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Climate Change and Emissions Management

There is consensus among the science community, international organizations and leading decision-makers that climate change figures among the most significant problems of the present day. The Global Risk Report of the World Economic Forum has identified climate change among the top three risks threatening the global economy for the past four years. To this end, climate change has rapidly started to become part of the strategic business plans and operational process of corporations. Koç Group closely monitors developments regarding climate change. Accordingly, Koç Group’s strategic approach that assesses risks and opportunities arising from climate change, is developed, revised and updated in line with latest domestic and international progress such as Republic of Turkey 10th Development Plan, Sustainable Development Goals and Paris Agreement. Koç Group responds to climate change with this strategic approach that extends from Koç Holding down to Group companies. The Group’s climate change initiatives are coordinated by the Koç Group Environmental Council. The Koç Group Climate Change Strategy, which was formulated based on SWOT analyses conducted with the participation of the Group companies, serves as the foundation for the climate change management-related activities within Koç Group. Group companies integrate this strategy into their business processes and develop action plans based on the specific requirements of their respective industries. These action plans encompass improvement targets for supply, production, product design and development processes. The results in relation to these targets are tracked by way of numerical, time-series performance indicators. Assessments are also influential in the compensation of responsible managers as part of corporate and individual performance evaluation systems.

Performance assessment results are reviewed by the Group Environmental Council; used to create future scenarios in light of expected developments; and reported to Koç Holding senior management for use in setting strategic guidelines. In addition, compliance with related policies, efforts carried out, and results obtained are also subjected to audits conducted by the company’s internal audit function and Koç Holding Audit Group. Koç Group regards climate change as a major risk that has the potential to impose devastating impacts on environment in addition to social and economic welfare. The need for new products, services and business models to address this threat has emerged both for impact mitigation and for compliance as a result of the effects of climate change. The provision of financial tools, products and services to support these needs presents opportunities for the business community. Companies that agree to be part of the solution through their business models, next-generation products and forward-looking services will continue to exist and prosper in the future. To this end, Koç Group considers the combat against climate change as a major business and investment opportunity.

Generating effective solutions to the problem of climate change requires coordinated efforts of all related actors. Armed with this awareness, Koç Group assumes pioneering roles on various platforms in order to attract public attention to the subject and to produce solutions in conjunction with interested parties, in addition to the Group’s internal efforts. Koç Group has been represented on local and international climate change platforms since 2011. In the international arena, the Group follows the United Nations Framework Convention on Climate Change (UNFCCC) processes and participates in the Climate Change Conference of the Parties. Locally, the Group supports the contribution efforts carried out within the scope of UNFCCC as well as the climate change initiatives of NGOs.

This term (for 2 years), Turkish Industry & Business Association (TUSIAD) Environment and Climate Change Working Group is led by a Koç Group senior executive. The Working Group contributes to improvement of Turkey’s environmental policies and to developing legislation necessary for these policies. In this direction, at 2016 year-end “Addressing Climate Change from an Economic Policy Perspective” report has been published.

The Climate Change Strategy consists of four main headings: products, technology, partnerships, and stakeholder relations.

CLIMATE CHANGE STRATEGY
I. PRODUCTS
This part consists of the manufactured and consumed products. Koç Group:
• Focuses on reducing impact of its products on the environment and produces environmentally friendly products.
• Increases diversity in green products, which are supported by the R&D activities and contributes to the transition process to low carbon economy and leads the way in the industry.
• Prioritizes the use of environmentally sensitive alternative products.

II. TECHNOLOGY
This part consists of areas of improvement in production, services and operation processes. Koç Group:
• Focuses on reduction of energy consumption and greenhouse gas emissions and prioritize the relevant projects within the sustainability principle framework in processes where it manages operations, production and service activities.
• Conducts energy efficiency studies in buildings and ensures sustainable practices integrate with everyday life.
• Analyzes and harmonizes its processes with the best and brand-new energy efficient technologies that are sensitive to climate change and to the environment.
• Increases the use of renewable energy resources and shall make relevant investments.
• Assesses opportunities and risks attached to emission trading.
• Sustains and develops its waste water recovery projects as a measure against one of the negative impacts of climate change, i.e. the subsidence of water resources and its financial dimensions.
• Ensures that the international standards and management systems are implemented and that there is a proactive approach to environmental risks. The Group also ensures that the resources are used efficiently.

III. COLLABORATION
This chapter provides details regarding the collaboration with the industry, public institutions, university, civil society institutions and the sector. Koç Group:
• In processes related to its field of operations, collaborates and communicates with the relevant agencies and institutions in development of legal and sector based regulations and standards on environmental management elements and in policy making.
• Participates in the related platforms in order to follow national and international objectives, commitments, strategies and policies to combat climate change and to ensure sustainability and plays an active role.
• Cooperates primarily with Koç University and also with other universities and Research and Development Centers to bring an innovative approach to technological and operational business processes.
• Engages in innovative efforts to develop new creative and progressive business areas and models compliant with low carbon economy.
• Develops organizational structures in the companies in order to further improve, execute and report the sustainability management plans.
• Prepares short and long-term plans for greenhouse gas emission reduction and energy efficiency efforts and monitor these as a performance indicator for related persons. The Group continuously improve these efforts.
• Organizes awareness raising activities and trainings among the employees.

IV. STAKEHOLDER RELATIONS
This chapter consists of the supplier’s, customer’s and community’s needs. Koç Group;
• Follows up on the stakeholder approaches in the field of climate change.
• Offers technical support to suppliers for awareness raising in terms of climate change.
• Considers “Green Procurement Criteria” in the procurement system.
• Increases end users’ awareness to reduce greenhouse gas emissions.
• Undertakes activities to contribute to social awareness in the field of climate change.
• Strives to extend the greenhouse gas emission calculations to the locations of operation in Turkey and abroad.