How is Türkiye’s Akiş helping sustainable finance gain currency in the MENAT region?

Foreign currency (FX) tools are critical to commercial landlords in Türkiye, many of whom rely on international funding but charge rent to tenants in the volatile local currency, the lira.¹ For Akiş REIT, one of country’s biggest real estate investment trusts (REITs), FX hedging is also an opportunity to incorporate sustainability into their strategy and operations.

Although loans and bonds linked to sustainability performance have become commonplace, derivatives linked to environmental, social and governance (ESG) objectives are still relatively new. Akiş REIT’s FX hedge linked to ESG key performance indicators (KPIs) also marks the first sustainability-linked deal by the company and in the Turkish REIT sector.

With a portfolio focused on two major shopping malls in the most populated city of Türkiye, Istanbul, Akiş was the first REIT to make it onto the sustainability index of Türkiye’s stock market , Borsa Istanbul, in January 2022.² It has set measurable targets for consumption of electricity, natural gas and water at its flagship malls, Akasya and Akbatı, both of which are certified ‘Excellent’ under the widely used BREEAM (Building Research Establishment Environmental Assessment Method) certification system³ for sustainable buildings. The emissions reduction strategy of Akiş concentrates mainly on making its assets more energy efficient, purchasing renewable energy certificates for power used in its common areas, and commissioning recently installed solar panels on its malls’ rooftops.³ In September, Sustainable Fitch awarded the company an ESG Entity Rating of ‘2’, which reflects good ESG performance and integration across its business.⁴

Akiş turned to HSBC for its ESG-KPI linked FX deal because of the bank’s extensive network and expertise in the sustainability arena, thus deepening a longstanding partnership between the two organisations.

HSBC kicked off the process by identifying appropriate and measurable KPIs. These include reducing electricity consumption in common areas, and increasing the number of electric vehicle charging stations at Akiş properties. Another KPI is raising the company’s Refinitiv ESG score—it currently ranks 9 th among 472 global commercial and residential REITs on the Refinitiv database.⁵

This structure gives Akiş a financial incentive to reach its targeted numbers: if it falls short of its KPIs at the end of the one-year observation period, as verified by an independent auditor, it must donate to Young Guru Academy, a Turkish non-governmental organisation If Akiş reaches its targets, HSBC will make the donation itself.

For Akiş, sustainability-linked finance provides a powerful way to rally its employees behind its decarbonisation and ESG goals.

“This will motivate them to work hard and come up with innovative ideas to reach the targets. It is very important that they all embrace this issue and make it a part of their everyday work,” he adds.

Beyond its own sustainability goals, Akiş also hopes to inspire its tenants and subcontractors to take climate action and encourage more visitors to use electric vehicles.

“Buildings, along with transport and industry, are a key focus area of Türkiye’s roadmap to achieve net zero emissions by 2053.⁶ Akiş is striving to set a strong example for other operators of large-scale developments to follow,” noted Namik Aksel, Head of Global Markets, Markets & Securities Services, HSBC Türkiye.

“We are excited to partner with companies like Akiş who are focusing on the transition to net zero in Türkiye’s retail sectors” , he adds.

Today we finance a number of industries that significantly contribute to greenhouse gas emissions. We have a strategy to help our customers to reduce their emissions and to reduce our own. Find out more: https://www.hsbc.com/who-we-are/our-climate-strategy