) released into the market. Early development Angel Investors Platform. ventures can be presented with an incubation Initiative Progress in the Reporting Period center (working environment/office) opportunity. GarantiPartners is open to anybody who The online and mobile marketing support, as well as Disabled-friendly ATMs Garanti Bank has introduced its disabled-friendly ATMs alongside its successfully passes the evaluation process banking services that are necessary for the ventures, existing machines and put them into service. These machines have whether they are a bank’s customer or not. With are presented with advantageous conditions. lower screens; their keyboards are easily visible for disabled people the knowledge of Boğaziçi University and the and can be approached easily by them. In addition, visually disabled support of the Bank, not only capital, but also The Bank’s doors are wide open to entrepreneurs customers have the opportunity to perform transactions on these experience is passed on. who dream of establishing their own businesses, ATMs with the help of audio guidance. but cannot find the courage or capital; do not The biggest goal of the program is speeding up know about the proper channels or resources to entrepreneurship with the help of the platform realize their dreams and invites entrepreneurs Disabled-friendly branches In disabled-friendly branches: and takes on missions such as making sure every to GarantiPartners, which adds value to all item necessary is reached through this structure. stakeholders. »Branch entrances are accessible to the orthopedically-disabled It makes it possible to strategize together with customers; the entrepreneur and prepare a comprehensive By the end of 2015, 569 applications had been business plan to realize the projects and received by GarantiPartners, which was launched »The visually-impaired are guided by floor surface features; contribute to sustainable growth. in February 2015 to fast-track entrepreneurships and 12 entrepreneurs won the right to participate »Priority is given to disabled customers in the Qmatic queuing system, It is possible to provide technical support to in the program. if information related to their situation is kept in the Bank’s records; entrepreneurs and their solution partners that are developing products in an R&D focus while https://www.garantipartners.com/ »Counters have lower tellers for serving orthopedically-disabled customers

Disabled-Friendly Banking Garanti has created ‘experience standards’ to highlight important points in communicating with disabled customers, to help ensure a In 2015, Garanti Bank continued initiatives to ease the access of disabled customers to banking services. standardized approach and quality service to our disabled customers. In 2012, the Bank started to make its branches and ATMs disabled-friendly. Garanti trains employees Various trainings are provided to Bank employees to create higher on critical points of services provided to disabled people and targets to continue easing the lives of its awareness regarding disabilities. In addition, how to communicate disabled customers in 2016 through training its employees on the important points in services provided with customers with disabilities has been an integral part of the Bank’s to disabled customers. disabled-friendly banking program. All employees that communicate directly with customers have received the training, as did volunteers from head-quarters.

Garanti Bank has also completed design works for Sign Language trainings that are going to be rolled out in 2016.

Internet branch and credit Garanti Bank’s internet branch and mobile branches were made card transactions for the compatible with screen reader software, enabling them to perform visually-impaired customers audio transactions by listening to the internet branch menu.

The Bank is planning to send text message notifications to visually- impaired customers regarding their credit card transactions. The target is to complete the works on this issue in 2016.

78 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 79 Table 12: Assistance to Disabled Customers and Future Targets

Target Explanation Progress and Future Target Target Explanation Progress and Future Target

Disabled-Friendly Rendering teller counters and 150 branches had been transformed into DF Help visually- Implementing the necessary Internet and mobile banking branches (DF) Branches branch entrances wheelchair- branches by the end of 2015. impaired improvements in the internet were made compatible with screen accessible customers branch to ensure that visually- reading software used by visually impaired The Bank’s target for the next period carry out their impaired customers are able to customers. Applying surface features on is to continue opening DF branches, or transactions perform audio transactions. branch floors to guide visually- transforming existing branches into DF through the impaired customers formats, in micro-markets where our internet branch disabled customers are concentrated. Inform visually- Informing visually-impaired A pilot study is being targeted before the Disabled-Friendly Ensuring that visually-impaired The Bank had 33 orthopedically-disabled impaired customers of credit card end of calendar year 2016. ATMs customers can carry out audio and 422 visually-disabled friendly ATMs by customers of transactions through audio SMS transactions at ATMs the end of the year. In addition, there were their credit notifications 147 ATMs that were both orthopedically- card Widening easy-to-use ATMs and visually-impaired friendly ATMs. transactions for orthopedically-impaired customers SUSTAINABILITY COLLABORATION Distance Distance learning programs to The Bank’s targets are to train its employees learning ensure that branch personnel to create higher awareness on disabilities programs for provide a better service to and on how to communicate with WITH INTERNATIONAL FINANCIAL Bank disabled customers. customers with disabilities. personnel By the end of 2015, 16,884 employees were INSTITUTIONS registered for the distance learning program with 11,721 having completed (completion rate 69%). Garanti Bank offers long-term financing to SMEs Garanti Bank signed the goodwill letter for the by working in cooperation with international “Financing and Consulting Support Program for Design works for Sign Language trainings financial institutions on projects connected with Establishments Managed by Women” that was are completed and are going to be rolled energy-efficiency and renewable energy, as the initiated by the EBRD, European Union Turkish out in 2016. Bank views these projects as having a significant Delegation, Republic of Turkey Ministry of Labor opportunity to reduce Turkey’s GHG emissions. and Social Security and Turkish Business Council. For example, Garanti has provided favored With this program, Garanti is involved in a Euro Give priority to Keeping information related to All customers recorded as disabled in the financing to small and medium-sized businesses 300 million loan package that will be given to disabled disabled customers in the Bank’s branch and call center database are given on energy efficiency and renewable energy establishments managed by women. customers in records and giving them priority priority in the Qmatic system. subjects through the Turkey Sustainable Energy branch in the Qmatic queuing system. Financing Facility (Tur-SEFF) and Mid-Sized Additionally, Garanti signed the “Protocol for transactions Sustainable Energy Financing Facility (Mid-SEFF), Guarantee Support to Women Entrepreneurs of both of which are supported by the EBRD. Garanti” with the Credit Guarantee Fund (KGF) to provide a solution to the guarantee problems Examples of sustainability collaboration with women entrepreneurs face when applying for international financial institutions are Women loans. in Business, EIB, KfW, Mid-Seff and similar programs. Please refer to Appendix 3 for detailed information.

80 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 81 Women Entrepreneurs Meetings and Turkey’s Women GARANTİ BANK SUPPORTS WOMEN Entrepreneur Competition ENTREPRENEURS Between 2008 and 2015, Garanti Bank organized Garanti Bank became the first Turkish Bank 32 Women Entrepreneurs Meetings in 31 cities to become a member of the WeConnect in collaboration with the Women Entrepreneurs International, an organization aiming to include Association of Turkey KAGİDER to further women entrepreneurs in the supply chain. We Garanti Bank sees supporting women entrepreneurs as a major responsibility for Turkey’s social and support women entrepreneurship and reached aim to strengthen women entrepreneurs in our economic development. Apart from extending financing to women entrepreneurs, the Bank also 6,662 women. The Turkey’s Women Entrepreneur customer portfolio by this international platform. supports activities encouraging entrepreneurship and educational projects. Table 13 summarizes some Competition that we initiated in cooperation with of the Bank’s recent successes. Loans extended by Garanti Bank to women entrepreneurs had reached the Ekonomist magazine and KAGİDER was held TL 2.8 billion as at the end of 2015. for the ninth time.

Financing Women Entrepreneurs Table 13: Progress in Women Entrepreneurship Programs With the intention of solving women entrepreneurs’ warrant problems related to borrowing issues GCF renewed ‘Garanti Women Entrepreneur’s Bail Support Protocol’. Natural entities owned by women who fall into the SME criteria, who are active for a maximum of 3 years, less than 60 years old, holding a Target Explanation Progress and Future Target primary school or a higher diploma and women who own a minimum of 51% of a company and in the specified age bracket can benefit from financing. Women The Program was aimed to be In 2015, 5 new provinces were reached. Entrepreneurship rolled out to 4 new provinces in Program 2015 4 more provinces are due to be added in Women Entrepreneur Research 2016 to the education program for women entrepreneurs to transform their businesses ‘Women Entrepreneur Research’ program, coordinated and run by Dr. Yıldız Ecevit, Head of Department into sustainable ones. of Women Studies at Middle East Technical University (METU), and supported by the Bank, which aims to identify potential women entrepreneurs along with identifying their problems, expectations and requests and mechanisms that support women entrepreneurs was completed in 2015 and the results were disclosed.

82 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 83 SUPPORTING RURAL DEVELOPMENT WITH “AGRICULTURAL BANKING” PRODUCTS Number of Customers

The Bank’s “Agricultural and Rural Development a solution partner that provides for the needs, Strategy,” which targets helping the sector meet advice and consulting services in the sector. its financial needs both during the agricultural production period (primary production) and By the end of 2015, the amount of loans provided 31,000 the processing and marketing obtained after to customers with the agriculture and husbandry production (secondary production) in Turkey. sector codes had reached TL 5 billion, and the Through these initiatives, the Bank continues to number of customers had reached 31,000, while stand with the agricultural establishments with its 22,000 of these customers were SMEs. “Supporter of Agriculture, Guarantee of Producer” slogan. Garanti was the first private Bank in Turkey to not request the use of Farmers Register System (FRS) SME In order to offer permanent financing to the as the Bank is directly integrated with this system. agricultural sector, Garanti Bank offers financing As a result, Garanti has eliminated the cost of FRS with appropriate grace periods on harvest for farmers. schedules. In addition to providing credit to agricultural facilities, the Bank aims to become 22,000

Agricultural Irrigation Systems Loan

Garanti finances agricultural irrigation systems that use solar power with modern agricultural irrigation system loans.

Field Days

Garanti has established a strong partnership with German Agriculture Union (Deutsche Landwirtschafts-Gesellschaft – DLG) which brought a new approach to the Field Days with Fair Organization and Leader Farmer Project. The ‘Field Days’ and ‘Agriculture and Technology Days’ have Amount of loans provided to customers hosted many national and international participants. Garanti, which is the main organization sponsor for the 6th year in a row, tries to introduce the most innovative techniques and technologies to growers. with the agriculture and husbandry sector TL 5 billion codes (by the end of 2015) Supporting Farmer Families in Agricultural and Rural Development

‘Supporting Farmer Families in Agricultural and Rural Development’ program organized by Garanti Bank, Boğaziçi University Lifelong Learning Center and the UN Food and Agriculture Organization continued with trainings held in Konya this year. Both personal and professional improvement was targeted in the 5 hours long sessions which 116 growers attended.

84 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 85 Boğaziçi University on environmental and social mentioned in the report called “The Business EFFORTS TO EXPAND THE INFORMED risk management to its corporate customers Case for Responsible Corporate Adaptation: and presented the bank’s approach and best Strengthening Private Sector and Community practices. In the workshop, besides Garanti Bank, a Resilience” published by UNGC, UNFCCC and CUSTOMER GROUP specialist from the EBRD, a responsible investment UNEP on climate change adaptation. specialist and two international independent advisor companies presented their knowledge and Garanti Bank organizes seminars, conferences and sector-based information meetings in order to raise its experiences. customers’ level of knowledge and to bolster their loyalty to the Bank. The Bank also organizes foreign trade training sessions and meetings with economists. The Bank has further encouraged its customers to In 2015, EBRD selected Garanti Bank as one of attend domestic and international conferences organized by international institutions like Euromoney. The the best practices for its trainings for financial Bank, in cooperation with fund providers, also offers various opportunities to its customers – who plan to institutions on strong sustainability policy and invest within the scope of the efficiency projects – to receive technical consultancy services. implementation on Environmental and Social Risk

Assessment among the financial institutions. Garanti was also selected by the UN for one of the best cases for policies on mitigating water ENVIRONMENTAL AND SOCIAL RISK risks and financial sustainability. Garanti was the ASSESSMENT PROCESS only Turkish company and one of the two banks Environmental and Social Loan Policies (ESLPs) Banks, in particular, face risks associated with financing In 2015, EBRD activities that could be associated with adverse impacts on the environment and society such as flashpoint issues capable of Garanti Bank initially set up its Environmental » Protection and management of natural selected Garanti generating significant negative publicity, such as an oil spill. and Social Loan Policies in order to minimize the biodiversity - taking into consideration the Failure to address these risks in a timely and appropriate manner indirect impacts of loans granted by the Bank measures which will protect biodiversity and the Bank as one of the may result in reputational damage and consequently a loss of and put them into practice in 2011. These policies natural habitat in project financing; investor support and customer loyalty, among other challenges. constitute the environmental and social principles governing the extension of loans at Garanti Bank » Increasing energy efficiency and supporting the best practices for its Garanti Bank sees its proactive management of these risks, such through which the Bank runs the “Environmental transition to a low carbon economy. as arising from climate change, not only as critical to its success and Social Impact Assessment Process” trainings for financial but also as one of its most essential duties to its stakeholders (ESIAP). ESIAP, designed with the support of an During the reporting period, 100% of the loan Through its effective approach to sustainability embedded independent consulting firm, also includes the requests received by the Bank were subjected to throughout its organization, Garanti Bank monitors its resource “Environmental and Social Impact Assessment the ESLPs. institutions on strong consumption, takes steps to reduce it, raises the awareness Model” (ESIAM). of employees and collaborates with suppliers. Moreover, to sustainability policy extend its work to a larger scale, Garanti also developed an Loan requests received by Garanti Bank are first Environmental and Social Risk Assessment Process to help drive subjected to the ESLP; projects which do not similar improvement across its loan portfolios. comply with the policies are rejected. The ESLP, and implementation applied on all loans without a threshold, is based Garanti Bank ensures that the projects it finances satisfy the on the following principles: on Environmental and social and environmental standards required by legislation and the Bank’s policies, that an impact assessment is undertaken » Maximizing the environmental and social by the project owner(s), if necessary, that prescribed measures benefits in financing projects considering their Social Risk are taken by the project owner(s) and that project owners have environmental and social impacts; effective internal audit systems. When necessary, the Bank Assessment suggests additional measures to mitigate negative impacts. Garanti contributes to raising awareness regarding non-financial among the financial risks in the non-financial and financial sectors by explaining its ESIAM to its external stakeholders via a variety of platforms. institutions. For example, Garanti organized a workshop together with 3rd Bridge Afforestation Area

86 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 87 Environmental and Social Impact Assessment Model (ESIAM) ESIAP Results in 2015

Garanti Bank subjects loan requests for » Ensure projects are sustainable from an During the reporting period, all loan requests were subjected to the ESLPs regardless of the loan type investments, which it defines as new projects environmental and social perspective; and size. 8 loan requests were directly rejected due to non-compliance with the ESLPs before ESIAM. with an investment total of more than US Dollar In Table 14: investments; 20 million, to the Bank’s ESIAM. With this internal » Ensure that financed projects and all associated model, projects are categorized and graded processes and policies pursued by the Bank » which are rejected due to non-compliance with ESLPs; according to their characteristics, size, sensitivity, comply fully with national legislation and location and their possible social (including with regulations; » which fall under the scope of ESIAM and assessed as per the ESIAM; respect to human rights) and environmental impacts. The Bank’s decisions are based on the risk » Ensure project owners reduce identified impacts » which are out of the scope of ESIAM, but still evaluated according to the fundamental criteria of rating calculated in accordance with the model, to an acceptable level; ESIAM due to their potential environmental and social risks which enables Garanti Bank to: » Effectively monitor the Environmental and Social are provided for the reporting period. » Determine and evaluate all environmental and Management Plan (ESMP) prepared by customers social impacts of projects in a systematic way in (project owners) in order to help monitor and accordance with ESIAM methods; improve their compliance with the Bank’s environmental and social policies. Table 14: Breakdown of Investments which were Subjected to

Updating ESIAP ESIAP in 2015*26

During 2015, the Bank continued to apply its »For the projects requiring tree removal, Garanti Environmental and Social Impact Assessment asks the borrowers to plant 4 to 5 trees per each Loan Limit (US Dollar, million) Number of Projects Process while having regard to the changes in local tree to be cut down. If the Project is a greenfield and international regulations, standards and issues fossil fuel based power plant, Garanti requires brought by our stakeholders. the borrowers to plant 1 tree per 10 MWh annual Loan requests rejected as per - 8 gross energy production for at least 10 years after the ESLPs In terms of the ESIAP update, the following commissioning. points were agreed following confirmation by the Sustainability Committee. »Projects that receive financial advisory are also in Loan requests within the the scope of the ESIAM. 1,621 10 »Agreed to lower the monetary limit for projects scope of ESIAM and assessed subject to ESIAM to US Dollar 10 million from US »For high risk projects, the sponsors’ compliance to as per the ESIAM Dollar 20 million. OHS related local legislation and international best practices should be ensured. If any non-compliance is Loan requests27 which are 70 2 »Agreed to apply ESIAP to projects financed present, the preparation of an action and monitoring approved with conditions after outside Turkey as well. If the country is a plan by an independent technical/environmental/ a basic evaluation despite “designated” country within the scope of Equator OHS consultant will be requested from the sponsors. being out of the scope of Principles, its own environmental and social ESIAM standards are also applied. If the country is »High risk and medium risk projects are to be listed as “non-designated”, international best IFI monitored via site visits by an independent adviser practices are applied as well as Garanti’s ESIAP. and/or Garanti Sustainability Team, once every six *Externally assured by KPMG, see assurance report on page 136 months during the construction phase and annually »If the GHG emissions of the Project are expected during the operation phase.

to exceed the 100,000 ton/year CO2 equivalent GHG emissions limit, it will be reported to Garanti »An ESIA summary of the high risk projects is to be and published on the website of the Project. published on the projects’ website by the sponsor.

»Environmental and social impacts of the Project to »Sectoral principles have been updated. be financed should be assessed. If there is no EIA 26. Includes projects assessed only in 2015 report or it has been exempted from an EIA by Turkish Detailed information on ESIAM is presented in 27. Although these projects are not subjected to ESIAM, these were assessed according to a set of standard environmental and social legislation, an EIA will be requested by Garanti. Appendix 2. criteria more detailed than the scope of ESLP.

