For a better world

Sustainability Report 2009 - 2010 1st Half

Zorlu Energy 2009 - 2010 1st Half Sustainability Report

About This Report

The scope and limits of this report The reporting period This is the first sustainability report published by the Zorlu Unless otherwise indicated, this report covers the period Energy Group. The material topics of this study, which deals beginning on 1 January 2009 and ending on 30 June 2010. with the sustainability performance of the Zorlu Energy The data and other information provided within this report Group along the primary axes of environment, employees, will serve as benchmarking criteria for sustainability reports stakeholders in the broadest sense, and social responsibility, which the Zorlu Energy Group may publish in the future. were identified as a result of interviews and studies carried out at the Zorlu Energy Group with members of middle and The reporting cycle senior management employing a methodology that was both systematic and open to international review. The Zorlu The Zorlu Energy Group intends to issue its sustainability Energy Group Board of Directors has been provided with reports at 18-month intervals. The Group therefore expects detailed information about this report and its publication. to publish its next sustainability report in the first quarter of 2012. A valuable data base and reference points for this report were provided by findings which GRI indicators pertain to the ordinary, day-to-day relations of the Group with those who make up the This report has been prepared within the guidelines of the Global Reporting Initiative (GRI) G3 international reporting Group’s stakeholders and who consist of: standard. The report complies with G3 principles and with • Shareholders the requirements of Application Level C. For more detailed • Investors information about GRI Reporting Principles please see • Customers www.globalreporting.org • Employees The GRI Index and Performance Indicators are presented on • Members of the local community where the pages 45-47. Group has investments • Non-governmental organizations (NGO)

This report deals with the sustainability performance of the Zorlu Energy Group companies whose complete list is Publication format given on page 5. Another exception to this consists of the information presented in the “Performance Highlights” table Zorlu Energy Group Sustainability Report was published that appears on page 11 (Please refer to the footnotes to that in Turkish and English. In keeping with the Group’s table). environment policies, the report was not produced in printed form but is instead made available in electronic format as a PDF file that may be downloaded from the Group’s website at www.zorluenerji.com.tr

Contents

3 The Zorlu Energy Group’s Sustainability Priorities 26 Our Business 5 We 35 Our Employees 11 Performance Highlights 39 An Integral Part of the Community 12 Chairman’s Message 44 Global Reporting Initiative (GRI) G3 Content Index 14 Group CEO’s Message 45 GRI Göstergeleri Tablosu 16 Board of Directors 46 GRI Performans Göstergeleri 18 Senior Management 48 Online Sürdürülebilirlik 21 Our Stakeholders 22 The Energy Industry’s Most Respected Company 24 Our Awards Renewable Energy = A Sustainable World

The Zorlu Energy Group does not just create value for its stakeholders through its investments in local and renewable energy resources: it also demonstrates that it is a responsible corporate citizen through the efforts that it makes on behalf of the community that it serves.

Believing that investments which are made for a better future are the most important building blocks of sustainable growth, the Zorlu Energy Group contributes substantially to its national economy by generating productive, high quality energy while also investing in the world’s future by taking maximum advantage of renewable energy resources.

Page 1 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Our Dreams are Great. And so are Our Objectives…

With the increasing needs of a rapidly rising worldwide population combined with limited resources and the onset of the effects of climate change, the mission of the energy sector has become increasingly more critical and important on a global scale. Aware of the responsibilities incumbent upon it in many different aspects ranging from environmental protection to quality standards and from employee health to social problems, the Zorlu Energy Group acts in compliance with those responsibilities at every stage of all of its activities. The Group focuses on responsible, perceptive behavior when making use of natural resources and it considers protecting nature, culture, and human life to be a priority concern.

Acting in accordance with the United Nations Global Compact subscribed to by its parent company Zorlu Holding, the Zorlu Energy Group has committed itself to the Compact’s ten voluntary principles since the day it was founded and it has successfully made them intrinsic to its operational cycles. The Zorlu Energy Group regards the United Nations Global Compact, which promotes awareness in the areas of human rights, environmental protection, labor health and safety, anti-corruption, production quality, and social responsibility, as a guide to be followed in all of its activities. The Group desires to be an exemplary corporate citizen with respect to such issues at the international level just as it already is in its own country and sector.

Page 2 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Zorlu Energy Group’s Sustainability Priorities

Zorlu Enerji Sürdürülebilir İş Yönetimi • increase its employees’ loyalty to the Group, • minimize the environmental and social impact of the The global economic crisis has once again demonstrated Group’s operations. the long-term importance of responsible and sustainable business management. The Zorlu Energy Group’s sense of sustainability is shaped around the concepts of: For the Zorlu Energy Group, being a sensitive and • abiding by sound corporate governance practices sustainable corporate citizen means having to: • employing qualified human resources • provide stakeholders with added value through effective • acting responsibly whenever dealing with customers, corporate governance practices, suppliers, and business partners • establish long-term, trust-based relationships with • safeguarding the environment customers, • contributing to social and cultural life.

Sound corporate governance practices

Contribution to qualified human social and resources cultural life Zorlu Energy Group Sustainability Priorities

acting responsibly whenever dealing Safeguarding the with customers, environment suppliers, and business partners

Page 3 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Zorlu Energy Group is one of the strongest players in the Turkish energy sector.

Page 4 Zorlu Energy 2009 - 2010 1st Half Sustainability Report We

Lüleburgaz

Trakya Region Eskişehir

Kayseri Van

Denizli

Osmaniye

Gaziantep

Natural gas power plants Hydroelectric power plants Wind power plant Geothermal power plant Natural gas distribution Zorlu Energy Group

Zorlu Energy Electricity Zorlu Natural Electricity Natural Gas Distribution Generation Inc. (Listed on the ISE). Generation Inc. (142,6 MW) Others Companies Gazdaş Natural Gas Electricity Generation (595 MW) 7 Hydroelectric Power Plants Zorlu Industrial Distribution 1 Geothermal Power Plant 100% 5 Natural Gas Power Plants 1 Fuel-oil Power Plant Zorlu O&M Thrace Region Natural Gas Distribution 85% Rotor Electric Power Zorlu Electricity Energy Import, Production Inc. Export and Wholesale Trade Zorlu Natural Gas Import, Export 80% Zorlu Hydroelectric Power and Wholesale Trade Production Inc. 73% Zorlu Jeotermal 85% Zorlu Geothermal Energy Electricity Generation Inc. Natural Gas Exploration Headquartered in , the Zorlu Energy Group is + Generation active in the areas of production (electronic and steam), operation and maintenance, power plant construction, trade 73% Zorlu Petrogas* (electricity and natural gas), and distribution (natural gas). With national operations based in Turkey’s certain cities, 100% Amity Oil* the Group is currently engaged in investments and joint International ventures in Russia, Pakistan, and Israel. For more detailed information, please see www.zorluenerji.com.tr 51% Rosmiks LLC As of 30 June 2010, 32% of the shares in Zorlu Energy 100% Zorlu Energy Pakistan Electricity Generation Inc., the Zorlu Energy Group’s flagship company, were being traded on the İstanbul Stock 25% Dorad Energy Exchange’s national market under the symbol “ZOREN”.

51% Ashdod Energy

51% Ramat Negev Energy

27% Solad Energy

100% Bundoran Financial Corporation *Zorlu Amity Oil International Pty Ltd and Zorlu Petrogas, Group companies that were trading natural gas, were sold on 25August 2010. Page 5 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Zorlu Energy Group believes that using renewable and local resources when producing energy is also the most important way to create a cleaner world.

The foundations of the Zorlu Energy Group were laid in 1993 Operating in one of the most fundamental of sectors across with the establishment of the firm of Zorlu Enerji Elektrik a broad geographical area, the Zorlu Energy Group’s activities Üretim A.Ş. (Zorlu Energy Electricity Generation Inc.). The are guided by its principle of ensuring that society also gains Company strengthened its presence in different aspects of the while it does. energy sector through integrated activities that encompassed electricity production and sales, natural gas production and Strictly complying with all national and international sales, and power plant projects that included everything environment-related laws and regulations, the Zorlu Energy from initial development to turnkey delivery and long-term Group strives with all its might to minimize the impact of maintenance and operation contracts. its activities on the environment and on people’s lives. It takes care to ensure that the power plants that it builds and The Group currently has a total installed capacity of 738 MW operates to contribute towards community development are consisting of: environment-friendly. To this end, the Group develops and • 5 natural gas power plants carries out enduring projects in order to contribute to the • 7 hydroelectric power plants economic, environmental, and cultural development of the • 1 geothermal power plant areas in which it is active. • 1 wind power plant • 1 fuel-oil power plant. The Zorlu Energy Group believes that using renewable and local resources when producing energy is also the most In addition to those which it undertakes in Turkey, the important way to create a cleaner world. In the years when Zorlu Energy Group also carries out investments in parts it was originally formed, the Zorlu Energy Group generated of Europe, Asia, and the Middle East where the demand for 100% of its electricity production from natural gas; as of June energy is growing and privatization gains force. Through such 2010, renewable energy resources accounted for about 40% investments, the Zorlu Energy Group is advancing confidently of its installed capacity. Continuously developing corporate towards becoming a regional force. strategies whereby it may increase this percentage, the Group acts as a responsible global citizen who is committed In addition to electricity production, the Group is also actively to making an increasingly greater contribution to the world’s engaged in natural gas distribution. It currently holds natural future. gas distribution licenses in the Trakya and Gaziantep regions of Turkey.

Page 6 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Zorlu O&M Power Plant Operation and Zorlu Energy Group: Vision, Mission, Maintenance Services Inc. Core Values Our Vision Zorlu O&M was the first nationally-owned company set up in Turkey to engage in business of operating and maintaining In every aspect of energy, to be the leader in Turkey and a power plants. The Company commenced operation in 2000 regional force elsewhere in the world. as the provider of operational and maintenance services for Our Mission Zorlu Energy. • To produce and distribute energy that is environment-friendly, reliable, high-quality, and sustainable. Zorlu O&M provides service in the areas of: • To create value for our shareholders, our customers, and our • complete power plant maintenance, employees through activities that are effective and market- • power plant operation, and customer-focused. • complete turbine replacement, Our Core Values • replacement of hot-section modules, • compressor vane repair, • Commitment to Quality • control system maintenance and software development, Our commitment to quality is rooted in the Zorlu Group’s philosophy of being the best at whatever you do. We always • performance and production enhancement modifications. concentrate on doing our work in the best way possible and we never sacrifice quality no matter what markets or Zorlu O&M holds ISO 9001: 2000 Quality Management competitive conditions may require. System (S&Q Mart-CERT), ISO 14001: 1996 Environmental Management System (BVQI), and OHSAS 18001 • Expertise Based on Intelligence and Information Occupational Health & Safety Assessment Series (BVQI) We carry out our activities through approaches that are based certifications. Its principle is to deliver fast, customer-focused on knowledge and reason. Productive work is fundamental service with a well-trained and experienced maintenance in every endeavor; however we never deviate from our team making use of state-of-the-art technologies. commitment to quality for the sake of cutting costs. • Results-focused Thinking Zorlu Industrial and Energy Facilities We strive to achieve the very best results for our project, our customers, and our country. Construction & Trade Inc. • Innovation-based philosophy of change Zorlu Industrial was set up in 2000 with the objective of In order to capture all of the potential inherent in change we being a preferred contractor in international energy markets. always take an approach that is open to new conditions, new opinions, new ideas, new methods, and new practices. Zorlu Industrial provides effectively-priced and • Respect for People, the Environment, and Energy Resources environmentally-friendly solutions that include: In our investments we seek to develop projects which • preliminary feasibility studies for investors, contribute to production, which provide employment • engineering services, opportunities, which ensure continuity in energy supplies, and • procurement services, which are respectful of nature, culture, and human life. We act • turnkey delivery construction and installation (complete responsibly in order to pass our natural resources and cultural engineering, procurement, and construction (EPC) services). values on to the future. We attach great importance to energy resources that are renewable and clean as well as to new All of Zorlu Industrial’s activities are carried out under its ISO technologies. 9001: 2000 Quality Management System certification (S&Q • Durability and Continuity Mart-CERT). The facilities that the Company has successfully The energy sector demands a sense of public responsibility as completed have given it a position of importance in the well as enduring investments in order to ensure that resources international market. Zorlu Industrial carries out all of the are well managed and that the energy supply is continuous. Zorlu Energy Group’s national and international projects on a With this awareness, in all of our investments we look ahead fully EPC basis. and strive to realize designs that are mindful of the future.

The Group is actively engaged in becoming a regional force by seeking out opportunities not just in Turkey but also in other national markets in Europe, Asia, and the Middle East where both the demand for energy and the move towards privatization are growing rapidly.

Page 7 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Zorlu Energy’s Power Plants*

Lüleburgaz Power Plant

Type Natural Gas Cogeneration Power Plant

Capacity 115.3 MW Electricity + 162 tons/hour steam

Bursa Power Plant (Organized Industrial Zone)

Type Natural Gas Combined-Cycle Power Plant

Capacity 90 MW Electricity

Kayseri Power Plant (Organized Industrial Zone)

Type Natural Gas Combined-Cycle Power Plant

Capacity 188.5 MW Electricity

Page 8 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Yalova Power Plant (İpek Kağıt, Altınova)

Type Natural Gas Cogeneration Power Plant

Capacity 15.9 MW Electricity + 30 tons/hours steam

Ankara Santrali (Organize Sanayi Bölgesi)

Type Doğal Gaz Kombine Çevrim Santrali

Capacity 50.3 MW Elektrik

Wind Power Plant Gökçedağ Wind Power Plant ()

Type Renewable Wind Power Plant

Capacity 57.5 MW Electricity

* as of the end of 2009

Page 9 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Despite the effects of the global economic crisis that prevailed in 2009, Zorlu Energy Electricity Generation Inc. achieved a major success by increasing its capitalization 244.9%.

