Climate Change

Combating the Climate Change

Emissions originating from the energy consumption are the main reason for the increase of GHG gases in the atmosphere which results in the climate change. However, energy is the most fundamental need for us to survive. Increase of energy consumption as a result of population growth that we currently witness, deprives our planet from ensuring its fragile balance within its natural means. While the scientific researches offer different time frames, they are on the same page that the climate change will pose a vital threat for all populations living on Earth, not long after. It's necessary to foresee that changes in the physical living conditions will lead further fundamental changes in the global socioeconomic structure.

For this reason, climate change should be taken not only as an environmental threat but also as a social and economic threat, thus must be combated with.

As Arçelik, we acknowledge that the climate change is a serious risk both for the future of the world and for our corporate sustainability; as a responsible global citizen, we conduct serious work in order to tackle this issue.

ARÇELİK Management proves its commitment to present and future environmental and social issues with its announced vision "Respects the Globe, Respected Globally".

Arçelik’s sustainability approach is to consider social, economic, environmental and ethics aspects into its activities, to integrate these aspects into its corporate business targets, to manage its activities in accordance sustainability principles, corporate policies and strategies. Arçelik assesses sustainability and climate change related risks and opportunities and stakeholder expectations as its main inputs.

The highest level of direct responsibility of sustainability and climate change efforts is Sustainability Committee. Arçelik Sustainability Committee is comprised of the full executive board, including the COO (Chief Operations (Production&Technology) Officer), CFO, Assistant General Manager - Turkey Trade, Finance Director, Strategic Planning Director, Human Resources Director, Customer Services Director, Innovation Director, Corporate Communications Coordinator, Sustainability and Corporate Affairs Director.

The head of Sustainability Committee is CFO and the General Secretariat of the board is Sustainability & Cooperate Affairs Director. The sustainability board meets biannual.

Duties and responsibilities of the Sustainability Committee are:

·         Specifying the corporate policies and strategies about corporate sustainability principles and climate change

·         Following the consolidation of corporate business process with specified sustainability and climate change policies and strategies, provide integration to corporate business targets

·         Evaluating corporate risks and opportunities in scope of sustainability principles and policies, make strategic decisions and manage prior risks and opportunities

·         Identifying KPIs and targets of sustainability and climate change related issues

·         Following the global developments on sustainability and climate change issues, to build the company strategies according to these developments

·         Encouraging collaboration with NGOs, public enterprises, universities on sustainability and climate change issues

·         Defining the strategic framework and decisions of the external sustainability assessment and rating tools (CDP, BIST SI etc.) and follow up the results

The sustainability working groups are established to control and coordinate of the sustainability and climate change implementations. The members of sustainability working groups consist of environmental and energy specialists (Environmental Engineers, Mechnical Engineers, Energy Managers) and/or managers responsible for sustainability issues.

Arçelik Sustainability Working Groups (WG) are; Environmental Coordination WG, Energy Coordination WG, Climate Change Coordination WG, Green Chemistry Coordination WG, Health & Safety Coordination WG, Human Rights & Business Ethics Coordination WG, Value Chain Coordination WG, Sustainability Reporting WG.

These groups report to the Sustainability Committee members. Duties and responsibilities of sustainability working groups are:

·         Providing conformity of all activities in sustainability working groups to corporate strategy, policy and sustainability principles.

·         Implementing decisions of Sustainability Committee.

·         Implementing the sustainability as a main strategy in related processes

·         Developing and reporting proactive solutions for the companies sustainability and climate change related risks and opportunities, share best practices

·         Preparing and/or coordinate action plans for sustainability and climate change targets, follow the progress against targets, reporting performance monitoring and KPI results

·         Recommending a roadmap related to sustainability and climate change operational issues

·         Prepare and present the reports of external sustainability assessment and rating tools (CDP, BIST SI etc.)

In order to increase motivation, success and productivity of its employees and to materialize best practices and ensure their dissemination; Arçelik evaluates rewards and ensures promotion within the company all success, invention and suggestions that provide benefit. In this context, since 2005 Human Resources Department of Arçelik has been implementing a "Pyramid Climbers Award" annually, all employees who are successful are encouraged and rewarded.