88 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 89 28 Impacts on Flora and Prevention of Deforestation Mitigations and Actions towards Social Table 15: Breakdown of New Investments subjected Impacts To help mitigate carbon emissions and impacts of deforestation, forestation plans that cover the activities »On an infrastructure project, the sponsors were to ESIAM in 2015* below were requested from Sponsors and were requested to conduct a social impact assessment implemented: study to determine people affected by the project and possible impacts. Accordingly, relevant covenants »A thermal power plant privatization project: Planting were included in the loan agreement. If resettlement Assessment Result Breakdown Loan Limit (US Dollar, million) Number of Projects and care of 1 million trees a year during ten years is required in the following phases of the project, a resettlement action plan will be requested. »An infrastructure project: Planting and care of 4 trees for every tree that is cut down. »On two infrastructure projects, the sponsors were Category Category A 925 6 requested to conduct a stakeholder engagement

»A geothermal energy project: Relocation of the trees process including public consultation, disclosure Category B 766 6 instead of cutting them down of the environmental and social impacts of

the project transparently on the website and Category C 0 0 »An infrastructure project: Biodiversity action plan establishment of a grievance mechanism. prepared and sensitive flora species have been Risk Rating R1 950 4 relocated to suitable habitat and being monitored. »On an infrastructure project, the sponsors were requested to prepare and implement a plan R2 219 1 Impacts on the Fauna and procedures on labor / working conditions, occupational and community health and safety in R3 522 7 »On infrastructure and wind power projects, sponsors line with international standards. were requested to determine assessment of the R4 0 0 impacts of the project on the bird population and the HEPP Acquisition Projects migration routes by comprehensive ornithological Final Score 1 1,169 5 studies and impacts minimized by views of experts and During acquisition financing process of scientific methods. hydropower projects, 2 342 3 »On an infrastructure project, sensitive fauna species have »Current environmental impacts of the project were 3 180 4 been relocated to suitable habitat and been monitored assessed and the readings from the power plant’s environmental water release were checked; and Cumulative Impacts / Additional Impacts »A management plan was requested from the Following the ESIAM process, assessment process may be Some examples from corrective »The sponsors were requested to conduct cumulative sponsor to manage existing environmental and Garanti Bank may request revised or updated, if deemed and mitigating actions impact analyses at many energy projects including social impacts. wind, hydroelectricity and thermal power plants, even from the project owners that necessary by the Sustainability requested from the Sponsors though the regulations do not have such requirements. Impacts to Groundwater a detailed ESMP is prepared, Committee. and projects in 2015 are listed applied and with regular below: »The sponsors were requested to have a For geothermal power projects: reporting required for projects If a project does not satisfy supplementary individual ESIA and an Environmental »100% reinjection of groundwater was achieved; with higher risk ratings. the environmental and social Social Action Plan (ESAP) for a new loan and criteria required by ESLPs and/ accordingly additional afforestation was requested to »Pollution prevention measures related to The results of the assessment or ESIAM, the Bank may reject compensate additional impacts. drilling and operations were included in scope of of environmental and social the request for the project, or monitoring with a management plan. impacts are shared with the may ask additional precautions, Environmental and OHS Management Systems Loan Committee. The limit for tracking of specified impacts Project Emissions the total investment amount and may request detailed and For 6 high and medium risk projects financed in the stated under the scope of continuous reporting of these power and infrastructure sectors sponsors were »For thermal power plant projects, the sponsors ESIAM, policies and the impacts. requested to: were requested to make sure the projects comply

with the EU SO2 emission standards during the »establish an EMS and obtain certification in rehabilitation process via design changes. For accordance with ISO14001 existing plants, European emission standards are 200 mg/Nm3, while Turkish standards are 400 mg/ »establish an OHS Management System and obtain Nm3. 28. New investments in scope of ESIAM that exceed US Dollar 20 million limit. certification in accordance with OHSAS18001

90 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 91 Garanti Bank does not finance activities that are banned or restricted by national legislation and/or MONITORING AND REPORTING international agreements to which Turkey is a party. The Bank also does not finance the activities, projects or companies listed below, without carrying out any environmental and social impact assessment and applying any limits. Garanti Bank conducted 30 site visits in 2015 Reporting to senior management with regard in order to be able to identify the current to the findings from these visits, along with the environmental and social conditions at the corresponding ESIAM results is conducted through project sites. These visits were organized by the the process shown in the following figure. Table 17: Activities not Financed by Garanti Bank Sustainability Team directly and/or with other technical and loan personnel along with the 1. Companies involved in the production of weapons of mass destruction and landmines Sustainability Team. 2. Individuals or companies found to employ child labor or who violate human rights

3. Individuals or companies that deal with the production and trade of asbestos fibers or radioactive substances (excluding healthcare equipment, quality control devices and situations in which use of Table 16: Reporting to Senior Management on Environmental radioactive substances is extremely limited or insignificant, or in situations where there is sufficient protection29)

and Social Impact of Loans 4. Fishing activities which are deemed to constitute overfishing

5. Forestry activities which cannot be sustainably managed

6. Individuals or companies involved in the production, warehousing, transport and trade of hazardous Project Finance and Sustainability Department chemicals (petroleum and petrochemical products) in large quantities according to their industrial scale Corporate and Commercial Loans Unit 7. Activities carried out in wetlands defined as RAMSAR (Convention on Wetlands of International Importance) sites

ESIAM Results of new Current Loan Portfolio E&S 8. Individuals or companies involved with products and/or activities that fall under the scope of CITES Loan Requests Performance Tracking (Convention on International Trade in Endangered Species of Wild Fauna and Flora) Process 9. Activities that threaten the cultural heritage qualifications of sites classified as UNESCO World Cultural Heritage.

EVP Responsible ‘With the implementation of ESIAP, set up in »Loans that do not include the realization of any EVP and SVP Credit Sustainability for Project and accordance with international practices, the project, Responsible for Project Committee Committee Acquisition Finance Bank has achieved significant progress towards and Acquisition (~once every (-four times and Sustainability compliance with the Equator Principles, which are »Loans provided to a project that is already Finance and week) in a year) (once every two internationally recognized by the financial sector.’ operational (provided these projects do not create Sustainability months) an additional impact) and (once every week) Appendix 2 includes detailed information on the Bank’s ESIAM. »Refinancing loans for ongoing projects (provided these projects do not create an additional impact). Loans not Subject to ESIAM The reason for excluding the above-mentioned The following types of loans are not subject to loans from ESIAM is Garanti’s aim to evaluate Bank’s ESIAM: environmental and social impacts on previously undeveloped sites; therefore the Bank considers »Acquisition and privatization loans, greenfield investments and projects with potentially material environmental and social »Construction loans (excluding mass housing projects), impacts.

29. Example: Power plant projects

92 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 93 Table 18: Progress in Environmental and Social Risk Assessment MANAGEMENT OF INDIRECT Target Explanation Progress and New Target WATER FOOTPRINT

Review of Garanti Bank aimed to review Garanti Bank reviewed and updated ESIAP in ESIAP its ESIAP based on the 2015. These updates and improvements were In order to manage the Bank’s indirect water resource consumption and re-use/recycling, all improvements in national and presented to the Sustainability Committee footprint from financed projects, the Bank ensures, of which are customized based on the sectors in international environmental and in 2015 and the Committee’s approval was requests and monitors that appropriate measures question. Furthermore, projects where energy and social standards. obtained. Garanti aims to implement the are taken to minimize environmental impacts, water conservation is taken into consideration are amendments in the following years. reduce the consumption of water and other prioritized. resources, ensure recycling is undertaken and that Drafting plans In 2014, the Bank drafted plans Lowering the US$ 20 million limit negative impacts on water quality are minimized. One of the main consequences of climate change to lower the to lower the US$ 20 million limit designated for projects subject to the in Turkey will be its effect on the water cycle. monetary limit designated for projects subject ESIAP to US$ 10 million limit was submitted Based on the ESLP, Garanti does not finance For example, individual regions (those prone for ESIAP to the ESIAP in response to to the Sustainability Committee in 2015 projects and activities on RAMSAR sites under to flooding or that experience climate change- changes in the Equator Principles and approval was obtained. Garanti aims any circumstances. In addition, following the ESLP, led severe weather) and sensitive sectors of the (EP III). to implement the approved changes in the Garanti pays regard to the environmental and economy (those unable to transition to a low upcoming years. social impact of the projects it finances and the carbon business model or dependent on stable maximization of their positive impact. Accordingly, weather patterns, such as agriculture) could suffer Expanding the Garanti has targeted expanding In 2015, Garanti Pension signed the UNGC. the Bank considers the projects’ impact on water significant loss of income. Environmental its Environmental and Social Garanti aims to continue working with its sources in its loan processes and requests various and Social Risk Risk Assessment System to all its subsidiaries in the coming years. measures towards the minimization of water use In this context, the following criteria are taken into Assessment subsidiaries during the upcoming and impact on water quality, efficiency in water consideration during the financing of new projects. System to years. Subsidiaries

Expanding In 2015, Garanti Bank will review In 2015, the Sponsors from 8 high risk the EMS to its loan portfolio and will draft projects that were financed were requested Customers plans to expand the EMS to to establish EMS and Occupational HS its customers for the following management systems and to certificate these years. systems with ISO 14001 and OHSAS18001. In 2016, this approach will continue.

Implementing An OHS Risks Assessment Garanti has started implementing a project the application System is being designed for for the assessment of these risks, which is of the OHS financed projects. due to be implemented by the end of 2016. grading system

Turkey’s GHG Emissions Legislation

The Regulatory Framework on ‘Monitoring GHGs emissions data for all activities which it finances, Emissions’ was published by the Ministry of since most of the companies in Turkey do not yet Environment and Urbanization in the Official calculate and monitor all of their GHG emissions Gazette on 17 May 2014. The regulation will on a regular basis. Nevertheless, Garanti Bank require companies from energy-intensive sectors has developed an inventory that covers fossil

to monitor, report and verify their CO2 emissions. fuel-based power plants in order to have an However the reporting requirement starts in indication of its indirect GHG emissions from its Kızıldere Geothermal Power Plant 2016 and the first year’s reporting requirement loan portfolio. Garanti is using this inventory to ends 30 April 2016. Therefore it is not currently place a price on carbon to the cash flow on these

possible for Garanti Bank to gather reliable CO2 projects.

94 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 95 »Choice of location and project area: Location basin ecosystem and preserve river hydrology. It »Emergency Action Plans should be prepared of the Project with respect to protected areas should be ensured that environmental water is for events like as accidents, collisions or leakages under international or national regulations (e.g. calculated specific to project location considering to the sea and systems to prevent dispersion of RAMSAR sites), important water sources, shores Ecosystem Assessment Report by related technical contaminants in the marine environment such as and ground water operations. Projects located in experts besides meeting minimum standards set by barriers, foams, etc. should be in place in case of RAMSAR sites are not financed by Garanti Bank. official authorities. Furthermore, based on the results such incidents. Furthermore, if the Project location is found of these studies, the Bank may request that the to be in close proximity to residential areas, project technical design be amended. Environmental Mining Projects sensitive wetlands, protected areas and the like, water release data and impacts on river habitat are re-locating the Project may be requested. monitored periodically by Garanti Bank. »Water management strategies are prioritized. Reduction measures regarding project water »Current water properties: Prior to »Adverse changes to flow rate, drainage and flow requirements as well as recycling and re-use commencement of construction works, studies are assessed. Preventive measures are requested strategies are assessed. Prevention of acid rock to measure and assess the quality and properties for occurrences such as flow direction and flow drainage needs to be assured through a water of water in the project location are requested. rate changes, excavation in the water source, management plan. Based on the findings of these studies, dredging and sediment accumulation due to preventive and/or minimization measures possible adverse downstream effects. regarding project impact are implemented. Other Projects Thermal Power Plant Projects »Impact on ground water: Negative impacts of »In industrial projects, management plans are projects on ground water during the construction »Discharge of cooling and process water is one necessary for industrial effluent water discharge. and operation phases are assessed. In the case of of the critical issues for projects of this type. Best Available Technologies (BAT) should be any negative impact, the use of alternative water Accordingly, Garanti Bank requests modelling and/ preferred with respect to treatment facilities. sources would be considered. or cumulative impact studies regarding thermal Projects that enable efficient use, recycling and re- discharge, particularly with respect to projects in use are prioritized. »Impact on surface water: During the coastal areas. construction and operation phases of hydroelectric power plant projects, adverse »Furthermore, minimizing the impact on the changes to flow rate, drainage and flow are ecosystem of water consumption during assessed. Preventive measures are requested construction and operational phases is a material for occurrences such as flow direction and flow issue. Garanti Bank requests alternative methods to rate changes, excavation in the water source, obtain water. dredging and sediment accumulation due to possible adverse downstream effects. Geothermal Power Plant Projects

Fuat Wind Farm »Water quality: Effluent water should be treated »In order to preserve groundwater equilibrium, in treatment facilities. Furthermore, treatment 100% reinjection is required in geothermal projects. systems should comply with discharge limits. »However, necessary precautions should be taken Each sector can have different effects on water during the process to prevent contamination of sources in terms of consumption and quality. groundwater in relation to reinjection. Accordingly, Garanti Bank has developed specific provisions in its Sectoral Principles and monitors Transportation / Infrastructure projects: and manages project impacts based on these principles. The following section gives some »Impacts on aquatic / marine ecosystem should be examples from the Sectoral Principles: assessed, and should be included in the mitigation and monitoring plan. Hydroelectric Power Plants »Oceanographic/hydrographic reports should »Environmental flow water is regarded as one of be prepared for ports/coastal facilities, filling/ the critical issues in hydroelectric power projects. dredging impacts should be assessed, Garanti Bank places emphasis on ensuring that basin water rights are observed and that environmental flow is sufficient to sustain the

96 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 97 FOCUSING ON MANAGING ENVIRONMENTAL POLICY Garanti Bank’s Environmental Policy is based on »To keep the direct environmental impacts caused ENVIRONMENTAL IMPACT the following principles: by in-house operations to a minimum, »To monitor and comply strictly with all »To evaluate loans extended under ESLPs and their environmental legislation, associated indirect environmental impacts and to keep to a minimum, »To monitor and analyze carefully national and OF OPERATIONS international sustainability programs; go beyond »To develop eco-friendly products and services, the mere fulfilment of obligations under the Key Highlights: programs joined and maximize the value added »To bequeath a sustainable world to future regarding sustainability, generations by constantly improving environmental performance, »1,013 service points, covering 100% of employees, certified to ISO 14001; »To respect the environment, embrace and spread environmental responsiveness, »To contribute to the awareness and development of all stakeholders by encouraging multi-channel »First Turkish bank to be awarded with the Green Office Diploma by WWF- »To enable and promote the efficient usage of all communication. Turkey; resources,

»The new Pendik Technology Campus being built based on LEED criteria;

»Ratio of e-learning hours to total training hours throughout the Bank was 16%; GARANTİ BANK’S ENVIRONMENTAL

»32% increase in amount of waste sent to recycling. MANAGEMENT SYSTEM

In 2012, Garanti Bank established an ISO Garanti Bank’s Handbook demonstrates how it fulfils 14001 Environmental Management System the standards set out in ISO 14001 and its related in order to manage its direct and indirect strategies, policies and procedures that include: environmental impacts in an effective and systematic way. The procedures were aligned »Bidding (Tender) Procedure; with the Bank’s ISO 9001 Quality Management System’s Procedures. To ensure compliance with »Corporate Brand and Marketing covering the EMS requirements in all stages of its banking Communication Procedure; activities, Garanti Bank also began providing training to its employees. These training sessions »Corrective and Preventive Activities Procedure; also aim to keep the Bank’s employees informed of 32% 100% the latest legal developments, voluntary initiatives »Customer Satisfaction Procedure; increase in of employees, and customer feedback regarding the environment. waste sent to certified to The EMS is managed by the Sustainability Team, »Document and Data Control Procedure; recycling ISO 14001 in collaboration with the Efficiency team within the Bank’s Construction Department, under »Emergency Environmental Impact Procedure; the leadership provided by the Sustainability Committee. »EMS Internal Audit Procedure;

»EMS Review and Sustainability Procedure;

98 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 99 »Environmental Dimensions Assessment and »Social Platforms Management Procedure; Control Procedure; »Learning and Development Procedure; and SUPPLY CHAIN MANAGEMENT »Environmental Impact Assessment and Loan Procedure; »Waste Control Procedure. Garanti Bank’s supply chain is the products and services located throughout Turkey »Human Resources Procedure; Following its ISO 14001 accreditation in 2012, extensive, with a large number with price advantage from a (2014: TL 106.2 million) with the the Bank started to determine targets for of suppliers providing goods single supplier. The Purchasing main expenditure groups shown »Investor Relations Procedure; energy consumption and other environmental and services to support the Department located at the in the table below. During impacts in order to improve its environmental Bank’s operations. Bank’s Istanbul head-quarters the reporting period, Garanti »Logistics and Purchase Procedure for Social performance in 2012. ensures that nearly all (95%) Bank conducted all its direct Purposes; Garanti Bank meets the daily of the cleaning services procurement from suppliers in By the end of 2015, Garanti Bank had 1,013 needs of its branch network by and cleaning chemicals are Turkey. »Procedure to Determine and Keep Track of service points certified to ISO 14001 and had means of procurement from purchased locally. During 2015, Environment-Related Legal Requirements and increased its coverage to 100%, following the local suppliers. However, the Garanti Bank paid a total of Other Requirements; audits of an independent audit agency. As a Bank buys in bulk purchases, TL 112.7 million to its suppliers result, Garanti is still the first and only bank »Quality Records Procedure; that operates an EMS in such a large area and context in Turkey. »Service Procedure; Table 20: Main Supplier Groups30

Estimated Table 19: Progress in Environmental Management System annual value Function of Details of of payments Supplier Supplier (million TL) Contract Renewal Date Target Explanation Progress and New Target Cleaning 8 companies in Istanbul 33.33 80% on January 2, 2015 and other local companies 20% during 2015 Increasing the The Bank will continue to In 2015, Garanti Bank had 1,013 service all around Turkey. coverage of effectively apply the EMS and points certified to ISO 14001 covering all its EMS expand its scope. buildings and employees. Garanti’s target Car rental 1 company 36.04 Permanent for the following years is to expand its ISO The number of locations 14001 certification scope to its subsidiaries Transportation, 3 companies 29.86 July 1, 2015 subject to the EMS was portage and aimed to be increased to 1,013 shipment in 2015. In line with this target, the Bank will also increase the number of its internal auditors for EMS. Printed paper 25-30 firms 12.37 No contract and stationary

Improving the Improvement of the Bank’s data In 2015, Garanti Bank has been working on Consumable 2 suppliers 7.27 January 2, 2015 data collection collection system in order to new software that will be used to collect goods for for EMS better monitor the amount of environmental data such as fossil fuel computers waste produced. consumption, electricity consumption and recycled waste generated in ISO 14001 Vehicle 34 companies 3.45 No contract certified facilities. maintenance and repair services The new software for environmental data collection is due to be launched in 2017.

30. This table covers centralized procurement excluding energy purchase. Service points may undertake ad hoc independent procurement of goods and services where necessary. Energy consumption data is separately reported in Table 22.

100 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 101 In 2012, Garanti Bank started to include a While supplier contracts contain provisions requirement for compliance to Garanti Bank’s EMS pertaining to environmental issues, they currently CLIMATE CHANGE MANAGEMENT in supplier contracts. New catering and cleaning do not have any clauses pertaining to auditing for services contracts thus started to become and reporting human rights’ violations. They do, compliant by 2012. In 2015, suppliers operating however, make reference to laws and regulations AT GARANTİ BANK in sectors with a relatively higher footprint and (including the Labor Law) pertaining to the constituting a substantial component (44%) of protection of workers’ rights. Such provisions the Bank’s total procurement were requested to give Garanti Bank the right to terminate any Climate change continues to be one of the Garanti also became the first Turkish company to provide information on how they manage their contract which is deemed to be in violation biggest challenges facing the world today, as sign the UNGC’s Business Leadership Criteria on environmental impact. of worker protection regulations. During the a global threat that may affect each and every Carbon Pricing. The Plan represented the business reporting period, Garanti Bank was not aware of aspect of our civilization. The climate change world’s support for carbon pricing prior to the After reviewing their suppliers’ respective any supplier with which it was working that was related risks for the banking industry vary from Paris COP 21 Meeting. management strategies, the Bank communicated under investigation for any issue related to human rising operating costs to the uncertainty in the its criteria for suppliers’ environmental rights. legal framework. Banks that successfully handle As summarized in Table 23, in 2015, while performance and compliance methods through a and manage these risks will not only be in a Garanti Bank’s total emissions increased by variety of platforms such as one-to-one meetings In addition, each year, Garanti Bank’s internal position to minimize these costs but will benefit 14.47% to 75,637 tCO2e, its emission per total and teleconferences. As a result of this process, auditors inspect a selection of the Bank’s from various opportunities such as being able to assets decreased by about 1.5% to 270.5 tCO2e/ supplier contracts representing 6.4% of total suppliers on a sample basis in order to assess address changing customer profile expectations billion TL. Emissions from Garanti Bank, Garanti procurement were revised to include specific their compliance with its EMS. In case that a and meeting the financing needs of “green” Mortgage, Garanti Technology and Garanti provisions regarding compliance with Garanti supplier is found to be non-compliant, they investments. For this reason, Garanti Bank Payment Systems were included in the boundary. Bank’s EMS by the end of 2014. are given a grace period to improve their believes that climate change is a strategic issue Garanti Bank also included its fuel consumption performance and the assistance provided by the that requires full integration with all business in generators to Scope 1 emissions calculations In 2015, in order to expand the scope, Garanti Bank when necessary. processes and decision-making mechanisms. in 2015, which caused anm artificial increase in Bank continued to work comprehensively on its the total emissions reported. The Bank’s Scope supply chain’s environmental management and Accepting that the first step to be taken in 3 emissions, indicated in the Table 23, decreased included legal Environmental regulations and ISO tackling climate change is to determine the GHG 4% compared to 2014 i.e. 3,571 tons of CO2e, 14001 EMS compliance rules to all its contracts emission profile, Garanti has been measuring are related to emissions from business flights made with its suppliers. its carbon footprint and implementing an array only. Beginning from 2013, Garanti Bank has of initiatives since 2009 in order to manage it. also started to disclose its Scope 3 emissions Assessing the risks and opportunities imposed associated with activities such as purchased by climate change on its activities, Garanti Bank goods and services, employee commuting, reports all of its efforts to tackle climate change transportation and distribution and paper Table 21: Progress in Environment-Friendly Supply Chain to the CDP Climate Change program. In 2015, consumption, in addition to the indirect emissions Garanti was awarded the “CDP Turkey 2015 – associated with business travels. These are Carbon Disclosure Leadership” award and CDP disclosed on an annual basis through the CDP 2015 Carbon Performance Award by CDP, making reports31 published every year. Target Explanation Progress and New Target it the only Turkish company to get on the global A list in 2015. Environmentally- Increase the number of suppliers Renewed or new supplier contracts were In addition, Garanti published its Climate Change Friendly Supply who apply the sustainability reviewed to include specific provisions Action Plan Statement for combating climate Chain criteria that were included in the regarding compliance with Garanti Bank’s change in 2015. Garanti focuses its activities on Bank’s purchasing procedures in EMS by the end of 2015. combatting climate change on four main areas: the short term. pricing of carbon and prioritization of renewable The Bank’s target is that supplier contracts energy investments, reducing deforestation, representing 50% of total procurement management of water risks related to climate will include specific provisions regarding change, and establishing green office standards. compliance with Garanti Bank’s EMS by the For more detailed information, please review the end of 2016. Climate Change Action Plan in Appendix-9.