Page 10 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Performance Highlights

(2008-2010 1st Half)

Sales (Zorlu Energy Group) 2008* 2009 2010 / 1. Yarıyıl Electricity (KWh) 2,739,111,148 2,655,375,429 1,352,507,497 Steam (ton) 745,677 576,138 308,373 Natural Gas (s/m3) 88,330,657 95,837,553 97,440,972 Financials (Zorlu Energy Electricity Generation Inc) (USD 1 mn) Sales 410.9 353.8 169.3 Gross Profi 82.1 83.0 17.3 Operational Profit 35.8 173 3.1 EBITDA 64.0 201.3 29.4 Net Current Profit (260.1) 63.3 (17.1) Assets 1,714.6 1,603.5 1,568.1 Shareholders’ Equity (0.2) 152.3 110.0 Net Debt 1,177.9 888.2 860.0 Gross Profit Margin (%) 20.0 23.5 10.2 EBITDA Margin (%) 15.6 56.9 17.4

* The Company undertook affiliate sales in 23.06.2009 accordingly financial indicators for the year 2009 shown in the table above covers the results for the continuing operations. For the compatibility of the current financial statements, 2008 financial statements are classified.

Despite the effects of the global economic crisis that prevailed in corresponds to increasing the Company’s capitalization by 244.9% 2009, Zorlu Energy Electricity Generation Inc. achieved a major from TRL 81,655,350 to TRL 281,665,350. success by increasing its capitalization 244.9%. In order to further strengthen its financial structure, on 24 June 2009 Zorlu Energy Through this share capital increase, the Zorlu Energy Group has Electricity Generation Inc. decided to increase the Company’s further bolstered its financial structure while reinforcing the issued capital to TRL 200,000,000 by means of a cash injection. This confidence that its stakeholders have in the Group.

Zorlu Energy Group power plant production indicators (KWh) (1 January 2009 to 30 June 2010)

Plants 2009 2010 - 1st Half Total Bursa 526,432,192 226,188,328 Ankara 288,386,321 91,896,217 Kayseri 875,588,352 315,230,060 Lüleburgaz 454,375,666 222,020,547 Yalova 100,417,771 51,135,579 Total ZOREN 2,245,200,302 906,470,731 Kuzgun 25,916,942 37,290,885 49,128,379 49,757,680 Mercan 92,823,261 53,140,066 İkizdere 125,882,350 66,666,552 Çıldır 34,815,014 20,162,709 Beyköy 59,548,010 18,612,210 Jeotermal 94,691,614 40,752,254 Van Engil 44,120 0 Ataköy 1,687,946 4,518,127 Total ZDÜAŞ 493,714,460 290,900,483 Total Rotor 20,128,714 125,426,910 Total generation 2,759,043,476 1,322,798,124

Zorlu Energy Group Power Plants generated about 2.8 billion kWh electricity in 2009.

Page 11 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Chairman’s Message

Valued stakeholders, The Zorlu Energy Group is one of the Turkish energy sector’s strongest players by virtue of integrated At a time when the issues of climate change, renewable activities that are based on the strategy of achieving energy, low-carbon economy, global crisis, globalization, diversity in both resources and services. and the future of our world are being intensely debated, we regard it as an important step forward to be The Zorlu Energy Group formulates its strategies along two publishing our Group’s first sustainability report. axes in order to add impetus to its strength in the national and international arenas: The Zorlu Energy Group approaches the key issues cited • Undertaking service in different areas of the energy sector above with the utmost seriousness. Our Group keeps these topics in view during the conduct of its day-to-day business • Undertaking projects that broad in their geographical while also developing strategies that will shape our future scope. in light of the realities, opportunities, and threats which the same issues pose. Corporate citizenship that entails both In addition to producing electricity, our Group is also involved sustainability and responsibility is one of the fundamental in natural gas distribution in the Trakya and Gaziantep regions determinants of behavior and business practices in the of Turkey and it achieves economic sustainability through a Zorlu Energy Group. Having developed a human resources mix of diversified activities. The Group is actively engaged in structure and internal capacity that are models for its sector, becoming a regional force by seeking out opportunities not sustainability has become a focal point of our Group’s just in Turkey but also in other national markets in Europe, strategies and policies. Asia, and the Middle East where both the demand for energy and the move towards privatization are growing rapidly. Projects being undertaken in Russia, Pakistan, and Israel are examples of the strategic ventures that the Group is involved in as a way of achieving this goal.

Concerns about global warming, climate change and reducing the environmental impact of the energy sector’s production activities will be confronting us as critical agenda items in the period ahead.

Page 12 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Valued stakeholders, The Zorlu Energy Group is ready to be an assertive actor in the production of the clean and renewable energy that Turkey As we also mentioned in our 2009 annual report, the will need as it undergoes the transition to a low carbon concepts of energy supply security and sustainable economy. As a corporate concern, it has all of the internal development remain among the most important items capacity and competencies that are necessary to achieve this. on current agendas in our own country and around the world. The Zorlu Energy Group’s actions are guided by the principle of making gains along with society as a whole. Attention is Countries’ worries about the security of their energy supplies given to ensuring that its investments do no harm to either are increasingly exacerbated nowadays by three ongoing the environment or to the community. The Group strives to developments. The first is the growing need for energy contribute not just economically but also environmentally, and the fact that dependence on conventional energy culturally, and socially to the community of which it is a sources is going to persist in the near term. The second is member. that existing renewable energy sources are not being used effectively. The third is that developments in the area of new As we shall be presenting in detail under different headings energy technologies are still a long way from being either in this report, the Zorlu Energy Group shapes its approach commercially viable or capable of meeting rising demand. to sustainability around the concepts of good corporate governance’ qualified human resources; accountability in all Turkey’s adherence to sustainable energy policies that are business dealings with customers, suppliers, and partners; based on source diversity and maximum utilization of local safeguarding the environment; and contributing towards resources is a matter of crucial importance in its achieving social and cultural life. supply security. It is also the issue of having recourse to sources of renewable energy such as wind. Aware of the responsibilities incumbent upon it, the Zorlu Energy Group will remain committed to authoring enduring Concerns about global warming, climate change and reducing projects which are environment-friendly, which give priority the environmental impact of the energy sector’s production to making use of locally available resources, and which create activities will be confronting us as critical agenda items in the sustainable economic values. To the degree that we act as a period ahead. Alleviating the adverse effects of their activities responsible corporate citizen in the face of the essential issues will similarly be contingent upon the conscientious and of which I mentioned in the first sentence of this message, determined efforts of energy sector participants. According we will play a role in the building of a sustainable future and to calculations, greenhouse gas emissions generated by the continue to produce value for all of our stakeholders. energy sector will reach levels corresponding to 40.2 billion tons of CO2 in 2030: on current estimates they are presently on the order of 28.8 billion tons. It is our pleasure to state that the Zorlu Energy Group is the author of activities which are related to reducing emissions and making the best possible use of resources and which have earned it the admiration of its customers and employees and of its other stakeholders in the broadest sense as well as of Zeki Zorlu both national and international public opinion in its capacity Zorlu Energy Group Chairman as an energy producer and service provider in all of the İstanbul, June 2010 business lines and geographical regions in which it is active.

The Zorlu Energy Group is ready to be an assertive actor in the production of the clean and renewable energy that Turkey will need as it undergoes the transition to a low carbon economy. As a corporate concern, it has all of the internal capacity and competencies that are necessary to achieve this.

Page 13 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Group CEO’s Message

Sustainability is a fundamental issue whenever the The method by which we accomplish this in the Zorlu Energy creation of enduring, continuous value for the Zorlu Group involves identifying and executing groupwise-specified Energy Group and its stakeholders is concerned. strategies and policies on a business line and business unit basis. This approach emerges both from the commitment We measure the value that we create in terms of the benefit and with the guidance of the Board of Directors and of the that we secure for the Turkish economy, for the environment, Group’s senior management. Sustainability targets and action and for society. Sustainability is also absolutely essential to plans are identified for our business lines and business units. the investments that we carry out, to our service delivery In the realization of our sustainability priorities, owning of processes, and to our business practices throughout the an individual business line and units, the evaluation of the Group. feedback of the training and the data are highly significant.

We determine our strategic perspective at the highest level Sustainability plays a role as a valuable means for within the Group while making it possible for sustainability correctly identifying our risks and opportunities while to be integrated into our business and to become an also providing a sound foundation on which to base our indispensable part of our everyday lives. We achieve this by actions. ensuring that all of our human resources willingly participate in the process.

As a corporate citizen which is aware of the critical relationship between climate change and energy production, we act with great responsibility in the conduct of our activities and continue to author exemplary practices involving renewable energy production.

Page 14 Zorlu Energy 2009 - 2010 1st Half Sustainability Report We are mindful of the increasingly greater sensitivity being The Zorlu Energy Group’s activities are governed by the shown towards environmental and social issues by our United Nations Global Reporting Initiative (UN Global customers and business partners and by people in general not Compact) to which its parent company, Zorlu Holding Inc., is just in Turkey but also everywhere else throughout the world. a subscriber. The Zorlu Energy Group has committed itself to the compact’s ten voluntary principles and it has successfully As a corporate citizen which is aware of the critical made them intrinsic to its own operational cycles. The relationship between climate change and energy production, Zorlu Energy Group regards human rights, environmental we act with great responsibility in the conduct of our protection, labor health and safety, anti-corruption, activities and continue to author exemplary practices production quality, and social responsibility as guiding involving renewable energy production. We recognize principles to be followed in all of its activities. our responsibilities in the areas of climate change and environmental safety and we attach great importance to The Zorlu Energy Group desires to be an exemplary corporate ensuring that our stakeholders are equally aware of these citizen with respect to such issues at the international level issues as well. We know that the only way to head off the just as it already is in its own country and sector. dangers that confront us is for individuals and organizations to act out of a common awareness and to common shared strategies.

We strive to take the right steps at every stage of the Murat Sungur Bursa activities in which we engage out of our awareness of the CEO Zorlu Energy Group responsibilities incumbent upon us in many different areas İstanbul, June 2010 from environmental protection to quality standards and from employee health and safety to social well-being. The Zorlu Energy Group always concentrates on responsible, sensitive behavior when making use of natural resources and it gives priority to protecting nature, culture, and human life.

The Zorlu Energy Group always concentrates on responsible, sensitive behavior when making use of natural resources and it gives priority to protecting nature, culture, and human life.

Page 15 Zorlu Energy 2009 - 2010 1st Half Sustainability Report

Board of Directors

Zeki ZORLU Chairman of the Board of Directors Olgun ZORLU (1939 - Denizli) Zeki Zorlu began his Board Member career in a family company operating Melih E. ARAZ in the textiles sector and opened Vice Chairman (1965 - ) Having graduated his first textiles store in Trabzon. from university in the UK, Olgun Having founded Korteks in 1976, (1948 - Istanbul) Melih E. Araz Zorlu began his career in 1986 and which was established in Babadağ, graduated from the Faculty gained managerial experience in the Denizli and which continued in of Political Sciences at Ankara Zorlu Group’s textiles companies. He Istanbul, Zeki Zorlu laid down the University in 1972. After having started to serve as a Board Member foundations of Zorlu Holding which completed an MBA at the Kelley for Zorlu Holding in 1998. In addition today has 25,000 employees and 60 School of Business within the to being a member of the Zorlu companies. In addition to its new University of Indiana, he continued Energy Board of Directors, Mr. Zorlu investments in the textiles sector, his education at the Harvard also serves on the boards of Zorlu Zorlu Group entered the electronics Business School in the field of “Top Holding and other group companies. and white goods sector with Vestel, Level Management”. Commencing which was acquired in 1994, the his career at the Citibank N.A.’s energy sector in 1996 and the real organization in Turkey, Mr. Araz estate sector in 2006. As well as assumed top level duties in a variety serving as the Co-Chairman of the of units in the Istanbul, Izmir, Board of Directors of Zorlu Holding, Bahrain, Athens and New York Zeki Zorlu is also serving as the branches and took on important Chairman of the Group companies responsibilities in the foundation operating in the textiles and energy and expansion of the Citibank sectors. organization. Later, being appointed as the CEO/General Manager at Interbank A.Ş., Mr. Araz played a leading role in bringing Interbank to a respected position in the corporate and investment banking fields in Turkey. Mr. Araz now serves as a consultant for a variety of companies in the fields of finance and strategic management, and is also the Vice Chairman of the Board of Directors of Zorlu Energy Inc., the Managing Director at Ata Yatırım A.Ş., and a Board Member at Şenocak Holding A.Ş., Klimasan A.Ş., Izmir Enternasyonel Otelcilik A.Ş. and Entegre A.Ş.