One category of this award process is "Environment and Society Contributors". Projects nominated in this category are evaluated and concluded according to following performance indicators:

1. to produce higher efficient solutions and/or products (including reducing greenhouse gas emissions with spending less energy and source by environmentally friendly activities).

2. to develop projects that would contribute to the society lived and worked in with the perspective of social responsibility.

3. to set an example in/out of company with studies and make an effort for sustainability and dissemination of studies.

Environmentally friendly activities for product and production with energy efficiency projects are evaluated under this reward process.

Rewardable projects and solutions are announced within the company and the project owners are rewarded in "Pyramid Climbers Award Ceremony" which is held in October annually.

Arçelik develops environmental-friendly, innovative and technological products which increase life standards of customers with R&D employees.

R&D Department collects creative and innovative ideas of employees through a suggestion system called "Inter", an evaluation board evaluates suggestions and projects design opportunity is created for ideas that may be transformed into a product. In the name of encouraging employees for creativity, to ensure announcement of creative ideas within the company and to reward owners of such ideas "Invention Award Ceremony" is organized on World Patent Day (on April) every year.

By using TPM tools, our white and blue collar employees develop projects on subjects such as environment, energy and climate change and such projects are identified individually. Employees receive individual points in consideration of TPM activities they perform and they are rewarded at year end in response to these points by using tools such as situational reward.

In Arçelik, CFO, COO, Sustainability and Corporate Affairs Director and Energy and Environment Managers take monetary reward for the management of climate change issues. Energy Reduction Ratio (thus carbon emissions reduction) KPI is the part of their performance evaluation.

 

Climate Change Short and Long Term Strategies

With its vision "Respects the Globe, Respected Globally",Arçelik reviewed its business strategy by considering climate change.

Arçelik‘s 4th core business strategy is to increase the ability to offer enriching, pioneer, innovative, climate change respected and environmental friendly product, solution and technology to society and customer through product life cycle.

 Arçelik’s business strategy management method is explained below:

The highest level of direct responsibility of sustainability and climate change efforts is our new Sustainability Committee which is responsible to specify the corporate policies and strategies of corporate sustainability principles and climate change; to follow integration to corporate business targets; to evaluate corporate risks and opportunities; to identify KPIs; to follow global developments and built strategies accordingly.

All business strategies and targets are being studied and implemented by Climate Change Coordination Working Group which consists of Sustainability & Cooperate Affairs Director, Environment and Energy Managers,Environment and Energy Specialists and production managers.

This Working Group is responsible to integrate climate change efforts and ensures that all efforts comply with Arçelik’s strategy, policy and legal regulations. This committee collects and reports the information to influence the strategy. The committee meets quarterly.

Arçelik Climate Change Coordination Committee identifies the company’s climate change related risks and opportunities at asset level and reports to Sustainability Committee. Sustainability Committee evaluates and prioritizes asset level corporate risks and opportunities. Company level risks and opportunities are identified by Sustainability Committee. Climate change risks, strategies and influence to business targets are monitored and assessed by Sustainability Committee, biannual.

The aspects of climate change that influence Arçelik’s strategy are mainly relevant to products and production phase. These aspects are;

·         - International agreements, legal legislations (e.g. emission reporting, targets, BAT)

·         - Product labelling regulations and standards (e.g. energy label, voluntary environmental labels)

·         - Extended producer responsibility and energy efficiency requirements (e.g. WEEE,Circular Economy Package)

·         - Fuel/Energy taxes and regulations (e.g. energy prices, renewable energy)

·         - Physical conditions (this mainly effects investments and location choice)

·         - Decrease of Natural resources (e.g. water, energy, raw material decreases)

 

We focus on climate change in our short term strategies, which are based on 3 main issues:

to mitigate GHG emitted by production by energy efficiency projects; to provide our customers with green products that has the highest water and energy saving values; to conduct awareness raising informing studies regarding climate change.

To support GHG mitigation;

• Our production plants have 5% reduction target for energy consumption. In  2015, 5217 tons of eCO2 reduction has been achieved by these projects.

• In 2015, we have continued our practice of supplying energy generated from renewable energy resources to our campuses, which we implemented since 2012. As part of the practice in 2015, the purchasing rate in our Bolu, Beylikdüzü, Sütlüce, Eskişehir, Çerkezköy and Ankara Campuses is raised to 82% and prevented 83,553 ton CO2 of greenhouse gas emissions.