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

102 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 103 Table 22: Energy Consumption within the Organization CLIMATE CHANGE MITIGATION

Energy Source Total Consumption (2014) Total Consumption (2015)* While Garanti Bank’s direct emissions are lower levels. Garanti will continue to effectively apply than the emissions of many companies that its EMS, expand its scope and set new targets Electricity (MWh) 116,010 115,693 operate in other sectors, it has an important in the coming years. This will include improving role to play in helping its clients across many the data collection and reporting process for Natural Gas for Heating (m3) 2,341,128 3,039,563 different sectors to reduce their environmental Scope 3 GHG emissions, and as such setting footprint. In 2015, Garanti set a 5% reduction GHG reduction targets for Scope 3 in addition to Natural Gas for Heating (MWh) 23,236 29,144 target for its 2015 Scope 1 & 2 emissions per total Scope 1 and 2 emissions. assets against 2014 baseline. The main reason Diesel for Heating (liter) 172,276 199,668 preventing this target being achieved is the The GHG Protocol sets the global standard increase in Turkey’s grid emission factor by 12%. for how to measure, manage and report GHG Diesel for Heating (MWh) 1,798 1,965 For 2015 Scope 2 emissions calculation, the grid emissions. On January 20, 2015 the Scope 2 emission factor based on 2014 TEİAŞ data - the Guidance of GHG Protocol was updated. The Coal for Heating (ton) 159 180 most recent available official data- was used. updated version requires companies to report The reason for 12% increase in Turkey’s 2014 grid Scope 2 emissions based on both market- Coal for Heating (MWh) 555 628 emission factor compared to 2013 is the reduced based and location-based methods. However, amount of hydroelectric power production due as supplier-specific data for Garanti Bank’s Diesel Consumption in Generators (liter) - 183,860 to low precipitation rate in 2014. A decrease of electricity consumption is not available, Garanti’s - 10% in Garanti Bank’s Scope 1&2 per its total market based Scope 2 emission is same with Diesel Consumption in Generators (MWh) - 1,809 assets is observed when the grid emission factor the location based Scope 2 emissions (63,874

of the previous year, i.e. 2013, is used for Scope tCO2e). Fuel Oil (liter) - 25,475 2 emissions calculation. In 2015, Garanti Bank’s EMS continued to be expanded reaching a total In 2015, most of Garanti Bank’s total Scope 1 Fuel Oil (MWh) - 270 of 1,013 centers that covered 100% of the Bank’s and 2 emissions were indirect emissions from employees. Being the first Bank with such a purchased electricity (84%). The other main Diesel Consumption in Vehicle Fleet (liter) 1,108,205 1,508,848 comprehensive Environmental Management components of the Bank’s carbon footprint System in Turkey, Garanti has reached a included its GHG emissions from stationary Diesel Consumption in Vehicle Fleet (MWh) 11,564 14,846 certain level of maturity about its knowledge and mobile sources such as natural gas from and capabilities on GHG monitoring and data boilers burnt for heating and petrol and diesel Gasoline Consumption in Vehicle Fleet (liter) 2,885 9,965 management this year. Additionally, Garanti has consumed in company-owned or leased vehicles received limited assurance from a third party respectively and from some of the refrigerants Gasoline Consumption in Vehicle Fleet (MWh) 27 89 for its 2015 Scope 1 and Scope 2 GHG, energy (16%) used in air conditioners. consumption, water consumption, renewable Total Energy Consumption (MWh) 153,191 164,443 energy portfolio and ESIAM data from an During 2015, the Bank continued to develop external assurance firm in 2016. Garanti has set projects to reduce its emissions by carefully *Externally assured by KPMG, see assurance report on page 136 a new short-term target to reduce Scope 1 and evaluating its GHG profile and the continued Scope 2 GHG emissions by 5% per total assets focus was on energy efficiency projects that will under management by 2016 compared to 2015 also help reducing its operating costs.

104 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 105 32 Table 23: GHG Emissions (tCO2 equivalent) Table 25: Progress in GHG Reduction Target

Scope 1 Scope 2 Scope 3 Total % Increase in Intensity Target Explanation Progress and New Target (tCO2e) (tCO2) (tCO2e) tCO2e Total Figure (Scope 1 & 2) Scope 1 &2 (tCO2e / Setting a By the end of 2015, the Bank In 2015, Garanti set a 5% reduction target for its tCO2e Total Assets) new GHG aimed to reach its target of 2015 Scope 1 & 2 emissions per total assets against Reduction reducing the ratio of total Scope 2014 baseline. The main reason preventing this 2015 11,763*** 63,874*** 3,571* 75,637*** 14.47% 271 Target 1 and Scope 2 greenhouse gas target being achieved is the increase in Turkey’s grid

emissions (equivalent to tCO2) emission factor by 12%. For 2015 Scope 2 emissions 2014 8,698 57,378 3,709* 66,077 -15.03% 274** per its total assets by 5%. calculation, the grid emission factor based on 2014 TEİAŞ data - the most recent available official data- 2013 9,307 68,459 3,701* 77,765 -13.17% 351 was used. The reason for 12% increase in Turkey’s 2014 grid emission factor compared to 2013 is the 2012 15,568 73,994 3,017 89,562 2.55% 498 reduced amount of hydroelectric power production due to low precipitation rate in 2014. A decrease of 2011 16,981 70,351 2,632 87,332 6.88% 534 10% in Garanti Bank’s Scope 1&2 per its total assets is observed when the grid emission factor of the 2010 14,108 67,599 2,685 81,707 1.40% 597 previous year, i.e. 2013, is used for Scope 2 emissions calculation. *Only Scope 3 emissions from business travel is included **G4-22: Intensity figure for 2014 is restated because of changes to the total assets in the consolidated financial statements. Please refer By the end of 2016, the Bank aims to reduce the to note 3.24 to the consolidated financial tables in page 179 of the 2015 Annual Report. ratio of Scope 1 and Scope 2 GHG emissions (CO2 ***Externally assured by KPMG, see assurance report on page 136 equivalent) per its total assets by 5%.

*2014 Grid Emission Factor: 552 tons/GWh, Table 24: Energy Efficiency Indicators 2013 Grid Emisssion Factor: 495 tons/GWh

Type of Indicator 2014 2015

Total Energy Consumption per employee (MWh/FTE) 8.11 8.41

(tCO e/FTE) Total Scope 1 & 2 GHG emissions per employee 2 3.50 3.87

(tCO e/FTE) Total Scope 1 GHG emissions per employee 2 0.46 0.60

(tCO e/FTE) Total Scope 2 GHG emissions per employee 2 3.04 3.27

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

106 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 107 Garanti Bankası’nın yeni açılan ve yenilenen şubelerinde R22 gazı yerine ozon tabakasına daha az zarar veren R410 gazı kullanan soğutma sistemlerine geçilmeye başlanmıştır. Garanti Bankası yeni açılan ve yenilenen şubelerinde enerji verimliliğini artırmak için eski klimaları tasarruf sağlayan yeni nesil klimalarla değiştirmektedir.

A+ enerji tüketen klimalarla %30’a varan verimlilik sağlayan yeni sistemler kullanılarak tipik bir şubenin tükettiği toplam enerji miktarı %10 oranında düşmektedir. 2015 yılında, hizmet noktaları ve ATM’lere toplam 1.264 yeni klima takılmış, yıllık yaklaşık 825.444 kWh36 enerji tasarrufu sağlanmıştır.

Ayrıca, yeni açılan ve yenilenen şubelerde elektrik tüketimi daha az olan (plug fan ile çalışan) ısı geri kazanım cihazlarının kullanımına başlanmıştır.

ENERGY EFFICIENCY PROJECTS Use of R410 Gas and Switching to Energy-Efficient Air-Conditioning In recently opened or renovated branches, Garanti Bank has started using air-conditioning units that use R410 gas, as it does not contribute to ozone depletion like the R22 gas used previously. The Bank is replacing old air-conditioning units with new generation energy efficient air-conditioning units in a bid to Technological Solutions that Reduce Travel Needs increase energy efficiency in its recently opened or renovated branches. During 2015, the Bank continued to focus on using technology to reduce its environmental impacts For Use of the new systems, which improve efficiency by up to 30% through A+ class air-conditioning units, reduces example, there was a focus on reducing the traveling needs for training purposes and an avoidance of total energy consumption by 10% in a typical branch. In 2015, a total of 1,264 new air-conditioning units were 1,373 flights in 2015 was achieved. In 2015, the ratio of non-travelling e-learning hours to the total training installed at service points and ATMs, saving approximately 825,444 kWh33 of energy throughout the year. hours throughout the Bank was 16%. Moreover, the recently opened or renovated branches began to use heat recovery devices (working with Server Virtualization in Data Centers plug fans) that consume less electricity. The highest carbon emissions per m2 in Garanti Bank’s physical service buildings are derived from the use of servers. With the server virtualization project that was started in 2007, servers in the Bank’s data centers throughout Turkey started to be virtualized. With the use of this technology that allows the Table 26: Progress in Environmental Measures Undertaken efficient utilization of server capacity, reductions in the electricity consumption and cooling requirement of the servers were achieved. In 2015, growth, including the virtualization of the Call Center physical servers, was 45%. When the last 4 years’ average is taken into account, Garanti Bank has saved 4.73 During Construction and Renovation of Garanti Bank’s Facilities

million kWh of electricity per year, corresponding to 2,338 tCO2 equivalent. Target Explanation Progress and New Target Renovation of Energy and Lighting Systems Usage of The Bank launched efforts to use renewable, In 2015, Garanti Bank worked Garanti Bank has launched a number of practices »Design focusing on maximizing the use of Environment recyclable and non-hazardous materials on plans to expand the scope of to save energy in its lighting systems including: daylight (natural lighting) in new or renovated Friendly during opening and renovation of branches, environmentally friendly materials branches as this reduces energy expenses and Materials and while using materials that offer the possibility and equipment used during branch »Increased efficiency through using hanging lights provides a healthier working environment, Equipment of recycling and reuse at the end of their renovations and construction. in portfolio rooms. Estimated energy savings of lifespan. With this approach, the Bank aims 258,342 kWh, »Installing heat insulation at its branch fronts to minimize its environmental impacts in the where feasible to prevent energy losses, selection and use of materials. »LED lighting in new or renovated branches where feasible have achieved energy savings of 421,657 »Commitment to improving the energy kWh efficiency of buildings and obtaining their energy Energy All the branches opened in 2015 were In 2016, Garanti will continue to performance certificates. Efficiency in designed to maximize the usage of daylight ensure energy efficiency in lighting »Astronomical time clocks, adjusted according Lighting and also used lighting fixtures with low systems through the usage of LED to sunrise and sunset times, are used in the outer energy consumption LED fittings. systems and other methods in fronts of all ATMs and branches, branches that are renovated or newly constructed. »LED lighting systems for band lighting at ATMs and in advertising boards at branches, Likewise, projects maximizing the use of daylight in branch designs will be continued.

Switching to Garanti Bank has started switching to A+ In 2016 Garanti Bank will continue Environmentally type air conditioners using R410 in either to save energy with the use of A+ Friendly renovated or newly opened facilities, in order type air conditioners using R410 Refrigerants to gradually change over to environment- refrigerant in new and existing friendly cooling systems. branches.

33 . Calculated based on the last year’s data.

108 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 109 Amount of Waste Recycled WASTE MANAGEMENT As Garanti has been continuing to increase the coverage of its ISO 14001 certified EMS, the total number of offices that recycle and monitor their waste has also been increasing. Garanti Bank achieved its target of extending its EMS, which is audited by an independent accredited third party every year, to all service The Bank’s EMS envisages the re-use of waste where possible and, wherever not, recycling or, where this points by the end of 2015. is not appropriate, its disposal by an authorized disposal company. Table 27 summarizes this approach.

Table 28: Amount of Recycled Waste34 Table 27: Waste Management Approach Recycled Waste (tons) Method Explanation

1. Re-use The re-use of waste is the first priority. Computers that are broken or redundant are delivered to Garanti Technology which examines their potential scope for re-use. Repaired computers are then donated to schools in need if deemed to be usable.

Materials that are no longer in use due to Branch/Department/Unit renovations and concept changes are delivered to warehouses belonging to the Construction Department. Furniture that is no longer needed is donated to institutions in need.

In addition, furniture that is in usable shape is kept in our warehouses for servicing and sent to branches/departments/units when the needs arise. 172.5 287.4 406.9 601.2

2. Recycling Beginning with buildings subject to the EMS, the Bank began to deliver 2012 2013 2014 2015 recyclable waste to authorized recycling and disposal facilities.

Recyclable paper, plastic, metal and glass are delivered to whichever municipality the service point is located in or to a licensed recycling firm, where they are recycled.

3. Management of Toner cartridges, which is hazardous waste produced by the Bank, are Hazardous Waste collected in accordance with determined rules and delivered to authorized recycling and disposal facilities.

4. Excavation Waste Excavation waste and debris left over during branch openings or renewal is sent to disposal areas as designated by the municipality.

34. The calculation was made by multiplying the average waste recycled per employee by the total number of employees working at ISO 14001 certified buildings.

110 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 111 WATER MANAGEMENT MORE SUSTAINABILITY INITIATIVES FROM GARANTİ BANK Although the most significant After increasing the quality of treated and used as drinking risks and opportunities related data collection process and water at the head office building, to water are in the Bank’s loan establishing a robust base- which is not a widespread portfolio (i.e. indirect water line, Garanti Bank plans to set practice in Turkey where most foot-print), the Bank is also reduction targets for water use. drinking water is purchased. As a WWF-Turkey striving to reduce consumption In addition to this, Garanti has result, the Bank’s initiative at its and improve performance in its included water consumption head office building eliminates offices and branches throughout in the scope of the external use of plastic bottles and the Garanti Bank, as the main sponsor for 23 years of WWF-Turkey36, is Turkey. The Bank opted to assurance it obtained for the GHG emissions caused by their making a major contribution to the sustainable use and conservation become the sponsor of CDP first time for its Sustainability transport. of our nation’s natural resources, through “Garanti for Nature”. Due to Water in Turkey and was one of Reporting this year. its long-term support for WWF-Turkey’s nature conservation projects, the first companies to respond In addition to the above, flushes Garanti was recognized in 2008 for the second time with the Golden to the CDP Water Program in Measures aimed at saving water have 3 or 6 liters options Panda award and remains the only Turkish company to have won this Turkey in 2015. have been implemented at the available in new branches. award. In 2012, Garanti Bank joined the WWF green office program with Bank’s existing service points, as Reduction in water consumption the aim of ensuring increased energy efficiency in its headquarters and Water consumption35 from well as its new branches. In this from flushing is targeted with being pro-active in the fight against climate change and qualified to the Bank’s facilities in 2015 is context, Garanti Bank aims to this arrangement. receive WWF Green Office Diploma for its Headquarters in 2014. Garanti estimated as 270 thousand keep daily water consumption aims to obtain the WWF Green Office Diploma for 6 new buildings in m3 (2014: 381 thousand m3). under control through the use 2016. 76 thousand m3 out of the of new faucets with a lower flow total amount is withdrawn in rate. The Bank also treats and the following three facilities: collects the rainwater from the Zincirlikuyu Head Office, roof of the head office building, Güneşli Operation Center, using it in landscape irrigation. Learning & Developmet Center. Furthermore, mains water is Buildings with LEED Criteria Compliant Design

With construction work having begun in August 2011, Pendik Technology Campus is a sustainable project CDP Water Program with its architectural and engineering solutions. During project design and construction work, LEED criteria such as the building’s compatibility with the land, the reduction of energy and water consumption, selection of environmentally-friendly materials and waste management in construction work are taken In 2015, the CDP Water Program was implemented for the first time in Turkey under the main sponsorship into account. According to the US Green Building Council, LEED buildings typically save 18% to 39% of Garanti Bank. The launch of the CDP Water Program was organized on 27 February 2015 at Grand of total energy use than comparable buildings and thus Garanti’s new campus will make a significant Hyatt Istanbul. 50 companies from the top 100 companies in the BIST were invited to respond to the contribution to energy reduction. Program. These 50 companies were determined by applying a sectoral filter regarding water usage related risks and were subsequently invited to two workshops on the subject at SALT Galata before During the reporting period, Garanti has also continued working on a project in order to certify its they prepared their responses. Results of the CDP Water Program in Turkey and globally were also Zincirlikuyu Head Office according to LEED criteria for existing buildings. announced in a press conference held at Salt Galata. Opening speeches were given by Prof. Dr. Sondan Durkanoğlu from Sabanci University and Ebru Dildar Edin from Garanti Bank, and results from Turkey and In addition to the Pendik Technology Campus and the Head Office, the Bank has started to work on globallywere presented by the CDP Turkey Director, Melsa Ararat. obtaining LEED green building certification for the recently built İzmir Karşıyaka and Ankara Kızılay Service buildings.

35.Here the term “water consumption” refers to “water withdrawal” which is defined as “the sum of all water drawn into the boundaries of the organization from all sources (including surface water, ground water, rainwater, and municipal water supply) for any use over the course of the reporting year”. 36. WWF-Turkey is part of WWF, the world’s largest environmental organization.

112 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 113 FOCUSING ON Equality of Opportunity HUMAN RESOURCES and Diversity Garanti views equality of all employees at December 31, and retaining local talent, opportunity and diversity as a 2015 and 41% in senior/ middle and actively improving the Key Highlights: fundamental value and a driving level management). diversity of its team. The senior force of its corporate culture. In management including the CEO, line with this purpose, Garanti As a result of the importance it EVPs and Coordinators are »57% of employees are women encourages its employees to gives to social gender equality Turkish. Consequently, the Bank think differently and improve and the empowering of women, is better able to understand »41% of managers are women their personal and professional Garanti Bank was one of the and serve an increasingly wide competencies while supporting first to implement the Equal range of customers across diversity in the workplace. One Opportunities Model38 (FEM) and Turkey. In Garanti’s overseas »16,200 ideas and suggestions collected from employees of the clearest indicators of was awarded its certificate in 2012. operations, local talent is also successful diversity at Garanti is hired at various levels of the »An average of 44 hours of training per employee the comparatively higher number Garanti Bank is focused organizations. of female employees (57% among on attracting, supporting

»1,938 hours of Sustainability E-learning program trainings The following tables contain information regarding Garanti’s workforce during the reporting period. »The first institution in Turkey awarded with “IIP37 Gold Certificate” for the second time

Garanti’s most valuable asset is its human resources and the Bank views its human resource as the Table 29: Average Seniority per Gender for 2015 guarantee of its sustainability and efficient growth. The Bank continued to invest heavily in its people in 2015 and total training hours per employee were 44 hours. Men Women Average

‘Garanti was the first Turkish company to be awarded the “Gold” certificate, an accolade given to only 2.6% of companies holding the ‘ IIP certificate around the world.’ 7,6 7.6 7.6

Human Resources and the Business Environment Table 30: Employee Breakdown per Age and Gender for 2015 Garanti’s corporate target is to maintain a modern market conditions while encouraging them business environment where human rights are to continuously develop their personal and respected. Aiming to be a sustainable employer, professional talents and competencies. This 18-25 26-30 31-35 36-40 41+ Garanti’s HR strategy is based on the fundamental continuous cycle of training and personal and consideration of offering its employees the best professional development is one of the essential financial opportunities under the prevailing promises of Garanti to its employees. Women 1,547 3,582 2,975 1,701 1,403

Men 1,033 2,758 2,249 1,313 1,131

Total 2,580 6,340 5,224 3,014 2,534

38. Equal Opportunities Model (FEM) is a certification program initiated by Women Entrepreneurs Association of Turkey (KAGİDER) with the support of the World Bank, aiming to provide equal opportunities in business life by identifying inequalities in areas such as recruitment procedures, internal training programs, and career planning and development processes, and subsequently presenting 37. Investors in People companies with equal practices as a solution. More information can be found here: http://www.kagider.org/?Dil=1&SID=727.