Page 16 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Murat Sungur BURSA Burak İ. OKAY Board Member Board Member

(1954 - ) Murat Sungur (1967 - Ankara) Burak İ. Okay Bursa graduated from the Middle Prof Dr. A. Can TUNCAY graduated from the Faculty of Law East Technical University in Board Member at the Ankara University in 1990. Selen ZORLU MELİK 1977. Following his education in After completing the international (1944 - Ankara) Prof Dr. A. Can law certificate program in New Board Member American Hobart School of Welding Technology, he completed an MBA Tuncay graduated from the Faculty York, he started his career at the of Law at Ankara University in 1966. Department of Legal Consultancy in (1975 - Trabzon) Selen Zorlu in Business Administration-Product After completing his advocacy İşbank. He later went on to work in Melik graduated from the Faculty Management at Gazi University. He internship, he was admitted to Garanti Bank, MNG Bank and Nortel of Economics and Administrative began his career in Industrial Training the Faculty of Law at the Istanbul Networks Netaş respectively and Sciences in the Department of and Development Centre as a University in 1968 as an assistant then served at the Bener Law Firm as Business Administration at Uludağ mechanical engineer in 1977. Having lecturer. He was awarded a PhD an executive. Joining Zorlu Group in University. She started her career served several positions in the in law in 1975 and became an 2006, he played an active role in the in Deniz Bank in 1998. Following public sector between 1986-1991, assistant professor of law in configuration of the law department her internship at DenizBank Bursa Mr. Bursa served as the General 1980. Having been promoted as serving all the Group companies. Branch, she joined Management Manager of the Environmental a professor in 1988, Mr. Tuncay Mr. Okay still serves as the Law Trainee Program in 1999 at the Impact Assessment and Planning lectured in the Department of Law Coordinator of the Zorlu Group same bank. Having served in several Department at the Ministry of on Occupational and Social Security and is a Board Member of the Zorlu positions at the Deniz Bank’s Head Environment between 1991-1994. at the Istanbul Faculty of Law for Energy Group since 2007. Quarter, she attended Marketing Between 1995-1998, he was 32 years. He retired from his post Certificate Program at the University appointed as Deputy Undersecretary at Istanbul University in 2000. He of California Berkley (USA) in 2001. at the Ministry of Environment, was appointed as a Board Member In 2002 she started to work in and then as an Undersecretary at of Zorlu Energy Group in 2006, and Korteks, the textile manufacturing the Ministry. In 2003 he started to has been working at Bahçeşehir and trade company of Zorlu Group work as Director in Prime Ministry’s University as a lecturer at the and became a Member of the Board Project Implementation Unit. He Department of Law on Occupational at the same company in 2004. She joined Zorlu Energy Group in 2006 as and Social Security since 2003. He joined Zorlu Energy Group as a CEO and as a Board Member. was appointed the dean of the same Vice-President and a Board Member department in October 2009. Mr. A. in 2005. Can Tuncay is also a legal advisor at a number of domestic and foreign companies.

Page 17 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Senior Management

Murat Sungur BURSA Arif ÖZOZAN * İ. Sinan AK Bülent ÇİLİNGİR CEO of the Zorlu Energy Group, Genel Müdür Assistant General Manager, Director, Procurement and Board Member Finance Logistics (1969 - Ankara) Arif Özozan Please refer to page 13 for the CV of graduated from Bilkent University (1971 - Ankara) İ. Sinan Ak has (1963 - Ankara) Bülent Çilingir Murat Sungur Bursa. (Department of Electrical and graduated from Istanbul Technical has graduated from Middle East Electronic Engineering) in 1991 University with a BSc degree in Technical University Department of Selen Zorlu MELİK after which he completed the MBA Engineering Management. He Civil Engineering and completed an Deputy CEO of the Zorlu Energy program at the Catholic University began his career as a bond dealer MSc degree at the same university Group, Board Member of Leuven in Belgium (1993). In in Evgin Securities in 1996. He in 1985. He started his career as 1995 he took part in the master’s completed an MBA course from Old a Project Manager in Kutlutaş Please refer to page 13 for the CV of and doctoral degree programs of the Dominion University (USA) with a Construction in 1985. Between Selen Zorlu Melik. Department of International Finance concentration on finance. He then 1989-2003 he has undertaken and Business Administration at the joined Zorlu Group in June 2000. several managerial positions Free University of Brussels. He served in various positions and in Bayındır Holding, Bayındır companies within the Zorlu Group Construction, Erel Technology Group. Mr Özozan began his career in as follows: between 2000-2002 in In 2003 he started to work as a 1993 at Unit International also Vestel Communications as finance consultant in the energy field and he in Belgium, serving first as an chief; between 2002-2006 in Vestel joined Zorlu Energy as Procurement assistant project finance manager White Goods as finance manager and Logistics Director in 2006. and then as a business development and since 2006 in Zorlu Energy manager, project manager, and as Assistant General Manager. He project director. In 2003 and 2004 is currently the Assistant General he served as a member of the same Manager responsible for finance at Tansel VARAN company’s executive committee Zorlu Energy Electricity Generation Director, Human Resources and with responsibilities for power plant Inc. Corporate Communications investments in Eastern Europe, (1970 - Istanbul) A. Tansel Varan Turkey, North Africa, and the Middle Gökmen TOPUZ East. From 2004 to 2006 he served graduated from the Faculty of Assistant General Manager, Economics and Finance Istanbul as general manager and company Investments director for Tynagh Energy in Ireland University and completed an MA degree in economics from the before becoming the firm’s chairman. (1972 - Istanbul) Gökmen Topuz Arif Özozan returned to Turkey in University of Vienna in 1996. He has graduated from the Department attended a Business English and 2006 and became managing director of Electrical Engineering at Istanbul of the firm of GAMA Enerji. Internet Certificate Program at the Technical University in 1995. He University of California Berkley (USA) got his MBA degree at Yeditepe in 1997 before joining Anadolu University. He started his career as a *Appointed general manager of Zorlu Group as a Management Trainee Project Manager in MAN Desentrale Energy Electricity Generation on 1 August later in 1997, going on to serve in 2010. Energie Systeme. He served in various managerial positions within various managerial positions in the Group. He worked as a Human Wartsila-Enpa, Kale Energy, Piramit Resources Manager in Doğan Group Energy between 1998-2007. He and Ak-Al Tekstil between 2002- has been serving at Zorlu Energy 2005 and joined Zorlu Energy in Electricity Generation Inc. since December 2005 as Human Resources 2007 as Assistant General Manager and Corporate Communications responsible for investments. Director. Serhat ŞİMŞEK Assistant General Manager, Production and Trade

(1968 - Elazığ) Serhat Şimşek graduated from the Electrical Engineering Department at Yıldız Technical University in 1990. He started his career in Tekfen as an engineer and undertook a number of managerial positions in Temel Su, Shell and Trakya İplik. He joined Zorlu Energy in February 2001 and has served as an Assistant General Manager responsible for production and trade in Zorlu Energy Electricity Generation Inc. since 2007.

Page 18 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Corporate Governance and Sustainability in The Zorlu Energy Group

The Group has formulated a series of corporate governance The Zorlu Energy Group Board of Directors consists of seven principles that inform not just the activities that it members, two of whom are elected as independent directors. undertakes to create value for all of its stakeholders but also its own organizational structure and management in the The independent members of the Zorlu Energy Group Board broadest sense. of Directors satisfy the criteria of independence stipulated in Communiqué on Corporate Governance Principles published For the Zorlu Energy Group, a commitment to corporate by the Capital Markets Board in Turkey. governance principles and to the effective implementation of those principles constitutes the bedrock of value-creation The duties of the Board’s chairman and chief executive for the Group’s stakeholders and for society in the broader officer are carried out by different individuals. sense. More detailed information about the Group’s capital The Chairman of the Board does not carry out any executive structure and about the principles that underlie the Group’s duty in day-to-day business. approach to effective, transparent, and responsible corporate governance is provided in the Group’s 2009 annual report, The chief executive officer (CEO) of the Zorlu Energy available at www.zoren.com.tr/fıles/zoren09tr_fınal.pdf Group is fully responsible and accountable for the conduct, administration, and coordination of the Group’s day-to-day The Zorlu Energy Group Board of Directors is responsible for business in the broadest sense. the Group’s environmental and social performance, for its corporate governance practices, and for its economic and environmental sustainability in general.

Page 19 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Zorlu Energy Group has an extensive community of stakeholders whose foundations consist of customers, employees, and shareholders.

Page 20 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Our Stakeholders

The Zorlu Energy Group has an extensive community of The Zorlu Energy Group is in an ongoing relationship with stakeholders whose foundations consist of customers, a broader mapping of its stakeholders that includes other employees, and shareholders. The Group believes that energy sector participants, public and regulatory authorities, continuously developing its stakeholder relations will make a NGOs, and media concerns. The Zorlu Energy Group big contribution to its economic and social performance. assesses the sustainable development opportunities that the economic environment offers in the best way possible within the framework of these existing relationships while also contributing to economic, social, and environmental progress.

Stakeholders Definition and scope of relationships Dialogue platform

Customers The Zorlu Energy Group has an extensive group of corporate and Because of its power plants and distribution networks located individual customers. in different parts of Turkey, the Group is engaged in a 24/7 service relationship with its customers. Professional and personal development training activities, career programs, and management meetings provide the platforms on which mutually interactive relationships between Group employees and the employer take place. Employees The Zorlu Energy Group’s basic responsibility towards its A corporate intranet is used throughout the Zorlu Energy Group employees is to provide them with mutually fair and satisfactory in order to foster effective communication among employees employment conditions and compensation. and to make it possible for information to be shared. Shareholders, domestic The Zorlu Energy Group’s responsibility towards its shareholders Zorlu Energy Electricity Generation Inc., the flagship company and international and investors is shaped by an approach that is rooted in of the Zorlu Energy Group, is a publicly-held company whose investors achieving environmental and social sustainability through the shares are traded on the İstanbul Stock Exchange. The Company best possible economic performance. maintains ongoing communication with its shareholders and investors in addition to holding annual general meetings.

The Company’s investor relations team fully complies with all of the public disclosure requirements imposed on it by lawmakers in Turkey. National and international investors are kept informed in the most transparent and best way possible. For more detailed information about investor relations, please visit http://www.zoren.com.tr/TR/INVESTORS/genel_bilgi.asp Government and The energy industry in Turkey is regulated, monitored, and The Zorlu Energy Group engages in dialogues with regulatory agencies audited by the Ministry of Energy and Natural Resources. governmental and regulatory agencies through consultative In addition to that ministry, the Zorlu Energy Group is also meetings, conferences, panel discussions, and working groups. regularly involved in communication and relationships with It fulfills all cyclical reporting requirements as set forth by laws the Ministry of Environment and Forestry, the Ministry of and regulations. Labor and Social security, the Ministry of Foreign Affairs, the Ministry of Internal Affairs, the Ministry of National Education, the Ministry of National Defense, the Ministry of Industry and Commerce, the Ministry of Agriculture and Village Affairs, the Privatization Administration, the Energy Market Regulation Authority, the Turkish Electricity Transmission Corporation, the Turkish Electricity Distribution Corporation, and other relevant public agencies as required by its obligations under laws and regulations. NGOs The Zorlu Energy Group communicates and cooperates closely The Group conducts educational programs with a variety of with non-governmental organizations (NGO) in matters which NGOs such as the Environment Foundation of Turkey and the are of elevated environmental and social concern. Within the Educational Volunteers Foundation of Turkey. The Group also framework of its relationships with NGOs, the Group conducts continues to create value for society by cooperating with NGOs projects on many different issues touching upon its corporate on many different projects that contribute to environmental/ social responsibility, foremost among them being environment- social sustainability. related matters, while also participating in such activities. Local communities The Zorlu Energy Group regards protecting and rehabilitating the In places where it has operations, the Group confers with cultural heritage of any region in which it is active as one of its members of the local community in information meetings at duties. It sets great store by social interests and gives importance which problems and expectations are discussed. By means of to the sensitivities of local communities. a variety of socioeconomic surveys that are conducted, the needs of local inhabitants are identified after which social responsibility projects are carried out in order to address such needs. Media In keeping with its aim of always being a transparent economic The Zorlu Energy Group maintains continuous communication actor in its dealings with its stakeholders, the Zorlu Energy with media by means of press conferences, press releases, and a Group keeps them informed about the Group’s activities and variety of announcements about the Group. developments through media channels.

Page 21 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Energy Industry’s Most Respected Company

A company which develops sustainable projects, is environmentally sensitive, and conserves resources

During 1 April to 13 July 2009 the Zorlu Energy Group According to the results of this reputation survey, the Zorlu conducted a reputation survey to determine what impact Energy Group leads its sector as the company: it made on public opinion and how it was perceived among • Which people know about people. • Whose news items were heard/read in 2008 • Which creates a favorable impression Respondents in the survey, which consisted of people from government agencies, universities, NGOs, media • Whose news items made a favorable impact. organizations, competitors, and suppliers, were ask to express their views about the Zorlu Energy Group and its competitors in such areas of concern as: • Expertise • Business processes • Project development • Project implementation 500 • References • Trustworthiness 400 • Environmental protection and resource conservation • Advantages and disadvantages 300 • Treatment of employees. 200

100 In the reputation index formulated on the basis of the results of this survey, the Zorlu Energy Group received 0 higher points than any other energy company. Average Zorlu Energy The Zorlu Energy Group continues to create added value for its stakeholders, who cite it for the Perception value Which has a good reputation “favorable reputation” that it enjoys. The Group Which is successful Whose news items made Which is recognized most believes that its economic, social, and environmental a favorable impact Whose ads have been seen sustainability is rooted in its relationships with its Whose news items were heard/read stakeholders. in 2008 Which comes to mind first

The Zorlu Energy Group assesses the sustainable development opportunities that the economic environment offers in the best way possible within the framework of these existing relationships while also contributing to economic, social, and environmental progress.

