Appointed as the ESMS Manager within the structure designed for Sustainability Governance, the Assistant General Manager (Investor Relations) is responsible for the management of sustainability and environmental-social issues at the highest level. S/he is also the highest-level representative of the established ESMS. General management of internal and external impacts arising from İş Leasing’s activities is carried out by ESMS Officers consisting of the Corporate Loans Manager, Corporate/Commercial Sales Managers, Financial Management Manager, Treasury and Financial Institutions Manager. Main duties of the ESMS Officers are to ensure the effective management of external environmental and social risks of İş Leasing, to monitor internal environmental and social impacts, to ensure continuous improvement in the ESMS, to represent the ESMS before the Loans Committee and İş Leasing Senior Management.

An Environmental and Social Risk Management Working Group was created to carry out activities in line with İş Leasing’s sustainability goals, to develop an environmental and social risk management approach, to identify and manage environmental and social risks and impacts arising from leasing activities, to ensure effective communication between departments and to convene at certain intervals so as to control and manage the Company’s direct environmental and social impacts. The Environmental and Social Risk Management Working Group is chaired by the ESMS Manager. The Working Group reports its activities directly to the ESMS Manager. The Working Group consists of the representatives of İş Leasing’s Loans, Corporate Sales/Commercial Sales, Treasury and Financial Institutions, Asset Management, Investor Relations, Financial Management, Procurement, Human Resources and Administrative Affairs Departments and the ESMS Officers.

Under the ESMS Project, a system has been designed to observe environmental and social sustainability as well as economic sustainability in leasing processes.

İş Leasing’s ESMS Governance Structure

Under the ESMS Project launched by İş Leasing to integrate the business processes created based on sustainability into the corporate culture, a system has been designed to observe environmental and social sustainability as well as economic sustainability in leasing processes. This project aims to ensure the integration of leasing activities into environmental and social risk management issues. The activities introduced for social benefit in line with the processes identified within the project aim to mainstream sustainability for the way of doing business and render sustainability an important part of İş Leasing strategy. On the other hand, this system allows for creating a cumulative value for sustainability by raising the awareness of customers on environmental and social issues. All activities carried out at İş Leasing under the system will be handled holistically and followed up within the framework of the relevant policies and the processes identified.

The processes identified within the scope of the ESMS Project are listed below.

• Sustainability Governance
• Identification of Environmental and Social Goals and Targets
• Assessment of Internal Environmental Impacts
• Assessment of Environmental and Social Risks in Leasing Activities
• Competence, Training and Awareness
• Grievance Mechanism
• Communication
• Follow-up of Legislation
• Internal Control
• Document Control
• Management Review

The procedures related to each process set up in the ESMS, which was created to ensure environmental, economic and social sustainability, will enable İş Leasing to achieve continuous improvement in line with the following objectives:

• Assessment of the internal environmental impacts caused by the Company’s operational activities and consumption as well as its performance
• Assessment of the environmental and social risks of customers in leasing transactions as well as the transactions related to leasing activities to be performed
• Raising the environmental and social awareness of employees
• Identifying how the complaints, requests and suggestions of employees, customers and all other parties regarding the direct or indirect environmental and social impacts arising from İş Leasing’s activities will be conveyed to İş Leasing, how they will be recorded, and how the management process will be executed
• Identifying how to develop, approve, implement and communicate environmental and social goals and objectives
• Determining and communicating legal and other needs related to environmental and social issues 

Under the project through which underlying topics such as energy and climate change, financial inclusiveness, digital transformation, corporate governance, financial performance and profitability, diversity and inclusiveness, talent management and the management of environmental impacts are prioritized for reflection in business processes, İş Leasing aims to be a pioneer in the industry also in this vein by conveying to stakeholders its economic performance as well as its management approach, strategy and performance concerning environmental and social impacts. The principles to be taken as a basis for the assessment and management of environmental and social impacts that may occur due to İş Leasing’s activities are published in the Environmental and Social Impact Policy accessible by stakeholders.

İş Leasing informs all its stakeholders on environmental and social issues and encourages them to develop sustainability practices.

Under its Environmental and Social Impact Policy, İş Leasing evaluates the potential environmental and social risks and impacts that may arise from leasing activities above a certain amount within the framework of national and international legislation, standards and good practices, and, where deemed necessary, develops action plans and monitors the activities of investor companies to mitigate the impacts according to the risk level identified during the contract period. In order to raise their awareness, İş Leasing informs its customers, suppliers and all other stakeholders on environmental and social issues and encourages them to develop sustainability practices.