114 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 115 Table 31: Employment Type and Employment Contract by Gender in 2015 Table 33: Total Number of Joiners and Leavers During the

2015 Type Men Women Total Grand Total Reporting Period by Age

2015 18-25 26-30 31-35 36-40 41+ Total Employment Full Time 8,482 11,197 19,679 Type 19,692 Part Time 2 11 13 Joiners 1,579 1,051 134 36 31 2,831

Leavers 588 845 396 193 211 2,233 Permanent 8,289 10,895 19,184 Employment 19,692 Contract Temporary 195 313 508

Table 34: Total Number of Joiners and Leavers During the Table 32: Total Workforce, Employees Hired and Number of Reporting Period by Gender Leavers Broken Down by Region in 2015 2015 Women Men Grand Total

2015 Workforce Employees Number of Joiners 1,548 1,283 2,831 Hired Leavers Leavers 1,232 1,001 2,233 Aegean 1,398 95 100

Central Anatolia 2,420 238 158

Eastern Anatolia 374 34 19

Eastern Black Sea 351 24 29

Marmara 5,090 364 306

Mediterranean 993 86 98

South-Eastern Anatolia 463 42 26

Western Black Sea 369 37 27

Garanti Bank Trnc 69 9 10

Other* 8,157 1,896 1,461

Total 19,692 2,831 2,233

* Branchless banking which is shown separately in previous years, integrated into the ‘Other’ group by 2015.

116 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 117 issues such as risk assessments, health reviews, Improvement points in 1,000 branches and in all Table 35: Parental Leave trainings, OHS Councils, near miss work accidents, buildings were determined with the help of the review of occupational illnesses, coordination and Garanti Bank OHS Criteria set by the software. audit of precautions were pursued. Enhancing Based on implementing the action points from Metric Result satisfaction and welfare of the employees and these findings, improvements were made in terms stakeholders was targeted with these outcomes. of selection in computers, office furniture or in technical arrangements. The number of employees All female employees who left for parental leave returned to work A total of 31,224 hours of service was provided by who returned to work after after their parental leave ended. OHS experts, Occupational Physicians and Nurses Garanti Bank formed OHS units at 18 locations parental leave ended, by at Garanti Bank sites. where there are 50 or more employees. gender: Return to work data is not traced for male employees. Occupational Physicians provided pre-job A total of 9,554 hours of OHS trainings and other and periodical examinations. OHS Committee The number of employees Since a full year has not yet passed after the end of the period trainings with various contents were provided Meetings were held every 3 months in line with the who returned to work after covered by this report (December 31, 2015) we are able to provide through 8 hour long face-to-face and 4-hour long regulation. parental leave ended who only the following ratios: distant training courses. Specialised trainings were still employed twelve included IOSH Managing Safely, Ergonomics in months after their return to The total number of female employees who took parental leave the Office and Assessing Risk Training. In addition, work, by gender: during the reporting period was 726. As of December 31, 2015, groups that use their voices often such as Call 100% of these employees were still employed by the Bank. The Center, Internal Training were able to receive total number of female employees who were still employed ‘Correct Use of Voice’ trainings. includes both employees who returned to work and the ones who were still on parental leave during the reporting period. In 2015, with the use of OHS software, a risk assessment in all locations was started. Return to work data is not tracked for male employees

The return to work and Since a full year has not yet passed after the end of the period retention rates of employees covered by this report (to December 31, 2015), we are not yet able who returned to work after to provide the return to work and retention rate for employees Figure 3: Organizational Structure for OHS leave ended, by gender: that left for parental leave in 2015.

Burak Yıldıran

OCCUPATIONAL HEALTH Human Resources Coordinator AND SAFETY (OHS) Göksel Geyik OHS Management System Occupational Health and Safety Manager In line with local regulations39 on OHS, Garanti Continuous OHS communications is provided with Bank formed a specialized OHS unit in 2013 under OHS champions in all locations. HR and accelerated its work in the field. As of Burçin Çimşit Mehmet Cemal Tüzün 2015, the unit which has been identified as OHS The OHS outlook section placed in the Garanti Management continues its work throughout Turkey Code of Conduct Manual that waspublished in 2015 OHS Expert OHS Coordination Supervisor with a team of 34 (OHS experts, occupational demonstrated how, as a corporation, Garanti pays physician, occupational nurses). Locations with importance to OHS. less than 50 employees are taken care of by the Head office OHS team and locations with more As a pioneer amongst the Turkish Banks of its size, than 50 employees are served by an appointed Garanti adopted a specialized OHS software for Occupational Safety Experts Workplace Doctors Healthcare Staff occupational physician and OHS experts. its operations in all locations. Using this software,

39. The Law on OHS No. 6331 (“Law No.6331”), which governs the health and safety standards to be adopted by employers in Turkey and was published on 30 June 2012.

118 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 119 Work-Related Accidents SECURITY MEASURES In the reporting period, there were 124 work-related incidents of injury.

In order to provide a safe and The procedures that need to Internal Affairs. In addition to Total Lost Working Days secure working environment for be followed by the security the regulatory training, Garanti its employees, Garanti Bank has personnel of the Bank are Bank further requires its security The total lost working days were 32,566 days for women and 13,610 days for men in 2015. The total lost established robust safety and governed under the relevant personnel to complete on-the- days data is collected on the basis of medical reports of sickness leave and injuries and is shown in the emergency procedures. Security Procedure and job training for 15 days as well as table below. published in the Bank’s intranet. 2 day in-class training. Security Employees are required to As per applicable regulations, personnel also receive ad hoc know the emergency plan all private security personnel training on various subjects Table 36: Lost Days and emergency procedures of employed by the Bank are during their employment. the Bank and the duties to be required to complete 120 carried out by them in a state hours of training and satisfy 2010 2011 2012 2013 2014 2015 of emergency. Emergency plans minimum testing requirements. and procedures are available on The training is overseen and Total Working Days 3,773,646 3,802,207 3,922,082 4,211,526 4,722,806 4,500,266 the Bank’s intranet. monitored by the Ministry of

Change % -0.91% 0.76% 3.15% 7.38% 12.14% -4.71% Total Lost Days 21,771 27,832 33,407 36,088 47,337 67,460 GOOD WORK LIFE RELATIONSHIP Change % -1.64% 27.84% 20.03% 8.03% 31.17% 42.51% (“IYI”) PROGRAM % of Lost Days in 0.58% 0.73% 0.85% 0.86% 1.00% 1.50% Total Working Days Garanti Bank presents various events and »IYI Treats: Surprise treats to lighten the office services in the Good Work Life Relationship mood and make sure employees take a short (“IYI”) program in order to enhance employee break and enjoy pleasant moments with co- satisfaction, and to ensure a richer and easier life workers. CHILD CARE for Garanti employees. In 2015, the annual average of İYİ events and services organized per employee »IYI Entertainment: To liven the social lives within Employer Brand Management works of Garanti employees, discounted tickets for Employees who are Garanti offers additional increased to 20 from 13. concerts, shows, and social activities and nursing are granted insurance guarantees for invitations for cultural and sports events the Bank flexible time for nursing childbirth expenses. Our In the scope of the platform that will go live in the is a corporate sponsor of are offered. until the infant is 1 year employees who become first months of 2016 and that is planned to be the old and can take 2 hours parents are supported in voice of all employees under the scope of İYİ, the »IYI Courses: Hobby or personal development off every day in this first child development and target is for Garanti employees to share ideas and courses that employees can attend with co- year. Alternatively, they can attend courses at suggestions for workplace improvements. workers for different experiences apart from work, can prefer to use this leave the Mother-Father-Child where most of the fees are covered by the Bank. each day (or combine the Academy. Activities hours into one additional »Hobby Clubs: Garanti employees with hobbies day of leave each week, A new orientation program »Motivational Meetings: Regional (Four Season can participate in Photography, Underwater or aggregate all days and is planned in 2016 for Meetings) and departmental meetings to enhance Sports, Sailing, Hiking, Classical Turkish Music, extend their maternity women employees who are employee motivation and improve internal Turkish Folk Music, Social Responsibility, Running, leave by approximately returning from maternal communications. Movie and Theatre, and Winter Sports clubs one month). leave to ease their where they can develop their hobbies and attend adaptation to work life and »IYI Talks: Talks with top management and activities. In order to support duties. subject experts to support institution ownerships employees giving birth, of Garanti employees and work-personal life developments.

120 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 121 HEALTH AND NUTRITION

There are sports centers and internal nutritionists at headquarter buildings and branches will present in our Zincirlikuyu and Güneşli Head continue in the upcoming period. Offices. Additionally, Garanti agrees with local sports centers for special deals for its employees. In addition to all these efforts, an application called İyilik Sağlık (Wellness & Health) has been Garanti has implemented many innovations to its developed to serve as a healthy life platform working environment for its employees. The chairs providing information on exercise, nutrition and used in Zincirlikuyu and Güneşli Head Offices have ergonomics to employees. Employees can access been replaced with more user-friendly, ergonomic, their specific diet program through running the certified and design awarded ones. The chairs application on their smart phone or computer. can be adjusted according to sitters’ posture Active users of the application have reached 5,486 and 95% of the materials used in the chairs are in November, 2015. recyclable. The furniture, as well as the chairs, has been designed taking the employees’ physical The Bank has also a food engineer recruited comfort into consideration. Specific use areas in 2014 to keep track of compliance with at employees’ desks have been increased. User quality, taste and hygiene of food provided at specific working areas have been created with a Headquarter buildings. more minimal design at branches as well.

Another recent initiative in the pipeline is to design special areas for employees to have fun Ebru Dildar Edin (EVP at Garanti Bank) having a speech at COP 21 during their recreation time at the office. The development of recreation rooms and playgrounds

In 2015, Garanti Bank organized employees to demonstrate their »Green Shuttle: The routes of a gathering called “Pembe support for HeforShe initiative. shuttle services provided to CAREER OPPORTUNITIES PROGRAM Suare”, which aimed to inform the Headquarters employees female employees about the In 2016, Garanti is aiming to launch are automatically adjusted by gender-equality and women’s a separate hot line for support a software to make them more Employees have priority of consideration for open positions at Garanti. Open positions and required empowerment initiatives on legal, psychological and other efficient. qualifications are announced to employees through in-house job postings and the Career Opportunities undertaken by Garanti Bank. In matters for female employees who Bulletin, which is shared with employees over the intranet. Candidates who believe they are suitable this meeting, Garanti Bank also are victims of domestic violence. »SadeMail: This is a new mailing for these positions may apply without obtaining approval from their managers or any other individual. placed a wallboard, on which the system to increase the quality Candidates who fit selection criteria notify their managers and are invited to the selection process. women employees were asked to Services of internal and external e-mails leave their handprints, in order to and to decrease unnecessary raise their awareness on violence »Employee Assistance Program: emailing, thus decreasing time against women. This board, which Garanti Bank provides all loss and work stress. was filled with female employees’ employees with call center PROMOTION OPPORTUNITIES handprints, was exhibited in support, i.e. a hotline available Zincirlikuyu Head Office in the to all employees and their family Promotion at Garanti Bank may be vertical or were assessed in terms of performance and career following weeks, in a bid to draw members. Experts in various horizontal. Authority comes with responsibility and opportunities. Careers at Garanti are not limited attention of both male and female fields including medical, legal, higher pay. Acquiring necessary knowledge and to positions in banking. Transfers between Garanti employees to the same topic. psychological and financial experience identified in the relevant terms of reference subsidiaries are also possible. These activities were followed by provide support to callers is a must in order to move to a higher position. The an email sent to the entire staff 24/7. As part of the assistance development of managers’ managerial competencies During the reporting period, Garanti Bank introduced by the CEO in order to explain program, callers may be referred is a key element of Garanti’s HR policies. However, the the requirement to include at least one woman Garanti Bank’s ongoing activities to psychologists and counsellors most important factor is always the performance level. candidate for a vacancy so as to support the and future plans about women’s for 6 sit-down sessions free of During the reporting period, 100% of all personnel, empowerment of women employees and help empowerment and ask male charge. who have been working at least 3 months at the Bank, increase the number of women in senior management.

122 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 123 COMPENSATION AND REWARDS LEARNING AND DEVELOPMENT

Compensation and rewards are the other building » fair, In a bid to create the best broadcasts, simulations, videos, blocks of Garanti’s HR policies. In line with its » transparent, In a bid to create human resource in the financial e-library and mobile learning target of being the employer of choice, the Bank » measurable and based on balanced performance services sector and to ensure under the heading “Garanti applies a competitive, market-sensitive salary targets, the best human continuous development, Learning Technologies” and system, which aims to improve employees’ quality » encourages sustainable success, Garanti provides regular training they are accessible anywhere, of life. At Garanti Bank, the compensation system » complies with the Bank’s risk management programs on an ongoing basis anytime through mobile devices. is essentially based on performance and it is principles. resource in the so as to enhance the expertise totally gender-neutral. In addition to individual of its people. Determination of business performance, the Bank keeps a close view of At Garanti, the salary package comprises various financial services partners is a key performance general macro-economic circumstances, the components including the monthly salary, bonus Employee expertise is backed indicator in all these activities. current inflation rate in Turkey and trends in the payments and premium payments each year, sector and to with five main faculties: “Loans”, Distinctive and current sector in order to apply a proper and fair policy on meal vouchers, foreign language payments and “Leadership”, “General Banking”, information is captured and salaries of its employees. other benefits with variations depending upon “Investment” and “Sales”. While disseminated to employees level of seniority or scope of work and location ensure this structure helps them build via business partners such as In implementing its compensation policy, the of service. More information about Garanti Bank’s on their existing competencies, the designers in each faculty, Bank takes into account the values set forth by Compensation Policy is available on-line: continuous additional support is also full-time internal trainers, this policy as approved by the Board of Directors. offered for their development in ICF-certified professional/full- These values strictly apply to every employee’s https://www.garantiinvestorrelations.com/en/ various interest areas. time coach, reputable training salary, including senior managers. Garanti corporate-governance/Compensation-Policy/ development, companies, universities, and Bank goes to great lengths to ensure that its Compensation-Policy/100/411/0 Needs analysis is performed business schools abroad. compensation system is always: Garanti provides with one-to-one interviews, Moreover, cooperation is workshops or inventories for established with the academic all units. Units are expected to world so as to familiarize the regular training gain internationally recognized universities with the business expertise and to become world. FAIR AND TRANSPARENT programs on an global leaders of the sector. Along these lines, there are training options diversified PREMIUM MODELS ongoing basis according to each job family. In addition to those, employees so as to enhance also participate in programs Garanti Bank employees are awarded with premiums based on a system that measures success related with Garanti’s service based on balanced and objective criteria such as the realization of financial targets, risk management culture and leadership concept and customer satisfaction. Results are shared with the employees themselves and their managers the expertise for their development. Garanti periodically and transparently. Leadership Academy, in of its people. particular, offers long-lived and varied opportunities for getting equipped for the future. Furthermore, coaching, best GARANTİ BANK PENSION practice sharing, project work and experiential learning have FUND FOUNDATION been in use for long. The training programs are When employees join Garanti Bank, they automatically become members of the Garanti Bank Pension designed with world-class Fund Foundation, which was founded in accordance with temporary article no. 20 of the Social standards and innovative Securities Law no. 506. A health certificate is issued for employees, their spouses and children. methods. Speed and accessibility are provided by various platforms including live

124 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 125 Table 37: Communication Technology Used by the Bank RAISING AWARENESS

Technology Description ON SUSTAINABILITY

GET Kurs (Course) Web-based training sessions that include video, animation, text and Garanti Bank is aware of the importance Garanti has also identified and selected visual content. of embedding sustainability into its culture sustainability representatives from all bank and organizes numerous training programs departments and all of the regional directorates GET Sınıf (Classroom) Web conference system set up within the Bank and via corporate on sustainability to ensure this. The Bank’s and branches to support all sustainability tablets which facilitates audio and video remote. Sustainability E-Learning program was designed efforts as needed. Those representatives receive for all bank personnel as a result of the Bank’s Environmental Management trainings and became commitment to raising the awareness of auditors after their election. They play a key role in its employees, who form its most precious disseminating their knowledge to their colleagues Simulation Branch Allows participants to view critical issues concerning customer experiences in real life and to experience possible risks in advance in a stakeholder mass. The Bank also added its view in their responsibility areas. safe environment. of the concept of sustainability to its orientation training, spelling out its expectations of employees on this issue. GET TV Live broadcast portal allowing customers to quickly access information.

GET Video Video sharing website aimed at enhancing the learning process via experience sharing. Table 39: Progress in Awareness Raising Activities

Table 38: Average Training per Employee during the Target Explanation Progress and New Targets

Reporting Period Share of 25% of all training sessions were aimed to be In 2015, 16% of all training sessions Learning incorporated to learning technologies by the incorporated learning technologies. Technologies end of 2015. Hours 2014 2015 The new target for learning technologies is 23% by December 31, 2016. Average Training per Employee 44 44

Average Training per HQ Employee 41 49 Increasing Garanti has carried on with its internal In 2016, the new Sustainability Employee communications strategy and training E-Learning Program will be opened Average Training per Branch Personnel 46 42 Awareness program for sustainability, which was created for all of our employees. Additionally, in 2013. informative training programs related Average Training per Employee (Women) 44 43 to financing of solar power projects The awareness raising program includes will be held in 2016. Average Training per Employee (Men) 44 45 informative e-mails, videos, exhibitions (e.g. artwork from electronic waste of the Bank) Average Training per Employee (Management Positions) 38 44 and an online sustainability platform on the intranet. Average Training per Employee (below Management Level) 44 44

126 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 127 GELECEK (FUTURE) MEETINGS GARANTİ MANAGERS SUMMIT

Garanti Bank holds Gelecek (Future) Meetings that allow strategies for the new period to be discussed Held annually, the Garanti Managers Summit brings together managers of Garanti Bank and its with a joint approach after the Bank’s senior management undertakes an evaluation of the previous subsidiaries and is a special sharing and a common learning platform. The theme of the summit year’s results with employees. These meetings reflect a corporate culture based on teamwork, joint is determined particularly in accordance with the priorities of the Bank and the latest global thinking, sustainability and social benefit in which employees are able to comfortably express their developments and trends, financial projections, cultural changes and consumer behavior. thoughts and suggestions on different platforms. EMPLOYEE SATISFACTION 4 SEASON MEETINGS

Measurement and systematic follow-up of employee The Internal Customer Satisfaction Survey Garanti Bank has been organizing regional 4 Season Meetings since 2009 with the aim of increasing satisfaction levels are important in terms of the allows Garanti Bank employees to evaluate the employees’ motivation, improving employee relations, and achieving communication more effectively success and sustainability of Garanti Bank’s HR service they have received and to offer their within the Bank. 4 Season Meetings create an opportunity for branch employees in a certain region to strategy, policies and practices. Through surveys suggestions. The survey includes questions on get together and socialize in an informal environment. held every year, the Bank listens to its employees’ such criteria as accessibility, teamwork, customer opinions and gathers information concerning their approach, communication, service quality and requests and expectations. Surveys held annually at openness to criticism. Garanti Bank are explained in the following section. The 360 Degree Feedback Survey aims The Employee Engagement Survey is carried to contribute to managers’ development by out to gather employees’ opinions concerning the determining their competencies, as well as their working environment at Garanti Bank so as to create strengths and areas open to development. The a better and more efficient working environment, findings gathered from the surveys are shared taking into account feedback from its employees. with senior management and managers and used The scope of the survey includes basic employee- in the proper design of development plans in related subjects, such as the performance system, accordance with employees’ needs. salaries, work/private life balance, job satisfaction, the working environment, development facilities and managers.

SUGGESTION AND IDEA PLATFORMS

Suggestions and ideas submitted through “Önersen” and “Atölye” platforms by Employees are assessed for continuous improvement.

In addition to Önersen and Atölye platforms, employees can share ideas and suggestions regarding all topics through the ”Ask/Share” section of the new intranet portal opened in 2015. Suggestions shared by employees are assessed by related departments and necessary adjustments are made to business Nafiz Karadere (EVP at Garanti Bank), Awards Ceremony of the 8th Women Entrepreneurship Competition. procedures.