Page 22 Zorlu Energy 2009 - 2010 1st Half Sustainability Report According to the same reputation survey, the qualities which In the reputation survey, the Zorlu Energy Group also were most essential for an energy company are: received full marks from its own personnel. “We are the • developing sustainable projects, employees of a company that we trust. • being experienced and specialized, • being environmentally aware and conserving resources, Among the respondents in the reputation survey were 208 • being respectful of employee rights, Zorlu Energy Group employees and members of senior • giving importance to employee health, management, according to whom the most important qualities for an energy company are: • being innovative. • having high product/service quality As part of the survey, respondents were asked to indicate • being sensitive to the country’s energy problems the degree to which the Zorlu Energy Group had the • being an experienced expert qualities which they thought were the most important for • being environmentally sensitive and conserving resources an energy company to have. The Group received high marks • being respectful of employee rights • providing its employees with training opportunities particularly in the “able to develop sustainable projects” • being innovative and “environmentally aware and conserves resources” • showing commitment and consistency in management. categories. These results show that the importance which the Group gives to environmental sustainability was once again Zorlu Energy Group personnel respondents were asked to confirmed by its stakeholders. indicate the degree to which the Zorlu Energy Group had the qualities which they thought were the most important for an energy company to have. The Group received above-average marks in many categories.

% Attributed to % Attributed to Statement Zorlu Energy Statement Zorlu Energy Develops sustainable projects 50.0* Has high product/service quality 91.1* Is experienced and specialized 35.7 Is sensitive to the country’s energy problems 89.3* Is environmentally aware and Is experienced and specialized 74.6 conserves resources 67.9* Is environmentally aware and Is respectful of employee rights 32.2 conserves resources 89.3* Is innovative 42.9 Is respectful of employee rights 81.1* Gives importance to employee health 32.2 Provides its employees with Has high product/service quality 39.3 training opportunities 84.6* Provides employees with Is innovative 87.6* training opportunities 32.2 Shows commitment and consistency Has a corporate, well-functioning organization 35.7 in management 71.0* Develops projects aimed at children and Gives importance to employee health 84.6* young people 35.7 Stood up well during the crisis 79.9* Refrains from using its influence for its own benefit 50.0* Develops sustainable projects 82.8* Supports culture and art 35.7 Is strongly capitalized 80.5* Collaborates with NGOs 32.2 Invests in renewable energy 91.7*

* Above-average result. * Above-average result.

In the reputation survey, the Zorlu Energy Group also received full marks from its own personnel. “We are the employees of a company that we trust.

Page 23 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Our Awards

We are encouraged by our stakeholders’ appreciation and praise.

In 2007 the Zorlu Energy Group In 2010: ranked: • The Gökçedağ wind power plant received • 2nd in the Capital “Most Liked Companies: Energy Sector” survey. the “2009 Year’s Best WPP Financing” • 156th in the Capital “Turkey’s Biggest 1,000 and 500 award from Euromoney Group’s Project Privately-Owned Companies” survey. Finance magazine. • 134th in the Fortune “Turkey’s 500 Biggest Companies” survey. • The Gökçedağ WPP received an award as • 138th in the İstanbul Chamber of Industry’s “500” an investment that is respectful of nature, listing. the environment, and animal rights from Nature Fighters NGO from the İstanbul In 2008 the Zorlu Energy Group Environment Council. ranked: • Zorlu Energy Group assistant general • 2nd in the Dünya Gazetesi “Stars of the Economy” manager for financial institutions affairs listing. • 122nd in the Capital “500” listing (rose 34 positions) Sinan Ak was chosen “CFO Of The Year” • 98th in the Fortune “Turkey’s 500 Biggest by International Naseba Group. Companies” survey (rose 36 positions) • In the “Most Popular Companies 2010” • 10th (as Rotor) and 66th (as Zorlu Energy Group) in Turkishtime magazine’s “500 Biggest Investments” survey conducted by the independent listing. researchers Realta in which university • 100th in the İstanbul Chamber of Industry’s “500” students were asked to rank the listing. companies they would most like to work for, the Zorlu Energy Group placed 1st in In 2009 the Zorlu Energy Group: its sector and 20th over all. • Was cited as the most highly respected energy company in the “Reputation Survey” carried out by • In Turkishtime magazine’s “Performance the independent researchers Trend Group. 250” listing of companies achieving • In 2009 while ISE-100 index increased by 100% on US the highest performance based on their dollar basis, Zorlu Energy Electricity Generation Inc shares’ return was 279% on US dollar basis, achieving turnovers during 2009, Zorlu Energy a market value of USD 587. Group ranked 50th. • Ranked 2nd in the Capital “Most Liked Companies: • In Turkishtime magazine’s “500 Biggest Energy Sector” survey. • 100th in the İstanbul Chamber of Industry’s “500” Investments” during 2009 listing, the listing. Zorlu Energy Group ranked 12th. • Received “Gold Standard” certification in the Voluntary Emissions Reduction Market for its • In Forbes magazine’s listings of the Gökçedağ wind power plant facility. biggest companies in the world and in • Received the “Green Energy Initiative” award of the Turkey, Zorlu Energy Group ranked 57th year for excellence under the auspices of the 2009 Platts Global Energy Awards for its Gökçedağ wind in the “Turkey 100” list and 49th among power plant facility. the 50 companies that had increased their net profit by the most.

Page 24 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Recognizing that environmental sustainability lies at the focal point of its business, the Group continuously improves its environmental performance and never strays from its principle of striving for a better environment.

Page 25 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Our Business

For a Cleaner World Detailed information about the Zorlu Energy Group’s business activity areas is provided on page … of this report Having adopted for itself the mission of making an and also on the internet at http://www.zoren.com.tr/TR/ increasingly greater contribution to a cleaner world, the Zorlu ACTIVITY/default.asp. In this part of the report, examples Energy Group seeks to ensure the environmental and social of the Zorlu Energy Group’s projects in Turkey and other sustainability of all of the activities in which it engages while countries are provided and their contributions towards the exhibiting the best possible economic performance for its Group’s sustainability performance are considered. stakeholders. To this end, the Group contributes towards greater public awareness of environmental issues wherever it Gökçedağ WPP: Making for a better operates even as it produces cleaner energy itself and assists community development through the social projects that it future in every aspect of life… conducts. Recognizing that environmental sustainability lies Gökçedağ Wind Power Plant (WPP) is the biggest facility of at the focal point of its business, the Group continuously its kind currently in operation anywhere in Turkey. improves its environmental performance and never strays from its principle of striving for a better environment. Having adopted the principle of taking maximum advantage of renewable and alternative sources of energy, the Zorlu In the conduct of all Zorlu Group activities: Energy Group authored a first in Turkey when it laid the • National and international environment-related laws and foundations of the Gökçedağ WPP, the biggest wind power regulations are strictly complied with. plant in Turkey, in 2008. • Materials, technologies and processes are chosen on the basis of their ability to minimize the adverse effects of their environmental impact. • Work on the infrastructure of the 135 MW • Energy and natural resources are used in the most capacity Gökçedağ WPP, the biggest facility of productive way possible. its kind in Turkey, began in July 2008. • Systems are developed to prevent pollution from occurring at its potential sources. • The plant’s 85-meter tall towers were • Waste and effluents of every kind and form are kept under manufactured abroad and were erected on the control and are disposed of in ways that will not cause site situated 900-1,600 meters above sea level. environmental harm. Installation of the plant’s 54 turbines, each • Group and subcontractor personnel are given training to weighing 356 tons, was completed during 2010. increase their environmental awareness. • New investments are considered and analyzed from the • The blade diameter of each 2.5 MW turbine is standpoint of their environmental impact. 100 meters. • The plant will generate about 500,000,000 kWh Strictly complying with all national and international of electricity a year, which is enough to meet the environment-related laws and regulations, the Zorlu Energy Group strives with all its might to minimize the impact of needs of about 170,000 households. its activities on the environment and on people’s lives and it takes care to ensure that the power plants that it builds In the near future the Group plans to undertake a second- and operates are people and environment-friendly while also phase investment with a combined capacity of 110 MW contributing towards community development. consisting of two stations to be constructed at Sarıtepe (50 MW) and Demirciler (60 MW). This will bring total installed capacity at Osmaniye to 245 MW.

Gökçedağ Wind Power Plant (WPP) is the biggest facility of its kind currently in operation anywhere in Turkey.

Page 26 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Gökçedağ WPP project is being carried out by Rotor Electric Power Generation Inc., a member of the Zorlu Energy What is the voluntary carbon market? Group. It not only represents a major investment for a better Although the origins of voluntary emissions trading reach environment but, even more importantly, is already playing a back to 1989, the market owes its real development to big role in the economic and social development of the region the Kyoto Protocol. The voluntary carbon market’s growth in which it is located. has been in line with the market mechanisms of the Kyoto Regarding the environment and community in which it Protocol, having developed both in countries that subscribe operates as one of its most important priorities, the Zorlu to the protocol and in those that do not. Energy Group’s aim with the Gökçedağ WPP project is not The voluntary carbon market emerged and developed as a just to contribute towards the environment but also to be of way for commercial firms and other organizations that are economic and social benefit to the lives of the people who sensitive to global climate change within the framework of are living in the area. their sense of social responsibility to conveniently offset each others’ emissions. About Rotor Electric Power Generation Inc. Rotor was founded originally to set up, operate, and maintain Companies that are sensitive to climate change calculate wind power plants and also electricity, steam, and heat- the carbon emissions generated in the course of their generation facilities that make use of all forms of renewable operational cycles. (This is what is often referred to as their energy and to sell the electricity, steam, and heat that it “carbon footprint”.) Having done so and in order to reduce generates. The Company joined the Zorlu Energy Companies or offset these emissions, they render themselves “carbon- Group in 2007. Construction of the Gökçedağ WPP, which neutral” by buying carbon reduction credits generated by is located in Osmaniye and is Turkey’s biggest wind power projects (such as renewable energy, energy efficiency, and plant, was completed by Rotor in just two years’ time. waste management projects) that are being undertaken to reduce emissions themselves. The Carbon Market and the Gökçedağ WPP Through the voluntary carbon market, organizations and Zorlu Energy Electricity Generation realized the first carbon individuals which are not themselves subject to emission emissions project in Turkey with the Gökçedağ WPP owned limits can be included in the process of combating climate by Group company Rotor Electric Power Generation Inc. The change. Firms, especially those involved in services, fulfill first eight turbines of the Gökçedağ WPP were commissioned their social responsibilities and support environmental in August 2009 and the total number reached 23 by the end sustainability by offsetting their carbon emissions of the same year. This brought total capacity to 57.5 MW and through emission credit purchases. In addition to reducing total carbon emission reduction (as defined by the CDA Gold emissions, high-quality carbon credits also provide a Standard) to 13,000 tons of CO . number of economic and social benefits and are regarded 2 as an undertaking that enhances one’s reputation in the The anticipated annual carbon emission reduction to be private sector. achieved by the Gökçedağ WPP and its 135 MW installed Turkey is not a signatory to the Kyoto Protocol and, for capacity is the equivalent of about 302.657 tons of CO2. The carbon emission credits generated upon verification of these that reason, the compulsory market mechanisms provided figures will be tradable on the voluntary carbon market. All for in that agreement do not apply in this country. rights pertaining to the carbon emission credits generated Nevertheless, many energy projects undertaken in Turkey by the project itself have been assigned to EcoSecurities since as early as 2005 have taken steps to benefit from the PLC, a company which is authorized to trade in voluntary voluntary carbon market and have become a part of it. As carbon markets and which was acquired by JP Morgan in of September 2009, there were 26 projects in Turkey that September 2009. Under the verified emission reduction had reached the point where they had emission rights to purchase agreement (VERPA) signed in 2008, trading rights sell. The aggregate greenhouse gas emission to the emission credits have been transferred to EcoSecurities reduction achieved by them is put at 2.3

until 2012. The Gökçedağ WPP will prevent about 300 million tons of CO2 a year. thousand tons of carbon dioxide from being released into the atmosphere every year.

The Gökçedağ WPP will prevent about 300 thousand tons of carbon dioxide from being released into the atmosphere every year.

Page 27 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Though taking place during a period of severe global economic crisis, the Gökçedağ WPP is being undertaken at a total investment cost of EUR 210 million.

