This is a Category B project according to IFC’s 2012 Policy on Environmental and Social Sustainability due to limited and site-specific E&S risks and impacts associated with reinforcement, maintenance, and resource efficiency investments within existing factories. These can be avoided or mitigated by adhering to recognized Good International Industry Practices (GIIPs). Key E&S risks and issues associated with this project include: (i) adequacy of Ülker’s E&S and supply chain management systems, including management of activities associated with the modernization of the factories and sourcing of raw materials; (ii) HR management, including working conditions and terms of employment, non-discrimination, equal opportunity, workers grievance mechanism, and contractors’ labor and occupational health and safety (OHS) management guidelines; (iii) emergency preparedness and response, and life and fire safety; (iv) resource efficiency; (v) air emissions, ambient air quality, odor, noise, solid waste, wastewater, and hazardous material management; (vi) community health and safety, including risks due to transport of products and raw materials; and, (vii) stakeholders’ engagement, including community grievance mechanism and gender-based violence (GBV) sensitive grievances and referrals.  

 PS1: Assessment and Management of Environmental and Social Risks and Impacts

Environmental & Social Policies. Ülker updated its Sustainability Strategy in 2022 which is structured across four pillars, namely (i) Planet; (ii) Value Chain; (iii) Employees; and (iv) Community. It also adopted a 2014-24 sustainability roadmap, with targets defined for 2024, such as (i) reduction of 40% absolute carbon emissions per ton of production; (ii) reduction of 30% water consumption; (iii) zero waste to landfill; (iv) reduction of 20% of logistic based carbon emission; and (v) developing a sustainable packaging strategy. A roadmap has been defined for achieving these targets at Ülker’s 13 factories, including those three targeted by this proposed investment. Ülker’s sustainability framework include Environmental Management, Human Rights, Occupational Health and Safety, Energy and Supply Chain Policies. Ülker’s Sustainability Platform (at corporate level) and Operational Excellence Committee (at plant-level) oversee the progress against the targets on a quarterly basis. Ülker will upgrade its corporate policies (Environmental, OHS and Supply Chain) to align its E&S performance against IFC PS requirements for all its factories and raw materials sourcing (ESAP#1). Specifically, the policies will be aligned with the nine elements of PS1 requirements, and addressed PS gaps as per ESAP#2, ESAP#5, and ESAP#6 below.

Identification of E&S Risks and Impacts. The seismic reinforcement works in the two factories in Türkiye will result in improvement in safety standards of the buildings. There will be no demolition activities or construction of new buildings. The maintenance activities in Hamle includes process improvements and technology modifications that will lead to resource (energy/water) efficiency. Since there will be no capacity increase or land expansion/relocation activities that will lead to additional E&S impact, there is no requirement for a relevant ESIA study. Topkapi is located in a semi-commercial zone while Gebze is in the Organized Industrial Zone (OIZ). All infrastructure services (natural gas, electricity, drinking/process water, sewerage, rainwater collection systems) are provided by the Istanbul municipality for Topkapi and by the OIZ management for Gebze. Hamle plant is located in an industrial zone and infrastructure services are provided by Kaskelen Industrial Zone. Both operations in Türkiye (Topkapi and Gebze) received an “EIA exemption decision” by the competent authorities. The three factories have the required environmental permit. Factory operations in Türkiye were inspected during MoEU audit which did not identify any non-compliance against the conditions of the environmental permits in 2021 and 2023.

Ülker implements an E&S risk avoidance and mitigation process, which is composed of the following components: (i) compliance with environmental permits (e.g., air emission, waste, wastewater discharge). This compliance is reported by each factory and verified annually by local environmental authorities; (ii) implementation of EHS Standard Operating Procedures (SOPs) including a risk assessment procedure and verification audits as part of its quality, environmental, food safety, occupational health and safety, and energy management systems (consistent with the relevant ISO standards as described below). Ülker maintains a legal EHS and labor registry of Türkiye and Kazakhstan laws and regulations. Legal scorecard exists for all facilities. As per ESAP#1, Ülker will undertake a gap analysis of its EHS SOPs against the applicable and relevant sections of the WBG EHS Guidelines (General and Sector-specific – Food and Beverage Production) and, as needed, develop a plan to implement any relevant corrective measure identified to the three factories being targeted by this investment.

