Turkey’s Garanti BBVA bank to stop financing coal projects

The fifth-largest bank in Turkey has been supporting only renewable energy since 2014, but now it vowed to cleanse the loan portfolio of the remaining coal mines and plants by 2040. Spanish BBVA, the biggest shareholder in Garanti BBVA, made a similar commitment earlier this month.

Garanti BBVA said it intends to encourage sustainable investments and reaffirmed its commitment to climate action by announcing it would stop financing coal-related activities. Turkey’s fifth-largest bank has actually been supporting only renewable energy since 2014.

However, there are still active loans in its portfolio for coal plants and mines. The lender said it would reduce exposure to zero by 2040 and added that it would comply with the recommendations of the Intergovernmental Panel on Climate Change (IPCC). It is the first bank in Turkey to make such a pledge.

Taking climate action

“Climate change is the most important global crisis facing the world from an economic and social welfare point of view. That is why we urge the business world and stakeholders to take action,” Chief Executive Officer Recep Baştuğ said.

The Turkish lender is leaning on renewables in project financing

Garanti BBVA will help clients operating in the coal sector to shift their investments to greener environments and thus accelerate the just transition to low-emission energy in Turkey, he asserted.

The bank says it has a share of 25% in financing domestic wind power plants and that renewables account for 73% of its project financing portfolio.

BBVA also won’t have room for coal from 2040

The lender is part of the network of Banco Bilbao Vizcaya Argentaria or BBVA. The multinational financial services company holds almost 50% in the Turkish franchise. Garanti BBVA is also active in Romania and the Netherlands.

Earlier this month, BBVA said that by 2030 it would stop financing clients in developed countries that have a share of coal-related revenues larger than 5% and apply the same rule in 2040 for the rest of the world. It promised in 2018 to align its loan portfolio with the goals from the Paris Agreement.

The Spanish bank said that since December it doesn’t do business with clients that have a share of production from tar sands above 10% and didn’t develop a diversification strategy. BBVA was the first financial entity in its home country to issue a green bond.