Tofaş - 2023 Annual Report

SUSTAINABILITY PRINCIPLES COMPLIANCE REPORT

	PRINCIPLE	COMPLIANCE				EXPLANATION	RELATED REPORT/LINK
	PRINCIPLE	YES	NO	PARTIAL	N/A	EXPLANATION	RELATED REPORT/LINK
	A. General Principles
	A1. Strategy, Policy and Targets
A1.1	The Board of Directors determines material environmental, social and governance (ESG) issues, risks and opportunities.	x				At Tofaş, the Board of Directors is responsible for risk management processes. Tofaş takes a comprehensive approach to risk management entailing economic, environmental and social aspects, and carries out its activities in line with the principles of “protecting company assets and values”, “ensuring commercial, financial and operational trust”, and “sustainability in enterprise risk management”	Annual Report sustainability section (Page: 70-71)
A1.1	The Board of Directors establishes relevant ESG policies (e.g. Environmental Policy, Energy Policy, Human Rights and Employee Policy, etc.) and they are publicly disclosed.	x				Sustainability-related policies put into implementation by Tofaş can be found on the company website.	Corporate Website - Policies
A1.2	Publicly discloses short- and long-term goals set according to ESG policies.	x				Making its environmental and sustainability targets available for the information of all its stakeholders, Tofaş transparently reports the results from its activities in these areas on its corporate website and in its sustainability reports	Annual Report sustainability section (Page: 68-100)
	A2. Implementation/Monitoring
A2.1	Determines and discloses the committees/units responsible for the execution of ESG policies, and the highest level positions in charge of ESG issues at the Company and their duties.	x				Sustainability approach and practices are addressed as a whole, incorporating all stakeholders of Tofaş. The CEO and the Company’s senior management are responsible for; • determining and managing strategic trends, • ensuring the operation of risk management, early warning and control systems, • setting corporate targets, • achieving compliance with corporate governance principles and executing the efforts for capturing the anticipated performance and outcomes in this area	Annual Report sustainability section (Page: 68-100)
A2.1	The responsible committee and/or unit reports the activities carried out as per the policies during the year at least once a year to the Board of Directors.	x				Tofaş Corporate Sustainability Policy is followed up at the Board of Directors level, and related matters are evaluated and reported by the committees under the Board of Directors. A regular Sustainability Report is published annually	Annual Report sustainability section (Page: 68-100)
A2.2	Creates and discloses implementation and action plans aligned with ESG targets	x				Tofaş transparently discloses its corporate sustainability strategy and associated implementations which guarantee the continuity of its operations, and the performance values resulting from the actions taken by the Company to the public and stakeholders. Climate targets, diversity and inclusion targets, and all other ESG action plans are publicly disclosed	Annual Report sustainability section (Page: 68-100)
A2.3	Discloses ESG Key Performance Indicators (KPI) and the degree of their achievement by years.	x				Tofaş has been monitoring ESG key performance indicators since 2013. They are reported in a format showing the past 5 years’ trends on the corporate website, in the annual report and sustainability report	Annual Report sustainability section (Page: 68-100)
A2.4	Discloses efforts for improving sustainability performance with respect to work processes or products and services.	x				Tofaş achieves full compliance with national and international legal requirements in all its activities, constantly strives to mitigate the impacts of its manufacturing, products and services by employing improvement tools and appropriate technologies, and implements actions that will better its performance. The outcomes of the Company’s activities in these departments are published transparently	Annual Report sustainability section (Page: 68-100)
	A3. Reporting
A3.1	Discloses sustainability performance, targets and actions in an intelligible, accurate and adequate manner in annual reports.	x					Annual Report sustainability section
A3.2	Provides information about which of the United Nations (UN) 2030 Sustainable Development Goals its activities relate to.	x				Provided in detail in the table titled SDGs and What does Tofaş do about it?	Annual Report sustainability section (Page: 73)
A3.3	Makes disclosures regarding the lawsuits filed and/or concluded against the company on account of ESG issues, which are material with respect to ESG policies and/or have material impact on operations.	x				No lawsuits, including those on account of environmental, social and governance matters, of a nature to impact the Company’s financial position and activities have been brought against the Company; nor are there any administrative or financial sanctions imposed against the Company or the governing body on account of any practices contrary to the provisions of the legislation.	Annual Report sustainability section (Page: 83)