E&S Management System & Programs. Ülker maintains ISO22000 (Food Safety Management System), ISO14001 (Environmental Management System), ISO45001 (Occupational Health and Safety Management System), ISO50001 (Energy Management System), and food safety and quality certifications, such as British Retail Consortium (BRC) V8 (Achieved Grade: A), International Featured Standard (IFS) (Higher Level) and HALAL certificates. As part of its sustainability efforts, Ülker integrates the GHG Emissions Accounting and Verification System and ISO50001 certificate at its facilities in Türkiye which were noted to be renewed and up to date. Additionally, all factories are managed in accordance with the ISO45001 Occupational Health and Safety Management System. As part of its management system, Ülker developed procedures for waste management, water management, air emissions management, operation of wastewater treatment plants, chemical controlling, OHS accidents, EHS monitoring, emergency response, first aid, natural hazard emergency, crisis management, explosion protection at the three targeted factories. Furthermore, Ülker has a set of EHS KPIs such as Loss-Time Accidents (LTA) Rate, electricity, natural gas, water consumption, waste recycling ratio and number of EHS suggestion cards for improvement completed for each targeted factory.

E&S Organizational Structure. Ülker established a three-tiers organizational structure for its sustainability framework. A Sustainability Platform was established in 2014 and is under the leadership of its Board of Directors. The Platform is responsible for the review and update of Ülker Sustainability Strategy and annual workplans for achieving the sustainability targets. The head of the Sustainability Platform is Ülker’ CEO and the coordination is under the responsibility of the Vice-President of Sustainability, Environmental, OHS and Quality. The Platform is composed of representatives from various Departments and provides an integrated approach to update Ülker’s policies, sustainability strategy and targets. It meets four times a year to monitor implementation progress. A Group-level HSE/Sustainability team is responsible for the Group-wide ESG performance and reports directly to the VP Sustainability/HSE. Finally, each factory has an OHS supervisor/Environmental Specialist and OHS foremen and shift workers. The plant-level HSE leader reports directly to the factory director/General Manager of the production unit. A Learning / Professional Development Program, based on professional needs assessment, is implemented to build and maintain competency of Ülker’s EHS/Sustainability organizational structure. Each factory has an OHS Committee for safety performance review. 

E&S Training. Ülker’s EHS/Sustainability team and plant-level officers are providing mandatory induction training to all workers, including permanent employees, temporary/casual workers, contractors and service providers. This training program includes Ülker EHS risk assessment and workplace risk assessment, SOPs, working permit (e.g., lockout tagout – LOTO) and measures defined to achieve the sustainability targets. The company’s training plan includes refreshers and specialized training (e.g., first aid, handling of weight, working at height, manlift operations, management systems, waste management, food safety).

Emergency Preparedness and Response (EPR). Ülker developed, as part of its EHS SOPs, an EPR framework, including emergency and pre-fire preparation and intervention procedures, and earthquake/explosion protection plans. Ülker factories have their own plant-level emergency response plans which are reviewed and approved by the local Fire Department and includes a process to provide appropriate information and collaborate with local authorities/neighboring communities in case of emergency situations. All factories are stationed with 24/7 trained firefighting teams. A team of occupational health first aid/doctors/nurse is also present 24/7. Fire drills are carried out bi-annually. Fire risk assessments were conducted at the three targeted factories in 2022. The roles and responsibilities of the Emergency Response Team (ERT) are clearly defined, including notification and activation process, training, drills, coordination and communication with local authorities and neighboring communities.

