Our Decarbonization Targets

Our Decarbonization Targets

Garanti BBVA aims to align its credit portfolio with net zero scenarios by 2050, as part of its commitments to the Net Zero Banking Alliance (NZBA) and sciencebased target setting.

The Bank’s 2030 decarbonization targets for carbonintensive sectors, including energy, automotive, iron & steel, and cement, have been developed using the internationally recognized PACTA (Paris Agreement Capital Transition Assessment) methodology and were publicly disclosed in 2023. Garanti BBVA continuously reviews these targets as data quality improves and works towards updating them.

The objectives of Garanti BBVA’s sectoral decarbonization targets are:

• Measuring customers' progress in their decarbonization processes and providing them with the necessary financial support for investments in new technologies and production methods.
• Increasing risk weighting for customers aligned with decarbonization targets to reduce transition risks in the loan portfolio.
• Fulfilling the transparency commitment regarding environmental and social performance disclosures, which have become increasingly important for the financial sector.

Garanti BBVA's portfolio decarbonization targets for companies in the energy, automotive, iron & steel, cement, and coal sectors, for which it has set decarbonization goals, and their progress as of 2024 are as follows:

Note: Garanti BBVA has negligible Oil&Gas exposure.
*The starting point for Energy, Automotive, Iron & Steel, and Cement is 2022.
**Starting data for Energy has been updated.
***The emission factor per ton of production in the iron and steel sector has been updated, taking into account grid electricity emissions.

Garanti BBVA monitors its progress toward its 2030 decarbonization targets through data collection, customer visits, sectoral plans, and internal risk assessment tools; reports annually to NZBA and receives 3rd Party verification.

• In 2024, emissions intensity in the automotive sector decreased by 4.47%.
• In cement sector calculations, no changes were observed in emissions intensity due to database limitations.
• In the iron and steel sector, emissions intensity increased by 8.27%, driven by heightened short-term risk exposure among companies utilizing high-emission production technologies. Nevertheless, all firms within the sector were evaluated to be aligned with the Bank’s 2030 decarbonization goals.
• In theenergy sector, despite an increase in renewable energy investments, a 9.44% rise in emissions intensity was observed due to high-emission companies shifting towards renewable energy investments and a temporary increase in short-term risk exposure. A decline in emissions intensity, aligned with targeted goals, is expected once these investments are fully completed.

All risk exposure and credit limits for customers in these sectors are monitored monthly and evaluated using PACTA-derived emissions intensity values on a weighted average basis (Risk x Emissions Intensity). In cases where PACTA data does not accurately reflect actual emissions intensity (e.g., when customer-reported emissions data differs), direct customer data is used for calculations. The TRi (Transition Risk Indicator) tool, developed by BBVA, integrates decarbonization targets into daily risk management processes. Using a sector-based approach, TRi evaluates each customer’s emissions profile and decarbonization strategy, enabling the categorization of customers based on transition risks and strategy maturity. The tool provides customized services to support decarbonization efforts. TRi reports are updated monthly tracking current emissions intensity in energy, automotive, iron & steel, and cement sectors, along with 2030 projections for energy, iron & steel, and cement sectors.