Thanks to energy efficiency project and electricity supply from renewable energy sources, Arçelik has been saved 233,000 ton eCO2 in the last 5 years.

To provide our customers green products;

·        We have spared TL  36.6 million to environmental-friendly R&D investment and expenses.

·        Since 1995,energy consumption of refrigerator, washingmachine, dryer, TV, dishwasher, oven are reduced in the ratios of 72%, 84%, 72%, 66%, 52% and 53%.

 

To conduct awareness;

  •  Arçelik became a member of the Climate Platform in 2011 Arçelik signed the 2˚C Challenge Communique.
  • Arçelik former CEO has been the President of the Turkish Corporate Leaders Group on CC, he represented Turkey in the World Climate Conference (WCC)  2012. Having also participated in the World Climate Summit held in Warsaw 2013.
  • Arçelik also actively participated in work groups at the Ministry of Environment and Urbanization ahead of the WCC realized in Lima in 2014.
  • Arçelik also participated in the WCC held in Paris and represented Turkey in 2015.
  • Arçelik represented Turkey in two different panel sessions in COP21. In “Focus on initiatives - Fuel Efficiency and Appliances” session organized by SE4All Initiative of UN and World Bank(WB), Arçelik CCO for Global Sales, Mr. Ragıp Balcıoğlu, attended as a speaker. Mr. Fatih Özkadı, Arçelik Sustainability and Corporate Affairs Director, attended as a speaker in “The Game Changer - Interactive Energy Efficiency Accelerator” titled panel hosted by U4E initiative of UNEP and GEF.
  • Arçelik CEO, Mr. Hakan Bulgurlu, attended the "Dialogue for Climate Action" event in Vienna in May 2016, which was launched by the World Bank in order to increase dialogue on this matter, within the frame of COP21 goals. Arçelik signed 'The Principles for Dialogue on Climate Action' in scope of this event.
  • Arçelik made commitments to «Paris Pledge for Action» of Cambridge University and “Responsible corporate engagement policy” of “Road to Paris 2015 Project”.
  • Arçelik started "Market Transformation of Energy Efficient Products”Project to draw attention of consumers to energy efficient products.
  • Trainings in universities, trainings to suppliers

Arçelik’s long term business strategies related to climate change are:

  • To produce environmental friendly products by climate change and environment sensitivity, energy efficient production technologies, prioritizing climate change and environment sensitivity in all other activities, contributing to sustainable living by realizing mentioned commitments.
  • Collaboration with institutions and public enterprises in developing-phase of legal regulations and standards related to our products and processes to sustain fair competition environment.

Proceeding in these strategies, we focus on;

  • Enhance energy efficiency of the products beyond regulations with R&D studies
  • To promote green product range
  • To rise the range of purchasing electricity from renewable energy sources
  • To provide energy efficiency by using our own productions “WAT” and “TEE” the energy efficient electric motors in our production plants
  • To implement “Arçelik’s Net Zero Emission Plan”
  • Generalize clean and sustainable technology in production
  • Generalize green activities in all our other processes (e.g. green logistics, green procurement, green marketing)
  • Arçelik keep its strategic advantage over competitors by increasingly continue its environmental achievements, such as:Arçelik conducts its business processes in accordance with ISO 14001 EMS since 1994.
  •  Arçelik’s GHG emissions have been verifying and certifying since 2010 and Arçelik was the first in its sector in Turkey.
  • Arçelik won first prizes in "Management" category and in "Product" category under "European Business Awards for the Environment-Turkey Programme",in 2010.
  • "Cactus Dishwasher" was entitled to represent Turkey at Rio+20 in "Sustainable Development and Green Economy" category, beside the Turkey's best practices.
  •  Arçelik SR 2010 is first approved B(+) report in white goods sector in Turkey. Arçelik’s Sustainability Reports are being complied with GRI G4.