E&S Monitoring & Reporting. Ülker maintains monthly EHS performance dashboard for all its factories, including KPIs focusing on environment (Scope 1, 2 and 3 total GHG emissions, energy and water consumption and intensity, total waste as recycling ratio, sustainable packaging), social (employee diversity and inclusion) and occupational health and safety (leading and lagging indicators, including Loss-Time Injury Frequency Rate (LTIFR) and Loss Time Severity Injury Rate (LTSIR)). Annual performance against the targets are disclosed in the company’s Sustainability Report (Ulker_Surdurulebilirlik_Raporu_2022_ing), which is prepared in line with the Global Reporting Initiative (GRI) standards. Internal and external sustainability/EHS audits are carried out by Ülker and its customers on a continuous basis.

Supply Chain Risk Assessment and Management System. For its food manufacturing operations, Ülker uses a variety of raw materials, including cocoa and derivatives, wheat, flour and derivatives, sugar, vegetable oils, nuts (hazelnut and pistachio) and packaging materials. The sourcing of raw materials i.e. cacao (from Ivory Coast), hazelnut (from Türkiye), vegetable (palm) oil (from Indonesia and Malaysia), sugar and wheat (from Türkiye) is considered medium to high risks with regard to PS2/PS6 supply chain issues as the production of these commodities (especially cocoa, vegetable oil, nuts) in origins is associated with risks such as child labor, OHS and significant conversion of natural habitat. In accordance with its 2022 Sustainability Pillar, Ülker is committed to obtaining 100% of its raw materials (especially high-risks commodities, such as cocoa, hazelnut, palm oil) from sustainable sources by 2030 while promoting sustainable agricultural practices, through regenerative agriculture in Türkiye (for wheat, hazelnut ) and other origins (for cocoa in Ivory Coast). Out of the 1,036 suppliers Ülker worked with in 2022, 936 were local Turkish suppliers, accounting to 86% of its supplier base. As per its 2022 Sustainability Pillar, Ülker is committed to increase its domestic agricultural raw material use (except cocoa and palm oil) to 90% by 2030.

To implement its strategic 2030 sustainability sourcing and to pro-actively manage social, OHS and biodiversity related production risks of its raw materials sourcing, Ülker started the development of a Supply

Chain Management System (SCMS), including the adoption of a Supply Chain Policy (https://ulkerbiskuviinvestorrelations.com/_assets/pdf/surdurulebilirlik/Ulker_Tedarik_Zinciri_Politikasi_ENG.pdf) which defines the environmental, social and ethical responsibilities that it expects from all its suppliers that provide Ülker with raw materials. The policy is included in all supplier contracts and explicitly mentions the prohibition of child labor, forced labor, promotion of fair and equal treatment, of freedom of association and collective bargaining, working hours and wages; safe and clean working environment; protection of the environment; quality and food safety; ethical principles and reporting policy violations. In addition, Ülker (through pladis) has adopted a Human Right and No-Deforestation, No Peat and No Exploitation (NDPE) Policies applicable to its third-party suppliers.

Ülker’s Supplier Code of Conduct and commodity-based sustainable standards (at the time of this appraisal, it was only available for cocoa and hazelnut; such standards have yet to be developed for (palm oil) provide further policy and contractual guidance on specific Ülker’s E&S requirements applicable to the selection of its direct and indirect third-party suppliers for these agro-commodities. All Ülker’s third-party suppliers (direct or indirect) are required to sign, on a yearly basis, Ülker Code of Conduct and abide, on a voluntary basis, to its E&S requirements. Ülker also undertakes a desk review of its indirect cocoa and hazelnut suppliers to assess if these suppliers address E&S risks associated with their own sourcing and/or production as per Ülker’s Supplier Code. This desk review validated the eligibility of these third-party suppliers. Ülker has also established sustainability sourcing programs for its cocoa and hazelnut sourcing with its direct suppliers in Ivory Coast and Turkey respectively (known as Beyond Cocoa and Beyond Hazelnut) which encompass improving producers’ livelihood, environmental protection, and traceability and responsible sourcing. For its cocoa in Ivory Coast and CPO sourcing from South-East Asia, Ülker has established a partnership with Earthworm Foundation and a satellite monitoring service provider to monitor the risks of child labor and deforestation through continuous field monitoring (ref. Child Labor Monitoring Remediation System – CLMRS), including annual auditing and reporting of its direct suppliers.