	A4. Verification
A4.1	ESG Key Performance measurements are verified by an independent third party and publicly disclosed.			x			Tofaş Sustainability Report
	B. Environmental Principles
B1	Publicly discloses its environmental management policy and practices, action plans, environmental management systems (known by ISO 14001 standard) and programs	x				Having initiated activities related to environmental management system in 1997, Tofaş has been the first plant to obtain ISO 14001 Environmental Management System certification in the automotive industry in 1998. Tofaş has been employing ISO 14064-1 GHG Management System and annual GHG reporting verification since 2010, and ISO 50001 Energy Management System since 2013. Independent audits conducted on the said management systems in 2022 demonstrated “Zero Non-compliance”.	Annual Report sustainability section (Page: 83)
B2	Publicly discloses the limitations over the reporting scope, reporting period, reporting date, reporting conditions of the environmental reports to be prepared for providing environmental management information	x				Environment data disclosed in Tofaş 2022 Annual Report covers all the operations of Tofaş Türk Otomobil Fabrikası A.Ş. between 01 January 2022 and 31 December 2022. Unless otherwise stated, the reports do not cover environmental performance of Fer Mas Oto Ticaret A.Ş. and Koç Fiat Kredi Finansman A.Ş., two of Tofaş’s subsidiaries, and the environmental performance pertaining to dealers. For the same reason, 2022 data have not been verified by a third party organization on the date of the writing of the report; past data for the previous years have been verified.	Annual Report sustainability section (Page: 82)
B4	Discloses the environmental targets included in rewarding criteria within the scope of performance incentive systems on the basis of stakeholders (board members, executives, employees and so on).	x				Tofaş uses the OKR (Objectives and Key Results) methods whereby employees set objectives and key results aligned with the Company targets and strategies and objectives are dynamically revised according to priorities that change during the year. Environment targets are included in the OKRs of Tofaş CEO, Plant Manager, Sustainability Committee members and employees. Environmental management is also a part of annual target deployment and performance evaluation system.	Annual Report sustainability section (Page: 84)
B5	Explains how environmental issues identified to be material are integrated into business goals and strategies.	x				In line with AA1000 Stakeholder Engagement Standard, Tofaş classified its material issues in the area of sustainability as issues with low, medium, and high materiality according to the results from the survey participated by both internal and external stakeholders	Annual Report sustainability section (Page: 72)
B7	Explains how it manages environmental issues throughout the Company’s value chain including suppliers and customers so as to cover the operation process as well and how they are integrated into its business goals and strategies.	x				Within the frame of its sustainability approach, Tofaş holistically highlights environmental, social and economic values for its employees and all its stakeholders in its sphere of influence. The Company focuses on taking under control indirect environmental impacts throughout its value chain, as well as its direct impacts on the environment, and on minimizing them at the highest extent possible	Annual Report sustainability/Environment section (Page: 82-89)
B8	Discloses whether it is involved in policy-making processes on environmental issues of relevant institutions and non-governmental organizations and its collaborations with these institutions and organizations, if any.	x				Cooperation is established with civil society organizations, associations and governmental agencies to develop environmental policies and to mitigate environmental impacts. OSD (Automotive Manufacturers Association) membership and memberships on TUSIAD (Turkish Business and Industry Association) working groups, alongside collaborations with universities and partnerships with associations and chambers are intended to contribute to the value chain.	Annual Report sustainability/Environment section (Page: 82-89)
B9	Periodically reports information about its environmental impacts comparatively in the light of environmental indicators; GHG emissions Scope-1 (Direct), Scope-2 (Indirect from purchased energy), Scope-3 (Other indirect), air quality, energy management, water and wastewater management, waste management, biodiversity implications).	x				Within the scope of sustainability activities, Scope 1 and Scope 2 GHG emissions are regularly calculated, verified by an independent third party pursuant to ISO 14064-1, and publicly disclosed. Similarly, environmental indicators such as energy consumption, water and waste are also regularly monitored and reported.	Annual Report sustainability/Environment section (Page: 82-89)
B10	Discloses the standard, protocol, methodology and baseline year details used to collect and calculate its data.	x				Detailed information is provided in the explanation for each indicator on relevant page s of the annual report.	Annual Report sustainability/Environment section (Page: 82-89)
