Sustainability Bulletin (Issue 6)

MESSAGES FROM TRASTA ESG

?ZGüN ?INAR, CEO

It doesn't seem likely that the intense interest in sustainability will decrease. We encountered two clear indicators of this, this month. The first is the recent step taken by Borsa Istanbul in this regard. Borsa Istanbul has started calculating new sustainability indices in order to "make sustainable debt instrument issuances and their group returns more visible and meet the underlying asset and benchmark needs of investors." You can find the details of these indices in the "important concepts" section of the bulletin. As a result, the emphasis on sustainability has increased in the stock exchange.

The second indicator of the growing interest in sustainability is the events we were invited to. On Friday, May 10th, we participated in the Turkey Accounting Experts Congress organized by the Turkish Accounting Experts Association as a sponsor and panelist. We provided participants with a detailed presentation on ESG ratings, techniques and benefits. Many questions we received after the presentation once again demonstrated how closely this topic is followed by all sectors. Participants from many companies also shared valuable information on various aspects of sustainability during other sessions.

It seems that we will witness many such developments in the upcoming period... Stay sustainable...

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ON THE IMF SPRING MEETINGS…

The Spring Meetings held in Washington, DC from April 15-20, 2024, were a significant event in a critical year for international climate finance. Many developing countries are grappling with increasing food insecurity, income inequality and massive debts, making it difficult for them to invest in low-carbon energy production or prepare their citizens for the threat of climate change. The reduction of foreign aid expenditures by some developed and wealthy countries also complicates this process.

During the Spring Meetings, developed countries pledged $11 billion to increase the World Bank’s financing capacity in this area. However, this amount is undoubtedly quite low and largely leaves calls for new funding and debt relief for the world’s poorest countries unanswered. Meanwhile, at the COP29 climate summit to be held in Azerbaijan, countries are expected to agree on a new climate finance target. Perhaps this agreement (if it is completed) could advance progress on climate finance.

The Independent High-Level Expert Group on Climate Finance (IHLEG) stated in a 2022 assessment that developing countries, excluding China, need to invest $2.4 trillion annually until 2030. This underscores the necessity for a fourfold increase from current levels. IHLEG highlights that the main reason for the world’s failure to achieve the Paris Agreement targets is the lack of investment, particularly in developing economies.

Last year, multilateral development banks (MDBs) provided a record $60.9 billion in climate finance to developing countries. However, IHLEG estimates that these countries will need approximately $250-300 billion in funding annually by 2030, which highlights the inadequacy of the current financing.

Undoubtedly, this shortfall also indicates the need for certain reforms. The World Bank is implementing these reforms to increase funding allocation to developing countries, including greater financing for climate-related projects. At the end of this year, advanced economies will “replenish” the International Development Association (IDA), the branch of the World Bank that provides concessional and grant-based financing to the world’s poorest countries. Given the challenges ahead, World Bank President Ajay Banga has called for this replenishment to be the “largest ever,” with a commitment of $30 billion. Such a commitment would enable the IDA to lend over $100 billion. However, some observers argue that these reforms are still insufficient and more steps need to be taken.

Another important point emphasized during the spring meetings was the World Bank’s interest in increasing financing for renewable energy and other critical investments through greater collaboration with the private sector. In particular, a new initiative has been launched to provide electricity access to 300 million people in Africa by 2030.?

The ongoing financial discussions will be reviewed at the G20 meeting in Brazil in July, and the World Bank and IMF’s annual meetings will take place in October, shortly before COP29.

Almina Gencal, Sustainability Specialist

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ESG NEWS

• Climeworks starts operations of its to-date largest direct air capture and storage (DAC+S) plant, Mammoth, in Iceland. It is the second commercial DAC+S facility of Climeworks and is about ten times bigger than its predecessor plant, Orca. The plant is designed for a nameplate capture capacity of up to 36,000 tons of CO? per year once in full swing by filtering CO? from the air and storing it permanently underground. The plant has successfully started to capture its first CO?, with twelve of its total 72 collector containers installed onsite. Climeworks is also developing multiple megaton centers in the US, drawing on operational and testing experience from its two commercial facilities in Iceland. DETAIL

• An abundant mineral called olivine can help make carbon-negative cement.? This process could also improve the large carbon footprint of cement, which accounts for around 8 percent of global cement's CO2 emissions.? Olivine is found in reserves in one of the main regions of the earth's mantle and its continents.? Olivine is one of the few minerals available in gigaton operation, says Sam Draper of Seratech, a UK-based company that has patented the compounding of olivine cement. DETAIL