As Ülker is in the process of developing a 2025 sustainability strategy sourcing for all its “high-risk” raw materials as part of the European Union (EU) Supply Chain Due Diligence Directive, based on IFC appraisal findings, there are areas of improvement for strengthening its SCMS. Going forward, Ülker (and pladis) will (i) update its Supply Chain Policy and its 2020 NDPE policy to ensure consistency with PS6 supply chain requirements; (ii) update its Supplier Code to ensure consistency with PS2/PS6 supply chain requirements; (iii) update its existing commodity-based sustainable standards (for cocoa and hazelnut) and develop such sustainability standard for palm oil production in South East-Asia; (iv) conduct an E&S risk assessment of all its direct and indirect suppliers against PS1, PS2 and PS6 related supply chain requirements, especially for high-risk commodities (cocoa, hazelnut, palm oil); (v) formalize its SCMS, including sourcing procedures (e.g. contractual provisions, traceability system, supplier risk screening platform, training requirements, monitoring and verification system); (vi) update its E&S due diligence approach/methodology to assess compliance of its indirect suppliers against its Supply Chain Policy and Supplier Code and provide an time-bound implementation plan; the scope of the E&S due diligence will encompass the indirect supplier’s sourcing policies and sustainability sourcing strategy, comprehensiveness of its risk screening platform, implementation effectiveness of sourcing’s sustainability programs, and confirmation that all suppliers abide by either the trader’s based sustainability standard or certified by voluntary commodity standard (e.g. Rainforest Alliance or Fairtrade) meeting IFC PS2/PS6 supply chain requirements (as Ülker is sourcing 70% of its cocoa, 50% of its hazelnut, 100% of its sugar beet, and 100% of its CPO from indirect suppliers); (vii) develop a sustainable sourcing strategy for all its raw materials, especially high-risk commodities (cocoa, hazelnut, palm oil); and finally (viii) implement a monitoring and verification audit system to ensure that its Supplier Code, including E&S requirements, is effectively enforced with all its direct and indirect suppliers. Considering the significant risks associated with vegetable (palm) oil production in South-east Asia, Ülker will implement a plan to increase traceability at plantation-level of its palm oil sourcing from current 44% to 80% by 2025 and 100% by 2027. Monitoring of this palm oil sourcing will be monitored through satellite imagery with a service provider (ESAP#2).

PS2: Labor and Working Conditions

As of September 2023, Ülker employed 5,344 workers, including contracted workers, in the plants located in Türkiye. 24 percent are women, and 84 percent of the employees are blue-collar workers. The number of workers at Topkapi and Gebze are 1,144 and 1,377 respectively while it is 962 workers at the Hamle factory. 323 of them are contracted workers and 616 of them are female.

Human Resource Policy and Procedures. Ülker has adopted a Code of Ethics and Human Rights Policy which are aligned to PS2 requirements and is applicable to all workers, including those employed by third parties. Ülker commits to the following: fair and equitable wages, benefits and other conditions of employment in accordance with local laws, to recognize employees’ right to freedom of association, to provide humane and safe working conditions, and to prohibit forced labor and child labor. In addition to the principles in its Code of Ethics, the Human Rights Policy defines Ülker’s commitments regarding harassment, OHS, working hours and overtime, and the rights of local communities. Ülker has an Equality Statement which announced its support of the Women’s Platform launched by its parent company, Yildiz Holding, to strengthen equal opportunity and diversity. Human Resources (HR) procedures and practices were developed based on these two main policies. All direct employees are onboarded on key HR documentation, payroll systems, and EHS requirements at induction. The implementation of HR policies and procedures for the workforce is led by an HR Director and supported by onsite HR managers and payroll officers. Induction training covering HR policies and procedures is also provided to contracted workers by their own companies in cooperation with Ülker’s HR department.