B11	Publicly discloses the status of environmental indicators for the reporting year (increase or decrease) in comparison with previous years.	x				5 year-data are disclosed.	Annual Report sustainability/Environment section (Page: 82-89)
B12	Sets short and long-term goals to reduce its environmental impact and discloses these goals and the progress, if any, as compared to the targets set in previous years.	x				Short-, medium- and long-term targets and the actual situation are disclosed.	Annual Report sustainability/Environment section (Page: 82-89)
B13	Discloses its strategy and actions to combat the climate crisis.	x				Tofaş targets to put its renewable energy investments into use from 2022 and to reduce its GHG emissions resulting from manufacturing by 22.6% by 2026 solely with the support of these investments	Annual Report sustainability/Environment section (Page: 82-89)
B14	Explains its programs or procedures to prevent or minimize the potential negative impacts of the products and/or services it offers.	x				Tofaş considers its products and services with a lifetime perspective and manages the positive or negative impacts created. While the Company works to mitigate the environmental impact resulting from the manufacturing and usage of its vehicles, it continuously develops projects to make its vehicles more environment-friendly	Annual Report sustainability/Environment section (Page: 82-89)
B14	Takes and explains its actions for driving reduction of GHG emission quantities of third parties (e.g. suppliers, sub-contractors, dealers, etc.).	x				At the heart of Tofaş’s green procurement activities lie spreading the sustainability culture across its supply chain and the philosophy of highlighting products and services with reduced environmental impact. With the green purchasing initiative, Tofaş aims at the reduction of its suppliers’ environmental impacts resulting from their production processes and the services they produce, improvement of their overall environmental performances, and mitigating environmental risks.	Annual Report sustainability/Environment section (Page: 82-89)
B15	Discloses the total number of actions taken, projects carried out and initiatives undertaken to mitigate its environmental impacts, along with the benefits/revenues and cost savings they provide.	x					Annual Report sustainability/Environment section (Page: 82-89)
B16	Reports energy consumption data (gas, diesel oil, fuel oil, LPG, coal, electricity, heating, cooling, etc.) and discloses its energy consumption as Scope-1 and Scope-2.	x				Within the scope of sustainability activities, Scope 1 and Scope 2 GHG emissions are regularly calculated, verified by an independent third party pursuant to ISO 14064-1, and publicly disclosed. Similarly, energy consumption data are also reported broken down into “renewables/ non-renewables” to correspond to the expectations of international sustainability indices.	Annual Report sustainability/Environment section (Page: 82-89)
B17	Discloses information about the electricity, heat, steam and cooling generated during the reporting year.	x					Annual Report sustainability/Environment section (Page: 82-89)
B18	Conducts and discloses studies on increasing the use of renewable energy, transition to zero or low carbon electricity.	x				Tofaş carries on with its efforts and projects to be a carbon-neutral facility. Thanks to hundreds of energy efficiency projects carried out, Tofaş, sustains its energy intensity reduction trend	Annual Report sustainability/Environment section (Page: 82-89)
B19	Discloses data on its renewable energy generation and consumption.	x					Annual Report sustainability/Environment section (Page: 82-89)
B20	Develops energy efficiency projects and discloses the quantity reduced in energy consumption and emission enabled by these efforts.	x				During 2022, Tofaş carried out activities identified using the World Class Manufacturing-Energy methodology, which are targeted at reducing energy consumption and CO2 emissions. Within the scope of these activities, the Company implemented 194 energy efficiency projects, which helped save 99,224 GJ energy in total, and in turn, avoided 8,751 tonnes of CO2 emissions	Annual Report sustainability/Environment section (Page: 82-89)
B21	Reports the amount of underground or overground water withdrawn, recycled and discharged, the resources and procedures.	x					Annual Report sustainability/Environment section (Page: 82-89)
B22	Discloses whether its operations or activities are included in any carbon pricing system (Emission Trading System, Cap & Trade or Carbon Tax).	x				As of the date of this writing, Tofaş operations and other activities were not included in any carbon pricing system, nor any carbon credits were purchased. The Company does not implement a carbon pricing mechanism in its organization	Annual Report sustainability/Environment section (Page: 82-89)
B23	Discloses the carbon credits saved or purchased during the reporting period.	x				As of the date of this writing, Tofaş operations and other activities were not included in any carbon pricing system, nor any carbon credits were purchased. The Company does not implement a carbon pricing mechanism in its organization	Annual Report sustainability/Environment section (Page: 82-89)
