Türkiye: Aklease Multisector Facility

OBJECTIVE

The Project provides financing to renewable energy and energy efficiency related assets via the leasing industry in Türkiye.

DESCRIPTION

The proposed Project entails AIIB providing a 5-year nonsovereign-backed financing to support private companies in the Republic of Türkiye via the financial leasing industry. AIIB will on-lend to Ak Finansal Kiralama A.S. (“Aklease”), which will then lend to private companies in Türkiye. AIIB's financing will fund financial leases for renewable energy and energy efficiency related assets.

ENVIRONMENTAL AND SOCIAL INFORMATION

AIIB’s Environmental and Social Policy (“ESP”) including the Environmental and Social Exclusion List (“ESEL”) and Environmental and Social Standard 1 (“ESS 1”) Environmental and Social Assessment and Management will apply to this Project. Aklease has enhanced its Environmental and Social Management System (“ESMS”), which is materially consistent with AIIB’s ESP requirements. The Project is placed in Category FI, as the financing structure involves the provision of funds to Aklease pursuant to which AIIB delegates the decision-making related to the use of the AIIB’s funds insofar the leases meet the agreed conditions with the client. This will include the selection, appraisal, approval and monitoring of leases in accordance with AIIB’s ESP requirements. Enhanced ESMS includes provisions to identify and mitigate the potential E&S risks and impacts resulting from lessees’ use of assets, including labor and working conditions and health and safety matters.

The Project will support Aklease in its leasing of assets to Turkish private enterprises supporting renewable energy, energy efficiency, water conservation and healthcare. The preliminary pipeline includes assets such as power turbines, solar panels, textile weaving machinery, magnetic resonance imaging (“MRI”) and others. The use of the assets is expected to contribute to United Nations Sustainable Development Goals (“SDG”) including SDG 3 – Good Health, SDG 7 Renewable Energy, and others. The use of assets in the related subprojects may have an impact on biodiversity, create hazardous waste pollution, incur occupational health and safety matters. Every lease will be assessed by Aklease to identify risks and following the assessment, appropriate mitigation measures will be adopted. All higher risk transaction in this facility including any leases categorized as A or higher risk B will not be supported using AIIB’s facility. Activities included in AIIB’s ESEL will not be eligible for financing. Coal mining, coal transportation or coal-fired power plants, as well as infrastructure exclusively dedicated to support any of these activities will be excluded.

Aklease will continue to publish its ESMS on its website, in both Turkish and English. At the corporate level, Aklease’s investor presentation includes its sustainability strategy, performance highlights and product offerings. Aklease will be required to maintain a comprehensive database comprising all relevant E&S information and report to AIIB a summary of the E&S aspects and overview of the E&S performance of the Project portfolio, annually. AIIB will conduct post-reviews of the selection and implementation of leases as part of its regular supervision, comprising engagement with Aklease, potential site visits once conditions allow and detailed review of the E&S documentation of selected leases.

Aklease has established an External Communications Mechanism (ECM), including contacts and processes to receive and handle related E&S matters, and its information including PPM of AIIB will be disclosed in both Turkish and English in an appropriate manner. The ECM will be made available to Project-Affected People (PAPs) and project contracted workers. Under its enhanced ESMS, Aklease will require its lessees to establish a suitable sub-project level Grievance Redress Mechanism (“GRM”) or equivalent and inform people in the sub-project’s footprint about its availability. The GRM will receive and facilitate resolution of the concerns and complaints of people who believe they have been adversely affected by the Project’s E&S impacts.