Ülker also has a Supply Chain Policy that defines 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 the Policy. All policies and procedures of are accessible to all employees through Ülker portal. Ülker provides training on various HR policies and procedures to its employees via pladis Academy (an e-learning platform). This includes Code of Conduct, Anti Bribery and Sustainability Training etc. which covers environmental responsibility, diversity, inclusivity, workplace safety, and ethics. The training data is recorded and monitored based on participant number, gender, grade, and department annually. The HR department is responsible for training programs, working closely with other departments. Ülker’s commitment to training also extends to contracted workers. Contracted workers have accessed to pladis Academy training programs and have regular trainings on HR policies and procedures, Code of Conduct, and vocational programs.

Working Conditions and Terms of Employment. Ülker defines the terms and conditions of employment in line with the Turkish and Kazakhstan Labor Codes and aligned with PS2 requirements in its Türkiye and Kazakh plants. All workers are required to have a signed labor contract, which, at a minimum, states the nature and category of employment, place of employment, start date and duration, working hours, remuneration, leave, benefits, and employee rights and obligations as applicable. All employees can track and see their pay slips showing the number of hours worked, wages (including overtime provisions), statutory social security deductions and other HR information including performance and training, through the company’s portal. The minimum wage at Ülker aligns with the statutory minimum wage in Türkiye and Kazakhstan. In line with the Turkish Labor Code, total hours of work at Ülker are 45 hours a week. Overtime is voluntary and paid (1.5 x regular payment). Going forward, Ülker will review its overtime policies and procedures, including monitoring practices to ensure that overtime arrangements are in line with PS2, in connection with the three factories targeted by this investment. Based on overtime analysis, Ülker will develop an Overtime Management Action Plan (OMAP) and will share a progress report six months after the adoption of OMAP (ESAP#3). Discipline procedure that defines the process to be followed in case of the violation of the workplace rules by white-collar employees is in place. The relevant provisions within the Collective Bargaining Agreement (CBA) are followed for the discipline process related to blue-collar employees.

Non-discrimination and Equal Opportunity. Ülker has a commitment to non-discrimination and equal opportunity through its Code of Ethics and Human Rights Policy. Sustainability team manages gender-related issues in cooperation with the HR department. According to its 2022 Sustainability Report, 23% of all employees and 27% of senior management are women. In addition, Ülker increased the number of positions for disabled employees and created models that contribute to the education and employment of people with disabilities. As of 2022, Ülker has about 400 employees with disabilities.

Workers Organization. Ülker supports freedom of association and collective bargaining for its workers. The company is unionized in its plants in Türkiye. The CBA is renewed every two years. The latest agreement for the Gebze factory was signed in August 2023. The current CBA for the Topkapi factory is valid till December 2023 and will be renewed. Each factory has a chief representative and several representatives elected by the workers. Both Gebze and Topkapi plants have five union representatives (including female representative in the Gebze plant). The Industrial Relations unit, which is a part of the HR department, manages the relations with the Union. There is also an Industrial Relations Board consisting of HR and factory senior management. Industry relations meetings are held with the participation of employees. Employees share their agendas and actions are defined to address grievances or requests. Progress on the action plans is checked at every meeting. Hamle factory is not unionized and there is no CBA in place.

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 Ülker 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. Internal grievances can be made through mobile app (One blue), online employee platform, WhatsApp groups and email at Ülker. In the Hamle factory, a Conciliation Commission, which includes equal representatives from the employer and employee sides, assesses and monitors employee grievances and labor disputes. The company confirms that all internal grievances are investigated, and necessary actions are taken. It was reported by the HR teams in Gebze and Topkapi plants that employees mostly prefer to submit their grievances and requests verbally to their unit chefs and Union representatives. In each plant, a monthly meeting (breakfast event) is held with blue-collar workers to discuss issues, concerns, and grievances. These issues are recorded and reported to the factory management periodically, and the workers are informed verbally by HR when there is progress on the issue. Since 2017, an employee engagement survey is conducted twice a year to get feedback and requests from employees regarding the working conditions, corporate policies and procedures, and HR practices. Survey results are presented to the employees through e-mails and face-to-face department meetings. Ülker has an Ethics Committee to manage ethics-related grievances from its employees, contractor employees or business partners. Anonymous grievances can be submitted to the Ethics Hotline. The number and issues of the grievances submitted to the Ethics Hotline are disclosed in the annual Sustainability Report. Each plant has an ‘Investigator’ in the HR department trained for ethics-related confidential investigation process. The investigator reports to the Ethics Committee directly, not to the HR Manager or the factory management, to protect confidentiality. There is no grievance log that covers all the internal grievances received from different channels and recorded in one document. Ülker will develop a Grievance Procedure in line with PS2 to specify the process for managing grievances, the entities involved, the timelines, and a grievance log to record and monitor the grievances (ESAP#4).