The Zorlu Energy Group continues to conduct research on international agreements which are concerned with the birds at Gökçedağ. protection of birds and the conservation of bird habitats and species and to which Turkey is a signatory. Anatolia is located on a number of important migratory bird flyways between Europe and Africa. Understanding • Inasmuch as the placement of the wind turbines is both these routes and significant bird habitats is a matter of perpendicular to the north-south orientation of migratory particularly great importance when selecting sites for wind flyways, it is in compliance with the recommendations of power plant investments. Due to this concern, the Zorlu BirdLife International’s “Windfarms and Birds” report. Energy Group initiated “an ornithological survey” at the Gökçedağ WPP construction site in 2008. • The project area is 80 kilometers from a primary migratory route (Belen Pass). The nearest migratory bird flightpath Because of the attention that it gives to respecting nature runs 50 kms south of the plant. and people in all of its activities, the Zorlu Energy Group decided to have an ornithological survey carried out during • It is thought that birds living or breeding at the windfarm the Gökçedağ WPP project in order to determine what impact site or in nearby habitats have been disturbed by if any the plant might have on local and migratory birdlife. construction activities, even if only minimally. However A team consisting of some of Turkey’s leading ornithological the conclusion was reached that these are species academicians and experts was formed and it immediately set that have a wide distribution and do not constitute about work. populations of any considerable number and that, based on subsequently conducted inventory counts, the animals Observations, which began in 2008, were concentrated returned to their former areas. particularly in the spring and fall months, which are the primary migration periods. An inventory was made both of PDF version of the 2010 ornithological report may be the birds that nested within the project area as well as of downloaded from the following link: predatory birds that dwell in mountainous terrain. http://www.zoren.com.tr/FILES/Ornithological%20Report_ Highlights of the results reached as a result of the Turna_EN.pdf ornithological survey… • It was determined that the project area did not have an adverse impact on bird species when considered in light of “The Convention on Wetlands of International Importance, especially as Waterfowl Habitat” (Ramsar Convention), or “The Convention on the Conservation of European Wildlife and Natural Habitats” (Bern Convention), or of other

Page 28 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Gökçedağ WPP is a project that highlights the Zorlu (www.projectfinancemagazine.com/Article/2407866/Search- Energy Group’s economic sustainability and strength. Results/Rotor-Elektrik-First-wind.html?Keywords=gokcedag& OrderType=1) Though taking place during a period of severe global * Euromoney magazine’s project finance publication’s “project finance awards” are economic crisis, the Gökçedağ WPP is being undertaken granted to industrial project financing agreements on the basis of such criteria as at a total investment cost of EUR 210 million. Despite innovativeness, best practices, resourcefulness, renewability, and term of use. financial institutions’ guardedness on the matter of energy investments at such a time, the International Finance İstanbul Environment Council Award Corporation (IFC), the European Bank for Reconstruction and For its contributions to the ecological and social Development (EBRD), the European Investment Bank (EIB), environments, the Gökçedağ WPP received an award as an Denizbank, and HSBC together put up a total of EUR 130 investment that is respectful of nature, the environment, million worth of credit financing for the project. This is the and animal rights as part of the 2009 environment awards clearest possible evidence of the confidence that the Zorlu handed out by the Nature Fighters NGO and by the İstanbul Energy Group inspires in the national and international Environment Council, of which that NGO is a member. arenas. Gökçedağ receives “Award for Excellence” Success acknowledged by prestigious The Zorlu Energy Group’s Osmaniye Gökçedağ WPP received awards the “Green Energy Initiative” award of the year for excellence under the auspices of the 2009 Platts Global Energy Awards Having satisfied Gold Standard criteria, the Gökçedağ WPP in the eleventh year of that internationally recognized is the world’s biggest project to have received Gold Standard awards’ presentation. certification in the voluntary emissions reduction market. Having garnered the admiration of national and international A new example of our taking circles, the Gökçedağ WPP is seen as an exemplary project responsibility for the future: The and model for others. Biological Diversity Survey The world’s biggest project to receive Gold Standard certification Project A unique feature of the Gökçedağ WPP is that it is the world’s biggest project to have qualified for Gold Standard The Zorlu Energy Group believes that using certification. This wind power plant satisfied Gold Standard renewable and local resources when producing criteria within two years of the signing of the carbon energy is also the most important way to create a emissions trading agreement and thus was awarded Gold cleaner world. The Group focuses on responsible, Standard certification for trading in the voluntary emissions reduction market. (www.cdmgoldstandard.org) perceptive behavior when making use of natural resources and it considers protecting nature, “European Onshore Wind Deal of the Year 20009” award culture, and human life to be a priority concern. • “European Onshore Wind Deal of the Year 20009” award The EUR 130 million credit financing agreement put together Having received favorable environmental impact by the International Finance Corporation (IFC), the European study reports for the Sami Soydam (Sandalcık) Bank for Reconstruction and Development (EBRD), the Dam and HPP and for the Narlı Dam and HPP European Investment Bank (EIB), Denizbank, and HSBC for the projects, both of which are planned for building Gökçedağ WPP project received the “European Onshore Wind on the Dalaman River in southwestern Turkey, the Deal of the Year 20009” award.* Group decided that this was not enough and has The financing provided under the agreement represents the also launched a comprehensive biological diversity first time that commercial lenders have lent to a firm in the survey project for the impacted areas before Turkish windpower sector and is also the first time that IFC, starting construction work. EBRD, and EIB have ever worked together on the same deal.

Having satisfied Gold Standard criteria, the Gökçedağ WPP is the world’s biggest project to have received Gold Standard certification in the voluntary emissions reduction market.

Page 29 Zorlu Energy 2009 - 2010 1st Half Sustainability Report This combined survey and monitoring is expected to last for In the fragment of the project, a scientific committee has more than a year. Designed to identify and safeguard the been created. Dalaman Biological Diversity Survey Project will natural assets located within the project areas, the survey begin once the investment has been started. has also been designed with the aim of being an example for By increasing the use of natural gas and supplying clean the kinds of projects that the Zorlu Energy Group undertakes energy to people living in the Trakya and Gaziantep in line with its fundamental behavioral tenets of being regions, the Zorlu Energy Group promotes the use of more environmentally aware and responsible in all of its activities. environment-friendly fuels. The Project’s Goals Two Zorlu Energy Group companies– GAZDAŞ Trakya Region The projects goals are summarized below: Natural Gas Distribution and GAZDAŞ Gaziantep Natural Gas Distribution–continue to expand their natural gas • Determine the habitat features of the area where the distribution activities in their respective territories of Trakya hydroelectric power plants are to be built and its vicinity and Gaziantep. Key indicators related to the Group’s natural and identify important plant and animal species that are gas distribution business during the first half-year of 2010 are prevalent in these habitats presented in the chart below. • Formulate a protection-conservation-management plan Highlights from our natural gas business… for any species that are determined to be at risk in view of the potential impact of the HPP projects on natural areas Territory # of subscribers and species during both the construction and the operation Thrace Region 31,000 stages. Tekirdağ 20,000 • Develop application projects to achieve these goals. 4,500 The project’s aims to: Kırklareli 6,500 • identify globally and locally rare and threatened species Gaziantep Total 18,800 that may suffer from the construction and pre-operation Gaziantep 18,500 activities related to the Sami Soydam (Sandalcık) Dam 300 and Hydroelectric Power Plant and for the Narlı Dam and Lines installed Hydroelectric Power Plant projects that are planned in the southwestern part of Acıpayam township in the province Trakya 240 kms steel & 820 kms PE of Denizli and in the northwestern part of the township of Gaziantep 72 kms steel & 470 kms PE Dalaman in the province of Muğla. • collect material related to species that are identified as The Zorlu Energy Group contributes directly to the national being globally and locally rare and threatened and turn it economy and indirectly towards protecting the environment over to appropriate authorities such as the Seed by selling electricity to companies. and Gene Resources Research Institute. The Zorlu Energy Group supplies environment-friendly • determine on-site and off-site measures to protect globally electricity to firms like Mercedes Benz Türk, Tesco-Kipa, and locally rare and threatened species that may suffer Metro Grosmarket, Hisar Sağlık Grubu, and Panora Ankara harm. Shopping Center. • determine the principles and basics applicable to Zorlu Natural Electricity Generation Inc. sells environment- environmental monitoring activities that will be carried friendly electricity that it generates as a result of its out during the operational phases of the Narlı Dam renewable energy investments under agreements that it and Hydroelectric Power Plant and the Sami Soydam has signed with Mercedes Benz Türk and with such leading (Sandalcık) Dam and Hydroelectric Power Plant. retailers as Tesco Kipa, Metro Group company Metro Cash&Carry, and Panora Ankara Shopping Center.

Page 30 Zorlu Energy 2009 - 2010 1st Half Sustainability Report As of midyear 2010, the combined installed production capacity in all of the Zorlu Energy Group’s natural gas, geothermal, hydroelectric, and wind power plants amounted to 738 MW. 100% capacity increase at Turkey’s first geothermal power The first phase of this wind power plant is planned to have plant an installed capacity of 56 MW. The project is at the stage of project finance. This project has strengthened the Zorlu The Zorlu Energy Group holds the operating rights to Energy Group’s stature in the international arena as well as the Denizli Kızıldere Electric Power plant, Turkey’s first helping it to protect the environment by generating clean geothermal power plant, and also to the Kızıldere Geothermal energy in a country other than Turkey. Zone under a thirty-year license. The Group is currently engaging in exploration, drilling, and reservoir inventory As of midyear 2010, the combined installed production activities in various localities such as Denizli, Kızıldere, , capacity in all of the Zorlu Energy Group’s natural gas, Alaşehir, Kütahya, and . geothermal, hydroelectric, and wind power plants amounted to 738 MW. As a result of well cleaning and steam turbine maintenance activities at the Kızıldere Geothermal Power Plant, the The Zorlu Energy Group will continue to increase this capacity station’s capacity has been doubled from 7.5 MW to 15 MW. in its ongoing efforts to generate more clean energy. In addition to existing power plant operations at Kızıldere, the Group has obtained a license for a new geothermal R&D that supports sustainability power plant with a 60 MW capacity. Pre-construction work is Another first from Zorlu Energy in Turkey: A pilot project currently in progress. The Zorlu Energy Group is also involved power plant based on coal gasification technology in a variety of rehabilitation projects such as re-injection in In collaboration with the Scientific and Technical Research order to extend the useful lifetime of geothermal energy Council of Turkey’s Technology (TÜBİTAK) and its Innovation extraction while also minimizing its environmental impact. Support Program Department (TEYDEB), the Zorlu Energy The Zorlu Energy Group sets up Pakistan’s first wind power Group has begun work on a pilot project to generate plant. electricity using “coal gasification technology”. The Zorlu Energy Group is undertaking the construction of Under the project agreement, TEYDEB will be providing Zorlu a wind power plant in the vicinity of Jhimpir near the city of Energy Electricity Generation Inc. with TRL 1.5 million in Thatta in southern Pakistan. At a ceremony held on 19 April funding and research support on an interest-free basis for 2009 in the region, the plant’s first 1.2 MW turbine went into R&D work leading to the establishment of a pilot plant whose production. total estimated cost is TRL 9 million. With a fast-growing population of 162 million people and This project is important for several reasons. If successful rapid industrial development, Pakistan is believed to have it will not only make it feasible to generate environment- an energy production shortfall on the order of 30%. The friendly energy from locally-available but severely-polluting Zorlu Energy Group believes that this project, which will lignite but even allow agricultural and home waste to be used support Pakistan’s efforts to meet its needs for energy, will in the energy generation project. The first venture of its kind also further strengthen relations between our two countries. in Turkey, the plant will also be one of the first in the world to Because wind is a locally available and replenishable resource burn organic material at elevated temperatures. and also because it provides a more economical source of The primary goal of the project is to generate electricity more power than does thermal, the Group has plans to expand the productively while eliminating the polluting effects caused installed capacity of the project to as much as 300 MW. by using coal etc as fuel. The project is slated for completion some time during 2011.

Zorlu Energy Group will continue to increase its capacity and generate more amount of clean energy.

Page 31 Zorlu Energy 2009 - 2010 1st Half Sustainability Report What is coal gasification technology? Carbon Disclosure Project

R&D work at the plant will concentrate on transforming The Zorlu Energy Group plays an active role in coal into gas through partial combustion while removing the Carbon Disclosure Project (CDP), which was any polluting emissions (gaseous and particulate). The resulting “syngas” will be as clean and environment- set up by some of the world’s leading institutional friendly as natural gas. investors and which is highly regarded as an undertaking to help combat climate change. The essential aim in this coal gasification project is to make it possible for domestically available but relatively low energy-dense lignite to be used more effectively in This London-based voluntary initiative has been at work energy production. Instead of being burned conventionally since 2000. It is currently active in nearly 60 countries and in the open air, elevated-temperature technologies are helps companies ensure that an effective carbon emissions employed to transform the lignite’s energy potential into / reductions strategy is made integral to their business a more usable gaseous fuel. Through a process called operations. Since January 2010, the project’s Turkish arm has pyrolosis, the coal is decomposed into gas in a low-oxygen been under the coordination of Sabancı University. environment without actually being burned. In its first year, only the fifty companies included in the The result, which is a syngas (synthetic gas), is essentially İstanbul Stock Exchange’s ISE-50 index were invited to take a mixture of carbon monoxide and hydrogen; however it part in the project by publicly disclosing their policies related may also contain hydrogen sulfide and small amounts of to carbon emissions and climate change. other contaminants depending on the sulfur and other content of the original coal. These potential pollutants are Responding to the invitation received directly from CDP removed by a “gas scrubber” after which the syngas can headquarters in London, Zorlu Energy Electricity Generation be used to generate electricity and heat. became part of the international system directly through London and independently of its Turkish arm. The Company immediately set to work. A new undertaking from Zorlu Energy, the innovative pioneer of the Turkish energy sector: CSP technology As of 30 June 2010, Zorlu Energy Electricity Generation had fulfilled its data reporting requirements having supplied the The underlying objectives in the Zorlu Energy Group’s research Carbon Disclosure Project’s online system with information into concentrated solar power (CSP) technology are to: about its: • Set up a domestically-made, low-cost CSP unit • Explore other useful ways of tapping our country’s solar • Corporate policies and goals related to climate change power potential. • Carbon emissions numbers • • Reduction targets.

