IFC’s appraisal considered the environmental and social management planning process and documentation for the Project and gaps, if any, between these and IFC’s requirements. Where necessary, corrective measures, intended to close these gaps within a reasonable period of time, are summarized in the paragraphs that follow and (if applicable) in an agreed Environmental and Social Action Plan (ESAP). Through implementation of these measures, the Project is expected to be designed and operated in accordance with Performance Standards objectives.
PS1: Assessment and Management of Environmental and Social Risks and Impacts
For Disclosure
Policy and Management Systems: Borçelik has adopted and disclosed the following corporate policies: Environment Policy, Occupational Health & Safety Policy, Risk Management Policy, Quality Policy, Human Rights Policy, Water Policy, Energy Management and Decarbonization Policy, Responsible Steel Policy, Corporate Information Security Policy, Employee Relations policy, External Stakeholder Engagement Policy, Gender Equality Policy, Security Personnel Policy, and Anti-Corruption Policy.
Borçelik has established an Environmental and Social Management System (ESMS), generally aligned with the requirements of IFC’s PSs and commensurate with the E&S risks and issues of its current operations. The ESMS has been certified as per ISO 9001(quality management), ISO 14001( environmental management ), ISO 45001 (occupational health and safety), ISO 50001 (energy management ), Responsible Steel International Standards, and per SEDEX SMETA 4 Pillar (SEDEX Members Ethical Trade Audit). The company is subject to regular annual social and environmental compliance external audits.
As part of the management of the change process, Borcelik will augment its ESMS procedures to address changes the Project scope will generate. The company will augment site-specific E&S management plans, which cover waste management, wastewater management, hazardous materials management and transportation, resources and energy management, occupational health and safety, safe operation, emergency response, and risk assessment ensuring alignment with the requirements of IFC PSs and WBG General EHS Guidelines and WBG EHS guidelines for Metal, Plastic, and Rubber Products Manufacturing (2007) (ESAP #1 (i)). Borcelik will also develop a Construction Environmental, Occupational Health, Safety, and Social Management Plan (CESMP) in line with the requirements of IFC PSs and WBG EHS guidelines.
Identification of E&S Risks and Impacts: Borçelik, as part of the ESMS, has established a risk assessment and analysis procedure to regularly review operational EHS risks and issues. As described in ESAP #1 (ii), the procedure for identifying E&S risks and issues will be updated in line with the requirements of IFC’s PS1.
Borcelik has initiated an Environmental Impact Assessment (EIA) process in line with the national law for the expansion of the Bursa plant on acquired industrial premises adjacent to the existing Borcelik facility. Borcelik has prepared an E&S Scoping study of the proposed expansion work, which includes an overview of the main expansion lines and related E&S potential risks and impacts. As part of the ESAP #2, Borcelik will undertake the ESIA for the expansion of Bursa facility in line with the requirements of IFC PSs and WBG EHS guidelines for Metal, Plastic, and Rubber Products Manufacturing (2007).
Organization Capacity and Competency: Borcelik has established an EHS organizational structure, which includes a Sustainability Committee and Sustainability Board at the Borcelik level and a Borusan Group Sustainability Board at the Group level. The Management Systems Director leads the Sustainability Committee, and coordinates the communication with the Borcelik Sustainability Board. The Borçelik Sustainability Board oversees the novel all E&S performance and reports to the Borçelik Board of Directors (BOD). The Borçelik Sustainability Board engages with the Borusan Group Sustainability Board, with Borçelik General Manager being its member.
Borcelik’ s Management Systems Director is responsible for the implementation of the ESMS. Four OHS specialists are reporting to the OHS Manager, and the Utilities Unit Manager (along with his team) responsible for environmental-related aspects of the Gemlik Plant is reporting to the Technical Services Manager. Both the OHS Manager and Technical Services Manager report to the Executive Committee.
Emergency Preparedness and Response: Borcelik has documented Emergency Management Procedure as well as Emergency Plans specific to each plant including different emergency risks and associated procedures to be followed. The emergency plans identify the cooperation points with local governments and regional emergency response teams and the situations in which they will be involved. Borcelik shares a common area with group companies in its region. There are fire brigade, ambulance and health services that provide joint services to neighbouring group companies.
The roles and responsibilities of employees responsible for evacuation, rescue, and firefighting are defined and displayed at various locations. Evacuation route maps, assembly point signs, and hose reels have been placed at appropriate locations. Annual drills are conducted to ensure the implementation of fire safety measures. The EPRP framework will be updated to cover the expansion plant. The EPRP will identify the drill and training for the construction contractors and subcontractors engaged in the expansion project's construction (ESAP #11).