• Civil society briefs and economists say governments should pledge billions in international aid through the World Bank to combat climate change, the Guardian reports. DETAIL
• Issuance volumes of green, social, sustainability and sustainability-linked (GSSS) bonds rebounded sharply in Q1 2024 over the prior quarter, rising 36% to $281 billion, up from $207 billion in Q4 2023, according to a new report from Moody’s Investors Service.?DETAIL
• According to the new Banking on Climate Chaos Fossil Fuel Finance Report 2024, the largest banks in the world have given $6.9 trillion in fossil fuel funding to the industry since the 2016 Paris Agreement. The goal of the Paris Agreement — signed by 196 countries — is to limit human-caused global heating to 1.5 degrees Celsius above pre-industrial levels by lowering carbon dioxide emissions. However, contrary to their pledges, private interests in many countries have kept funding the operations of fossil fuel companies, which have continued to expand, reported The Guardian.?DETAIL

• ?EU markets regulator the European Securities and Markets Authority (ESMA) announced today the release of its finalized guidelines for the use of ESG and sustainability-related terms in investment fund names, including investment thresholds required for sustainable investment funds, and the establishment of a transition category for investments that are not yet green, but are on a positive trajectory towards achieving environmental sustainability goals.?DETAIL
• Carbon dioxide is increasing in the atmosphere 10 times faster than it has in the last 50,000 years, according to a new study led by researchers from University of St. Andrews and Oregon State University. The findings shed light on periods of abrupt climate change in the planet’s history while offering new understanding of the impacts of today’s climate crisis.?DETAIL

GREEN COLUMN

THE PLANET’S SAVIORS: Z AND Y GENERATIONS

Deloitte’s 2024 Z and Y Generation Survey reveals noteworthy results that are worth reading and contemplating. The survey was conducted between November 2023 and March 2024, with a total of 22,841 participants, including 14,468 representatives from Generation Z and 8,373 from Generation Y, across 44 countries.

The most significant finding applicable to both generations is their commitment to "values". To clarify further, let’s explore the key findings:

• Cost of Living:?Both generations share concerns about the cost of living, but they also maintain optimism in this regard.
• Purpose-Driven Careers:?Approximately nine out of ten Z and Y generation respondents emphasize the importance of "purpose" in job satisfaction. They are increasingly likely to reject jobs or employers that don’t align with their values.
• Climate Change Concerns:?As climate change awareness grows, many representatives actively align their careers and consumer behavior with environmental values.
• Impact of GenAI Uncertainty:?While GenAI (General Artificial Intelligence) uncertainty influences career decisions, technology-savvy individuals believe it will improve work and work-life balance.
• Work-Life Balance:?Both generations consider work-life balance a top priority due to the stress caused by long working hours.
• Return-to-Office Policies:?While returning to the office offers advantages like enhanced collaboration, some respondents report increased stress and decreased productivity.

From a sustainability perspective, the emphasis on climate change is evident. “Environmental protection” is the societal issue where Z and Y generations believe they have the most impact on driving business change.

Climate Concerns:?62% of Z and 59% of Y respondents express worry or concern about climate change, influencing their career decisions and consumer behavior.

Advocacy and Pressure:?54% of Z and 48% of Y respondents indicate that they and their peers exert pressure on employers regarding climate change. This pressure has steadily increased in recent years.

Changing Jobs:?Around 20% of Z and 19% of Y respondents have changed jobs or industries due to environmental concerns, with many planning to do so in the future.

As consumers, approximately two-thirds of Z (64%) and Y (63%) generations are willing to pay more for environmentally friendly products or services. They take personal actions or plan to do so, such as avoiding fast fashion, reducing air travel, adopting vegetarian or vegan diets, or purchasing electric vehicles.

These statistics suggest that Z and Y generations may be the heroes who can reverse climate change.

?zgün ??nar, CEO

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IMPORTANT CONCEPTS

BIST SUSTAINABILITY INDEX

The BIST Sustainability Index is a benchmark that includes companies listed on Borsa Istanbul (the Istanbul Stock Exchange) with high corporate sustainability performance. This index provides investors with the opportunity to invest in companies aligned with sustainability principles.

Starting from May 13, Borsa Istanbul has also begun calculating four new indices related to sustainability-themed debt instruments. These indices are as follows:

• BIST Green Corporate Eurobond Indices (USD)
• BIST Green Corporate Eurobond Indices (TRY)
• BIST Sustainable Corporate Eurobond Indices (USD)
• BIST Sustainable Corporate Eurobond Indices (TRY)

These indices reflect Borsa Istanbul’s commitment to promoting sustainable practices and providing investment options for environmentally and socially responsible companies.

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WHO ARE WE?

Trasta ESG, is a consulting firm in Turkey that offers services such as gap analysis and sustainability consulting, providing businesses with the opportunity to determine their ESG score using a "Sustainability Assessment and Management Platform" designed according to international standards and tailored to different sectors.

Our motto is, "We are with you at every stage of your sustainability journey!"

You can explore our services in detail here and reach us through the links below.

Click for our corporate web site…

Telephone: +90 (216) 455 39 66

Email: [email protected]