The Carbon Disclosure Project is one of the world’s most What is CSP technology? highly respected climate change-related projects being undertaken by major international investors. This fact makes In the most basic terms, CSP technology involves using Zorlu Energy’s participation in it even more important. lenses or mirrors to focus a large amount of sunlight onto a small area. The most widely deployed method involves a solar energy collector in the form of a parabolic trough that is mirrored. The trough’s shape concentrates the sunlight in a tube which is located at the focal point About CDP and through which water flows, resulting in direct steam The Carbon Disclosure Project was launched in 2000 to generation. Water and steam passing through serially- collect and share information that would help companies, connected units can raise the final temperature to as investors, and governments take measures against the much as 250 °C and the pressure to 3.5 bars. When the threat of climate change. desired temperature/pressure has been achieved, the resulting steam can be sent directly to a steam turbine to Through CDP, greenhouse gas emissions and climate produce electricity that is free of carbon emissions. change-related strategies are publicly disclosed and made available to investors, which enables companies and governments to set carbon emission reduction targets and Hitit Solar, which was set up to explore this technology, is to improve their own performance. This data is shared currently engaged in design and engineering work on such with a broad audience that includes institutional investors, units. The Company set up its first pilot (120 kW) unit within companies, public policymakers, government agencies, and the Denizli-Kızıldere Geothermal Zone and it was decided to academicians. have TÜBİTAK begin performance tests on 4 August 2010. A second pilot unit that was developed to make improvements The Carbon Disclosure Project is the only independent in some aspects of the first’s construction, tracking, and other international organization that provides globe-spanning systems is currently being tested at the Vestel-Manisa plant. information about how climate change risks are being managed by companies. The project acts on behalf of 534 institutional investors which together have assets worth USD 64 trillion worldwide under their management. www.cdproject.net

Page 32 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Zorlu Energy Group headquarters units engage in ongoing effort to improve recycling and recovery activities at all power plants and operational locations.

project sites. Renewable energy is integral to our view of a sustainable • Combined Environmental Audits were carried out by world… provincial environment and forestry authorities in Bursa, • Work has begun to install a triple-integrated (14001 + Ankara, Kayseri, Yalova, and Denizli. These inspections by 18001 + 9001) ISO management system at Zorlu Natural the Ministry of Environment and Forestry confirmed that Electricity Generation Inc. The Company aims to have the Group was demonstrating sufficient environmental accreditation completed before the end of 2010. sensitivity and was complying with the requirements of environmental law. • ISO 14001 Environmental Management System Internal Auditing and Environment training activities for staff are • The process of obtaining a class A emissions license for the currently being conducted as provided for in the annual Bursa power station has been successfully concluded. plan at the Zorlu Energy Group’s Ankara, Bursa, Kayseri, • Technical work has been initiated to obtain an Lüleburgaz, and Yalova power plants. Environment-related online environment license as is now required by the issues and other matters that need to be improved are Environmental Auditing Regulations. turned up during audits and systematically reported • Technical specifications and projects have been written to the appropriate management departments via the up to install septic tank/sewage system connections for Zorlu Energy Group Corporate Portal. Corrective and/or the Mercan HPP, Tercan HPP, İkizdere HPP and Denizli preventive measures are taken and followed up as required. GPP facilities as required by environmental regulations • Zorlu Energy Electricity Generation Inc.’s ISO 14001 concerning domestic waste water. This work is being Environmental Management System External Audit is carried out on an individual location basis in cooperation being carried out by Bureau Veritas within the framework with local provincial environment and forestry authorities. of the annual audit plan. The effectiveness of the ZOREN Approval has been obtained from local authorities to ISO 14001 Environmental Management System is connect the Tercan HPP facility to the Erzincan municipal quantified as a continuation of the accreditation process sewer system; construction of a septic tank has been by external and independent auditors. Findings are completed at the İkizdere HPP facility; an existing septic reported to the appropriate management departments tank at the Denizli GPP has been put into service. via the Zorlu Energy Group Corporate Portal. Corrective • Technical specifications have been written up for wetland and/or preventive measures are taken and followed up as license, environment plan, and regulatory development required. plan changes that are to be carried out under the • An Environment Legislative Framework Compliance expansion investment to be undertaken at the Denizli GPP. Monitoring Chart was created showing the degrees to • In February 2010, both Zorlu Energy Electricity Generation which Zorlu Energy Electricity Generation Inc. power Inc. and Zorlu Natural Electricity Generation Inc. fulfilled plants’ field practices are in compliance with the their 2009 reporting requirements to local environmental requirements of environmental laws and regulations. and forestry authorities at all locations using the During 2009 this chart was again updated and monitored standardized waste oil and hazardous waste disposal forms. on an individual location basis. • Both Zorlu Energy Electricity Generation Inc. and Zorlu • Applications for the Yalova station’s emissions and Natural Electricity Generation Inc. have launched work insalubrious establishments licenses were submitted to on constructing hazardous waste temporary storage the Ministry of Environment and Forestry and have been areas for all power plant letters of credit in line both with approved. environmental law compliance requirements and with • Environmental impact assessment certification has been ISO 14001 Environmental Management System goals. received for an expansion investment to be undertaken at Of these projects, hazardous waste temporary storage the Lüleburgaz plant. area construction work has been completed at the • Environmental assessment plans have been drawn up for Bursa, Ankara, Kayseri, Yalova, Lüleburgaz, Beyköy, Çıldır, both Zorlu Natural Electricity Generation’s and Rotor Kızıldere, İkizdere, and Tercan stations. Electric Power Generation Inc.’s power plants. The Group is • Zorlu Energy Group headquarters units engage in ongoing currently engaged in identifying the effects of the plants’ effort to improve recycling and recovery activities at environmental impact and determining what needs to be all power plants and operational locations. In 2009 done about it as required by environmental law. approximately 53 tons of waste paper was sent for • Environmental impact assessment (EIA) processes for the recycling. In addition, waste oil and discarded batteries etc Narlı and Sami Soydam Sandalcık hydroelectric power are surrendered to organizations licensed by the Ministry plant projects have been completed and favorable EIA of Environment and Forestry. Such activities resulted in reports have been received. A conservation-oriented the safe disposal of waste materials that are potentially biodiversity survey project has also been launched at the harmful to environmental and human health.

Page 33 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Seeking to be a preferred employer at all times, the Zorlu Energy Group gives importance to its employees’ views, requests, and suggestions.

Sayfa 34 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Our Employees

The average length of service among Zorlu Energy Group More than just personal gain, what is truly companies is currently four years. important is the pride that employees can take in the company they work for, their ability to identify Years of service Number of employees* with it, their motivation and success, and of course 0-5 755 their happiness. 6-10 113 11 or more 75 Believing that its employees are its greatest resource in * As of 30 June 2010. achieving its goals, the Zorlu Energy Group creates systems that support its vision, mission, principles, and values while At Zorlu Energy, everyone is listened to; everyone’s also improving, enriching, and simplifying working life. opinion is heard and discussed. Seeking to be a preferred employer at all times, the Zorlu When formulating human resources policies, the Group seeks Energy Group gives importance to its employees’ views, to be responsible towards its companies, sensitive to its requests, and suggestions. The Group maintains a corporate employees, and respectful of all the stakeholders with home portal which employees may access at any time and from any it communicates. place in order to: The Zorlu Group is focused on: • find out the most current information, • Achieving superior accomplishments in the area of human • view developments taking place in Group companies, resources, • send views and suggestions to senior management or • Keeping its human resources processes up-to-date at appropriate units. all times in order to provide the support that Group Workplace meetings conducted by the management of each companies need in order to achieve their goals, Group company provide platforms for mutual communication • Increasing effectiveness and productivity in all matters and feedback. related to human resources, Information about major changes that affect Group • Deploy technology and advanced methods in the service companies is provided by the Board. Employees may send any of employees, when communicating with them, and when views or suggestions which they may have directly to even developing systems for them the highest levels of management. • Providing suitable working environments. The Zorlu Energy Group strives to recruit competent Working Life Evaluation Survey people into its workforce and to hold on to those who have high potential. The Group continuously supports training, All managers working for Zorlu Energy Group companies have progression, and learning activities with the aim of creating a duty to ensure job satisfaction among company personnel. energy industry experts within its own ranks. As a way of formalizing this duty, all members of senior management from the top down are assigned a “satisfaction Employee Profile Highlights rate” performance target.

2009 2010 1st Half Every employee who has worked at least six full months for Total number 943 988 the Zorlu Energy Group is polled in this survey, which solicits White collar 943 988 their views and opinions about: Women 126 141 • their company in general, • their workplace, Men 817 847 • their superiors, Bachelor’s degree or higher 359 337 • their fellow workers and jobs. Foundation degree 226 242 Survey and human resources interviews are conducted Lycee or less 358 409 during which employees’ plans and goals for the future are Senior managers 82 80 detailed and their suggestions and feedback is shared with departmental managers. Middle managers 109 99 Employment type Full-time 943 988 Contract Type Fixed 943 988

80% of Zorlu Energy Group companies’ employees were hired within the most recent five years.

Page 35 Zorlu Energy 2009 - 2010 1st Half Sustainability Report The Zorlu Energy Group believes that employee performance makes the biggest contribution towards achieving its own goals.

The Group’s Working Life Evaluation Survey is conducted The Zorlu Energy Group is respectful of employee rights every year by an outside firm. Its aims are to discover and is strongly committed to business ethics. employees’ expectations and opinions on many different issues ranging from the working environment to company Complying with fundamental human rights as recognized management and from performance evaluations and internal by international rules and supporting the defense of those communication to salaries and fringe benefits. Survey results rules ranks foremost among the core principles of the Zorlu are shared with the unit managers of all Group companies, Energy Group. Individual differences among employees are who are requested to submit action plans. Location-based respected and the Group is firmly opposed to any form results are also shared with employees at group meetings of discrimination based on such differences, be they race, during which their views are solicited. origin, religion, sex, class, nation, age, or physical handicap or disability. As a part of its commitment as employer, the An employer who rewards employee success… Group approaches individual careers based not on employees’ origins or beliefs but rather on their performance and ensures Annual performance review system that every employee takes advantage of every opportunity equally in light of that essential principle. Every Zorlu Energy Group employee takes part in an annual performance review process within the framework of a The Group makes it possible for its employees to have access performance system and in line with targets set for the year. to whatever equipment will enable them to do their jobs Every employee who has worked at least six full months for effectively and it seeks to create an environment that is the Zorlu Energy Group takes part in this annual performance physically and emotionally suitable for working in. Employees review system, which also focuses on employee competencies are provided with regularly scheduled rest periods and their as well. The results of performance evaluations have a direct taking of short breaks is encouraged and supported by impact on employees’ salaries and are also used to determine management. career plans and training activities. Every employee’s advancement within the company takes place within the The Zorlu Energy Group conducts its operations in accordance framework of specified standards and in accordance with with the requirements of labor law and is respectful of their job and performance, experience at the company, and employees’ collective bargaining agreements and of labor competencies. union rights. No personnel currently employed in Group companies are members of a labor or trade The Zorlu Energy Group supports technical and behavioral union. training as part of its employees’ career development. It seeks to train its own managers from within its own ranks. For this reason, all employees are provided with management training at different levels based on their individual jobs in order to prepare them for higher positions.

Sayfa 36 Zorlu Enerji 2009 Sürdürülebilirlik Raporu Work Safety and Employee Health at Under the heading of occupational health and safety in 2009 • • The Zorlu Energy Group’s employee health and safety Zorlu Energy policy was reviewed and revised. Another issue to which the Zorlu Energy Group attaches • Large-sized colored posters concerning work safety and importance is occupational health and safety. No task is environmental policies were printed up and distributed to begun at any Group company until all necessary safety all workplaces in order to heighten awareness about such precautions have been taken. All field personnel are provided issues. with information on health and safety issues before starting • An occupational health and safety handbook was prepared work. All Zorlu Group employees are provided with training to provide Zorlu Energy Group employees with information on occupational health and safety issues and they are about health and safety and about ways to protect individually responsible for: themselves against workplace-associated risks and the • complying with health and safety rules, accidents and illnesses that might result from those risks. • contributing towards workplace safety, This handbook was distributed to all Group company • immediately reporting any infractions of safety rules as employees by the end of January 2010. well as instances of accidents or injury. • Basic occupational health and safety training was provided to students at the Namık Kemal University Professional Zorlu Energy Occupational Safety and Employee Health College as part of the Zorlu Energy Group’s industrial- Policy academic collaboration program. • With the involvement of all personnel, always identify • In the wake of a fire at the BT-2 unit of the Bursa power dangers in advance and take measures against the risks plant, an investigation was conducted and a detailed of loss, accident, or damage in line with health and safety incident report was issued. Employees were rewarded for principles. their part in the successful process management of safety • In order to reduce the adverse impact that their activities may have on human health, make all employees, measures and fire-fighting activities. contractors, subcontractors, and customers aware of • Prior to OHSAS 18001:2007 occupational health & safety health and safety issues and, to this end, support them system revision auditing, a group of 23 employees from through training, cooperate with all organizations that are Zorlu Energy Electricity Generation Inc., Zorlu Industrial on the lookout for public interests. Energy Facilities Inc., Trakya Gaz, GAZDAŞ, and Zorlu O&M • Reward those who make contributions towards improvements in health and safety issues. were provided with OHSAS 18001:2007 refresher training • Ensure that the Emergency Management Plan is capable of by Bureau Veritas. operating at the highest level of performance. • OHSAS 18001 internal auditing was carried out. Instances • Comply with the requirements of all current laws and of non-compliance were identified and were entered into regulations that are applicable to health and safety issues. the system along with recommended solutions. • Continuously and regularly review, monitor, and develop OHS Management System practices. • Prior to an OHSAS 18001:2007 occupational health & • Keep occupational health and employee safety factors safety system update audit, the risk assessment team at in mind during the project development stages of new the Bursa power plant met and assessed the potential risks installations and processes. that might arise from human behavior. • All Zorlu Energy employees are aware of the need to ensure health and safety and to increase performance in • The Zorlu Energy Electricity Inc. and Zorlu O&M this area. occupational health and safety management system at the Bursa power plant was updated. • After an audit conducted by an independent auditing The Group complies with all necessary rules and regulations concern, OHSAS 18001:2007 certification was updated. pertaining to employee and public safety. All of the vehicles, • Basic worker health and safety training was provided to 39 equipment, building materials etc belonging to the Group are people at the Sarayköy geothermal power plant and to 31 rated safe for both employees and the public at large. people at the Çıldır hydroelectric power plant..