EHS Training: Borcelik provides E&S and OHS trainings to its direct employees. Environmental and one OHS training is organized annually to increase the employees' awareness, improve OHS culture, and convey Borçelik practices. Borçelik Management Policies, Code of Ethics and Sustainability concepts are conveyed to employees through social training. Borçelik Technical Academy also offers employees online training videos. Borcelik will develop an OHS training module for implementation by the Contractors and will contractually require and monitor its contractors, including those engaged by the key supply chain contractors, to train contracted employees for awareness and compliance of Borcelik’ s OHS procedures. (ESAP #3(i)).
Monitoring and Reporting: The company's safety performance is monitored through daily inspections by the Health & Safety team, and unsafe practices or violations of the safety procedures are communicated daily. Borçelik Sustainability Committee monitors the EHS performance following the sustainability KPIs and checking compliance with local regulations. Annual audits are conducted in line with ISO requirements. The company documents the EHS performance in Environmental and OHS Assessment reports, which are reviewed quarterly by the Borcelik Sustainability Board and Board of Directors.
PS2: Labor and Working Conditions
For Disclosure
As of October 2023, Borcelik employed 1,149 workers, including around 130 contracted workers, in the Gemlik/Bursa, Türkiye plant. 12,8% of the employees are women, and around 63% are blue-collar workers. Five percent of blue-collar workers are women. The Company has a targeted to increase female ratio for blue-collar workers by 2030.
Human Resource Policy and Procedures: Borcelik has adopted a Code of Ethics (Orange Ethics Guide: https://www.borcelik.com/dokuman/2-TURUNCU%20REHBER_EN.pdf) and Human Rights Policy that are compliant with national law and consistent with the requirements of IFC’s PS2 and apply to all workers, including those employed by third parties.
The company’s “Orange Guide” defines working principles, codes of conduct, Discipline Policy, and roles and responsibilities. Borcelik’ s Sustainability Strategy (https://www.borcelik.com/en/social-responsibility/Human) includes ‘human’ pillar which defines the general framework of the Company’s human rights and employee relations principles. All direct employees are onboarded on key HR documentation, payroll systems, and EHS requirements at induction. Borcelik also has a Responsible Steel Policy and a Sustainable Procurement Policy that define its expectations from its third-party suppliers. Child labor, forced labor, fair and equal treatment, freedom of association and collective bargaining, legal working hours, a safe and clean working environment, and ethical principles are covered by these policies.
Contract workers are not provided with training on HR policies and procedures. Borcelik will ensure that all contracted workers receive training on the Code of Ethics, Human Rights Policy, Gender Equality, and Gender-based Violence and Harassment during the induction (ESAP# 3(ii)).
Working Conditions and Terms of Employment: Borcelik defines the terms and conditions of employment in line with the Turkish Labor Code. The overtime is compensated in accordance with the CBA. Borcelik’ s HR department will develop an Overtime Analysis Study and Action Plan with the Production Manager to ensure that the overtime is managed in line with the regulations (ESAP #4).
Non-discrimination and Equal Opportunity: Borcelik is committed to non-discrimination and equal opportunity through its Orange Guide and Human Rights Policy. Its main goals are defined in the Sustainability Strategy which include diversity and inclusion and Gender Equality Policy.
Workers Organization: Borcelik supports freedom of association and collective bargaining for its workers. The Company has been unionized since 1994. Collective Bargaining Agreement (CBA) is renewed every two years.
Protecting the Workforce: Both the Code of Ethics and the Human Rights Policy have provisions for the prohibition of child labor and forced labor. Furthermore, the minimum age of employment at Borcelik is 18 years. All potential employees are required to present proof of age in the form of a birth certificate or an identification card.
Worker’s Grievance Mechanism: An Appeal and Complaint Procedure is in place. However, this procedure is not fully allined with the requirements of IFC PS2 There is an Orange Ethics Hotline dedicated to ethics complaints managed independently. Grievances received through the Ethics Hotline are reported to Borusan Holding’s Ethics Committee directly. For confidentiality purposes, HR is not a part of the ethics hotline process. Anonymous grievances can be submitted to the Ethics Hotline and the Company website. There is no Grievance Log that covers all the internal grievances received from different channels and recorded in one document. Given these, Borcelik will i) develop a Grievance Procedure consistent with the requirements of IFC’s PS2 to manage employee grievances; ii) be informed of total number of the ethics notifications to get a general idea related to ethics and code of conduct performance of the Company, and iii) record and monitor internal grievances through Grievance Log in line with IFC PS2 (ESAP #5).
