Emirates NBD, Dubai’s government-owned bank and the MENAT (Middle East, North Africa and Türkiye) based banking group, has cemented its reputation as a sustainability-focused financial service entity as it supports İşbank, Turkey’s national bank, and Erguvan, a climate and financial technology in their latest endeavours.
Emirates NBD has taken part in a syndicated loan deal with İşbank. The deal has a 367-day maturity with the amount of EUR €411 million and USD $465million.The transaction reached a total amount of USD $915million, making it the highest syndicated loan obtained in the Turkish banking sector in the second half of the year.
The Facility Agreement was signed on November 21, 2023. Emirates NBD Capital Limited, Standard Chartered Bank, First Abu Dhabi Bank PJSC and The Commercial Bank (P.S.Q.C.) acted as joint-coordinators. Sumitomo Mitsui Banking Corporation, ING Bank N.V., Mashreqbank psc, and Standard Chartered Bank acted as joint-sustainability coordinators, and Emirates NBD Bank (P.J.S.C.) as the agent bank.
With 17 new participants, 44 banks in total from 23 countries across the Americas, Europe, the Middle East, and Asia participated in the Facility, which will be used for general trade finance purposes. The all-in cost of the syndicated loan for the highest participating ticket size is EURIBOR + 3.25 per cent for the Euro tranche. Meanwhile, it is SOFR + 3.50 per cent for the USD tranche.
The loan was agreed on a sustainability-linked basis. This means sustainability performance criteria have been set:
- One is the amount of cash loans to be extended to small and medium-sized women entrepreneurs.
- The second is the amount of consumer loans to be extended in 11 cities affected by the earthquake.
Supporting carbon management
The syndicated loan agreement is not the only way Emirates NBD is showing its support for firms focusing on sustainable practices. The Dubai-based bank also announced that Erguvan successfully launched a pilot programme to deploy its carbon management solution, ‘Azalt’ among regional SMEs.
Vijay Bains, group chief sustainability officer and group head of ESG at Emirates NBD, said: “With the intensified focus on climate action, it is imperative for financial institutions to offer and implement advanced digital tools to meet the evolving needs of businesses and individuals. The introduction of Erguvan’s carbon management solution underscores the bank’s commitments to being a catalyst for the green transition in the MENAT region.”
He added: “Emirates NBD aims to bridge the digital gap and empower its customers in the region to embrace more sustainable practices, aligning with global environmental goals. Additionally, Emirates NBD seeks to aid its clients to reduce their environmental footprint, thereby contributing to the bank’s broader climate goals and reinforcing its position as a responsible and forward-thinking financial institution.”
The proof-of-concept project was conducted with EKOS Electric, an SME client of DenizBank, a fully owned subsidiary of Emirates NBD Group. Azalt emerged as a vital tool for EKOS Electric, aiding in identification of greenhouse gas (GHG) emission hotspots and implementing data-driven emission reduction campaigns.
The successful pilot highlights the significant potential of Erguvan’s SaaS product Azalt. Additionally, it supports businesses and their financial partners in understanding and mitigating emissions. Emirates NBD and Erguvan announce plans to expand the programme to UAE-based SMEs to measure, reduce and offset their GHG emissions.
Combatting greenhouse gases
SMEs significantly contribute to GHG emissions. However, many are unaware of their carbon footprint. This is due to low awareness and organisational capacity for sustainability. A lack of cost-effective digital tools for climate action with easy deployment and use are also key factors.
In this context, Erguvan aims to equip SMEs with a digital tool to initiate their journey into emissions accounting and reporting. Ultimately, it aims to reduce emissions. The climate fintech startup also plans to establish linkages between the decarbonisation efforts of SMEs and sustainable finance instruments to accelerate progress.
Erguvan’s carbon management SaaS product Azalt will be launched officially in earl 2024. It is designed to:
- streamline data collection and management efforts
- enhance data reliability
- accurately measure, reduce, and offset a company’s carbon footprint (i.e., scope one, two, and three emissions).
Azalt also offers an efficient and scalable carbon accounting infrastructure for financial institutions. Furthermore, it enables a strong foundation for the sustainable products they offer.
Barış Balat, chief executive officer and co-founder of Erguvan, stated: “A driving factor behind our partnership with Emirates NBD is the essential role financial institutions play in the decarbonisation of business sectors.
“As financial institutions address the critical issue of financed emissions by setting targets and making commitments, there is an escalating emphasis on data quality to ensure accuracy of decarbonisation across lending portfolios and other asset classes.
“Erguvan’s Azalt solution provides a user-friendly carbon management platform to businesses of all sizes while fulfilling the emerging requirement in the financial sector to collect high-quality, actionable emissions data. We believe that at scale deployment of our solutions will also help bridge the data gap in the MENAT region and accelerate climate action.”
Quantifying DenizBank and EKOS Electric’s carbon footprint
Tunahan Akbaş, vice president at EKOS Electric, said: “We firmly believe that an integral part of our commitment to both our esteemed clients and the broader society lies in understanding and actively reducing the environmental impacts arising from our operations. This collaboration and the deployment of Erguvan’s Azalt software marks our company’s inaugural step in quantifying our carbon footprint, which we pledge to vigilantly monitor and manage.
“Through this initiative, we pinpointed key emission hotspots, setting the stage for direct emission reduction measures. This proof-of-concept project also allowed us to engage with DenizBank in a new way, fostering a rejuvenated discourse around decarbonisation and its associated financial avenues.”
Verda Beril Yüzer Oğuz, executive vice president and head of FI and ESG coordination at DenizBank, remarked: “DenizBank is deeply committed to accelerating the green transition in Türkiye. To break new ground in this domain, we highly value the opportunities to work with promising start-ups, and NEOHUB (DenizBank’s subsidiary) continues to play a fundamental role providing this access.
“Our collaboration with Erguvan has particularly been helpful in making tangible strides in decarbonisation. Also, this proof-of-concept project executed with EKOS Electric paints a vivid picture of the larger, bank-wide ambitions we harbour for climate action.”