128 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 129 Önersen

Önersen is an idea gathering platform which encourages all employees to submit their ideas or FOCUSING ON recommendations about the Bank’s products, processes or operations.

There is also a category dedicated to environmental performance under Önersen and all employees can submit their suggestions related to environmental performance directly to the Sustainability Team. The COMMUNITIES Sustainability Team consolidates the suggestions, determines the ones that are feasible and presents them to the Sustainability Committee. Once the Committee’s approval is taken, the Sustainability team starts to work with relevant departments to implement the suggestions. Key Highlights: “Önersen” has been running since 2007 and collected 2,257 suggestions in 2015. In total, 18,500 suggestions have been collected since the platform was launched. »‘No Limits in Teaching’ program reached a total of 122,249 teachers across 81 cities

Atölye »With the ‘Join the Workforce, Join Life’ project 170 disabled people joined the workforce In the scope of “Atölye”, a project-based idea platform, active since 2010, departments seek employees ideas on a subject of interest by opening a project on the platform for a certain period of time. »Number of people who visited Salt Beyoğlu, Salt Galata and Salt Ulus free of charge reached 1,638,107, starting from 2011

Volunteer Clovers »Basketball trainings were given to more than 55 thousand students through 12 Giant Men Basketball schools in 75 centers and the Turkish Having carried out many valuable projects since education and social development of the children. Republich of North Cyprus. its establishment, Volunteer Clovers (Gönüllü In addition, Volunteer Clovers gave support to the Yoncalar) Corporate Social Responsibility Club distribution of food and clothing items given away has defined its mission as to continuously and in Soma in cooperation with the Food Banking and Garanti Bank views its systematic and long-term These Community Investment programs, which generate significantly increase the value that it produces for Basic Needs Association (Gıda Bankacılığı ve Temel efforts, which it conducts within the scope of a significant amount of added value for society, range the community and the environment through its İhtiyaç Derneği - GBtider). Under the ongoing Community Investment, as an essential element of from programs from sports to education, from art to effectiveness, sensitivity and harmony. Our Book Box project, Volunteer Clovers donated its sustainability approach. nature, and to enlightening the business world. books to more than 18 schools in different cities The employees design and execute numerous across Turkey. projects under the roof of Volunteer Clovers Club, and ensure voluntary participation of all managers 2,400 wishes were granted in 2015 as part of the Garanti Bank’s Corporate Social Responsibility Policy in these projects by organizing activities during the Wish Tree project, which was initiated in 2014 Future Meetings. For example, in November 2014, with the collaboration of Human Resources and The Bank’s Corporate Social Responsibility Policy operating areas; to address our stakeholders’ two schools in Beldibi, Antalya were repaired and Volunteer Clovers for granting the wishes of is based on the following principles: needs and expectations by building a permanent given a makeover with the voluntary participation children in Anatolia. structure with these organizations and by aiming of employees in an effort to contribute to the »Driven by the importance we attach to the to produce long-term benefits for a larger group added value we offer to our country, society and of people, individuals, to constantly monitor our country’s and society’s needs and establish our Community »To become an organization, of which all our Investment efforts, stakeholders - including our employees – are proud to be a part, with our community-oriented »To create institutions that are open to social activities, that we have been conducting with interaction and that will set an example in their Community Investment awareness.

130 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 131 EDUCATION SUPPORTING THE PARTICIPATION OF DISABLED INDIVIDUALS IN SOCIAL The Teachers’ Academy Foundation (ÖRAV) was Unit works on increasing the capacity of Special established in August 2008 by Garanti, in order Education Practice Center teachers, combining to contribute to the personal and professional schools and branch teachers who take care AND ECONOMIC LIFE development of teachers, who will contribute of the education of individuals with autism, to raising young generations aware of their planning parental trainings, developing the individual and social responsibilities, who research foundation portal and maintaining its continuity Seeking to support the participation of disabled individuals in social life, Garanti and question, are self-confident, care about the and contributing to the development of training Bank began sponsoring women’s, men’s and juniors’ National Wheelchair continuity of personal development and are able materials and methods. Basketball Teams along with the Wheelchair Basketball Leagues in April 2013. to protect the cultural heritage of the country. Garanti became the main sponsor of the Young ‘Join the Workforce Join Life’ project, which aims to increase disabled The first and only NGO in Turkey that focuses on Life Foundation’s Ben de Varım (I Am Here As individuals’ involvement in work life and was initiated with the leadership of the this area, ÖRAV reached 122,249 teachers in 81 Well) project, which began in 2014, and aims to Ministry of Family and Social Policies and the support of Garanti Bank in October cities at the end of 2015 with the “High School- achieve employment and social inclusiveness of 2014, enabled 170 disabled individuals to be employed along with business Learning Leader Teacher”, “Solution-Oriented the students and teachers from Girls’ Technical coaches in Ankara and Sakarya in 2015. The project is being continued in Samsun, Communication”, “The Chemistry of Teaching”, and Vocational High Schools. The project is Gaziantep and Istanbul provinces. “Development Program for Education Executives” aiming to raise awareness towards social gender (EYGEP), “Unlabeled Teaching” and “Creative Kids equality, increasing the knowledge of parents Creative Minds” programs alongside with the “No on the recruitment of young girls and informing Limits in Teaching” project that continued under the internship sponsors in the institutions where the title “Learning Leader Teacher”. students complete their internships on working with students and providing feedback. 80,000 registered active users visit the “e-Campus” web site that was developed as a Garanti Bank is the main corporate sponsor of continuing education and information sharing TOG (Community Volunteers Foundation), which platform to complement ongoing projects. is a change and transformation project that aims to turn the energy of youth into social benefit and Garanti became the main sponsor of the “Math ensure the organization of youth and development and Science Learning with Fun” training program of social responsibility projects based on the which is developed in partnership with the Turkish needs identified. TOG youth has been active Education Volunteers Foundation (TEGV) in developing social responsibility projects based order to increase the problem solving ability and on the needs identified in the groups, social clubs science-math skills of primary education students. and societies in their universities.

The TEGV program, which will be organized with the support of volunteers, is aimed at reaching 100,000 students from 37 cities in 3.5 years.

Tohum Autism Foundation established its Continuous Education Unit in April 2015 with the support of Garanti. The Continuous Education

132 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 133 SUPPORT FOR CULTURE AND COMMUNITY INVESTMENT GOALS

CULTURAL HERITAGE Garanti Bank considers systematic and long-term These initiatives which added significant value social investment responsibility projects as the to society are implemented in different areas SALT was formed by restructuring cultural organizations basic component of its sustainability approach. including sports, education, art, nature and even that operated within Garanti as an independent entity in Garanti reserved TL 22.6 million for its corporate raising awareness in the business world. Through 2011. responsibility activities’ fund in 2015. these initiatives, Garanti Bank aims to help raise added value to society and its stakeholders in a From 2011 until the end of 2015, Salt Beyoğlu, Salt sustainable manner. Galata and Salt Ulus in Ankara hosted 67 exhibitions, 1,241 events in conjunction with the exhibitions, and 459 guided exhibition tours and workshops for students, as well as publishing 14 comprehensive publications. The number of people who visited Salt Beyoğlu, Salt Galata Table 40: Progress in Community Investment Target and Salt Ulus totaled 1,638,107 during the same period.

In addition, Garanti has organized the first film festival, Target Explanation Progress and New Target which is called the Garanti Children’s Film Festival, for children in Turkey in conjunction with Turkey Cinema and Audiovisual Culture Foundation (TURSAK) annually By the end Implementing a community investment An important investment for since 2004. Through the Festival, around 85,000 of 2015, project that is material for the finance sector. entrepreneurship, a material topic children from fifteen cities in Turkey with a very limited implementing In other words, a project that will add value for the finance sector and one that access to cinema found the opportunity to experience the a community to the sustainable growth of the economy is being considered a locomotive art of cinema. investment in the medium-long run and will help some for growth and employment, was project crowds overcome financing difficulties.. realized. The GarantiPartners Garanti continues to support Turkey’s first and only material to the program, which has the target modern art museum, Istanbul Modern since 2005. finance sector of supporting and accelerating Program aims to raise creative, questioning individuals entrepreneurial projects from every who are interested in art. By the end of 2015, more than scale and sector, SMEs and growing 550,000 children and young individuals had received entrepreneurships, went live. training within this training program. Garanti will continue its materiality Garanti Bank has supported the establishment of assessment with the support of an structures, which encourage artists to perform innovative independent research and consulting research, through a special exhibition prepared in firm through the inclusion of 2015 in İstanbul Modern. “YAP İstanbul Modern: New stakeholders’ feedback by the end Architecture Program” which is carried out by İstanbul of 2016. By including independent Modern in collaboration with The Museum of Modern stakeholder feedback and conducting Art (MoMA) and MoMA PS1, gives young architects the a materiality assessment, the Bank is opportunity to design a temporary building in the open targeting to improve its community area of Istanbul Modern. The program aims to encourage investment strategy. architects to use innovative design research about the SALT Galata possibilities of increasing open areas’ utilization and suggesting environmental friendly solutions.

As a corporate supporter of SAHA Association, which aims to increase the recognition and awareness of contemporary art in Turkey, Garanti is helping to develop training places and creative environments for artists, curators, art historians and art critics and to improve their interaction with international networks. SALT Beyoğlu

134 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 135 INDEPENDENT AUDITOR’S ASSURANCE REPORT

To the Board of Directors of T. GARANTİ BANK A.Ş.

Independent Auditor’s Assurance Report 2015

Our Conclusion Basis for our conclusion Responsibilities of Management for Our review engagement has been performed with The Selected Indicators a limited level of assurance. Procedures performed We have reviewed (limited assurance) the selected We conducted our engagement in accordance in a limited assurance engagement are aimed at determining the plausibility of information and indicators of the Sustainability Report 2015 with the International Standard on Assurance The Management is responsible for the preparation therefore vary in nature and timing from - and (hereafter: The Selected Indicators) of T. GARANTI Engagements (ISAE) 3000: “Assurance Engagement of The Selected Indicators in accordance with the are less extensive than - a reasonable assurance BANK A.Ş. (hereafter: Garanti Bank). The following other than Audits or Reviews of Historical internally developed criteria as described in About engagement. indicators were in scope: Financial Information” and ISAE 3410: “Assurance this Report section. It is important to view The Engagements on Greenhouse Gas Statements”, Selected Indicators in the context of these criteria. The procedures selected depend on our »Total Scope 1 and 2 Greenhouse gas (GHG) emissions issued by the International Auditing and Assurance As part of this, Management is responsible for such understanding of The Selected Indicators and other Standards Board. Our responsibilities under internal control as it determines is necessary to engagement circumstances, and our consideration »Energy consumption Standards ISAE3000 and ISAE 3410 and procedures enable the preparation of The Selected Indicators of areas where material misstatements are likely to performed have been further specified in the that is free from material misstatement, whether due arise. The following procedures were performed: »Water consumption paragraph titled “Our responsibility for the review of to fraud or error. The Selected Indicators”. Reviewing the suitability and application of the »For the Environmental Impact Assessment Process Our responsibility for the review of internal reporting criteria [including conversion related to projects financed by Garanti Bank We do not provide any assurance on the The Selected Indicators factors] used in the preparation of the reported data achievability of the objectives, targets and in scope and accompanying notes. »Number of assessed projects; expectations of Garanti Bank. Our objective is to plan and perform the review Evaluating the design and implementation of the assignment in a manner that allows us to obtain »Number of rejected projects; We are independent of T. GARANTİ BANK A.Ş. reporting processes and the controls regarding the sufficient and appropriate assurance evidence for our in accordance with the Regulation regarding qualitative and quantitative information in the data conclusion. »Risk ratings the independence of auditors in case of related to The Selected Indicators. assurance engagements (‘Verordening inzake de We apply the Further Regulations for Audit Firms »Number of site visits performed during 2015 onafhankelijkheid van accountants bij assurance- An analytical review of the data and trend Regarding Assurance Engagements (‘Nadere opdrachten’ (ViO)) and other relevant independence explanations submitted by all locations for voorschriften accountantskantoren ter zake van »Amount of investments in renewable energy projects. requirements in The Netherlands. Furthermore we consolidation at corporate level. assurance opdrachten’) and accordingly maintain a have complied with the Regulation code of conduct comprehensive system of quality control including Amsterdam, 22 April, 2016 Based on our review, nothing has come to our and professional practice for auditors (‘Verordening documented policies and procedures regarding KPMG Sustainability, attention to indicate that the information for gedrags- en beroepsregels accountants’ (VGBA). compliance with ethical requirements, professional Part of KPMG Advisory N.V. The Selected Indicators are not presented, in all We believe that the assurance evidence we have standards and applicable legal and regulatory material respects, in accordance with the internally obtained is sufficient and appropriate to provide a requirements. W.J. Bartels, Partner developed criteria. basis for our conclusion.

136 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 137 APPENDIX

138 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 139137 Frequency of Stakeholder Engagement Stakeholder Evaluation of Engagement APPENDIX 1: KEY STAKEHOLDER Group Platforms Engagement in the Reporting Period

Public »Systematic reporting Varies from Garanti Bank demonstrates the utmost GROUPS AND ENGAGEMENT authorities/ daily to once care in complying fully with the law and »Meetings, forums, every three regulations in all of its activities. The Bank Regulatory conferences years depending is in regular contact with the BRSA – the PLATFORMS institutions on the type of regulatory authority of the Turkish banking »Periodical Audits engagement industry – as well as with SDIF . The Bank is in contact with the Under Secretariat of Table 1: External Stakeholders »Press releases the Treasury, Central Bank of the Republic of Turkey, the Capital Markets Board of Turkey, respective ministries, other »One-to-one meetings Frequency of Evaluation of institutions and agencies as required by Stakeholder Engagement Stakeholder Engagement in the laws and regulations. Group Platforms »Public Disclosure Engagement Reporting Period Platform In order to increase its support for sustainable development, the Bank takes advantage of Customers »Banking service process (Branches) Continuous Garanti Bank engages any opportunities for cooperation that arise interaction by with its customers as part with platforms such as BCSD Turkey, UNEP FI »Customer experience and market email, social of the banking service and the UNGC, of which the Bank is a member research media accounts process. Customers are or through direct engagement. telephone able to submit their »Customer Care Line and through feedback concerning the Garanti Bank’s activities for ensuring branches. Bank’s environmental compliance with laws and regulations »“Contact Customer Representative” and social performance, are explained in the section ‘Focusing on Icon in internet banking platform Ad hoc meetings as well as its products Corporate Sustainable Governance’. as needed. and services to Garanti »www.garanti.com.tr Bank through a number of channels, including Suppliers »Daily business cycle Continuous as Garanti Bank is committed to addressing »Social media the Customer Care Line, general course of the environmental impact caused by which is a specialized line »Meetings business (e.g. by its suppliers, in addition to the direct »www.facebook.com/Garanti for receiving feedback email) environmental impacts resulting from from customers who »E-mail communication its internal operations. In 2012, the »https://twitter.com/garanti have raised complaints. Meetings as Bank started to include a new article to supplier contracts requiring new suppliers, Through this line, »Ongoing relation required especially in cleaning and catering, to »https://plus.google.com/+garanti Garanti Bank assesses during EMS (ISO 14001) comply fully with Garanti Bank’s ISO 14001 its customers’ problems Environmental Management System. »Social customer care (“Garanti’ye Sor”) and improves itself accordingly to serve them »Seminars, conferences and sector- better. Non - »Sponsorships Minimum once Sharing with the communities in which based information meetings governmental every three it operates is one of the core values of Garanti Bank considers organizations »Strategic collaborations months Garanti Bank’s corporate culture. Offering »Communication activities its customers the focus its expertise and knowhow to the service of all its activities. Please »Events of the community and future generations, »Activities within the scope of social refer to the section the Bank provides support to NGOs in responsibility projects on ‘Focusing through »Regular Meetings Turkey regarding social, economic and customers through environmental issues as well as carrying »One to one meetings sustainable finance’ for out joint projects with them. details of developments »Teleconferences concerning the Bank’s Please refer to “Focusing on Communities” relationships with its section for further activities. »feedback received via customers, as well as its [email protected] products and services.

140 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 141 Table 1: External Stakeholders

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

Media »Press conferences Varies Garanti Bank is in a transparent International »Meetings Minimum on The Bank collaborates depending relationship based on mutual Financial quarterly basis. with international »Press releases on the type respect with the media. Garanti Institutions »Periodically published informative financial institutions on of initiative, Bank establishes dialogue with publications (CDP, Sustainability topics such as renewable »Interviews minimum once national and international media Reports, Annual Reports) energy, energy efficiency, every three and undertakes efforts with the supporting women months. objective of raising awareness about »Phone calls/teleconferences, e-mail entrepreneurs and the Bank and its operations, and communication financial services offered answering questions forwarded to to SMEs in order to meet the Bank in the swiftest and most Turkey’s financial needs straightforward manner. for sustainable growth.

Community -Garanti Anatolian Meetings Varies Garanti Bank transparently Finance »Member of the Banks Association of Minimum once The Bank engages in Sector Turkey every two working groups with -Support for Women depending announces all events – organized months. other banks in numerous Entrepreneurs (Meetings on the type within the scope of its strategic »Member of the United Nations organizations through its with Women Entrepreneurs, of initiative, collaborations with NGOs – with Environmental Program Finance membership of initiatives Women’s Entrepreneur Contest) minimum once all of its stakeholders at www. every three garanti.com.tr and http://www. Initiative (UNEP FI) such as UNGC, UNEP FI »UNICEF –Now We Have a months. garanti.com.tr/en/our_company/ and BCSD Turkey. School (Şimdi Okullu Olduk) sustainability/corporate_ »Member of the Turkish Business »Tohum Autism Foundation responsibility.page websites. Council for Sustainable Development Garanti Bank has actively (Tohum Otizm Vakfı) (BCSD Turkey) participated in the “Role »Community Volunteers For the “No Limits in Teaching” of the Financial Sector Foundation (Toplum Gönüllüleri project, of which the Bank is »Member of the United Nations in Sustainable Growth Vakfı) the main sponsor within the Global Compact (UNGC) Workgroup” of the Banks Association of Turkey. »Join the Workforce, Join Life scope of the Teachers’ Academy www. »National and international (İşe Katıl Hayata Atıl) Foundation, please visit: ogretmeninsiniriyok.com. All conferences Please refer to Table »KOBİLGİ (SME Informative) Meetings information regarding Join the 2 in the International »ÖRAV (The Teacher Academy Foundation) Workforce, Join Life project is Memberships section for »Genç Hayat Foundation (Young Life shared transparently with all details of Garanti Bank’s Foundation) stakeholders through the http:// national and international www.isekatilhayatakatil.com memberships. »12 Giant Men – Basketball Schools (12 Dev and http://www.garanti.com.tr/ Adam Basketbol Okulları) Project en/our_company/sustainability/ »SALT corporate_responsibility.page »SAHA Foundation websites. »Garanti Children’s Film Festival For detail on these activities »Istanbul Modern Education Program please refer to the sections »BUMED Business Angels ’Focusing on Communities’ and »Entrepreneurship Foundation (Girişimcilik ‘Focusing on Customers through Vakfı) Sustainable Finance’. »WWF

142 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 143 Table 1: External Stakeholders Table 2: Internal Stakeholders

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

Shareholders, »Investor Relations website Varies depending The Bank, which is in Employees »Talent Management Study Varies depending Garanti Bank’s most analysts and on the type of constant communication on the type of important driving force investors »Investor Relations iPad the engagement. with its shareholders and »Assessment and Development engagement, is its human resources. Application Continuous investors through various Center minimum once Garanti Bank is a leading access is channels, carried out every three and model company »Social media (Garanti IR Twitter available through all required information »Garanti Leadership Academy months for in the finance sector in Account) IR website, IR disclosures during the trainings. In terms of training and iPad app, e-mail reporting period in »360 Degree Feedback Process addition, we support it provides to »Face-to-face meetings with and phone. line with applicable liaise with our its human resources. A analysts and investors regulations and paid »Internal Customer Satisfaction employees on a network of Sustainability utmost care to keeping Survey continuous basis Representatives have »Phone calls /teleconferences, domestic and foreign via e-mail from been established to webcasts/telepresences and investors informed in the »Employee Engagement Survey the sustainability maximize the positive e-mail communication with analysts and investors most straightforward e-mail account. contribution of the and transparent manner. »Suggestion and Idea Platforms Bank’s employees to »Roadshows/conferences “Önersen” and “Atölye” Garanti’s sustainability »Public Disclosure Platform Based on a proactive performance. approach to the »Career Opportunities Bulletin development of its Önersen and Atölye »Ordinary General Shareholders’ understanding of »4-Season Meetings Platforms aim to Meetings (Electronic AGM) sustainability, Garanti encourage all employees Bank surveys its »Sustainability Representatives to produce and submit »Periodically published investors’ assessments Network recommendations about informative publications (Monthly and reshapes its routine the Bank’s environmental newsletter, Quarterly newsletter communication practices »Future Meetings and social performance. Stockwatch, Semi-annually to ensure maximum Training sessions are published Corporate Profile, CDP, contribution from its »Garanti Managers Summit organized to ensure Sustainability Reports, Interim stakeholders regarding employees’ active and Annual Reports, Earnings sustainability. »WWF Survey participation. Presentations, Operating Plan During 2015, Garanti Guidance Presentations) Investor Relations took »[email protected] Please refer to the section part in 21 national and ‘Focusing on Human »Perception Analysis Survey international investor »Interviews Resources’ to learn more conferences held in about the progress of »Investor Feedback Mechanism 12 cities in Asia, USA Garanti Bank in the area »Shareholder Identity Analysis and Europe with the of human resources. participation of the »Management Interviews administrative team, in addition to one-on- one meetings with 811 international investment funds, and held due diligence meetings with four rating agencies.