Workers Engaged by Third Parties: Borcelik utilizes contracted workers and service providers to undertake support in the production (forklift operators), cleaning, catering, health services and security activities. Administrative Affairs unit under the HR department is responsible for the contractor companies and workers. In addition to document review as per legal regulations (social security obligations etc.), Borcelik monitors third-party workers’ working conditions and wage payments. Borcelik will require and monitor that all the contractor workers are provided OHS induction training (ESAP #3(i)). Contractors and suppliers will be required to sign Code of Ethics as a contractual obligation (ESAP #6). Contractor employees can reach out to Borcelik’ s HR department to submit their grievances informally in case they cannot solve them with their own company’s HR. The Grievance Procedure to be developed will cover the 3rd party workers as well (ESAP #5).
Occupational Health & Safety: Borcelik has an OHS policy and procedures. However, current management and monitoring of OHS risks and issues during the night shifts need to be strengthened, and Borcelik will hire additional OHS specialists, specifically for night shifts (ESAP #7). OHS risk assessment is carried out annually and covers the contractor companies. OHS trainings are provided to workers, including the contracted workers, in daily toolboxes and weekly meetings. The company has established a work-related Accident Log where the accidents/incidents are recorded. Root analyses are conducted, and the Company identifies corrective actions. In addition to the internal audits, Borusan Holding and Arcelor Mittal (shareholders) make annual OHS/risk evaluation audits based on a yearly plan and focusing on a specific OHS issue.
For the Expansion Project, based on the ESIA, national law, and the ESMS procedures, Borcelik will develop a site-specific Construction EHS & Social Management Plan that would identify the worker's safety procedures and an OHS monitoring plan (ESAP #1(iii). Borcelik will ensure that during the expansion works, if the construction contractor develops any workers' camp/ accommodation, it should be in line with IFC’s PS:2 requirements and aligned with Good International Industry Practice inclusive of the IFC / EBRD guidance note on Workers’ Accommodation: Processes and Standards (ESAP #1(iv)).
Supply chain management:
Borcelik has adopted a supply chain management system based on Borusan Holding's policies and following the principles of Responsible Steel. The client keeps a record of products and components’ countries of origin of its key suppliers. Borcelik aims to improve its supply chain management system by developing a supplier code of conduct and collecting evidence from its main suppliers through on-site audits, as indicated below.
Borcelik has been a member of Responsible Steel since 2021, which requires the Company to follow a responsible supplier policy. Responsible Steel companies are committed to creating a responsible and sustainable steel value chain, from the production of raw materials through the purchase of final products, which includes the principles of human rights, labor rights, and Occupational Health and Safety in line with the IFC PS2: https://www.responsiblesteel.org/wp-content/uploads/2017/08/39669-ResponsibleSteel-Draft-Standard_V4.pdf
Borcelik adopted and disclosed the Sustainable Purchasing Policy that prohibits any form of forced labor and child labor: https://surdurulebilirsatinalma.com/index.html
Borcelik’ s key raw materials for the production process are hot-rolled coil, zinc, cold rolling oils, protection chemicals, liquid nitrogen, rolls (work rolls, intermediate rolls, backup rolls), and steel strapstraps. Borusan prepared a Supplier Guide and communicated its policies to the suppliers.. Borçelik aims to provide training on human rights and working environment, forced labor, child labor, freedom of association, gender equality and environmental performance to its priority suppliers, which it will be determined in terms of turnover and priority, and to require suppliers to submit their own audit reports on these issues. The company aims to initiate on-site ESG audits with a third-party company in early 2025. As per ESAP #6, during the ESG audit in 2024, Borcelik will map its primary supply chain with high risk for forced labor and child labor and prioritize completion of physical audits for these suppliers consistent with PS2 requirements. Borcelik will develop a Supplier Code of Conduct that prohibits child labor and forced labor and includes a reference to Company’s applicable safety requirements. Borcelik will incorporate contractual clauses in the suppliers’ agreements requiring compliance with the code of conduct and will continue monitoring its primary supply chain to ensure compliance.
