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?
Policy and Environmental and Social Management System
Arçelik's Environmental and Social Management System (ESMS) includes policies and procedures for managing the environment, energy, climate change, water, biodiversity, Occupational Health and Safety (OHS), labor and working conditions, conflict minerals, supplier Environmental, Social and Governance (ESG) program, and the Company's Code of Conduct, which are publicly available on its website (https://www.arcelikglobal.com/en/company/policies/). Each of these policies specifies the compliance requirement with the national and international legal regulations, risk identification and mitigation processes, duties and responsibilities, and performance monitoring procedures, which generally align with the PS1 requirements.
Arçelik management system is certified against ISO 14001 (Environment Management), ISO 9001(Quality Management), ISO 45001 (Occupational Health and Safety Management) and ISO 50001 (Energy Management) standards. Internal and external audits are periodically undertaken at the manufacturing facilities, and the results and corrective action plans are shared with the top management to maintain the system's efficiency. Supplier Ethical Data Exchange (SEDEX), Business Social Compliance Initiative (BSCI), and Responsible Business Alliance (RBA) are international programs that audit the Company's supply chain and social accountability performance.
The Company's sustainability strategy is based on short and long-term (2030) targets related to key performance areas such as water and energy efficiency, emissions and waste reduction, OHS, employee retention, and gender and supply chain compliance. The Sustainability report (https://www.Arcelikglobal.com/media/vyibvvsw/Arcelik_sustainabilityreport_2023.pdf) summarizes the Company's ESG performance against its targets. The Sustainability report is prepared following the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) standards.
Identification of Risks and Impacts
Consistent with the Company policies, each facility formulates site-specific E&S risk assessment, management plans, and monitoring procedures to address its environmental and social risks. For the existing SPPs, the Company's external E&S consultant prepared the local environmental impact assessment (EIA) for the Aksaray SPP (https://eced.csb.gov.tr/jsp/ek1/47427) and Kayseri SPP (https://eced.csb.gov.tr/jsp/ek1/43819). National regulations only require an EIA for high-voltage transmission lines, exempting the SPPs' medium-voltage capacity transmission lines. As per ESAP #1, Arçelik will undertake an environmental and social audit of the two SPPs to assess any gaps in the E&S performance of the project against IFC PS requirements and agree with the EPC contractor time-bound corrective action plans that it will implement. The EPC contractor will continue to manage the first two years of operation of the SPPs as part of the contract agreement with Arçelik. While the local EIA does not include risk assessment related to land acquisition, IFC’s review confirmed that Arçelik acquired the land parcels for the two SPPs through a willing buyer/willing seller arrangement. No physical or economic displacement or involuntary resettlement occurred due to land acquisition for the PV solar sites and transmission lines. There were no informal land users in the two SPPs, as the landowners were also the users. Permanent land acquisition within the scope of the SPPs will not create access restrictions to nearby land parcels. There is no additional land acquisition planned for the Project.
Aside from the permanent land acquisition, the EPC contractor of the Aksaray and Kayseri SPPs leased land for the temporary office site and laydown area. The EPC contractor will return the lands to the landowners in their original condition as specified in the agreement. As per ESAP #1, Arçelik will conduct a land audit to ensure the agreement conditions are met and the temporary land acquisition is managed.