144 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 145 Table 2: Internal Stakeholders APPENDIX 2: ENVIRONMENTAL

Frequency of Evaluation of Stakeholder Engagement Stakeholder Engagement in the AND SOCIAL IMPACT ASSESSMENT Group Platform Engagement Reporting Period MODEL (ESIAM) Top »Sustainability Committee Varies depending The Sustainability Management Meetings on the type of Committee, which is engagement, chaired by a Board The ESIAM comprises of the following three stages: »E-mail Communication minimum once a Member, convened several week. times during the reporting »Periodically published informative period, assessing a range 1 - Category Selection publications (Annual and Interim of sustainability issues The project is assigned to the most appropriate of the three categories in the table below based on the Reports; Weekly and Quarterly and opportunities. impact assessment and then held subject to the ESIAM. Stockwatch Publications, semi- annually published Garanti Moreover, through the Category Explanation Corporate Profile Booklets, weekly Sustainability Meetings and quarterly newsletters) held at least once a Category A » Projects defined as subject to ANNEX-I of the Environmental Impact Assessment week, the Executive Vice (EIA) Regulation, »Sustainability Meetings with President of Project and » Projects carried out in or around sensitive areas defined in ANNEX-V of the EIA Regulation, the Executive Vice President Acquisition Finance and » Projects where there is strong public or NGO opposition. Responsible for the Project and Sustainability, who is Acquisition Finance Department also a member of the Category B » Projects defined in ANNEX-II of the EIA Regulation (projects subject to the selection- Sustainability Committee, elimination criteria and that require project introduction files), »Sustainability Representatives is kept informed, thus » Projects attracting either strong interest or opposition from the public or NGOs, Network ensuring that senior » Projects which are exempt from the EIA. management provides »Future Meetings regular guidance and support. For details of the Category C » Projects included in ANNEX-I or ANNEX-II of the EIA Regulation, »Garanti Managers Summit Organizational Structuring » Projects where there is no adverse interest in, or opposition from, the public or NGOs. at Garanti Bank, please refer to the section ‘Focusing on Corporate 2- Determination of a Project’s Risk Rating Sustainable Governance’. Questionnaires have been designed for each » Paper-Cellulose Sector sector listed below in order to determine the project’s risk rating: » Petroleum and Natural Gas Industry

» Cement, Glass, Ceramics Sector » Solar Power Plants

» Food, Beverage, Feed and Agricultural Products » Textiles and Leather Sector Sector » Thermal Power Plant Projects » Geothermal Power Plants » Tourism/Healthcare/Mass Housing/Mall Sector » Hydroelectric Power Plant Projects » Transport/Infrastructure Sector » Metallurgy/Machine/Petrochemicals/Chemicals Industry » Waste Utilization and Disposal Sector

» Mining Industry » Wind Farms

» Nuclear Power Plants

146 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 147 Project These questionnaires assess a project’s Risk Rating Explanation R2 environmental and social impacts such as: R1 High Risk » Is the project carried out in areas protected by Project Finance Unit Loans Unit national or international legislation? R2 Medium Risk Environmental and » Are cumulative impacts of other plants already in operation taken into account during the impact Social Loan Policies Not Compliant with Policies R3 Low Risk assessment? (ESLP)* REJECT » Are there any economic, social or physical losses R4 Very Low Risk associated with the land purchases (expropriation) USD 10 million financial limit** or resettlement in the project? Category R1 R2 R3 R4 » Are environmental and social factors taken into account in the master plan or during the evaluation A 1 1 2 3 Sectoral Principles Not Compliant with Policies of alternatives in the feasibility study? REJECT The ultimate risk rating of the project is determined B 1 2 3 3 from an evaluation of the question responses Project Categorization using an algorithm prepared with the support of a C 2 3 3 3 (A, B, C) consulting firm.

Environmental and Social Impact Assessment Model (ESIAM) 3- Determination of Risk Group

Projects are classified according to their risk rating and category, by using a risk matrix created by the Bank Risk Group 1: Risk Group 2: Risk Group 3: and finally their risk classes are identified based on this evaluation. Garanti Bank demands specific actions to Independent Consultant ESMP (optional action) be taken depending on this risk evaluation. +ESMP +Periodic reporting

Risk Group Action Loan Committee 1 The Bank asks an independent consultant firm to prepare a comprehensive report regarding the project’s environmental and social impacts and also to prepare, apply and regularly report an ESMP. Loan Decision

2 The Bank requests that the project owner(s) prepare, apply and regularly report an ESMP. The Bank expects a detailed ESMP reflecting the project’s scale and risk level. RE-ASSESSMENT REJECTION APPROVAL 3 Actions are dependent on the decision of the Credit Committee.

If a project fails to meet the environmental and social criteria under ESIAM, the Bank may reject the project or ask the customer to take additional measures, monitor identified impacts and report these impacts in detail on a regular basis.

* In the scope of the ESPLs, apart from Garanti’s general environmental and social principles, a list of banned activities, which Garanti doesn’t finance in any condition, is also available. ** With the exception of the projects that are not assessed under the Garanti Bank Environmental Loan Policies (A.6)

148 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 149 APPENDIX 3: SUSTAINABILITY COLLABORATION WITH INTERNATIONAL FINANCIAL ORGANIZATIONS

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

STEP Small Tourism Enterprise Program) - Garanti Bank continues to extend Garanti Bank has secured a € 175mn loan from the European Investment loans to SMEs through the STEP program, which is designed to enhance EIB Bank (EIB). The six-year facility will be lent to small and medium-sized sustainability and the competitive strength of hotels and bed and businesses. breakfast accommodations in the tourism sector.

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

Proparco Garanti Bank secured financing from Proparco of € 50 million with a covers mid-size investments in renewable energy, waste-to-energy and Mid-SEFF tenure of 12 years in December 2011. Proparco is a subsidiary of the French industrial energy-efficiency. EBRD and EIB supported Garanti Bank in the Development Agency (AFD) that provides funds for private investments in amount of €150 million in 2010 and Garanti Bank secured financing from developing countries with a focus on supporting clean energy projects. EBRD of $100 million in 2015.

150 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 151 APPENDIX 4: WHISTLEBLOWING APPENDIX 5: ANTI-FRAUD POLICY

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

152 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 153 APPENDIX 6: ACTIVITIES OF THE BANK’S COMPLIANCE DEPARTMENT

Managing “compliance risks” that the Bank may be subjected to and carrying out its activities in order to seek prevention of potential risks by detecting before the implementation; the Compliance Department aims to contribute a constant development of the compliance culture and to establish a world-class compliance culture at the Bank. To achieve these objectives, the Department functions on 6 main areas which are given below.

According to regulations on »Laying down the efforts related regulations are evaluated. In Within the scope of corporate branches are supervised by the responsibilities outlined Prevention of Laundering to the training program about addition, the Compliance compliance activities, Compliance Department. In this above, in collaboration and in Proceeds of Crime and Terrorist prevention of money laundering Department carries out the responsibilities of the context, periodical meetings coordination with the relevant Financing, the following and countering the financing compliance controls in Compliance Department include are held with the compliance parties, such as; the Internal activities are performed by the of terrorism for the approval accordance with Article 18 promoting the awareness and functions’ responsibles of Audit Department primarily and Compliance Officer; of the Board of Directors, and of the Regulation on Internal application of the Garanti Code those entities. In line with the Internal Control Unit, Training ensuring that the approved Systems and Internal Capital of Conduct, developing and related regulation, a separate Department, Anti-Fraud »Carrying out all necessary training program is carried out Adequacy Assessment Process disseminating the procedures personnel is assigned in each of Management Department and efforts to achieve Garanti Bank’s effectively, of Banks. Supervision and developed by it, assisting the the Bank’s overseas branches Legal Services Department. compliance with the regulations coordination of the existing personnel in resolving any and subsidiaries subject to issued to prevent money »Looking into and evaluating control mechanisms is realized doubts they may have in its consolidation, to control laundering and countering information on potentially for the compliance of Bank’s interpretation and managing the the compliance functions the financing of terrorism and suspicious transactions that he/ performed/planned actions Whistleblowing Channel. consistency with abroad provide necessary coordination she receives or becomes aware and new products and services regulations. Aforementioned and communication with the of sua sponte; reporting any in parallel with the related In terms of the securities personnel, periodically report to Financial Crimes Investigation transaction that he/she deems regulations, the Bank’s domestic compliance function, within the Compliance Department. Board (in Turkish: MASAK), to be suspicious to the Financial policies and regulations and context of the “Communique Crimes Investigation Board, banking practices. By following on Obligation of Notification Within the scope of personal »Ensuring that the compliance changes in regulations, revision Regarding Insider Trading or data protection compliance, program is carried out; »Managing relations with requirements in processes are Manipulation Crimes” of Capital related regulations are followed- developing policies and relevant governmental or followed up and the Bank’s Markets Board (CMB), periodic up and related required policies procedures within this scope; private agencies. related personnel is informed investigations are carried out and procedures are created. executing risk management, about those changes. The to detect any suspicious stock Moreover, in order to increase monitoring and control Within the scope of customer Compliance Department also transactions. the awareness at the Bank, activities; following up the compliance activities, the forms its opinion on new bulletins are published and results of internal audit and compliance of products products and transactions In terms of coordination of trainings are organized. training activities, and processes with related before they are implemented. subsidiaries, the compliance functions of the Bank’s The Compliance Department Subsidiaries and overseas fulfills the duties and

154 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 155 Title

APPENDIX 7: ROLE OF THE APPENDIX 8: GARANTİ’S DISCIPLINARY COMMITTEE INTEGRATED SUBSIDIARIES Bank’s Share The roles and responsibilities of the Disciplinary Title Address (City/ - Vote Share if Related Party Committee are as follows: The Disciplinary Committee is authorized to give Country) different (%) Share Rate (%) the following penalties, based on the severity In the event where acts or practices that are of the act committed: Written Notice, Warning, not in compliance with laws, accepted banking Censure, Aggravated Censure, Aggravated Censure 1 Garanti Bilişim İstanbul/Turkey 100.00 100.00 practices, the Bank’s Code of Conduct, Personnel with Loss of Title, Dismissal. Dismissal is applied in Teknolojisi ve Tic.T.AŞ Communique or other notices, procedures the following cases: and communiques, are identified, the role of 2 Garanti Ödeme İstanbul/Turkey 99.96 100.00 the Committee is to investigate such acts and »Any gross violation of Code of Conduct and Sistemleri AŞ practices on its own authority (or requesting such Ethical Sales Principles, investigation from the Internal Audit Department) and carrying out appropriate administrative »Activities that harm the Bank’s commercial 3 Garanti Hizmet İstanbul/Turkey 96.40 99.40 sanctions as set out in the Personnel Communique. identity and reputation, Yönetimi AŞ

The Committee is responsible for: »Providing or attempting to provide unfair financial benefits to her/himself, relatives or third parties 4 Garanti Kültür AŞ İstanbul/Turkey 100.00 100.00 »ensuring that employees are committed to the Code of Conduct in their acts and actions; carrying out »Causing significant losses to the Bank as a result 5 Garanti Konut İstanbul/Turkey 100.00 100.00 oversight duties with respect to such commitment; of misconduct in his/her duties and conduct, Finansmanı Danış. acting as the advocate of the Code of Conduct across Hiz.AŞ the Bank and with respect to its employees. »Committing any activities considered crimes by the Turkish Criminal Law and the Turkish Banking »taking precautions with respect to all acts and Law (document forgery, malfeasance of security as 6 Garanti Finansal İstanbul/Turkey 100.00 100.00 practices that may lead to the Bank’s reputation a result of services, fraud, thievery, etc.). Kiralama AŞ and image being harmed in view of laws, public opinion and customers and announcing such 7 Garanti Faktoring Hiz.AŞ İstanbul/Turkey 81.84 81.84 precautionary measures throughout the Bank.

»ensuring that appropriate measures are taken 8 Garanti Yatırım Menkul İstanbul/Turkey 100.00 100.00 by relevant departments to eliminate systematic Kıymetler AŞ problems or flaws in work flow processes or general practices, which are observed in the cases that are on its agenda; directing relevant 9 Garanti Portföy İstanbul/Turkey 100.00 100.00 subsidiaries and monitoring the measures taken. Yönetimi AŞ

10 Garanti Emeklilik ve İstanbul/Turkey 84.91 84.91 Sanctions Process Hayat AŞ

The Bank’s Sanctions Process, including the roles and responsibilities, is explained in detail within 11 Garanti Bank Amsterdam/The 100.00 100.00 the Personnel Communiqué and communicated to International NV Netherlands employees through intranet. 12 Garanti Bank Moscow Moscow/Russia 99.94 100.00 Any individual violating the Bank’s rules or bringing the Bank into disrepute would be subject to disciplinary action regardless of whether their 13 Garanti Holding B.V. Amsterdam/The 100..00 100.00 acts resulted in financial loss to the Bank. Netherlands

156 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 157 APPENDIX 9: CLIMATE CHANGE POSITION STATEMENT AND ACTION PLAN

The increasing impact of climate change necessitates »We apply our own shadow carbon price in »requiring the annual reporting of GHG the timely transition to a low carbon economy. This evaluating the economics of all greenfield/ III. Green Office Standards emissions publicly based on the host-country’s urgency is reflected in the efforts of policy-makers, brownfield fossil fuel40 based and renewable regulational GHG reporting guidelines. the needs of our clients and priorities of society. energy production investments in our project In addition to our leading position in sustainable finance activities. energy financing, we are committed to take action to further enhance our contribution to For this reason, Garanti believes that climate II. Reduction of Deforestation change is a strategic issue that merits full »If the host country already implements an environmental sustainability by making progress integration with all business processes and emissions trading scheme (both voluntary and on the following areas: Forests are vital for life, home to millions of species, decision-making mechanisms. regulatory) or a carbon tax, then we use the actual they protect soil from erosion, produce oxygen, store price for carbon. If not, we use a fixed price per ton carbon dioxide, and help control climate. »100% of our employees in Turkey are working at Garanti has acknowledged that the main climate of CO2e emitted. The price is determined taking change risks and opportunities lie with the into consideration the market dynamics and is IS014001 certified buildings. Thus each office sets Therefore, we are taking the following measures to downstream impacts arising from financing reviewed by the Sustainability Team on a regular its own GHG emission target. help control deforestation. activities. Nevertheless, Garanti is also managing basis and updated when necessary. »Garanti has been the first bank in Turkey to its climate related risks in its office buildings and receive a Green Office Diploma from WWF Turkey »As per our Environmental and Social Loan upstream activities, i.e. supply chain. »As a pioneer in financing renewable energy and is committed to increase the number of offices Policies, we are not involved in the financing of projects and being by far the largest lender for having the Diploma moving forward. forestry activities which cannot be sustainably The following principles are the cornerstones of how we wind projects in Turkey, setting a carbon pricing managed without implementing any monetary limit. integrate climate change to the way we do business. scheme will allow us to further prioritize renewable »Garanti is building its Pendik Technology Campus investments. As a result, we expect that a minimum under LEED Gold criteria. According to the US »Furthermore, when financing greenfield investments of 60% of the total funds allocated to greenfield Green Building Council, LEED buildings typically above a certain monetary threshold and a risk rating energy production facilities will be directed to save 18-39% of total energy use than comparable I. Putting a ‘shadow’ price on carbon which are set and reviewed by our Sustainability renewable investments. With the current 50% buildings. Garanti is also working on a project Committee, we conduct a detailed due diligence The phrase “put a price on carbon” has become renewable investments ratio, this means an in order to certify its Zincirlikuyu Head Office about the impacts of the projects on deforestation increasingly common as discussions of how to increase of at least 10% compared to BaU as of according to LEED criteria for existing buildings. and ask for measures to minimize the impacts if address climate change move from concern to action. December, 2014. there are any, where applicable and necessary. »Garanti sets GHG emissions reduction targets and Despite the difficulties in determining the cost of »For the rest, we will implement our Environmental submits its annual progress report to CDP each »Additionally, for projects that are subject to our carbon in the absence of a regulatory framework, and Social Impact Assessment System including year. By the end of 2015, our target is to reduce Environmental and Social Impact Assessment Model; Garanti has been utilizing a fixed ‘forestation’ fee the following principles, allowing us to ensure our Scope 1 and Scope 2 emissions by 5% per »We make sure that the borrowers make every for carbon-intensive projects in order to reflect the highest environmental standards in thermal power total assets under management compared to 2014 effort to mitigate deforestation effects. In cost of carbon in project financing. However, we plants; emissions. projects where these effects cannot be avoided, are now enhancing our approach to better reflect we ask the borrowers to plant 4 to 541 trees per the global trend on carbon pricing among the »implementation of BAT where applicable, to »Garanti is also targeting to increase the number of each tree to be cut. private sector and to further increase the share of ensure minimum GHG emissions; supplier contracts which include specific provisions low-carbon investments in our loan portfolio. regarding compliance with Garanti Bank’s »If the Project is a greenfield fossil fuel based power The principles below explain our new carbon »setting emission limits for sulfur dioxide, Environmental Management System. plant, we require the borrowers to plant one tree pricing scheme in order to build on existing efforts nitrogen oxides, and dust based on EU per 10 MWh annual gross energy production for at about putting a shadow price on carbon. standards; »Garanti has been implementing an internal least 10 years after commissioning.42 communications strategy and training program for sustainability since 2012, and enables all employees

40. For a 20-year time horizon, Well to Tank (WTT) carbon footprint of shale gas and natural gas should also be taken into consideration, especially in a scenario where pre-production emissions are not captured and flared. As a result, we apply a carbon price 41. The exact number is determined depending on the environmental and social risk level of the Project. to those power plants, besides coal fired power plants and we take into consideration the upstream emissions in all our calculations. 42. The number of trees to be planted for a coal fired production facility with a total installed capacity of 1,230 MW is 9.5 million.

158 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 159 to submit recommendations about increasing »Impact on surface water: During the construction the environmental performance of the Bank’s and operation phases of hydroelectric power plant operations. These programs allow us to embed projects, adverse changes to flow rate, drainage APPENDIX 10: UNGC AND sustainable practices such as energy savings in our and flow are assessed. Preventive measures are employees’ daily life. requested for occurrences such as flow direction and flow rate changes, excavation in the water WEPS PRINCIPLES ANALYSIS IV. Adaptation to Climate Change: source, dredging and sediment accumulation due to possible adverse downstream effects. Mitigation of Water Risks AGAINST GRI G4 CONTENT »Water quality: Effluent water should be treated Impact on water cycle will be one of the major in treatment facilities. Furthermore, treatment consequences of climate change in Turkey. systems should comply with discharge limits. For example, individual regions (e.g., those prone to flooding or that experience climate change- »Sector-based criteria: Each sector can have A. UN Global Compact Principles Linkage to GRI Content43 led severe weather) and entire sectors of the different effects on water sources in terms of economy (those unable to transition to a low consumption and quality. Accordingly, Garanti carbon business model or dependent on stable Bank has developed specific provisions in its GRI G4 weather patterns, such as agriculture) could suffer Sectoral Principles and monitors and manages UNGC Requirements – Active Level Disclosures Page References significant loss of income. project impacts based on these principles. In order to manage our indirect water footprint, In addition, Garanti Bank is supporting CDP Water. we ensure, request and monitor that appropriate The Program was launched in Turkey with Garanti High-level Commitment G4-1 Message from the CEO, measures are taken to minimize environmental as the main sponsor in 2015. Through extending its and Strategy page 16 impacts and to reduce the consumption of water support for CDP Water, Garanti Bank aims to help and other resources, ensure recycling is undertaken increase building the capacity of private sector Governance G4-1 Message from the CEO, and that negative impacts on water quality are in Turkey, especially large corporates, about the page 16 minimized. business risks associated to water.