Workers Engaged by Third Parties. Ülker utilizes contractors and service providers to undertake packaging in the production, cleaning, storage, catering, maintenance, personnel transportation, logistics and security activities. In addition to document review as per legal regulations (social security obligations etc.), Ülker monitors third-party workers’ working conditions and wage payments. Ülker supervises that all the contractors train their employees on Ülker’s Code of Ethics and OHS rules and work in line with these policies and principles. Contractors and suppliers must sign Code of Ethics as a contractual obligation. Contractor employees can reach out to Ülker’s HR department to submit their grievances in case they cannot make it to solve with their own company’s HR. 

Occupational Health & Safety. Inherent hazards and risks of a food manufacturing’ factory include working with energized equipment, at heights, in hot environment and confined spaces, and hearing loss due to excessive noise levels at specific workstations. The three factories under this proposed investment are fully automatized. During IFC’s visit of Topkapi and Gebze factories, consistent use of PPEs (e.g., overall, ear plug, shoe cap) has been observed among factories workers together with displayed emergency escape plans. Loss-Time Frequency Injury Rate (LTIFR) in Türkiye (including Topkapi and Gebze) and in Kazakhstan (Hamle) was recorded as 4 and 2 respectively which is aligned with OSHA Industry benchmark for food manufacturing in 2021 (4). The OHS performance is indicative of an effective implementation of Ülker’s OHS management system. OHS committee meetings are planned every three months and factory agendas are evaluated together with the OHS committee members. At the board meetings, OHS performance and actions, including reporting from the plants and employee feedback are evaluated. The equipment used is monitored through a master-list and periodic inspections are carried out in accordance with legal regulations. Actions are taken according to periodic inspection results. Change management is applied according to changing conditions in the factory and actions are taken accordingly. Risk assessments are revised according to changing conditions and occupational hygiene measurements are made. Annual training and workplans specific to Ülker factory are prepared and follow-ups are carried out throughout the year within the framework of legal regulations and factory internal controls. Ülker factories are audited by the Factory Holding internal audit Team, Central OHS team, ISO organizations and local Ministries. No major non-compliance was noted based on the audits. Each factory has a full-time workplace physician and health officer. Periodic health examinations of employees are carried out periodically, including audiometry. Buses for the transportation of the workforce are owned by third party logistics companies. These companies undergo a due diligence review for compliance with applicable legal/regulatory (HR/OHS) requirements. Drivers of the employees’ buses and company vehicles are provided with necessary OHS and defensive driving training and psychotechnical training.

Supply Chain. Ülker is sourcing raw materials, such as cocoa, hazelnut, sugar and palm oil which are associated with risks of child labor, forced labor, significant OHS hazards (use of agro-chemicals and sharp instruments) and migrant workers. As per its Supply Chain Policy, such risks are being assessed during the selection process of its direct and indirect suppliers. For its direct cocoa and palm oil suppliers, this risk is closely monitored by Ülker through its partnership with the Earthworm Foundation, including the implementation of a Child Labor Monitoring Remediation System at all its cocoa cooperatives in Ivory coast. Since the establishment of the CLMRS, there has not been any case of harmful child and/or forced labor among its four cocoa cooperatives. As indicated under ESAP#2 above, Ülker will strengthen its monitoring and verification system for its direct and indirect suppliers for cocoa, hazelnut, and palm oil for these risks.