B24	Discloses the details if carbon pricing is applied within the Company	x				As of the date of this writing, Tofaş operations and other activities were not included in any carbon pricing system, nor any carbon credits were purchased. The Company does not implement a carbon pricing mechanism in its organization	Annual Report sustainability/Environment section (Page: 82-89)
B25	Discloses the platforms that it reports its environmental information to.	x				Making its environmental and sustainability targets available for the information of all its stakeholders, Tofaş transparently reports the results from its activities in these areas on its corporate website and in its sustainability reports.	Annual Report sustainability/Environment section (Page: 82-89)
	C. Social Principles
	C1. Human Rights and Employee Rights
C1.1	Develops a Company Human Rights and Employee Rights Policy, which pledges full compliance with the Universal Declaration of Human Rights, ILO Conventions ratified by Türkiye and other applicable legislation. Discloses the policy and the roles and responsibilities associated for its implementation.	x					Corporate Website - Policies
C1.2	Incorporates equitable workforce, improvement of working standards, women’s employment and inclusion (not discriminating on the basis of gender, race, religion, language, marital status, ethnicity, sexual orientation, gender identity, family responsibilities, union activities, political affiliation, disabilities, social and cultural differences, etc.) in its policy concerning employee rights, while looking out for the effects of supply and value chain.	x					Corporate Website - Policies
C1.3	Discloses the measures taken throughout the value chain for protecting the rights of groups sensitive to certain economic, environmental, social factors (low-income groups, women, etc.) or for securing minority rights/equal opportunity.	x					Annual Report (page 76-81)
C1.4	Reports on progress in relation to actions for preventing and remedying discrimination, inequality, human rights violations, forced labor and child labor.	x					Annual Report (page 76-81)
C1.5	Incorporates investments in employees (training, development policies), employee compensation, fringe benefits granted, the right to unionize, work/life balance solutions and talent management in its policies concerning employee rights.	x					Annual Report (page 76-81)
	Determines the mechanisms for resolution of employee complaints and labor disputes, and establishes conflict resolution processes.	x					Annual Report (page 76-81)
	Discloses the activities for ensuring employee satisfaction during the reporting period.	x					Annual Report (page 76-81)
C1.6	Establishes and discloses occupational health and safety policies.	x					Corporate Website - Policies
C1.6	Discloses the measures adopted for preventing workplace accidents and for protecting occupational health along with statistical data on accidents.	x					Annual Report page 81)
C1.7	Establishes and discloses personal data protection and data security policies.	x					Corporate Website - Policies
C1.8	Establishes and discloses a code of ethics.	x					Annual Report page 94
C1.9							Annual Report (page 95-99)
C1.10	Organizes information meetings and training programs on ESG policies and practices for employees.	x					Annual Report page 80
	C2. Stakeholders, International Standards and Initiatives
C2.1	Establishes and discloses a customer satisfaction policy for handling and resolving customer complaints.	x					Corporate Website - Policies
C2.3	Discloses information about the communication maintained with stakeholders (which stakeholders, topics and frequency).	x					Annual Report (page 74-75)
C2.3	Discloses the international reporting standards embraced in its reporting.	x					Annual Report sustainability section
C2.4	Discloses the principles embraced in relation to sustainability, international organizations, committees and principles that it is a signatory or member of.	x					Annual Report sustainability section
C2.5	Makes improvements and concrete efforts to qualify for inclusion in sustainability indices of Borsa İstanbul and/or international index providers.	x				The Company works to qualify for, and improve its performance on, nationally or internationally leading sustainability indices including Borsa İstanbul, and reports the indices that it is a constituent of	Annual Report sustainability section
	D. Corporate Governance Principles
D.1	Seeks stakeholders’ opinions when determining the measures and strategies in relation to sustainability.	x				In line with AA1000 Stakeholder Engagement Standard, Tofaş classified its material issues in the area of sustainability as issues with low, medium, and high materiality according to the results from the survey participated by both internal and external stakeholders	Annual Report page 72
D.2	Works on raising awareness of sustainability and its importance through social responsibility projects, awareness activities and training programs.	x					Annual Report (page 95-99)