Arçelik’s excellent reputation honoured and awarded by its success in CDP since 4 years by achieving Disclosure Leadership and Performance Leadership. ( For the detailed report of CDP 2016; please click here )

  • Arçelik has represented Turkey in COP21 Paris. In “Focus on initiatives - Fuel Efficiency and Appliances” session organized by SE4All Initiative of UN and World Bank(WB), Arçelik CCO for Global Sales attended as a speaker. Arçelik Sustainability and Corporate Affairs Director attended as a speaker in “The Game Changer - Interactive Energy Efficiency Accelerator” titled panel hosted by U4E initiative of UNEP and GEF.
  • Arçelik received 'AAA’ rating, the highest in the MSCI Global Sustainability Indexes
  • Arçelik is among the 29 companies listed in the BIST SI (Borsa Istanbul Sustainability Index).
  • In 2014, A level performance score, which is the highest, was achieved at CDP Performance Ranking thereby qualifying to enter “The A List: The CDP Climate Performance Leadership Index 2014” where companies with the highest CDP performance worldwide are included. For the 4th time, Arçelik is ranked among CDP Turkey 2015 Carbon Disclosure Leaders.
  •  We achieved the “Green Brands” award in Austria with our brand Elektrabregenz.

The most substantial business decisions that have been influenced by the climate change are;

  • Our target is to reduce total eCO2 emissions of its domestic production plants from 2010 (base year) to 2040 by 100% per sales revenue (“becoming net zero emission company”) by implementing new energy efficiency projects (emission reduction projects) and using the electricity generated from renewable energy sources and carbon offsets.
  • Our target is to reduce total eCO2 emissions of its domestic product logistics activities from 2013 (base year) to 2018 by 10% per shipping.
  • Saving 5% on energy via energy efficiency projects thereby reducing our GHG emission
  •  Increasing electricity supply generated through renewable energy resources until 2040
  •  Ensuring continuity of the following certificates, ISO 14064-1, ISO 50001 and extend the verification of GHG emission
  • Increase share of using maritime transport
  • “Dynamic Routing” practice in logistics to reduce GHG
  • To lower weight of products thereby decreasing GHG in transportation
  • R&D investment and expenses focused on developing environmentally friendly products.
  • Committing to “Responsible corporate engagement policy” in scope of “Road to Paris 2015 Project” of CDP.

One of the climate change aspects that influences our business strategy is product labelling regulations & standards. In EU, energy labelling regulation is to be revised by the year 2016 and it is expected that new energy label will be in force by 2018. In the scenarios, high energy efficient products of today will be labelled with a reputation of less efficient. Arçelik plans to tackle energy efficiency challenges by designing high energy efficient products.

The aspects of climate change that influence Arçelik’s strategy are mainly relevant to products and production phase. Production phase relevant climate change aspects are mainly in energy usage and energy regulations as mentioned before. The most substantial business decision in Arçelik is reducing GHG emissions by using renewable energy. As Arçelik, starting from 2012, we have been using electricity produced from renewable energy sources. In 2012 we bought 1,431,156 kWh from renewable energy company. In 2013, 2014 and 2015 we bought respectively 53,449,021 kwh, 158,314,563 kwh and 179,904,936 kwh from renewable energy.

The Turkish Regulation on Monitoring of GHG emissions has been published in Turkey, first reporting obligation period for industry will start at 2017 for GHG emissions of 2015 and 2016. Arçelik has been calculating GHG emissions since 2006 and has been certified its GHG according to ISO 14064-1 and IPCC which is verified by an independent body in a "reasonable assurance" level, since 2010.

With the project started at the end of 2015 year, Arctic Refrigerator Plant (Arçelik’s plant in Romania), was also included within the scope of this work. ISO 14064-1 Greenhouse Gas Emissions Management System was implemented to Arctic Refrigerator Plant, GHG emissions belonging to year 2015 have been verified with “reasonable assurance” by an independent body.

GHG emissions data and assurance reports of Arçelik and Arctic can be found in Sustainability Report 2015.The ratio of renewable energy usage was lower than 1 % in 2012, was nearly 28 % in 2013 and we have increased the rate of electricity generated from renewable energy sources in our total electricity consumption to the level of 78% in 2014 and 82% in 2015.

Arçelik production plants are "energy efficient" areas. According to energy audits work with a T.R.Ministry of Energy and Natural Resources Directorate General of Renewable Energy licensed and TÜV certificated energy efficiency consultancy firm, 9 of Arçelik’s domestic production plants achieved a "Platinum" certificate for energy efficiency. Arçelik also first home appliances company to be achieved "Platinum" certificate.