Basic training statistics In keeping with the great importance that is given to human resources training at Zorlu Energy Group companies Group employees* were provided with various training programmes.

Year Number of employees by category Total hours of training by employee Average training hours by employee category category Executive Non-executive Total hours Total hours of Average training Average training of training to training to hours per hours per executives non-executives executive non-executive 2009 82 861 4565 18755 4,565 / 82 = 55.67 18,755 / 861 = 21.78 2010/ 1st half 83 913 2159 8614 2,159 / 83 = 26,01 8,614 / 913 = 9.43

*Zorlu Energy Group defines its employee categories as executive and non-executive.

Page 37 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Since 2007 the Zorlu Energy Group has been internalizing the requirements of the United Nations Global Compact voluntary initiative in all of its activities.

Page 38 Zorlu Energy 2009 - 2010 1st Half Sustainability Report An Integral Part of the Community

Zorlu Energy Group: A responsible In 2007 by adopting the United Nations Global Compact and its practices, which coincide exactly with its own corporate economic actor that shares its energy values and which are based on the principle of voluntary compliance, the Zorlu Energy Group has demonstrated that it with society works for the benefit not just of its own country but for that Believing that it is part of a great family whose members all of the whole world. live in the same country, the Zorlu Energy Group is aware 3,000 trees have been planted in the “Zorlu Energy of its responsibilities towards any stakeholder who may be Memorial Forest” at Gökçedağ. directly or indirectly affected by the Group’s activities. The “Zorlu Energy Memorial Forest”, a joint venture Zorlu Energy Corporate Principles Guide undertaken with the Osmaniye Provincial Directorate of The Zorlu Energy Group’s approach to ethics is grounded Environment and Forestry, is an afforestation project. Located not just in the requirements of law but also in the public 7 kilometers from the town of Bahçe, 4 hectares of land have conscience. The Group is once again demonstrating the been planted with nut pine, cedar, and cypress trees. care that it gives to its stakeholders through a “corporate In addition, the Zorlu Energy Group has also planted 25,000 principles guide” which brings together the shared ideas of all trees on about 17 hectares of land at its Gökçedağ wind Group employees. Zorlu Energy Corporate Principles Guide, to power plant located in Osmaniye. which all Group employees will be required to subscribe, sets forth principles related to issues under four main headings: The saplings used in the afforestation projects undertaken • Human Rights jointly with the Gökçedağ Forestry Enterprises Directorate • Work and Business Life were obtained from the Osmaniye Forest Nursery and from • Environment local producers. • Combating Corruption. The objectives of the Zorlu Energy Group in these project are This guide sets forth the corporate identity, management to: approach, operating principles, and business processes which • quickly restore the vegetation of the natural surroundings, will make it possible for the Group to survive and continue to some parts of which suffered damage during the power improve its performance as the years go by. station’s construction, • support economically viable activities such as orchardry, Preparations leading to the publication of Zorlu Energy beekeeping, and aromatic plant cultivation in villages in Corporate Principles Guide are currently under way. the vicinity, Since 2007 the Zorlu Energy Group has been internalizing • landscape built-up areas surrounding the turbines, the requirements of the United Nations Global Compact • protect slope surfaces from soil erosion, voluntary initiative in all of its activities. • create a source of income for local villages by planting tree species that are economically valuable. The Zorlu Energy Group’s actions are carried out within The species used for the projects are laurel, oleander, mahaleb the framework of the United Nations Global Compact, to cherry, locust, almond, terebinth, acacia catechu, cypress, ash, which its parent company Zorlu Holding is a subscriber. alder, and chestnut. The project is also being supported by The Group has adopted the ten principles on which this forest engineers and landscape architects with experience in voluntary international initiative is based and has successfully afforestation. internalized them in all of its operational cycles.

In 2007 by adopting the United Nations Global Compact and its practices, which coincide exactly with its own corporate values and which are based on the principle of voluntary compliance, the Zorlu Energy Group has demonstrated that it works for the benefit not just of its own country but for that of the whole world.

Page 39 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Trees are being planted by local workers from Osmaniye. A social inventory project was conducted in April 2009 by Experienced foresters are employed especially in the terracing a consultancy contracted by the Zorlu Energy Group. The operations that are undertaken to control erosion on hillsides. goals of this study were to collect and analyze data about the current socioeconomic circumstances of people living in the The boundaries of a locally revered tomb known as “Yörük villages of Gökmustafalı, Savranlı, and Kızlaç in Osmaniye’s Mezarı” which is located within the plant’s grounds and which Bahçe township. is being preserved by Zorlu Energy, have been planted with cypress trees. Based on analyses of this information, the local inhabitants’ demands and expectations were determined, the On May 26th and 27th 2010 an inspection was carried out at the Gökçedağ WPP construction site to review the opportunities that the Group’s investment project would afforestation work that had been done during the first two create for local communities were revealed, and a foundation weeks of March of the year and to collect data about the was laid on which those opportunities might be realized. results of the initial plantings. This inspection determined that The survey identified three issues as being of the highest 82% of the trees which had been planted had successfully concern in all three villages: taken root. • Not enough drinking or irrigation water In order to maintain this rather high rate of success and to • Poor or inadequate roads support the healthy growth and development of the trees, • Unemployment watering and maintenance work continues to be carried out Before undertaking projects for the people of Bahçe on a regular basis. and townships, the Zorlu Energy Group first The Zorlu Energy Group is committed to doing everything conducted a comprehensive survey to determine the existing it possibly can to be in harmony with nature in all of its socioeconomic and demographic features of the region along projects, to protect the earth as an abode of life, and to hand with local inhabitants’ needs and wishes. a livable world on to future generations. Village headmen were contacted in order to identify While the Zorlu Energy Group regards these projects as individuals who could take part in the project as canvassers. crucial to the process which it has initiated to restore Sixty-three people were recruited for the survey, which used and rehabilitate the natural texture that was disturbed by quantitative research methods and personal interviews to construction work, it wishes to go beyond this process and gather data. The result of these efforts was a “Report on a transform them into a project which, by restoring the natural Household Profile Survey Conducted in the Villages of the ecosystem, may serve as an example for the whole world. Bahçe and Hasanbeyli Townships”. The survey, which was carried out in September 2009, collected and analyzed data The Zorlu Energy Group’s Gökçedağ WPP project is changing on a wide range of local issues from health to income and both the face and the outlook of the energy industry in Turkey. The Group also seeks to contribute to the economic from education to housing. and social development of those who live in the towns of Some of the findings of the survey are summarized below. Bahçe and Hasanbeyli near the power plant. • The average household size in the Bahçe and Hasanbeyli Zorlu Energy Group Social Inventory Survey determines the townships is five. The average number of children is three, socioeconomic circumstances of people living in the villages of whom two on average attend school. of Gökmustafalı, Savranlı, and Kızlaç. • 58.5% of the people interviewed stated they had no regular source of income. • 77.7% of the people interviewed stated that they had some form of social security.

The Zorlu Energy Group is committed to doing everything it possibly can to be in harmony with nature in all of its projects, to protect the earth as an abode of life, and to hand a livable world on to future generations.

Page 40 Zorlu Energy 2009 - 2010 1st Half Sustainability Report • 37.7% of the people interviewed stated that they were “Our Energy for the Kids” project part-time laborers. • 23.0% of the people interviewed stated that they owned While creating a cleaner world today through its environment land. projects, the Zorlu Energy Group undertakes a variety of • 44.7% of girls and 55.3% of boys were enrolled in school. projects and programs aimed at making children more • The reason given for the biggest (55.6%) share of children knowledgeable about such issues for the sake of the future as not attending school was lack of material means. well. These activities focus on increasing children’s awareness • Only 1.4% of children take advantage of any form of of the importance of efficient energy use and clean energy and material support for education. turning them into “ambassadors” for the Zorlu Energy Group. • 90.5% of the people interviewed stated that they had difficulty paying their children’s school expenses. Launched in 2010 by the Zorlu Energy Group, the aims of this • Of the people who reported that they had difficulty paying project are to: their children’s school expenses, 98.4% said they would • underscore the importance that the Group gives to keep their children in school longer if they were provided children, with some form of material support. • make the public at large aware of the Group’s social awareness through the children, Based on the results of this survey, the Zorlu Energy Group • create an awareness among children about the issues of conducted a number of projects in 2009, some of the energy consciousness, energy efficiency, and renewable highlights of which are presented below. energy, • enhance identification within children who live near • An information meeting was held by the Environment Gökçedağ and other power plant projects and, through Foundation of Turkey that was attended by local people them, among local inhabitants. and authorities in the Bahçe and Hasanbeyli townships The “Our Energy for the Kids” project was planned and in the vicinity of the Gökçedağ WPP that is being built targeted for three primary audiences: primary school children by the Zorlu Energy Group in Osmaniye. This meeting, in Osmaniye province’s Bahçe and Hasanbeyli townships; whose aim was to arrive at a consensus concerning what the children of Zorlu Energy power plant personnel; important projects should be undertaken to improve local children attending “education parks” run by the Educational socioeconomic life, was also attended by academicians Volunteers Foundation of Turkey. from a number of universities and by the Zorlu Energy Group’s assistant general manager responsible for investments, Gökmen Topuz. Subjects covered in Our Energy for the Kids • The Zorlu Energy Group has designed a project to • What is energy? support the education of children living in the Bahçe and • What is it used for? Hasanbeyli townships. Under this project, the Mehmet Zorlu Foundation provides financial support to needy • How is it obtained? young people to encourage and help them continue • How are resources turned into energy? their educations. A total of 82 university and college • What are the effects of resources on the world? students living in the Bahçe and Hasanbeyli townships and associated villages are currently pursuing their studies • What are the renewable and sustainable energy with support that they receive from the Mehmet Zorlu resources? Foundation. • What are the ways to use energy properly?

Page 41 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Energy conservation is the responsibility of everyone: not just of individuals but also of organizations and society as a whole.

Project activities in Bahçe and Hasanbeyli schools energy was prepared for Bahçe and Hasanbeyli primary school children. Children were encouraged to actively participate In this part of the project, the Group sought to inculcate in the presentation by asking questions and expressing awareness about using energy correctly and about renewable their ideas. The project attracted the attention of local energy by making children more knowledgeable about school authorities and as a result of the ensuing interest energy and energy resources. For this purpose a presentation and requests, the presentation was given to a total of 1,432 concerning energy, renewable energy in general, and wind children.

