Turkey’s First Climate Index based on CDP Data Now Live

Established in cooperation with CDP Turkey, which is hosted by Sabancı University Corporate Governance Forum, and Borsa Istanbul, the Garanti BBVA Climate Index is now live following the gong ceremony held at Borsa Istanbul.

Garanti BBVA İklim Endeksi

Borsa İstanbul Genel Müdürü Korkmaz Ergun, Garanti BBVA Genel Müdür Yardımcısı Ebru Dildar Edin, Sabancı Üniversitesi Kurumsal Yönetim Forumu Kurucu Direktörü ve CDP Türkiye Direktörü Melsa Ararat, Garanti BBVA Araştırma ve Yatırım Danışmanlığı Koordinatörü Tufan Cömert

Established in cooperation with CDP Turkey, which is hosted by Sabancı University Corporate Governance Forum, and Borsa Istanbul, the Garanti BBVA Climate Index is intended to improve the sustainable finance market and incentivize companies to be more transparent in communicating climate-related risks and opportunities to their stakeholders.

The Garanti BBVA Climate Index will promote publicly-listed companies in Borsa Istanbul that demonstrate a good performance according to CDP which rates the companies’ climate action performance. Accordingly, a globally accepted and reliable index is created that can constitute the basis for climate finance in Turkey.

Borsa Istanbul will calculate and maintain the Garanti BBVA Climate Index. The index´s universe will consist of companies listed on the Borsa Istanbul whose most recent score is B- or higher according to the CDP’s assessment and those that also meet the liquidity requirements set by the index methodology. Accordingly, the index will include shares with an average daily trading volume of at least 10 million TL in the last 6 months.

Melsa Ararat

Melsa Ararat, FoundingDirector of Sabancı University Corporate Governance Forum and Director of CDP Turkey said the following about the index: “On behalf of some 590 global investors managing 110 trillion USD of assets, CDP invites companies to disclose the impacts of climate change, water security and deforestation on their operations, and their impact on those. In 2020, 9600 companies, representing more than 50% of the capitalization of global markets, made disclosures by responding to CDP’s set of questions and using its data platform. The number of companies disclosing through CDP increased by 70% in 5 years. In recent years, the number of climate indices and funds based on CDP data has also grown, while indices and investment funds using CDP data along with other environmental and social criteria are becoming more and more widespread. Today, we are realizing what CDP’s Turkey operation had been dreaming of for 10 years. We are launching an investment index that is based on climate change scores given by CDP to companies.  The index will facilitate allocation of financial capital to companies that are resilient to climate change. We believe that, thanks to this index, Turkey’s companies that aim to reduce and finally eliminate their emissions by adopting science based targets will go onto the radar of international institutional investors, and attract more external capital inflows to Turkey. We hope that this index will also attract the attention of local institutional investors and encourage other companies that have not yet disclosed their climate change strategies to follow the suit.”

Korkmaz Ergun, CEO ofBorsa Istanbul said the following about the Garanti BBVA Climate Index: “As Borsa Istanbul, we are proud to be a part of this project realized by Borsa Istanbul, Garanti BBVA and CDP Turkey. As Borsa Istanbul, we will provide services including the calculation, maintenance and publication of this index. We are excited about the investment opportunities to be created by this index, which will act as a benchmark. Garanti BBVA and CDP Turkey are prominent institutions that offer innovative approaches and financing models in the field of climate change and sustainable development. I would like to thank everyone, starting with Garanti BBVA and CDP Turkey, who put their efforts into establishing this index, which will contribute to sustainable finance. I hope Garanti BBVA Climate Index will be beneficial to capital markets.”

Providing further details about the index, Ebru Dildar Edin, Executive Vice President ofGaranti BBVA said, “As Garanti BBVA, we act with the motto ‘We take care of the world and the future’, and advance our fight against climate change each day, and we are proud of this ground-breaking achievement in Turkey. Considering our objective of “fighting climate change”, one of two business strategies of ours, we completed Garanti BBVA Climate Index in collaboration with the CDP Turkey and Borsa Istanbul teams in less than a year. As Garanti BBVA, we have provided more than 5.6 billion USD of support to sustainable energy financing in Turkey, and our contribution to the sustainable finance market is above 810 million USD. With the Garanti BBVA Climate Index, we add yet another step to our sustainable finance efforts and we hope this will constitute a milestone for the transparent climate change performance of the Turkish private sector, turning climate risks to opportunities and developing the climate change awareness of local investors. As Garanti BBVA, we will continue to work with private sector players, state bodies and NGOs to break new ground in Turkey in the process of the transition of our country to a low carbon economy against climate change.”

Mentioning Garanti BBVA’s contributions to sustainable finance, Ebru Dildar Edin continued, “Only in the last 60 years, humans released 100ppm of CO2 to the atmosphere. This is 100 times faster than the previous, natural increases, as happened towards the end of the last ice age more than 10,000 years ago. Scientists at the Intergovernmental Panel on Climate Change estimate that the limits mean an atmospheric CO2 concentration of not more than 475 ppm for 2 degrees or 425 ppm for 1.5 degrees. If we still think about reaching the target of 1.5 degrees, we only have an allowance of 6 ppm globally. In brief, we are on the verge of a tipping point and we have to make sure that the next step is the right one. In terms of climate urgency, we are at a point in time when we have to assume the responsibility as the business world and create a new era of improvement offering reconciliatory opportunities and making use of technology with innovative initiatives to make the climate action a grassroots movement. While many innovative approaches such as renewable energy investments, energy efficiency applications and cyclical economy create millions of new jobs in the world, the World Bank estimates investments in these fields to reach at least 700 billion USD every year. Garanti BBVA’s role, which transforms the finance sector in the face of climate change, started 15 years ago with a vision stretching well beyond simply changing its own business strategy. With the more than 51 billion TL of support we have provided so far to sustainable development, we have not only contributed to the green and social improvement that the world needs but also made the sustainable finance market one of the actors in our local economy.”