The following criteria are being considered in Stakeholder Engagement G4-24; G4-25; Focusing on Stakeholders, financing greenfield investments: Responsibility for this Declaration: G4-26; G4-27 page 36. Focusing on Corporate The Sustainability Committee is responsible for »Choice of location and project area: Location of Sustainability Governance, approving and putting into effect this declaration, the project with respect to protected areas under Table 5, page 55. its amendment and improvement. international or national regulations, important water sources, shores and ground water operations Describe Practical Actions G4 Disclosures on GRI G4 Content Index. are assessed. Projects located in RAMSAR areas Management Approach are not financed by Garanti Bank. Furthermore, (DMA) if the project location is found to be in close proximity to residential areas, sensitive wetlands, protected areas and the like, re-locating the project Disclose Results and Outcomes GRI G4 Content Index. GRI G4 Content Index. may be requested.

»Current properties of water: Prior to commencement of construction works, studies to measure and assess the quality and properties of water in the project location are requested. Based on the finding of these studies, preventive and/or minimization measures regarding project impact are implemented.

»Impact on ground water: Negative impacts of projects on ground water during the construction and operation phases are assessed. In case of any negative impact, use of alternative water sources would be considered. 43. https://www.globalreporting.org/resourcelibrary/UNGC-G4-linkage-publication.pdf

160 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 161 GRI G4 Page 44 UNGC Four Issue Areas Disclosures References B. WEPs Reporting on Progress Linkage to GRI Content

G4-HR2; G4-HR7; G4- GRI G4 Content Index. HR9; G4-HR12; G4-SO1; Focusing on Customers G4-SO2 through Sustainable WEPs GRI G4 Disclosures Finance, page 64. Human Rights Principle 1 – Leadership Promotes Gender Equality G4-38; G4-40 G4-HR1 GRI G4 Content Index. Focusing on Customers through Sustainable Principle 2 – Equal Opportunity, Inclusion & Non-discrimination G4-LA1; G4-LA12; G4-LA13; G4-EC5; Finance, page 64. G4-LA3; G4-HR3

G4-11; G4-HR4; G4-LA4 GRI G4 Content Index. Principle 3 – Health, Safety and Freedom from Violence G4-HR3; G4-LA6 Focusing on Human Resources, page 112. Labour Principle 4 – Education and Training G4-LA9; G4-LA11 G4-10; G4-EC5; G4-EC6; GRI G4 Content Index. G4-LA1; G4-LA3; G4- Focusing on Customers Principle 5 – Enterprise Development, Supply Chain G4-DMA LA9; G4-LA11; G4-LA12; through Sustainable and Marketing Practices G4-LA13; G4-HR3 Finance, page 64.

Principle 6 – Community Leadership and Engagement G4-SO1 G4-EC2; G4-EN3; G4- GRI G4 Content Index. EN15; G4-EN16; G4- Focusing on Managing EN17; G4-EN20; G4- Environmental Impact Principle 7 – Measure and publicly report on gender G4-DMA EN21; G4-EN27; G4-EN31 of Operations, page equality 96; Focusing on Corporate Sustainability Governance, page 44.

Environment G4-EN3- G4-EN33 All Focusing on Managing GRI-EN Indicators) Environmental Impact of Operations, page 96; Focusing on Corporate Sustainability Governance, page 44.

G4-EN6; G4-EN7; G4- Focusing on Managing EN19; G4-EN27; G4-EN31 Environmental Impact of Operations, page 96.

Anti-Corruption G4-56; G4-57; G4-58; Policies and Principles, G4-SO3; G4-SO4; G4- page 47; Focusing on SO5 Corporate Sustainability Governance section, Code of Conduct, page 48; Focusing on Customers through Sustainable Finance, page 64. 44. http://weİlkes.org/files/attachments/WEPs_Reporting_Guidance_G4_Sept2014pdf.pdf

162 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 163 GRI G4 CONTENT INDEX

Garanti Sustainability 2015 Report 165 G4 GENERAL STANDARD DISCLOSURES

G4 General G4 General Standard External Standard External Dısclosures Description Page Omissions Assurance Dısclosures Description Page Omissions Assurance

STRATEGY AND ANALYSIS ORGANIZATIONAL PROFILE

G4-1 Statement from the most Message from the CEO - No G4-3 Name of the organization. Index. T.C. Garanti - No senior decision-maker of page 16 Bankası A.Ş. the organization about the relevance of sustainability to the organization and the G4-4 Primary brands, products, and/ Garanti in Brief, page 20. - No organization’s strategy for or services. Please also see: addressing sustainability. http://www.garanti.com. tr/en/our_company/ G4-2 Description of key impacts, Message from the CEO, - No about_us.page? risks and opportunities. page 16; Garanti in brief, page 20. G4-5 Location of organization’s G4 Index only. - No Please see pages 126 headquarters. Nispetiye Mah. Aytar to 129 of the 2015 Cad. No: 2, 34340 Annual Report to find Levent-İstanbul more information on the Management of Market Risk, Interest G4-6 Number of countries where the Turkey. - No Rate Risk Resulting organization operates. Garanti Bank operates from the Banking Book, in Turkey and serves Liquidity Risk, Credit through international Risk, Operational Risk, subsidiaries in the Reputational Risk and Netherlands, Russia and Other Risks: Romania.

https://www. Garanti in Brief, page 20. garantiinvestorrelations. com/en/images/pdf/ Please also see Garanti-Bank-2015- Annual-Report.pdf http://www.garanti.com. tr/en/our_company/ investor_relations/ corporate_information/ subsidiaries.page

166 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 167 G4 General G4 General Standard External Standard External Dısclosures Description Page Omissions Assurance Dısclosures Description Page Omissions Assurance

ORGANIZATIONAL PROFILE ORGANIZATIONAL PROFILE

G4-7 Nature of ownership and legal T. Garanti Bankası A.Ş. - No G4-10 Number of employees by Focusing on Human - No form. was established in Turkey employment contract, region Resources, page 114. by the decree of Council and gender. of Ministers numbered 3/4010 dated 11 April 1946 and its “Articles of G4-11 Percentage of total employees G4 Index only. Garanti - No Association” was issued covered by collective Bank respects the in the Official Gazette bargaining agreements. constitutional right to dated 25 April 1946. With become a union member an actual free float ratio and for collective of 50,02%, Garanti Bank’s bargaining. All employees shares are traded on the are free to act of their Borsa Istanbul (BIST) own free will with respect under the “GARAN” ticker to union membership. as of December 31, 2015. Garanti in Brief page 20. G4-12 Organization’s supply chain. Supply Chain - No Management, on page 101; Focusing on managing G4-8 Markets served. Garanti in Brief, page 20. - No Environmental Impact Please also see: of Operations section, page 98. http://www.garanti.com. tr/en/our_company/ about_us.page? G4-13 Significant changes during the G4 Index only. Garanti Bank - No reporting period regarding is a large company with size, structure, form of extensive operations there G4-9 Scale of the reporting ‘Garanti in brief’, page - No ownership and supply chain. were still some changes organization. 20. In addition, Garanti affecting the Bank’s size Bank’s financial and in terms of number of operational performance physical locations as well is available on pages 18 as organizational changes to 19 of the 2015 Annual to management that are Report: detailed on pages 252 and 114 of the 2015 Annual https://www. Report respectively. garantiinvestorrelations. com/en/images/pdf/ (https://www. Garanti-Bank-2015- garantiinvestorrelations. Annual-Report.pdf com/tr/images/pdf/ Garanti-Bankasi-2015- Faaliyet-Raporu.pdf)

168 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 169 G4 General G4 General Standard External Standard External Dısclosures Description Page Omissions Assurance Dısclosures Description Page Omissions Assurance

ORGANIZATIONAL PROFILE IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-14 Explanation of Focusing on Corporate - No G4-17 (a) List all entities included in G4 Index only. Unless - No whether and how Sustainability Governance section, the organization’s consolidated stated otherwise, this the precautionary page 46. Additionally, the pre- financial statements or Report focuses on the principle is addressed cautionary principle applies in all equivalent documents. operations of Türkiye by the organization. our business operations. Garanti Garanti Bankası A.Ş. Bank supports the precautionary (b) Entities included in the only. The boundary for principle under the UNGC. organization’s consolidated the Specific Standard Consistent with that principle, financial statements or Disclosures in this Garanti Bank implements a risk- equivalent documents are not Report such as for the based approach to its operations covered by the report. sections on the Bank’s through extensive management GHG Emissions is Türkiye systems. Garanti Bankası A.Ş. plus the following subsidiaries: Garanti Mortgage, Garanti G4-15 Externally developed Garanti Bank adopts various - No Payment Systems and economic, reporting initiatives and works Garanti Technology. environmental and in cooperation with a number The other subsidiaries social charters, of organizations with the aim of listed in Garanti’s investor principles, or other improving the reporting of the relations’ website initiatives, to which environmental and the social the organization impacts of its activities, and to (https://www. subscribes or which it promote communication with garantiinvestorrelations. endorses. other stakeholders. The initiatives com/en/about- we subscribe to are listed garanti/detay/ on page 43 with the date of Garantis-Integrated- adoption included in parenthesis. Subsidiaries/18/27/0) These are internationally adopted initiatives which have been The economic indicator developed with the participation data in this report of a wide range of stakeholders. covers all the Garanti However, Garanti was not entities covered by the involved in the development consolidated financial process of any of these initiatives statements reported in and we are not able to comment the 2015 Annual Report. in detail. See Focusing on Presented on page 221 Stakeholders section, page 38. of 2015 Annual Report and the list of integrated G4-16 Memberships of National and International - No subsidiaries presented in associations (such as Memberships, page 42. Appendix 8 of this report. industry associations) and national or G4-18 (a) Process for defining the report Approach to Materiality - No international content and Aspect Boundaries. section, page 44. advocacy organizations. (b) How the organization has

implemented the Reporting Principles for Defining Report Content.

170 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 171 G4 General G4 General Standard External Standard External Dısclosures Description Page Omissions Assurance Dısclosures Description Page Omissions Assurance

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-19 (a) List of all the material Garanti Bank July 1, 2012 - No G4-22 (a) The effect of any There have been - No Aspects identified in the – December 31, 2013 restatements of information restatements due process for defining report Sustainability Report, provided in previous reports, to improvements in content. Appendix-9. and the reasons for such the quality of the restatements. measurement methods http://www.garanti. used to calculate certain com.tr/proxy/novaform/ environmental data. press-room?file=/ assets/pdf/en/ These restatements affect other/sustainability_ prior year data in the report_07.2012_12.2013. report. Restated data is pdf highlighted on Table 9 on page 73, Table 23 on page 104 and table on Garanti’s G4-20 (a) Materiality of Aspects Garanti Bank July 1, 2012 - No Sustainability-related within the organization. – December 31, 2013 indicators (Corporate Sustainability Report, Governance and Appendix-9. Economic), on page 36.

http://www.garanti. com.tr/proxy/novaform/ G4-23 a) Significant changes in the G4 Index only. There - No press-room?file=/ Scope and Aspect Boundaries. have been no significant assets/pdf/en/ changes in scope or other/sustainability_ aspect boundaries from report_07.2012_12.2013. the previous reporting pdf period.

G4-21 (a) Materiality of Aspects Garanti Bank July 1, 2012 - No outside the organization. – December 31, 2013 Sustainability Report, Appendix-9.

http://www.garanti. com.tr/proxy/novaform/ press-room?file=/ assets/pdf/en/ other/sustainability_ report_07.2012_12.2013. pdf

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STAKEHOLDER ENGAGEMENT REPORT PROFILE

G4-24 (a) List of stakeholder groups Focusing on - No G4-28 Reporting period. G4 Index only. This - No engaged by the organization. Stakeholders , page 38. Sustainability Report covers the 12-month period from January 1, 2015 to G4-25 (a) Basis for identification and Focusing on - No December 31, 2015. selection of stakeholders with Stakeholders , page 38. whom to engage. G4-29 Date of the most recent G4 Index only. The previous - No previous report. Sustainability Report G4-26 (a) Organization’s approach to Focusing on - No covers the 12-month period stakeholder engagement. Stakeholders , page 38. from December 1, 2014 to December 31, 2014. G4-27 (a) Key topics and concerns Focusing on Corporate - No that have been raised through Sustainability G4-30 Reporting cycle. First sustainability report - No stakeholder engagement, Governance, Table 5, covers 18-month period. and how the organization page 57. Based on 2014 calendar has responded to those key year, Garanti switch to topics and concerns, including 12-month period. through its reporting. 20-21

G4-31 Contact point for questions. Project Finance - No and Sustainability Department, Sustainability Team, Ms. Derya Özet Yalgı, Phone: +90 212 318 13 87, e-mail: [email protected].

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

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REPORT PROFILE GOVERNANCE

G4-33 The organization’s policy and G4 Index only. Although - No G4-34 Governance structure of the Focusing on Corporate - No current practice with regard to Garanti Bank has not organization. Sustainability seeking external assurance for obtained external Governance, page 46. the report. assurance of the full report, the Bank has obtained Limited G4-35 The process for delegating Sustainability - No Assurance on its Scope authority for sustainability Committee, Corporate 1 and 2 GHG Emissions topics Governance section, for calendar year 2015 page 56. for the third time, and its renewable energy G4-36 Executive-level positions with Sustainability - No portfolio, energy responsibility for sustainability Committee, Corporate consumption, water topics Governance section, consumption and ESIAM page 56. data for the first time. In addition, all significant sustainability data G4-37 Processes for consultation Sustainability - No appearing in this report between stakeholders and the Committee, Corporate was subjected to our highest governance body Governance section, comprehensive internal page 56. metrics systems through which we employ a G4-38 Composition of the highest Focusing on Corporate - No variety of internal and governance body and its Sustainability external processes to committees Governance, Table 3, bring assurance that page 47. our operations are transparent and the Please also see pages information we report 105 to 123 of the 2015 is accurate and truly Annual Report at: reflective of our actual results. Garanti Bank’s https://www. financial performance garantiinvestorrelations. is independently com/en/images/pdf/ audited and some of the Garanti-Bank-2015- indicators presented in Annual-Report.pdf this report are checked by periodical audits.

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GOVERNANCE GOVERNANCE

G4-39 Position of the chair of the Focusing on Corporate - No G4-43 Measures taken to enhance the Focusing on Corporate - No board of directors Sustainability Governance Board of Directors’ collective Sustainability page 44. The Chairman knowledge of sustainability Governance, page 46. of the Board of Directors topics does not carry any executive duties. For further information G4-44 Evaluating board performance Focusing on Corporate - No please see Corporate with respects to sustainability Sustainability Governance Governance section topics page 46. Please see page pages of the 2015 Annual 123 of the 2015 Annual Report. Report at: https://www. G4-40 Nomination and selection Garanti Bank’s Corporate - No garantiinvestorrelations. processes for the highest Governance Structure, com/en/images/pdf/ governance body and its pages 105 to 123 of the Garanti-Bank-2015- committees 2015 Annual Report. Annual-Report.pdf

G4-45 The role of Board of Directors Focusing on Corporate - No G4-41 Avoiding conflicts of interest Focusing on Corporate - No in the identification and Sustainability Sustainability management of economic, Governance, page 46. Governance page 46, environmental and social Corporate Governance impacts, risks and opportunities Section of the Annual Report 2015 pages 105 G4-46 The highest governance Focusing on Corporate - No to 123. body’s role in reviewing Sustainability Governance the effectiveness of section, Sustainability G4-42 The role of the highest Focusing on Corporate - No the organization’s risk committee, page 56. governance body and senior Sustainability management processes for executives in setting purpose, Governance page 46, economic, environmental and values and strategy Corporate Governance social topics. Section of the Annual Report 2015 pages 105 G4-47 The frequency of the highest Focusing on Corporate - No to 123. governance body’s review Sustainability Governance of economic, environmental section, Sustainability and social impacts, risks, and committee, page 56. opportunities.

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GOVERNANCE GOVERNANCE

G4-48 The highest committee or Focusing on Corporate - No G4-54 Ratio of the annual total - We are not able to No position to formally approve Sustainability Governance compensation for the declare this data since this report and its materiality section, Sustainability organization’s highest paid it is not a business review Committee, page 56. individual to the median norm in the markets annual total compensation where we operate and is commercially sensitive. G4-49 Process for communicating Focusing on Corporate - No critical concerns to the highest Sustainability Governance governance body section, Sustainability G4-55 Ratio of percentage increase - We are not able to No Committee, page 56. with regards to G4-54 declare this data since it is not a business norm in the markets G4-50 Nature and number of critical Focusing on Corporate - No where we operate and is concerns communicated to the Sustainability Governance commercially sensitive. highest governance body section, Sustainability Committee, page 56.

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

G4-52 Process for determining Focusing on Corporate - No remuneration Sustainability Governance, page 46; Corporate Governance Section of the Annual Report 2015 pages 105 to 123

G4-53 Inclusiveness of stakeholders’ Focusing on - No views regarding remuneration Stakeholders, page 38; Focusing on Corporate Sustainability Governance, page 46.

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ETHICS AND INTEGRITY External G4-56 The organization’s values, Policies and Principles, - No Aspect DMA/ G4 Indicator Page Omissions Assurance principles, standards and norms page 49; Focusing on of behavior, such as codes of Corporate Sustainability ECONOMIC conduct and codes of ethics. Governance, section, Code of Conduct. Economic DMA - Focusing on Customers - No Performance through Sustainable http://www. Finance, page 66; garantiinvestorrelations. Focusing on Corporate com/en/images/pdf/ Sustainability Garanti_Bank_Ethical_ Governance, page 46. Principles.pdf

G4-57 Internal and external Policies and Principles, - No Economic G4-EC1 Direct economic Annual Report 2015, - No mechanisms for seeking advice page 49; Focusing on Performance value generated and Section 6 Consolidated on ethical and lawful behavior. Corporate Sustainability distributed Financial Report, pages Governance, section, 250 to 350. Code of Conduct.

http://www. Economic G4-EC2 Risks and opportunities Index. Garanti’s efforts - No garantiinvestorrelations. Performance due to climate change to manage climate com/en/images/pdf/ change related risks Garanti_Bank_Ethical_ and opportunities can Principles.pdf be classified into two categories,

- Asset level risks and G4-58 Internal and external Policies and Principles, - No opportunities which mechanisms for reporting page 49; Focusing on are associated with concerns about unethical or Corporate Sustainability the loan portfolio and unlawful behavior. Governance, section, company level risks and Code of Conduct. opportunities; http://www. garantiinvestorrelations. - Risks and opportunities com/en/images/pdf/ which are related to the Garanti_Bank_Ethical_ physical infrastructure Principles.pdf and the human resources of the Bank.

Economic G4-EC3 Coverage of defined Detailed information is - No Performance benefit plan obligations given at pages 266-267 of the 2015 Annual Report at:

https://www. garantiinvestorrelations. com/en/images/pdf/ Garanti-Bank-2015- Annual-Report.pdf

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ECONOMIC ECONOMIC

Economic G4-EC4 Financial assistance from G4 Index only. Garanti - No Indirect DMA - Focusing on - No Performance government bank did not receive any Economic Customers through financial assistance from İmpacts Sustainable Finance, Government during the page 66; Focusing reporting period. on Corporate Sustainability Governance, page 46. Market DMA - Focusing on Customers - No Presence through Sustainable Finance, page 66; Indirect G4-EC7 Development and Focusing on - No Focusing on Corporate Economic impact of infrastructure Customers through Sustainability İmpacts investments and Sustainable Finance, Governance, page 46. services supported page 66.