Management Plans
The Engineering, Procurement Construction (EPC) contractor for the Aksaray and Kayseri SPPs has ISO 14001, 9001, and 45001 certifications and is also a subsidiary of Koç Holding, the main shareholder of Arçelik. The legal agreement between Arçelik and the EPC contractor references compliance with the national laws, including Labor Law No. 4857, OHS Law No. 6331, Social Insurance, and General Health Insurance Law No. 5510. However, the EPC contractor needs to improve the E&S management of the two existing SPPs. There is a lack of management of waste, water sources, and hazardous materials, as well as limited management consideration for the workforce and community risks observed at the SPP facilities. As per ESAP #2, Arçelik will enhance its Contractor Management Plan (CMP) for the building renovation works for the earthquake preparation efforts and include requirements to meet IFC PSs, World Bank Group EHS Guidelines (General), and IFC's Good?Practice?Note for Managing Contractors' Environmental and Social Performance. For the two existing SPPs to comply with the enhanced CMP, the EPC contractor will address the corrective action plan that will be identified after Arçelik’s E&S audit as per ESAP #1 and prepare the E&S operational management plans, including occupational health and safety, community health and safety, water resources, and waste management
Organizational Capacity and Commitment
The Chief Financial Officer leads Arçelik's Sustainability Council and is responsible for implementing the Company’s ESMS. The Environmental, Energy, Green Chemistry, Climate Change, Sustainable Supply Chain, Recycled Plastics, Sustainable Packaging and OHS Working Groups support the council. The Chief Executive and Human Resource Officers lead the Global Ethics Committee and Human Rights Committee, respectively. The manufacturing facilities level organizational structure is responsible for managing the implementation of the ESMS policies within their respective facilities.
Arçelik's site-level E&S team monitors and reviews each of the manufacturing facility's E&S performance. Arçelik will designate an E&S, OHS specialists from the Arçelik corporate team and the Community Liaison Officer (CLO) to oversee the E&S performance of the SPPs and building renovation works for the earthquake preparation efforts. The appointed E&S specialist will also monitor completion of the ESAP items and coordinate with IFC specialists to closeout any gaps in the Project’s E&S performance throughout the Project cycle as per ESAP #3.
Emergency Preparedness and Response Plan
Arçelik’s OHS plan includes the emergency preparedness and response procedures (EPRP) for fire and explosion, earthquakes, floods and natural disasters, hazardous substances spill or release, epidemic disease, and food poisoning. At the SPP level, the EPRP includes information on site evacuation procedures, fire safety measures, response team responsibilities, and information about the fire protection agency, police station, and hospital station closest to the sites.
PS2: Labor and Working Conditions?
Human Resources Policies and Procedures, Working Conditions and Terms of Employment, Workers’ Organization
Arçelik Global Human Rights Policy reflects the company’s approach and standards to labor and working conditions, which is available on its website (https://www.arcelikglobal.com/media/6236/15_global-human-rights-policy-en-1.pdf). It is committed to fulfilling the Universal Declaration of Human Rights principles and ILO Declaration on Fundamental Principles and Rights at Work. It also covers provisions on working conditions, fair remuneration, health and safety, gender and equal opportunities, non-discrimination, prevention of child labor, forced labor and precarious employment, code of conduct, grievance mechanism, and freedom of association, with principles consistent with PS2 objectives. The Global Code of Conduct supplements the implementation of the HR policies (https://www.arcelikglobal.com/media/5510/1_global-code-of-conduct_.pdf). All employees are required to complete the set of training related to the Company’s policies. Arçelik manages that its contract agreements with third parties are in line with the regulatory requirements and Arçelik’s Global Code of Conduct.
Arçelik allows its employees to participate in collective bargaining agreements. As of 2023, 67.7% of Arçelik's employees are members of the Turkish Employers' Association of Metal Industries (MESS).
Grievance Mechanism
Arçelik’s has set up a grievance mechanism aligned with its Global Whistleblowing Policy, available at https://www.arcelikglobal.com/media/5515/3_global-whistleblowing-policy_.pdf. This mechanism allows employees, contractors, business partners, and external stakeholders to report grievances and related non-compliances. Reports can be made through the website-based ethics hotline (www.ethicsline.net), via email to (arcelikas@ethicsline.net), or through specific hotlines in certain countries of operation. All cases and the identity of the concerned person are handled confidentially.
Aksaray and Kayseri SPPs' Grievance Mechanism (GM) at each site is an informal set-up where workers can inform their supervisors about work-related grievances and concerns; however, such setup is insufficient to adequately log, track, and resolve workers' concerns. As per ESAP #4, a formal GM procedure for the SPPs will be established, including steps to manage grievances through timely feedback, monitoring, and reporting using agreed key performance indicators. The GM will also allow for anonymous complaints to be raised and addressed. Arçelik will inform all project workers, including contractors, about the mechanism process and monitoring its effectiveness on an annual basis. It will also include a specific process to cover gender-based violence and harassment (GBVH). The resolution of GBVH grievances will involve the participation of Arçelik's HR staff, who are trained to manage such issues.