Number of children and schools taking part in the Zorlu Energy Group “Our Kids First” program

Township School 3rd grade 4th grade 5th grade Total Hasanbeyli Gazi Mustafa Kemal İ.Ö.O. 23 37 51 111 Hasanbeyli Hasanbeyli İ.Ö.O. 26 21 30 77 Bahçe Bahçe Atatürk İ.Ö.O. 147 129 161 437 Bahçe Milli Egemenlik İ.Ö.O. 67 56 65 188 Bahçe Ahmet Pekkan İ.Ö.O. 85 60 87 232 Bahçe Kenan Evren Paşa İ.Ö.O. 69 50 60 179 Bahçe Burgaçlı Köyü İ.Ö.O. 11 13 16 40 Bahçe Nohut Köyü İ.Ö.O. 9 16 15 40 Bahçe Kızlaç Köyü İ.Ö:O. 20 18 16 54 Bahçe Yukarıdere Köyü İ.Ö.O. 32 23 19 74 Grand total 10 schools 489 423 520 1.432

Page 42 Zorlu Energy 2009 - 2010 1st Half Sustainability Report “Our Kids First” programs for Zorlu Energy Group employees’ children Educational Volunteers Foundation of Turkey (TEGV) project target messages In this part of the “Our Kids First” project, the objective was • The most widely used sources of energy today–wood, to teach the children of Zorlu Energy Group personnel about coal, and oil–are not unlimited. energy, renewable energy, and using energy correctly. For • Fossil fuels harm the atmosphere. this purpose, they were divided into four groups according • Attention needs to be given to generating electricity to power plants in which their parents worked. A three-part from renewable resources for the sake of the world’s educational program was put together and supported by a future. workshop. Total training time was 150 minutes per attending • Wind, sun, geothermal, and water power are clean and pupil. renewable energy sources. • It’s very important that we use energy correctly and Program Attendance Figures efficiently in order to prolong the lifetimes of the Power Plant # children resources which we use the most today but which may run out in the not too distant future and also to reduce Lüleburgaz Power Plant 20 the bad effects of that use. Denizli Geothermal Power Plant 18 • Energy conservation is the responsibility of everyone: Gökçedağ Wind Power Plant 10 not just of individuals but also of organizations and Rize Hydroelectric Power Plant 17 society as a whole. Total 65 in order to show the volunteers how the activities should be carried out. The Zorlu Energy Group believes that these and Educational Volunteers Foundation of Turkey programs similar activities employing specific methods and training In this part of the Zorlu Energy Group’s “Our Kids First” materials will be very beneficial by drawing attention to project, teaching and workshop activities were conducted for the crucial issues of energy resources and conservation and a total of 1,058 primary school children attending 11 of the by teaching them to the children who will be using and Educational Volunteers Foundation of Turkey’s “education managing those resources in the future. parks” in Afyon, Ankara, Antalya, Eskişehir, Diyarbakır, Zorlu Energy Group at the “Children With Leukemia Gaziantep, İstanbul (2), İzmir, , and Van. Through Village” these programs, children were taught about: • Energy generation systems On 21st and 22nd August 2010, children suffering from leukemia and their families took part in an event sponsored • Energy sources and organized by the Zorlu Energy Group at the “Children • The importance of renewable energy With Leukemia Village” located in İncek in Ankara’s Gölbaşı • Ways to conserve energy in our day-to-day lives. district. The first activity of its kind at the village, on which In the first stage of the program, thirty volunteers from work that is currently in progress will be completed and which TEGV’s 11 education parks gathered at the foundation’s will open in service before the end of 2010, was undertaken Sema Aydın Doğan Park in İstanbul’s Fındıkzade district jointly by the Zorlu Energy Group and the Mehmet Zorlu on Thursday, 17 June. During this meeting, the project Foundation. Dubbed “Our Kids First”, the program began was described and information was provided about the with a presentation followed by a workshop, both designed presentations and workshops that were to be conducted. A to teach children about energy conservation and renewable demonstration with a selected group of children was given energy. An iftar dinner party was held after sundown.

Page 43 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Global Reporting Initiative (GRI) G3 Content Index

Zorlu Energy Group’s 2009 – 2010 1st half Sustainability Report is aligned with the GRI G3 guidelines at an application level of C. This index lists GRI indicators (left), and details where we report in relation to each indicator. Information can be found in our sustainability report, our annual report (AR) and on our website (www.zoren.com.tr). For a detailed explanation of the GRI indicators, please visit www.globalreporting.org.

Page 44 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Page 45 Zorlu Energy 2009 - 2010 1st Half Sustainability Report G3 Content Index Profile Description Reported Cross-reference/Direct answer Explanation Disclosure Statement from the most senior 1,1 Fully Chairman’s message (Page 10) decision-maker of the organization. Description of key impacts, risks, 1,2 Fully Chairman’s message (Page 10) and opportunities. 2,1 Name of the organization. Fully About This Report (Page 2) Primary brands, products, and/or See also http://www.zoren.com.tr/ 2,2 Fully We (Page 4) services. EN/INDEX/default.asp Operational structure of the organization, including main See also http://www.zoren.com.tr/ 2,3 Fully We (Page 4) divisions, operating companies, EN/INDEX/default.asp subsidiaries, and joint ventures. Location of organization's See also http://www.zoren.com.tr/ 2,4 Fully We (Page 4) headquarters. EN/INDEX/default.asp Number of countries where the organization operates, and names of countries with either major 2,5 Fully We (Page 4) operations or that are specifically relevant to the sustainability issues covered in the report. Privately owned and controlled group of companies. Zorlu Energy, the leading company of the group Nature of ownership and legal 2,6 Fully is publicly quoted on the Istanbul form. Stock Exchange, under the ticker symbol ZOREN. See also www. zoren.com.tr/EN/INDEX/default.asp Markets served (including geographic breakdown, sectors 2,7 Fully Who We Are (Page 5) served, and types of customers/ beneficiaries). 2,8 Scale of the reporting organization. Fully Performance Highlights (Page 8) Significant changes during the There have not been any changes 2,9 reporting period regarding size, Fully during the reporting period. structure, or ownership. Awards received in the reporting 2,10 Fully Our Awards (Page 38) period. Reporting period (e.g., fiscal/ 3,1 calendar year) for information Fully About This Report (Page 2) 2009 - 2010 1st half provided. This report covers 2009 and the first Date of most recent previous half of 2010 and is thus the first 3,2 Fully report (if any). sustainability report of Zorlu Energy Group. Zorlu Energy Group will publish its Reporting cycle (annual, biennial, 3,3 Fully About This Report (Page 2) sustainability reports once in one etc.) and a half years. Contact point for questions See also http://www.zoren.com.tr/ 3,4 Fully Imprint (Page 46) regarding the report or its contents. EN/INDEX/default.asp 3,5 Process for defining report content. Fully About This Report (Page 2) Boundary of the report (e.g., countries, divisions, subsidiaries, 3,6 leased facilities, joint ventures, Fully About This Report (Page 2) suppliers). See GRI Boundary Protocol for further guidance. State any specific limitations on the scope or boundary of the 3,7 Fully About This Report (Page 2) report (see completeness principle for explanation of scope).

Page 46 Zorlu Energy 2009 - 2010 1st Half Sustainability Report G3 Content Index Profile Description Reported Cross-reference/Direct answer Explanation Disclosure Basis for reporting on joint ventures, subsidiaries, leased facilities, outsourced operations, The performance of the joint 3,8 and other entities that can Fully About This Report (Page 2) ventures is excluded from the significantly affect comparability content of the report. from period to period and/or between organizations. Significant changes from previous This report covers 2009 and the first reporting periods in the scope, half of 2010 and is thus the first 3,11 Fully boundary, or measurement sustainability report of Zorlu Energy methods applied in the report. Group. Table identifying the location of 3,12 the Standard Disclosures in the Fully G3 Content Index report. Policy and current practice 3,13 with regard to seeking external assurance for the report. STANDARD DISCLOSURES PART III: Performance Indicators Performance Description Reported Cross-reference/Direct answer Explanation Indicator Governance structure of the Corporate Governance and organization, including committees Sustainability in the Zorlu Energy under the highest governance Group (Page 16). In addition 4,1 Fully body responsible for specific please see pages 43-47 at http:// tasks, such as setting strategy or www.zoren.com.tr/FILES/ZOREN_ organizational oversight. ANNUAL_REPORT_2009.pdf Indicate whether the Chair of the Corporate Governance and 4,2 highest governance body is also an Fully Sustainability in the Zorlu Energy executive officer. Group (Page 16), For organizations that have a unitary board structure, state Corporate Governance and the number of members of the 4,3 Fully Sustainability in the Zorlu Energy highest governance body that are Group (Page 16), independent and/or non-executive members. Mechanisms for shareholders and employees to provide Our Stakeholders, Our Employees 4,4 Fully recommendations or direction to (Pages 17, 31) the highest governance body. List of stakeholder groups engaged 4,14 Fully Our Stakeholders (Page 17) by the organization. Basis for identification and 4,15 selection of stakeholders with Fully Our Stakeholders (Page 17) whom to engage. Direct economic value generated and distributed, including revenues, operating costs, employee See also annual reports on http:// EC1 compensation, donations and other Fully Performance Highlights (Page 8) www.zoren.com.tr/EN/INDEX/ community investments, retained default.asp earnings, and payments to capital providers and governments. http://www.zoren.com.tr/FILES/ Coverage of the organization's ZOREN_ANNUAL_REPORT_2009. EC3 Fully defined benefit plan obligations. pdf / Please see page 89, Note 20 in the 2009 Annual Report Zorlu Energy Group does not get Significant financial assistance EC4 Fully any type of financial assistance or received from government. aid from the government. Market presence

Page 47 Zorlu Energy 2009 - 2010 1st Half Sustainability Report STANDARD DISCLOSURES PART III: Performance Indicators Performance Description Reported Cross-reference/Direct answer Explanation Indicator Biodiversity Zorlu Energy natural gas plants are located in places close to the city center. The effects of the operations on air have been measured regularly and kept at the legally accepted levels. Gökçedağ Power Plant is out of the protected areas. Although Ministry of Environment Description of significant impacts and Forestry stated that there of activities, products, and services was no need for Environmental EN12 on biodiversity in protected areas Fully Impact Assessment, Zorlu Energy and areas of high biodiversity value conducted a detailed analysis outside protected areas. of environmental effects and concluded that there are not any considerable negative effects on environment. The preparations of the biodiversity effect analysis projects that will start in 2011 for Zorlu Energy Hydroelectric Power Plants are underway. An Integral Part of the Community Gökçedağ WPP Afforestation EN13 Habitats protected or restored. Fully (Page 34) Project Strategies, current actions, and Research on birds at Gökçedağ and Our Business – For a Cleaner World EN14 future plans for managing impacts Partially The Dalaman Biological Diversity (Page 21) on biodiversity. Survey Project Emissions, effluents and waste As of 30 June 2010, Zorlu Energy Electricity Generation had fulfilled Total direct and indirect Our Business – Carbon Disclosure its data reporting requirements EN16 greenhouse gas emissions by Partially Project (Page 28) having supplied the Carbon weight. Disclosure Project’s online system with information. Products and services Initiatives to mitigate environmental impacts of products Our Business – R&D that supports CSP technology, coal gasification EN26 Fully and services, and extent of impact sustainability (Page 27) technology mitigation. Compliance Monetary value of significant fines and total number of non-monetary There was not such an incident EN28 sanctions for non-compliance Fully in Zorlu Energy Group during the with environmental laws and reporting period. regulations. Employment Total workforce by employment LA1 type, employment contract, and Fully Our Employees (Page 31) region. Occupational health and safety

Page 48 Zorlu Energy 2009 - 2010 1st Half Sustainability Report STANDARD DISCLOSURES PART III: Performance Indicators Performance Description Reported Cross-reference/Direct answer Explanation Indicator In the reporting period, there were not any incidents of death or injury. Rates of injury, occupational The level of absenteeism was 3% diseases, lost days, and LA7 Fully for both 2009 and first half of 2010. absenteeism, and number of work- The rate of work related fatalities related fatalities by region. and ocupational diseases for both periods was 0%. Training and education Average hours of training per In the reporting period (in 2009), LA10 year per employee by employee Fully Our Employees (Page 34) average training time was 7.8 hour/ category. per employee. Percentage of employees receiving LA12 regular performance and career Fully Our Employees (Page 32) development reviews. There were not any incidents of Total number of incidents of HR4 Fully discrimination in Zorlu Energy discrimination and actions taken. Group during the reporting period. Corruption There were not any incidents of Actions taken in response to SO4 Fully corruption in Zorlu Energy Group incidents of corruption. during the reporting period. Compliance Monetary value of significant fines In the reporting period, there were and total number of non-monetary not any non-monetary sanctions SO8 Fully sanctions for non-compliance with for non-compliance with laws and laws and regulations. regulations. Marketing communications Total number of incidents of non-compliance with regulations and voluntary codes concerning There was not such an incident PR7 marketing communications, Fully in Zorlu Energy Group during the including advertising, promotion, reporting period. and sponsorship by type of outcomes. Customer privacy Total number of substantiated In the reporting period, there were complaints regarding breaches of PR8 Fully not any complaints delivered to customer privacy and losses of Zorlu Energy Group. customer data. Compliance Monetary value of significant fines In the reporting period, there for non-compliance with laws were not any significant fines for PR9 and regulations concerning the Fully non-compliance with laws and provision and use of products and regulations concerning the provision services. and use of products and services.

Page 49 Zorlu Energy 2009 - 2010 1st Half Sustainability Report

Sustainability Online

As part of our contribution to minimize negative effects on natural life conditions and climate, Zorlu Energy Group Sustainability Report is not printed but presented in two different electronic versions. A PDF document and a fully interactive web report version are available online at our corporate web site. Please visit www.zorluenerji.com.tr

Page 50 Zorlu Energy 2009 - 2010 1st Half Sustainability Report Imprint

Copyright © 2011 Zorlu Energy Group

Photographs Zorlu Energy Group photo archives

This Sustainability Report is also available in Turkish. We would be happy to send you further information. You can also find this the electronic versions of this Sustainability Report and further information on the internet at http://www.zoren.com.tr/EN/INDEX/default.asp

Contact Ms Şebnem Erverdi Director, Corporate Communications [email protected]

Mr Hakan Karan Senior Specialist, Environmental Management [email protected]

The Sustainability Report is published every 18 months. The first report was published in January 2011, the next is planned for 2012.

Project consultancy, concept and realisation Tayburn, Istanbul (www.tayburnkurumsal.com)

Produced by Tayburn Kurumsal Tel: (90 212) 227 04 36 Fax: (90 212) 227 88 57 www.tayburnkurumsal.com www.zorluenerji.com.tr