The First Green Lease Certificate (Sukuk) Issued in line with the Capital Market Board of Turkey's New Framework
14 September – Turkey, EkoVar has issued its green lease certificate (Sukuk), amounting to 50 million TRY with a maturity of 6 months, together with the authorized investment institution Turkiye Emlak Katılım (Turkish Real Estate Participation) Bank and Emlak Varlık Kiralama A.Ş. (Emlak VKŞ), a 100% subsidiary of the bank.
The Green Lease Certificate Framework Agreement prepared by EkoVar, Emlak Katılım, and Emlak VKS, based on the International Capital Market Association (ICMA)’s “Green Bond Principles” and the Capital Market Board’s “Guidelines on Green Debt Instruments, Sustainable Debt Instruments Green Lease Certificates, and Sustainable Lease Certificates,” is the green framework approved by the Capital Market Boards of Turkey.
The funds provided by the green Sukuk issuance will be used in purchasing, supplying, and collecting waste products and recycling them. The returns from the sale of the recycled assets to the market will constitute the income of Sukuk investors.
Turkey’s National Waste Management and Action Plan aims to prevent the rapid consumption of natural resources by recycling waste and achieving sustainable waste management in the country. The plan involves the disposal of 35% of the waste materials formed in 2023 through recycling and the disposal of 65% of the waste through storing.
In Turkey, 160,000 tons of waste are generated per day, including domestic, industrial, and medical waste. With its Zero-Waste Project, Turkey aims to achieve the efficient use of resources, the reduction of waste, the establishment of an effective waste collection system, and the recycling of waste.
The objective of the green lease certificate issuance is to prevent waste generation, re-introduce waste into the economy and mitigate climate change by reducing carbon emissions. With its projects financed by green lease certificate funds, Ekovar will purchase non-hazardous/hazardous waste and separate, recycle and re-introduce waste into the economy or dispose it. In this regard, Ekovar aims to achieve resource efficiency and prevent the rapid consumption of natural resources by recovering the secondary raw materials that can be reused in the economy, which will significantly reduce the energy needed for production.
The categories of projects eligible to be financed by Ekovar’s funds from the issuance are as follows:
- Pollution prevention and control
- Products, production technologies, and processes adapted to eco-efficient methods and/or the circular economy
- The mitigation of climate change
The Capital Markets Board of Turkey published the “Guidelines on Green Debt Instruments, Sustainable Debt Instruments, Green Lease Certificates, and Sustainable Lease Certificates” on 4th March 2022. These Guidelines regulate the principles that must be followed for green debt instruments, sustainable debt instruments, green lease certificates, and sustainable lease certificates both for the domestic and foreign issuance of these instruments. These Guidelines aim to ensure that green debt instruments, sustainable debt instruments, green lease certificates, and sustainable lease certificates are issued in compliance with the best practices and standards in international financial markets, and to increase transparency, integrity, consistency, and comparability in the context of financing of green projects which may contribute to environmental sustainability.
UNDP ICPSD and the Islamic Development Bank, in collaboration with the Securities Commission Malaysia (SC) and the Islamic Corporation for the Development of the Private Sector (ICD) of IsDB, launched the Green Sukuk Initiative, with an aim of facilitating access to finance for renewable energy projects in developing countries and across the world, providing financial solutions to environmental challenges and expanding the role of Islamic finance in achieving the SDGs. Under its role of convening stakeholders from both the public and private sectors, the Initiative focuses on raising awareness and helping stakeholders to build capacity for utilizing Green Sukuk in green infrastructure projects as an alternative financing instrument.
GIFIIP Green Sukuk Initiative supports and encourages establishing green Sukuk framework and green Sukuk issuances among Organization of Islamic Cooperation (OIC) member countries. As part of its mandate, the Initiative also implemented different activities in Turkey. The issuance of municipality green Sukuk, as an exemplary work of the Initiative, will be the first in the world. It has been done in collaboration with related stakeholders and the issuance is expected in the fourth quarter of 2022.
 Ulusal Atık Yönetimi ve Eylem Planı, https://webdosya.csb.gov.tr/db/cygm/haberler/ulusal_at-k_yonet-m–eylem_plan– 20180328154824.pdf