Occupational Health and Safety (OHS):
Arçelik’s OHS policy (https://www.arcelikglobal.com/media/6967/global-occupational-health-and-safety-policy.pdf) and procedures aim to prevent and control OHS-related impacts. Arçelik manufacturing facilities OHS teams monitor the workplace conditions, including noise, dust illumination, vibration, air quality, and thermal comfort in line with international and local regulations. The reported group Lost Time Incident Frequency Rate (LTIFR) in 2023 for employees is 1.51 and 3.21 for contractors, which are within the industrial benchmark of 6.0 for the manufacturing sector. The occupational disease frequency rate for employees was recorded as 0.1.
OHS plans have also been prepared for both SPPs. All workers are required to complete OHS training before being allowed to work at the sites. There is also a daily toolbox meeting where the hazards related to their specific work, including heat stress, are discussed with the workers. No fatalities or incidents have been recorded at the two existing SPPs as of IFC site visit.
Considering the Aksaray SPP's large footprint, appropriate resting areas were needed during its construction phase to reduce occupational heat stress exposure and fall risks for those using elevated improvised shaded areas. The environmental and social audit to be conducted by Arçelik as part of ESAP #1 will check and confirm if there are remaining constructed-related health and safety concerns that must be addressed by the EPC contractor on-site. To reduce OHS risks during operations phase, each of the two SPPs will prepare an OHS operational management plan as part of ESAP #2. It will include risk management for workers’ exposure to increased temperature, and heat protection and monitoring procedures.
Supply Chain
Arçelik Global has approximately 2,000 Tier-1 material suppliers from over 60 different countries. Procurement sourcing is concentrated mostly in Türkiye (36.7%) and Asia (37.5%). The rest of the materials are sourced from Europe (18.9%), South Africa (5.7%), United States of America (0.6%), and countries in the Middle East (0.6%).
The Arçelik Global Responsible Purchasing Policy includes requirements for suppliers to comply with national regulations and Arçelik’s own ESG requirements including but not limited to environmental protection, human rights, bribery, and corruption. Accepting and complying with Arçelik Global Responsible Purchasing Policy (https://www.arcelikglobal.com/media/2irhwtsg/responsible-purchasing-policy_en.pdf ) is a contractual obligation for suppliers.
Arçelik global sustainable supply chain management approach is aligned with PS2 and includes processes for screening and selection and continuous monitoring and development of suppliers. The Supplier ESG Assessment for significant suppliers consists of desktop assessment of suppliers via an online survey, onsite assessment of suppliers by Arçelik supplier development team employees and on-site assessment of suppliers by an accredited third-party auditor firm. Regarding appliance manufacturing’s supply chain, Arçelik has a Conflict Minerals Policy (https://www.arcelikglobal.com/media/5644/conflict-minerals-policy_0307.pdf), and Conflict Minerals Management System that aim to map out suppliers sources of raw materials particularly for the 3TG (tin, tantalum, tungsten and gold) minerals. Arçelik is also a member of the Responsible Minerals Initiative (RMI) and uses Responsible Minerals Assurance Process (RMAP) Standards to determine the risk levels associated with its 3TG suppliers' smelters and refineries (SOR).
Regarding the solar panels supply chain, Arçelik’s manufactures solar photovoltaic panels at its own solar manufacturing plants in Türkiye for the solar modules used for the two existing SPPs. Arçelik’s supply chain management system is largely focused on technical specifications qualifications and on Tier-1 (direct) suppliers; nonetheless, the Company has made initial progress in mapping the potential sub-suppliers of wafers, ingot, polysilicon, and refined and metallurgical silicon to its solar cell suppliers. Taking that into account, and to more effectively mitigate the risks associated with the solar supply chain, Arçelik supply chain management system’s scope will be progressively expanded to include a more systematic risk screening of the wafers, ingot, and polysilicon sub-suppliers. The screening system will include silicon raw materials mapping and traceability requirements, and the progressive inclusion of?Arçelik’s global responsible purchasing policy to suppliers and sub-suppliers as a contractual requirement and will develop a mechanism, to engage with suppliers for the application of the policy or disengage in case suppliers do not comply with the policy (ESAP #5).