PS3: Resource Efficiency and Pollution Prevention
For Disclosure
Raw Materials and Resource Consumption: The annual specific resource consumption of the Gemlik plant in 2023 was 123 kWh of electricity per ton of product, 33 cubic meters (m3) per ton of product natural gas, and 0.49 m3 raw water per ton of product, with 1.4, 1.8 reductions and 4,2% increase, respectively, compared to the previous year. As part of the project, Borcelik will install an in-house power generation of 2MW capacity for emergency power supply. The expansion project will install a natural gas-fired steam boiler of 10,000 kg/h for heating requirements.
Resource Conservation (Water and Energy): Borcelik has adopted Water Policy and Energy Management and Decarbonisation Policy Borcelik’ s Energy Committee monitors energy consumption and develops and implements programmes for energy conservation. Borcelik’ s energy conservation initiatives include: i) reducing electricity and natural gas consumption; ii) procurement of low-carbon equipment and goods; iii) preventing losses and leakages throughout the processes; iv) transformation to LED lighting; v) transformation to more efficient engine technologies; vi) Modernization (renovation) of production lines; vii) heat recovery; and viii) replacement of ICE vehicles with electric alternatives.
The Borcelik plant uses primary process water for cooling. Raw water (650,000 m3/year) is supplied from 4 wells where Borcelik holds valid permits for groundwater extraction. The newly acquired premises include one licensed well of 21.5 m3/hr production capacity. Borcelik water requirement after the expansion project will be about 100 m3/h on average, which will remain within the withdrawal permit limits from the basin. The closest settlement Gemsaz is using the same groundwater source for water supply. Therefore, Borcelik has initiated a Basin Source Validity assessment to identify groundwater characteristics and long-term storage capacity of the basin. Continuous monitoring was carried out for one year, and modelling studies were initiated. Borcelik will assess the Project’s additional impact on the groundwater resources to ensure long-term water availability at the Enguru Groundwater Basin (ESAP #8(i)). Drinking water is purchased from the market. The compressed air and steam consumed at the facility are produced in high-capacity boilers and compressors. Borcelik’ s decarbonization roadmap aims to reduce the amount of water withdrawn from underground clean water sources by 50% by 2030. Borçelik Reverse Osmosis Facility aims to prevent 100,000 m3 of water extraction by treating wastewater, and to provide a 15% reduction in total water use in the Demineralization Facility.
Liquid Effluents: The production generates emulsified wastewater from cold rolling lines (15%) and detergent alkaline wastewater from coil surface cleaning baths (85%). Borçelik has an effluent treatment plant (ETP) to treat its industrial wastewater. ETP includes degreasing, chemical, biological, and advanced treatment processes. The treated effluent is discharged to the Marmara Sea through a separate discharged line monitored by the local regulatory agency. All effluent parameters are below the limit values set by the Regulation on Water Pollution Control for Metal Industry and guidance values of WBG EHS Guidelines for Metal, Plastic, and Rubber Products Manufacturing, dated April 30, 2007. The sludge formed in the biological and chemical settling ponds, after dewatering, is disposed of by engaging authorized hazardous waste disposal companies. About 192 m3/d of effluent expected to be generated from the expansion project will be treated in the existing ETP by extending its capacity by addition of 240 m3/d of chemical treatment unit and 360 m3/d of biological treatment unit. Borcelik generates about 90 m3/d of domestic wastewater which is currently treated at a shared sewage treatment plant that another group company operates. Borcelik will commission its own domestic wastewater treatment plant in 2024, which will have adequate capacity to treat about 75 m3/d of domestic wastewater expected from the operations of the expansion project. Borcelik’s wastewater management procedure will be updated to align with WBG EHS Guidelines limit values for wastewater discharge. Borcelik will also ensure that the Sewage Treatment Plan (STP) is designed constructed and operated to meet the effluent limits defined by the national law and the WBG General EHS Guidelines (2007) ESAP 8(ii, iii)).
Air Emissions: There are twenty three air emission stack sources at the Borcelik plant, including 3 boiler stacks, 2 annealing furnace stacks, 4 oven/chromatin unit stacks (all natural gas-fired), and 9 process air ventilation stacks. The company monitors air emission parameters, including carbon monoxide (CO), nitrogen oxides (NO, NOx), sulphur dioxide (SO2), dust, volatile organic carbons (VOC), hydrochloric acid (HCl), Chloride and Heavy Metals. These parameters are monitored every two years as per the local regulatory requirements and the Plant Environmental Permit. The results of the last measurement campaign, performed in April 2024 indicate compliance of the air emission levels with the national air emission standards and WBG EHS Guidelines for Metal, Plastic, and Rubber Products Manufacturing, (2007) for process emissions as well as WBG General EHS Guidelines (2007) for combustion sources with capacity below 50MW. The expansion project will add five more air emission stacks with dust collection filters installed at PLTCK stacks. Borcelik will update the air emissions stack and process emissions monitoring procedures to be aligned with WBG EHS Guidelines (General Guidelines and EHS Guidelines for Metal, Plastic, and Rubber Products Manufacturing) including the frequency of monitoring (i.e. bi-annual monitoring) and the monitoring parameters (ESAP #9).