PS3: Resource Efficiency and Pollution Prevention

Resource Efficiency. The production of food is a resource (energy) intensive process. Ülker adopted an Energy Policy in 2019. As mentioned, Ülker maintains an energy management system consistent with ISO50001 at Group-level while all its facilities in Türkiye, including Topkapi and Gebze, have achieved ISO50001 certificate. Hamle facility in Kazakhstan is scheduled to achieve ISO50001 in 2024. All three factories are undergoing resource efficiency improvements for achieving Ülker’s performance as per the proposed Sustainability Linked Loan (SLL) including reduction of absolute Scope 1 and 2 GHG emissions and reduction of absolute Scope 3 GHG emissions. Energy/water scorecards (including electricity, gas consumption, carbon emission per ton of production and water consumption) are monitored and recorded in line with GIIP, including progress towards company’s targets. Ülker’s factories rely on permitted abstraction wells for its water supply.

Greenhouse gas emissions. The Project (Gebze, Hamle, and Topkapi factories) is estimated to generate ~37,689 tCO2e/year scope 1 emissions, and ~41,760 tCO2e/year scope 2 emissions. The total greenhouse gas emissions (scope 1 and 2) are estimated to be around 79,449 tCO2e/year.

Air Emissions. As required, Ülker developed an Air Quality Management and Monitoring Procedure to monitor factory’s point source air emissions and ambient air quality. For food safety measures, air inflow within the factories is filtered at entry. Concentrations measured were within the WHO Ambient Air Quality Guidelines values. For point source emissions at its three factories, including boilers and diesel-fired gensets, the results indicated compliance with Turkish / Kazak requirements and were within the applicable levels of the WBG EHS Guidelines. The results of these measurements are submitted to the local environmental authorities.

Noise. Ülker developed and implemented a workplace noise monitoring procedure at its facilities. Even if Ülker’s three factories are located within industrial zones at a distance from neighboring communities, there is noise monitoring for sensitive receptors during day and night-time. Measurements provided by the company indicated noise levels within WBG EHS Guidelines.

Effluent Treatment Plant. The food production at Ülker factories is mostly dry process. As such, water consumption is limited to drinking and cleaning purposes. For the factories using water for production process (e.g., Gebze), primary effluent treatment unit is installed at the factory. Treated effluents are channeled to the industrial zone’ wastewater treatment plant.

Waste Management. Ülker has defined a zero-waste target by 2024, which aims to achieve a recycling ratio of 100% while developing/implementing a sustainable packaging strategy which main goal is making all packaging recyclable, reusable or compostable by 2025. There are a wide variety of waste generated in Ülker factories, from recyclable waste (e.g., plastic, cardboard, pallet, ingredient barrel, bags, can), non-recyclable waste (e.g., waste vegetable oil), hazardous waste (e.g., residual oil, wastewater treatment sludge) and food waste. Ülker has implemented Waste Management plans at all sites, aligned with GIIP and relevant EHS Guidelines. The waste management plans identified solid and hazardous waste streams generated; quantities; defined management measures, such as segregation system in all factories (sort/reduce/re-use/treatment/storage/disposal), implemented monitoring / reporting requirements; identified final disposal facilities for each waste stream; implemented a chain of custody mechanism, including due diligence of service providers. Ülker has achieved 97% of waste recycling and is expected to meet its 2024 target.

Storage of Hazardous Materials. Hazardous materials at the factories include diesel for generators and chemicals as part of its production process. Management and storage of hazardous materials, including installation of secondary containment, are carried out per relevant company’s procedure and observed to be adequately managed, including the use of inventory logs, display of Material Safety Data Sheet (MSDS) and safe storage.

Pesticide Use and Management. Ülker uses licensed service providers for pest control at its factories, as per ISO 22000 requirements.