PS3: Resource Efficiency and Pollution Prevention?
Aligned with its policies, Arçelik continues to reduce its environmental footprint by implementing various energy efficiency projects and increasing the use of renewable energy. Arçelik has?committed to being a Net Zero 2050 company aligned with the Science Based Targets Initiative (SBTi) Corporate Net-Zero Standard.
Arçelik introduces products made with recycled materials and uses technologies that effectively reduce water and energy consumption. It also aims to increase the recyclability rate of the raw materials used in its products and uses recyclable packing materials to meet its Circular Economy objectives. The Company implemented 373 energy-saving projects at manufacturing sites that resulted in the conservation of 95,680 GJ and prevented emissions?by 6,983 tCO2e in 2023.
Greenhouse Gas (GHG) Emissions
The Project’s expected annual GHG emission reduction from the two SPPs is 38,835 tCO2e. Arçelik, through its SLL framework, aims to reduce its direct emissions (Scope 1 and 2) and indirect emissions (Scope 3) by 42 percent by 2030, compared to a 2022 baseline, which are SBTi approved targets aligned with the 1.5°C climate scenario.
Air Emissions
Arçelik’s manufacturing processes, including painting,?thermoforming polyurethane forming, and plastic injection processes, generate emissions such as nitrous oxides, volatile organic compounds, total organic carbon, sulfur oxides, and particulate matter. Independent accredited laboratories monitor the manufacturing facilities' air emission within the facilities boundary. Arçelik requires each manufacturing facility to implement a corrective action plan for any non-compliances with the local emission standards found during the monitoring period.
No significant air emission impacts from the SPPs during construction and operations phases of the project are anticipated. Moreover, the construction sites used temporary rooftop solar for their power requirements.
Water
Aligned with Arçelik’s Water Policy, the Company aims to reduce its water usage per product and increase water recycling and reuse ratio for all its manufacturing facilities. In Türkiye, the manufacturing facilities use municipal and ground water supply for its operations and occasional rainwater harvesting. Each manufacturing facility treats its wastewater through chemical and biological processes before discharge; and monitors the quality of the treated effluent according to regulatory limits. In cases when elevated parameters are recorded, a corrective action plan will be implemented by the Company’s E&S site team to bring the facilities back into compliance.
In the two existing SPPs, the contractor and subcontractor teams sourced their domestic daily water requirement from a nearby spring water collection point installed for the community’s needs. Each of the existing SPPs used approximately 1500 litres of water daily during the construction phase. Arçelik will verify during the community consultations for both Aksaray and Kayseri SPPs, if there are residual impacts related to the water extraction during the construction phase and agree with the EPC contractor on corrective action plans that have to be implemented. Arçelik will conduct the community consultations in line with PS 1 and as part of ESAP #10, and findings will be incorporated as part of the E&S audit in ESAP #1.
Arçelik will identify sustainable operational phase water sources for the two existing SPPs to avoid any water competition issue with residential users. If needed, Arçelik will obtain a water extraction permit from the relevant local government agency and monitor that SPPs extraction amounts to make certain that they are within the allowable volume specified in the permit (ESAP #6).
Wastes and hazardous materials management
Arçelik is dedicated to managing hazardous and non-hazardous waste in a manner that is consistent with applicable legal requirements and relevant international regulations. It has procedures, including sorting, handling, storage, and disposal, designed to comply with the European Directive 2011/65/EU and the EU Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation. These measures are being primarily implemented at the manufacturing facilities.
As part of ESAP #1, Arçelik E&S audit will review whether the EPC contractor have corrected issues with the segregation of hazardous and non-hazardous wastes and provision of appropriate container to collect the wastes at the Aksaray and Kayseri SPPs construction sites and assess any other remaining construction phase risks and impacts. Arçelik and the EPC contractor will agree on the corrective action to address the E&S audit findings, which the EPC contractor will complete before the two existing SPPs start operations.