In addition, İş Leasing does not support the activities listed below and the companies engaged in these activities:

• Activities that involve harmful and exploitative forms of forced/child2 labor and acts against human rights
• Projects that limit people’s personal rights or violate human rights
• Production of weapons of mass destruction and land mines
• Production and/or trade of any product or activity deemed illegal according to national legislation and international agreements to which it is a party, including:
• Production or trade of products containing PCBs (Polychlorinated Biphenyl, polychlorinated biphenyl)
• Production and trade of internationally-prohibited drugs, pesticides / herbicides and other harmful substances (Rotterdam Convention, Stockholm Convention)3
• Production and trade of ozone-depleting substances that are banned internationally (Montreal Protocol)4
• Activities associated with the manufacturing, commercial use, storage, transportation or trade of products containing unbonded asbestos fiber
• Cross-border movements of wastes prohibited by national or international laws (Basel Convention)5
• Activities in wetlands designated as RAMSAR (Wetlands of International Importance) sites
• Activities that threaten the cultural heritage qualities of places in the UNESCO World Heritage List and activities involving situations such as significant damage to or destruction of cultural heritage / Activities involving situations such as disputes over, damage to or destruction of significant cultural heritage
• Trade in wildlife and the trade or production of wildlife products prohibited under the CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora) Convention
• Activities related to pornography or prostitution
• Transportation of oil or other dangerous goods in tankers that do not comply with IMO requirements (IMO, MARPOL, SOLAS and Paris MOU)6
• Production or trade activities of radioactive products (except where healthcare equipment, quality control devices and use of radioactive materials are extremely limited or insignificant, or where adequate protection is provided)

If the transaction subject to a leasing request received by the Company is included in the List of Unfinanced Activities, the request is rejected and the process is stopped. If the leasing activity is not included in the said list, the preliminary evaluation and preliminary categorization of the application is carried out, and compliance with national environmental regulations is sought. Cross-risk assessment is performed based on the sector in which the leased asset will be used, the type of the leased asset, the potential adverse impacts of the leased asset on the environment, and the social impacts of the transaction. “Impact”, “Manageability” and “Probability” are separately assessed while assessing environmental and social risks for the transaction at this stage. At the end of the assessment, the environmental and social risk category (A, B+, B-, C) of the leasing activity is identified. 

• Transactions in category A are identified as potentially risky transactions. Environmental and social due diligence is carried out for category A transactions.
• Category B+ transactions are those that pose negative environmental or social risks within a more limited framework compared to Category A. Environmental and social due diligence may be requested for category B+ transactions.
• Category B- transactions are transactions that are less negative and more limited, more minor, site-specific, with potentially reversible impacts compared to category B+. Although environmental and social due diligence is not mandatory for category B- transactions, it is requested when necessary.
• Category C transactions, on the other hand, consist of activities that have no or insignificant negative potential social and environmental impacts. 

İş Leasing creates an Environmental and Social Management Plan for leasing transactions identified as A, B+ and B- categories. The actions in the plan must be completed by the investor company. In addition, each project categorized as A, B+ and B- is monitored at least once a year.

1  Forced labor refers to all actions or services that individuals do not voluntarily do/do not work, resulting from punishment or use of force.

2  Forced child labor means the work in which children are exploited in economic terms, or hindering and being harmful to the education, health, physical, mental, spiritual, moral or social development of the child.

3  http://www.who.int and http://www.pic.int

4  Ozone Depleting Substances (ODS): Chemical compounds that react with and exit the stratospheric ozone. http://www.unep.org/ozone/montreal.shtml

5  Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal, http://www.basel.int.

6  Tankers prohibited by the International Convention for the Prevention of Pollution from Ships (MARPOL), the International Convention for the Safety of Life at Sea (SOLAS) (including but not limited to), the International Safety Management Code, the Paris Memorandum of Understanding on Port State Control (Paris MOU) and a single tanker older than 25 years should not be used due to liquidation as per the MARPOL Regulation 13G.http://www.imo.org/About/Conventions/ListOfConventions/Pages/International-Convention-for-thePrevention-of-Pollution-from-Ships-%28MARPOL%29.aspx.