Environmental And Social Risk Management
Environmental and Social Risk Management
According to the World Economic Forum’s Global Risks Report 2024, environmental and social (E&S) risks are at the forefront of the global risks predicted in the medium term, and half of the risks predicted to have the greatest impact over the next 10 years are E&S risks; therefore, the need for institutions to effectively mitigate E&S impacts is growing by the day.
Banks, may face risks related to financing activities that could have negative consequences on the environment and society. Failure to take timely and appropriate precautions against these risks of financed projects may lead to damage to the reputation of banks, loss of investor support, and client loyalty.
In 2012, Garanti BBVA established the Environmental and Social Impact Assessment Process (ESIAP) based on international best practices. The aim of this process is to conduct an effective E&S risk assessment in loan portfolios and to ensure proactive risk management.
As part of the ESIAP, which we have continuously improved since 2012, we identify the E&S risks associated with financial transactions. We determine the necessary actions to mitigate risks and impacts before the financing occurs and monitor the management of these actions. Thus, we ensure compliance with the E&S standards required by the legislation and the Bank's policies in loan portfolios. If necessary, we conduct an impact assessment, implement sector-based good practices, establish adequate control mechanisms, and take prescribed measures.
Our 2025 targets within the scope of ESIAP:
- Successfully implement the updated Environmental and Social Loan Standard of 2024,
- Continuing to closely monitor the E&S performance of the loan portfolio and projects,
- To support our clients proactively in taking concrete corrective and preventive actions on E&S issues in projects financed by Garanti BBVA,
- To improve Environmental and Social Risk Management processes, refer to BBVA standards and international best practices.
Visit Environmental and Social Risk Governance for more details.