PS4: Community Health, Safety and Security?
The Arçelik’s manufacturing facilities in Türkiye are within existing industrial areas; hence, no significant impacts on the local community's health, safety, and security are expected to occur.
For the two existing SPPs, the contractors and suppliers transport equipment and materials through the community roads. Road sections going to the Kayseri SPP are steep and do not have hazard signages. The EPC contractor did not prepare a traffic management plan for the construction phase as it considered potential impacts as limited. To minimize safety risks, and as part of ESAP #2, Arçelik will prepare a code of conduct for drivers and workers going to the site and will require the EPC contractor to put up hazard signages at high-risk sections of the community roads. Arçelik will conduct a community consultation during the E&S audit to determine if community-related impacts, including traffic safety, occurred during the construction phase and still require remediation. Arçelik will prepare and implement a community health and safety plan, considering road safety, traffic risks, and climate risks as part of ESAP #2.
The Aksaray project site is approximately 40 hectares, and fencing was not built around the Project boundary before starting installation works. The Company will increase the construction security personnel and measures until the fencing around the Project area is completed. Implementing these measures to reduce community safety risks will be confirmed as part of Arçelik's E&S audit as per ESAP #1.
Arçelik engaged third-party experts to conduct technical drainage assessments of the two existing SPPs. Based on the assessments, Arçelik confirmed that only the Aksaray SPP requires a drainage system. the EPC contractor will expand the existing emergency preparedness plan to include flooding risks to the communities (ESAP #7).
PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources?
Arçelik’s existing manufacturing facilities in Türkiye are on converted land with no overlap with Protected Areas or identified priority biodiversity values. The two operational SPPs in Aksaray and Kayseri do not overlap with Protected Areas either. The Aksaray SPP is situated in the Central Anatolian steppe ecoregion of temperate grasslands, savannas and shrublands biome, while the Kayseri SPP is in Central Anatolian steppe and woodlands ecoregion of temperate broadleaf and mixed forests biome.
In Aksaray, the solar PV site is characterized by agricultural land with patches of natural steppe habitat. The overhead TL also passes through agricultural areas, steppe habitats, as well as riparian habitats around small streams. There are patches of steppe habitat at the solar PV site that have retained their ecological functions despite ongoing agricultural and grazing activities Priority biodiversity values associated with the mosaic of Natural and Modified Habitat include the Common Tortoise (IUCN Red List – Vulnerable), Anatolian Ground Squirrel (IUCN Red List – Near Threatened), Lesser Blind Mole Rat (IUCN Red List – Data Deficient), Tristram’s Jird (IUCN Red List – Least Concern), as well as ground-nesting birds and endemic plants, for which IFC No Net Loss (NNL) requirements will apply.
The Aksaray overhead TL (Associated Facility) presents a potential collision (e.g. large-bodied soaring birds colliding with powerlines) and electrocution (e.g. large birds, especially raptors, perching or nesting on pylons or poles) risk. For this reason, per ESAP #8, the company will implement a Post-Construction Fatality Monitoring (PCFM) along the Aksaray overhead TL. The company will also use best efforts to implement measures (e.g. insulator caps, conductor covers) to mitigate impacts of electrocution risks to large birds.
The company will also develop an operations-phase Biodiversity Management Plan (BMP) for Aksaray PV site (ESAP#9), which, at the minimum, will include (i) identification and mapping of habitat features, (ii) recommendations for restoration measures and opportunities to maintain biodiversity on-site and (iii) mitigation measures to achieve Natural Habitat NNL objectives. The BMP will also consider inclusion of off-site conservation measures. As part of the BMP, the Company will appoint a biodiversity specialist, who will be responsible for the overall management and reporting of all mitigation activities relating to the Project.
In Kayseri, the solar PV site is characterized as Modified Habitat, where the steppe habitat has lost its ecological functions due to ongoing agricultural activities and the level of degradation is considerably higher than in Aksaray. The loss of degraded steppe habitat at Kayseri solar PV site has been assessed to be insignificant compared to the wider grassland the Project is located in.