Economic G4-EC5 Entry level wage by G4 Index only. All Garanti - No Indirect G4-EC8 Significant indirect Focusing on - No Performance gender compared to bank staff is paid more Economic economic impacts Customers through minimum wage than the minimum wage. İmpacts Sustainable Finance, page 66; Focusing on Communities, page 129. Economic G4-EC6 Local hiring G4 Index only. The - No Performance senior management including the CEO, EVPs Procurement DMA - Supply Chain - No and Coordinators is Practices Management Turkish. By doing this the section, page 101; Bank is better able to Environmental understand and serve an Management System, increasingly wide range page 98. of customers across Turkey. In Garanti’s overseas operations, Procurement G4-EC9 Spending on local Supply Chain - No local talent is also hired Practices suppliers Management section, at various levels of the page 101; Focusing organizations. on Managing Environmental Impact of Operations, page 98.

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ENVIRONMENTAL ENVIRONMENTAL

Energy DMA - Focusing on - Energy G4-EN6 Reduction of energy Focusing on Managing - No Managing consumption Environmental Impact Environmental of Operations, page 98. Impact of Operations, page 98; Focusing Energy G4-EN7 Reductions in energy Focusing on Managing - No on Corporate requirements of Environmental Impact Sustainability products and services of Operations, page 98. Governance, page 46.

Emissions DMA - Focusing on Managing - Energy G4-EN3 Energy consumption Focusing on Managing - Yes Environmental within the organization Environmental Impact Impact of Operations, of Operations, page 98. page 96; Focusing on Corporate Energy G4-EN4 Energy consumption Focusing on Managing - No Sustainability outside the Environmental Impact Governance, page 46 organization of Operations, page 98.

Emissions G4-EN15 Direct greenhouse Focusing on Managing - Yes Energy G4-EN5 Energy intensity *Includes Diesel, - No gas (GHG) emissions Environmental Impact Natural Gas, Lignite, (scope 1) of Operations, page 98. Diesel (mobile), Gasoline (mobile), Electricity within Emissions G4-EN16 Energy indirect Focusing on Managing - Yes Garanti Bank greenhouse gas (GHG) Environmental Impact facilities in Turkey, emissions (scope 2) of Operations, page 98. Garanti Mortgage, Garanti Payment Emissions G4-EN17 Other indirect Focusing on Managing - No Systems and Garanti greenhouse gas Environmental Impact Technology (GHG) emissions of Operations, page 98. (scope 3) ** includes Garanti Bank facilities in Turkey, Garanti Emissions G4-EN18 Greenhouse gas Focusing on Managing - No Mortgage, Garanti (GHG) emissions Environmental Impact Payment Systems intensity of Operations, page 98. and Garanti Technology Emissions G4-EN19 Reduction of Focusing on Managing - No greenhouse gas Environmental Impact (GHG) emissions of Operations, page 98.

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ENVIRONMENTAL ENVIRONMENTAL

Emissions G4-EN20 Emissions of ozone- Focusing on Managing - No Products G4-EN28 Percentage of - G4 Index only. No depleting substances Environmental Impact and products sold and This indicator is (ODS) of Operations, page 98. Services their packaging not material to materials that are the Bank since reclaimed by category in the course of Emissions G4-EN21 NO , SO , and - G4 Index No x x its operations other significant air only. Garanti it does not emissions Bank does not produce report on this significant indicator as amounts of the disclosure packaging is not material materials. to its business because the Bank’s business Environmental DMA - Focusing on Customers - No activities and Compliance through Sustainable operations do Finance, page 66; not generate Focusing on Managing significant Environmental Impact emissions of Operations, page 98; of these Focusing on Corporate substances. Sustainability Governance, page 46. Products DMA - Focusing on - No and Customers through Environmental G4-EN29 Fines and sanctions G4 Index only. There - No Services Sustainable finance, Compliance for non-compliance have not been any page 64; Focusing with environmental significant fines or on Corporate regulations incidents of non- Sustainability compliance with Governance, page 46. environmental laws and regulations during the reporting period. Products G4-EN27 Mitigation of Focusing on - No and environmental Customers through Services impacts of products Sustainable finance, Transport DMA - Focusing on Managing - No and services page 64; Focusing Environmental Impact on Corporate of Operations, page 98. Sustainability Governance, page 46. Transport G4-EN30 Significant Focusing on Managing - No environmental impacts Environmental Impact of transportation of Operations, page 96; Material Aspects and Boundaries, page 44.

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ENVIRONMENTAL SOCIAL: LABOR PRACTICES AND DECENT WORK

Overall DMA - Focusing on Customers - No Employment DMA - Focusing on Human - No through Sustainable Resources, page 114. finance, page 66; Focusing on Managing Environmental Impact Employment G4-LA1 New employee Focusing on Human - No of Operations, page 96; hires and employee Resources, page 114. Focusing on Corporate turnover Sustainability Governance, page 46. Employment G4-LA2 Benefits provided to Focusing on Human - No full-time employees Resources, page 114. that are not provided Overall G4-EN31 Environmental Focusing on Managing - No to temporary or part expenditures and Environmental Impact time employees investments of Operations, page 98.

Supplier DMA - Focusing on Managing - No Environmental Environmental Impact Employment G4-LA3 Return to work and Focusing on Human - No Assessment of Operations, page 98. retention rates after Resources, page 114. parental leave

Supplier G4-EN32 Percentage of new Supply Chain - No Labor/ DMA - Focusing on Human - No Environmental suppliers that were Management, page 101; Management Resources, page Assessment screened using Focusing on Managing Relations 114; Focusing environmental criteria Environmental Impact on Corporate of Operations, page 98. Sustainability Governance, page 46. Supplier G4-EN33 Significant actual and Focusing on - No Environmental potential negative Customers through Labor/ G4-LA4 Minimum notice Focusing on Human - No Assessment environmental Sustainable finance, Management periods regarding Resources, page impacts inthe supply page 66; Material Relations operational changes 114. Garanti Bank chain Aspects and makes every effort to Boundaries, page 46. avoid redundancies. Whenever restructuring and/ or redeployment are unavoidable however, the Bank’s processes and guidelines seek to minimize the impact on those who may be affected.

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SOCIAL: LABOUR PRACTICES AND DECENT WORK SOCIAL: LABOUR PRACTICES AND DECENT WORK

Occupational DMA - Focusing on Human - No Occupational G4-LA7 Workers with high Index. None of our - No Health and Resources, page Health and incidence or high risk employees are subject Safety 114; Focusing Safety of diseases related to to a high risk of any on Corporate their occupation serious diseases Sustainability from the Bank’s Governance, page 46. occupational activities. Our Bank’s intranet Occupational G4-LA5 Percentage of Focusing on Human - No contains readily Health and workforce represented Resources, page 114. accessible information Safety in formal joint that is useful in dealing management–worker with a variety of health and safety subjects such as how committees to cope with the flu.

Occupational G4-LA6 Type of injury and In the reporting - No Occupational G4_LA8 Health and safety G4 Index only. As per - No Health and rates of injury, period, there were Health and topics covered in relevant regulations, Safety occupational diseases, 124 work-related Safety formal agreements all employees are lost days, and incidents of injury; with trade unions required to notify their absenteeism, and and no work-related employer upon their total number of work- incidents of death. becoming a member related fatalities, by There were not of a union. The region and by gender any work-related number of employees diseases. The total who had made such lost days data is notification at the collected on the basis beginning of the of medical reports of reporting period was sickness leave and zero and no such injuries. notification has been made to Garanti Bank The number of total during the reporting lost days is reported period. on page 120. Learning and DMA - Focusing on Human - No Development Resources, page 114; Focusing on Corporate Sustainability Governance, page 46.

Learning and G4_LA9 Average hours of Focusing on Human - No Development training per year per Resources, page 98. employee by gender, and by employee category.

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SOCIAL: LABOUR PRACTICES AND DECENT WORK SOCIAL: LABOUR PRACTICES AND DECENT WORK

Learning and G4-LA10 Programs for skills G4 Index only. - No Equal DMA - Focusing on Human - No Development management and When employees Remuneration Resources, page lifelong learning that join Garanti Bank, for Women 112; Focusing support the continued they automatically and Men on Corporate employability of become members Sustainability employees and assist of the ‘T. Garanti Governance, page 44. them in managing Bankası A.Ş. Memur career endings ve Müstahdemleri Equal G4-LA13 Ratio of basic salary Garanti Bank’s - No Emekli ve Yardım Remuneration and remuneration of compensation Sandığı Vakfı’ for Women women to men system is totally (Garanti Bank and Men gender-neutral and Pension Fund based entirely on Foundation), which performance. Salary was founded in variations result from accordance with relative experience temporary article levels of employees. no. 20 of the Social For instance, upper Securities Law no. level male managers 506. have approximately 15% longer Learning and G4-LA11 Percentage of Focusing on Human - No experience than Development employees receiving Resources, page 114. upper level female regular performance managers. and career development reviews, by gender and by Labor DMA - Focusing on Human - No employee category Practices Resources, page Grievance 114, Focusing Diversity DMA - Focusing on Human - No Mechanisms on Corporate and Equal Resources, page Sustainability Opportunity 114; Focusing Governance, page 46. on Corporate Sustainability Governance, page 46. Labor G4-LA16 Grievances about labor Focusing on Human - No Practices practices through Resources, page 114. Grievance Formal grievance No complaints were Diversity G4-LA12 Composition of Focusing on - No Mechanisms mechanisms lodged on any matter and Equal governance bodies Human Resources, pertaining to labor Opportunity and employee page 114; Focusing practices during the breakdown on Corporate reporting period. Sustainability Governance, page 46.

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SOCIAL: HUMAN RIGHTS SOCIAL: HUMAN RIGHTS

Investment DMA - Focusing on Customers - No Non- DMA - Focusing on Human - No through Sustainable discrimination Resources, page Finance, page 66. 114, Focusing on Corporate Sustainability Investment G4-HR1 Human rights 100% of all - No Governance, page 46. screening or significant clauses included in investment significant investment agreements are Non- G4-HR3 Actions taken Index. There were - No agreements assessed using discrimination in incidents of no incidents of the Bank’s E&S discrimination discrimination Impact Assessment reported during the Process that covers reporting period. human rights issues. Focusing on Customers through Freedom of DMA - Focusing on Human - No Sustainable Finance, Association Resources, page page 66. and Collective 114, Focusing Bargaining on Corporate Sustainability Investment G4-HR2 Employee training on G4 Index only. - No Governance, page 46. human rights Although no training was delivered that specifically focused Freedom of G4-HR4 Supporting right G4 Index only. - No on Human Rights, Association to freedom of Garanti Bank respects the Bank does and Collective association and the constitutional provide numerous Bargaining collective bargaining right regarding sustainability trainings in risk areas unionization and to all its personnel that collective labor incorporate material contracts. All on some human rights employees are free topics such as ethics. with respect to union For example, the total membership and act duration of trainings of their own free will. on Sustainability During the reporting E-learning Program period, Garanti Bank during the reporting had no dealings period was 1,938 with any supplier hours. who, to the Bank’s knowledge, was in violation of their employees’ union rights, which is to say of their employees’ right to join or not to join a trade or labor union.

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SOCIAL: HUMAN RIGHTS SOCIAL: HUMAN RIGHTS

Security DMA - Material aspects - No HR DMA - Focusing onCorporate - No Practices and boundaries on Assessment Sustainability page 44; Focusing Governance, page 46; on Corporate Material aspects and Sustainability boundaries, on page Governance, page 46. 44.

Security G4-HR7 Percentage of security G4 Index only. The - No HR G4-HR9 Operations subject G4 Index only. 100% - No Practices personnel trained in procedures required Assessment to human rights of operations have human rights policies to be followed reviews or impact been subject to or procedures by the security assessments human rights reviews personnel of the under Garanti Code Bank are governed of Conduct and under the relevant Environmental Social Security Procedure Loan Policies. and published in the Bank’s intranet. Human DMA - Focusing onHuman - No As per applicable Rights Resources, page regulations, all private Grievance 81; Focusing security personnel Mechanisms on Corporate employed by the Sustainability Bank are required to Governance, page 46; complete 120 hours Material aspects and of training and satisfy boundaries on, page 44. minimum testing requirements. The training is overseen Human G4-HR12 Grievances about G4 Index only. No - No and monitored by the Rights human rights through complaints were Ministry of Internal Grievance formal grievance lodged on any matter Affairs. In addition Mechanisms mechanisms pertaining to human to the regulatory rights during the training, Garanti Bank reporting period. further requires its security personnel to complete on-the-job training for 15 days as well as 2 days of in-class training. Security personnel also receive ad hoc training on various subjects during their employment.

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SOCIAL: SOCIETY SOCIAL: SOCIETY

Local DMA - Focusing on - No Local G4-SO2 Operations with G4 Index only. - No Communities Communities, page 131; Communities significant negative There were no in- Focusing on Corporate impacts on local house operations Sustainability communities with significant Governance, page 46; potential or actual Corporate Profile, page negative impacts on 18; Material aspects and local communities boundaries, page 44. during the reporting period. On the other hand, Garanti Bank Local G4-SO1 Local community G4 Index only. The total - No aims to control its Communities engagement, amount of contributions indirect impact on impact assessments, and donations made by the environment and and development the Bank in 2015 was society through ESLP programs TL 18,492,241 (2014: and ESIAP. Focusing TL 17,186,001). Based on Customers on its commitment through Sustainable to corporate social Finance, page 66. responsibility, the Bank makes donations and contributions Local FS-13 Access points in G4 Index only. - No mostly to persons, Communities low-populated Garanti Bank does non-governmental or economically not have access organizations, societies disadvantaged areas. points in low or foundations, populated areas. public entities and organizations that are Local FS-14 Initiatives to Focusing on - No engaged in the fields of Communities improve access to Customers through education, culture, art, financial services Sustainable Finance, environment and sports for disadvantaged page 66. throughout all regions people. of Turkey. Donations can also be made to promote the Bank’s corporate identity and to expand the coverage of banking activities. Amounts and Beneficiaries of the donations made in 2015 are disclosed on page 146 of the 2015 Annual Report.

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SOCIAL: SOCIETY SOCIAL: SOCIETY

Anti- DMA - Focusing on Corporate - No Anti- G4-SO5 Confirmed incidents of G4 Index only. - No corruption Sustainability corruption corruption and actions Investigation activities Governance, page 46; taken. aim at detecting/ Material aspects and preventing fraudulent boundaries, page 44. activities and all applications, transactions and attitudes contrary Anti- G4-SO3 Total number and Focusing on Corporate - No to policies, procedures corruption percentage of operations Sustainability Governance and Code of Conduct of assessed for risks page 44, Focusing on the Bank. Investigation related to corruption Customers through reports are evaluated and the significant risks Sustainable Finance and concluded by the identified. Page 64. Internal control Disciplinary Committee. monitoring activities are A criminal report is made grounded in predefined if necessary fraud scenarios which have been formulated on the basis of early- warning signals that take the entire Bank Anti- DMA - Focusing on Corporate - No into account. Virtually competitive Sustainability every headquarters unit Behavior Governance, page 46. is inspected at regular intervals by the Internal Audit Department. The Bank’s Anti-Fraud Anti- G4-SO7 Total number of Focusing on Corporate - No Unit also continuously competitive legal actions for anti- Sustainability develops strategies which Behavior competitive behavior, Governance, page 46. are capable of identifying, and anti-trust and controlling, and monopoly practices and preventing instances of their outcomes. externally-sourced fraud anywhere in the Bank.

Anti- G4-SO4 Communication and Focusing on Corporate - No corruption training on anti- Sustainability corruption policies and Governance, page 46; procedures Focusing on Customers through Sustainable Finance, page 66.

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SOCIAL: PRODUCT RESPONSIBILITY SOCIAL: PRODUCT RESPONSIBILITY

Product DMA - Focusing on Customers - No Marketing DMA - Focusing on Customers - No and through Sustainable Communi- through Sustainable Service Finance, page 66; cations Finance, page 66; Labelling Focusing on Corporate Focusing on Corporate Sustainability Sustainability Governance, page 46. Governance, page 46.

Product G4-PR3 Type of product and G4 Index only. Garanti - No Marketing G4-PR6 Sale of banned or Focusing on Customers - No and service information Bank complies with Communi- disputed products. through Sustainable Service required by the laws and regulations cations Finance, page 66; Labelling organization’s pertaining to the Focusing on Corporate procedures for product disclosure of information Sustainability Governance, and service information about the products and page 46. Garanti Bank and labeling, and services that it provides. complies with laws and percentage of significant To this end, the bank regulations pertaining product and service supplies any and all to the disclosure of categories subject manner of currently information about the to such information applicable information products and services that requirements about the products and it provides. The Bank also services that it offers its diligently strives to be in customers both as may full compliance with the be required by law and requirements of applicable as Garanti Bank believes laws and regulations in may be necessary for Turkey in the conduct of consumers to make all of its marketing and objective decisions. communication activities. Garanti Bank does not finance any activities Product G4-PR4 Total number of incidents G4 Index only. There - No which are restricted or and of non-compliance with were no incidents banned under national Service regulations and voluntary of significant non- legislation and/or Labelling codes concerning product compliance reported international agreements and service information during or after the that Turkey is a party to and labeling, by type of reporting period. or the projects or the outcomes activities of people or corporations which have been proven to employ Product G4-PR5 Results of surveys For the Bank’s - No child workers or violate and measuring customer engagement with human rights. Garanti Bank Service satisfaction Customers please see rejects loan demands for Labelling the section Focusing such projects or activities on Customers through without holding them Sustainable Finance subject to any social and though it is not environmental impact customary in the Bank’s evaluation and without sector in Turkey to any limit on the size of the disclose information on loan. survey results

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SOCIAL: PRODUCT RESPONSIBILITY SOCIAL: PRODUCT RESPONSIBILITY

Marketing G4-PR7 Total number of incidents G4 Index only. There - No Product DMA - Corporate Profile, - No Communi- of noncompliance were no incidents Portfolio page 32; Focusing on cations with regulations and of non-compliance Customers through voluntary codes reported during or after Sustainable Finance, concerning marketing the reporting period. page 66. communications, including advertising, promotion and sponsorship by type of Product FS-6 Percentage of the Corporate Profile, page - No outcomes. Portfolio portfolio for business 30. See also Annual lines by specific region, Report 2015, page 188, size (e.g. micro/SME/ footnote 4.2.2 Customer DMA - Focusing on Corporate - No large) and by sector. Privacy Sustainability Governance, page 46; Focusing on Customers through Sustainable Product FS-7 Monetary value of Focusing on Customers - No Finance, page 66. Portfolio products and services through Sustainable designed to deliver Finance, page 66. specific social benefit for Customer G4-PR8 Total number of G4 Index only. There - No each business line, broken Privacy substantıated complaınts were no substantiated down by purpose. regardıng breaches of complaints of breaches customer prıvacy and of customer privacy losses of customer data reported during or after Product FS-8 Monetary value of Focusing on Customers - No the reporting period. Portfolio products and services through Sustainable designed to deliver specific Finance, page 66. environmental benefit for Compliance DMA - Material aspects and - No each business line, broken boundaries, page down by purpose. 44; Focusing on Corporate Sustainability Governance, page 46 Audit DMA - Focusing on Corporate - No Sustainability Governance, page 46. Compliance G4-PR9 Monetary value of Focusing on Corporate - No sıgnıfıcant fınes for Sustainability non-complıance wıth Governance, page 46. laws and regulatıons concernıng the provısıon and use of products and servıces

206 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 207 External Aspect DMA/ G4 Indicator Page Omissions Assurance

SOCIAL: SOCIETY

Active DMA - Annual Report 2015, - No Ownership page 188, footnote 4.2.2.

Active FS-10 Percentage and Focusing on Managing - No Ownership number of companies Environmental Impact held in the institution’s of Operations page 96. portfolio with which the The ESLP is applied to reporting organization 100% of the companies in has interacted on Garanti Bank’s portfolio. environmental or social Additionally, Garanti Bank issues. applies ESIAM to projects with an investment amount of more than US dollar 20 million.

Active FS-11 Percentage of assets Focusing on Customers - No Ownership subject to positive and through Sustainable negative environmental Finance, page 66. or social screening.

208 Garanti Sustainability 2015 Report Garanti Sustainability 2015 Report 209 LEGAL DISCLAIMER

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

Contact Sustainability Team e-mail: [email protected] Türkiye Garanti Bankası A.Ş. Levent Nispetiye Mah. Aytar Cad. 2 Istanbul 34340 Türkiye

Reporting Consultant EY

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This report is printed on recycled paper.

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