Performance Standard 4: Community Health, Safety & Security

Community Health and Safety. Ülker factories are located in industrial zones and semi-commercial areas. Nearest communities are sensitized of Ülker factories’ Emergency Preparedness Response Plan (EPRP), which includes a process to provide appropriate information, assist and collaborate with local authorities and neighboring communities in case of emergency situations.

Road Traffic Safety. Ülker’s operations are equipped mainly with trucks and light vehicles (e.g., cars, workers transport buses, forklift). Ülker does not have its own truck fleet. Trucks used in the transportation of raw materials and products are owned by third party logistics companies. Ülker ensures that all drivers (direct and contractor) have driver's licenses, necessary OHS and defensive driving training, and psychotechnical training. Regular trainings and announcements (brochures, videos, email bulletins etc.) are provided for the drivers to mitigate traffic and road safety risks. A digital truck management system is used at the plants to monitor the trucks. Besides, the double-deck truck fleet has been renewed for safety reasons currently. At the time of this appraisal, Ülker did not have a traffic and road safety to manage the entire logistics process. Also, Ülker does not identify and/or monitor the community health and safety risks of its transportation route and its contracted logistic companies’ practices. Ülker will develop a Road and Traffic Safety Plan and monitoring framework (ESAP#5).

Food Safety. Ülker implements a Hazard Analysis and Critical Control Points for all its factories, The three factories targeted by this proposed investment are ISO 22001 (Food Safety Management System) certified. There is a product quality & food safety manager, food safety experts and technicians, and a raw and pack material finish product laboratory at each plant. Ülker develops a project called ‘On-site Quality Project’ and improved its supply and production processes by constantly analyzing audit results in line with this project. By determining a set of control criteria and critical control points, Ülker evaluates the risks that may occur in the entire value chain, from the raw material supply to the final product. Ülker audits its suppliers, warehouses and distributors for quality and food safety based on their degrees of risk.

Security Personnel. Ülker’s factory security is provided by a private security company. All security personnel are unarmed and trained by private companies authorized by the Ministry of Internal Affairs. Ülker has undertaken a security risk assessment for each plant with detailed information on assessment criteria, risk mapping, risk levels and actions to be taken. Security personnel management is consistent with PS4 requirements.

PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

Supply Chain risk assessment and management. The raw materials sourced by Ülker (especially palm oil and cocoa) may present risks of deforestation. Ülker has established contractual agreements with a service provider, using satellite image, to monitor deforestation risk of its direct suppliers and receive alerts in case of such events. This monitoring system does not cover its indirect suppliers. As indicated under PS1 Supply Chain section, Ülker will strengthen its due diligence of its indirect suppliers and monitoring/verification oversight against PS6 supply chain requirements (ref. ESAP#2).

 Stakeholder Engagement. Ülker currently does not have a Stakeholder Engagement Plan (SEP) aligned with PS1 requirements for each site. Ülker has an operational Grievance Mechanism (GM) in place for external stakeholders. External grievances can be submitted through the Ethics Hotline, social media accounts of Ülker or Yildiz Holding, company website, and petition. The corporate Sustainability Platform holds quarterly meetings for progress review which includes the review of external grievances.

There is no written Grievance Procedure at the corporate level. As per Ülker there have been no pending grievances and no court cases filed against Ülker related to E&S issues. In the previous years there have been grievances reported from nearby communities to the local municipality on issues related to odor/smell caused by the chocolate refinery located in the Topkapi plant, heavy traffic in the area contributed by Ülker trucks, and noise. Following these grievances, the company implemented measures to address both odor and noise concerns. To strengthen its stakeholder engagement and grievance management, Ülker will (i) develop a corporate Stakeholder Engagement Procedure and develop and implement site-level SEPs; and (ii) develop an External Grievance Procedure to comply with PS1 (ESAP#6).

 Fulya Banu Surucu
Fulyabanu.surucu@pladisglobal.com
+ 90 (216) 524 2500;

+ 90 (216) 316 4344

https://www.ulkerbiskuvi.com.tr/en

Kisikli Mahallesi Ferah Caddesi No: 1, Buyuk Camlica/Uskudar,

Istanbul, Türkiye