Noise: As long as Borçelik does not make any process changes, the noise permit obtained during the 2022 environmental permit process remains valid. The latest ambient noise monitoring results (2022) at the closest off-site sensitive social receptors conformed compliance of the ambient noise levels with the national standards and WBG General EHS General Guidelines guidance values.
Solid and hazardous wastes: Most of the wastes generated at Borcelik plants are metal. All metal wastes are recyclable and transported to recycling facilities. The other waste streams (oily sludge, acids, treatment sludge, waste oil, contaminated packaging waste, plastic, paper, and wood) are transferred to recycling or disposal facilities. Non-metal wastes that are sent to recovery or landfill were calculated as 2,440 tons in 2023. Borcelik has a target of a 50% reduction in non-metal waste by 2030 compared to 2021. Hazardous and non-hazardous Waste Management Procedures are in place. Borcelik has engaged government-authorized vendors for off-site disposal of wastes, including three vendors for hazardous wastes and about 30 for scrap and other mostly recyclable items. The local municipality segregates and collects non-hazardous waste from the site engaging its sub-contractor.
During the expansion work Borelik plan demolition of about 7800 square meters of the erected steel structures in the acquired premises and reusing the steel and other materials in construction of about 9300 square meters of the new structures. The expected 66 kilo tons of excavated material from the new construction will be disposed of in an authorized dumping site. Borcelik will develop a Demolition Management Plan in line with WBG General EHS Guidelines (ESAP #10).
Hazardous Materials Management: Procedures for management of Hazardous Waste and Transportation of Hazardous Substances by Road are developed and implemented at Borcelik plants at Gemlik, Bursa and Manisa. Documents refer to the ISO 14001 Standards and local regulatory requirements. Borcelik’ s practices for handling and storage of hazardous material including installation of secondary containment, display of Material Safety Data Sheet (MSDS) and safe storage are in line with IFC WBG EHS General Guidelines.
Greenhouse gases (GHG): Borcelik BOD has approved reducing greenhouse gas emissions in line with the goals of the Paris Agreement. Borcelik has adopted an Energy Management and Decarbonisation Policy aiming reduction of (Scope 1 and Scope 2) CO2 emissions from its operations by 47% by 2030 and reaching the net zero carbon emission target by 2050. Borcelik maintains a data inventory to calculate its Corporate Carbon Footprint. In the year 2023, the total GHG emissions (Scope 1 & Scope 2) for all Borcelik facilities were 157,881 tCO2eq while Scope 3 GHG emissions were 2,904,688 tCO2eq.
PS4: Community Health, Safety and Security
For Disclosure
Community Health and Safety: Borcelik’ s Gemlik plant is in an industrial zone. The nearest factories in the industrial zone and communities (the nearest neighborhood of Gemsaz is 2 km from the Gemlik plant) are sensitized to Borcelik’ s Emergency Preparedness Response Plan (EPRP), which includes a process to provide appropriate information, assist and collaborate with local authorities and neighbouring communities in case of emergency situations. Chemicals within the scope of the regulation on the prevention of Major Industrial Accidents (Directive 2012/18/EU) were evaluated in accordance with the method specified in the national regulation. The risks of Physical, Environmental, Health, and other hazards in the SEVESO spreadsheet are below the limit values determined according to the lower-level and upper-level collection rules. Limits are in the safe zone.
Road Traffic Safety: The transportation between Borcelik and the Borusan Port (Gemlik) is carried out by a contractor company (Borusan Logistics). Transfers within the plant fence are carried out by light vehicles (e.g. cars, forklifts) and cranes. In line with the OHS Policy, several policies and procedures are in place to minimize road and traffic risks related to logistics and transport. However, the Company has no management plan. Borcelik will develop a Road and Traffic Safety Plan covering transportation to and from the plant (ESAP #12).
Security Personnel: Borcelik’ s factory security is provided by a 3rd party company (Securitas). All security personnel are trained by private companies authorized by the Ministry of Internal Affairs. Security units in the plant are unarmed. Borcelik has a Security Personnel Policy and Security Risk Assessment Procedure.