With energy efficiency Projects in Production Plants at last 4 years, we have saved:

  • 90463 GJ in 2012 with 134 energy efficiency projects
  • 84351 GJ in 2013 with 105 energy efficiency projects
  • 40170 GJ in 2014 with 66 energy efficiency projects
  • 46914 GJ in 2015 with 99 energy efficiency projects

There are 3 time zones for electricity prices. This is a result of unbalanced usage of electricity by consumers. To tolerate unbalancing, electricity producers have to invest on higher capacity electricity stations. This results into inefficiency. Generation plants of Arçelik produce electricity in a harmony with electricity producers. We produce electricity where demand of all consumers is high and use grid energy where demand of all consumers is low. So we help to balance the consumption.

On the other hand, we’re working on to implement the carbon price system in Arçelik. There is no legislation about carbon pricing which is published and implemented in Turkey. Although there is no an explicit carbon price available in Turkey, Arçelik sets emission reduction target and mitigate its emissions by energy efficiency projects, using of combined heat and power plants which are much more efficient way of producing energy and increasing electricity supply generated through renewable energy resources.

For the next few years, Arçelik plans to implement an internal carbon fee. Each department of Arçelik will contribute a proportional amount to the carbon fund based on their emissions and determined carbon price. By using funds collected from the carbon fee, Arçelik will invest on carbon reduction projects such as energy efficiency projects, renewable energy projects and similar environmental initiatives. Besides creating a fund to support our net zero emission target, behavioural change at Arçelik will also be provided by carbon fee. Arçelik Sustainability Committee is responsible for the coordination of Arçelik’s internal carbon pricing.

Climate Change Related Short and Long Term Targets

Due to achive the strategies mentined above, Arçelik has defined its targets to combat climate change. Arçelik has defined its targets based on two different approachs: normalised (intensity) based and absolute based.

v  Arçelik’s  normalised (intensity) GHG emissions target and the progresses of the previous years targets related to production are given below:

Our short term target for 2020 was defined as; to reduce total eCO2 emissions of its domestic production plants from 2010 (base year) to 2020 by 70% per sales revenue.In metric tonnes CO2e per unit net total revenue was 0.000036 (tons eCO2/TL) in 2010 base year. Thanks to our energy efficiency projects and renewable energy purchasing we have achieved our goal defined for 2020 year. In 2014, we decreased our scope 1+2 emissions per sales revenue* 80% (0.00001063 tons eCO2/TL) compared to our base year (2010). And we achieved our 2020 target.

Because of this reason, we renewed our target for 2040, defined as below:

  • Our long term target is to reduce total eCO2 emissions of its domestic production plants from 2010 (base year) to 2040 by 100% per sales revenue* (“becoming net zero emission company” (0 tons eCO2/TL)) by implementing new energy efficiency projects (emission reduction projects) and using the electricity generated from renewable energy sources and carbon offsets.

 

v  Arçelik’s normalised (intensity) GHG emissions target and the progresses of the previous years targets related to product logistics are given below:

  • Our short term target is to reduce total eCO2 emissions of its domestic product logistics activities from 2013 (base year) to 2018 by 10% per shipping.

In 2013, in metric tonnes CO2e per shipping was 0.2439 (tons CO2e/shipping). In 2014, we decreased our Scope 3 (domestic product logistic) emissions per shipping by 7% (0.2268 tons CO2e/shipping).

 

v  Arçelik’s absolute GHG emissions target and the progresses of the previous years targets related to production are given below:

  • Our short term target is to reduce total eCO2 emissions of our domestic production plants from 2010 (base year-157,725 tons eCO2) to 2020 by 60% (63,090 tons eCO2) by implementing new energy efficiency projects (emission reduction projects) and using the electricity generated from renewable energy sources.

Thanks to energy efficiency projects (emission reduction projects) and supply of electricity produced by renewable energy sources, we have reduced our absolute GHG emissions around 51% (to 77,662 tons eCO2) by 2015 compared to base year (2010).

  •  Our long term target is to reduce total eCO2 emissions of its domestic production plants from 2010 (base year-157,725 tons eCO2) to 2040 by 100% (“becoming net zero emission company” (0 tons eCO2)) implementing new energy efficiency projects (emission reduction projects) and using the electricity generated from renewable energy sources and carbon offsets.

 

v  Arçelik’s absolute renewable energy target and the progresses of the previous years in production are given below:

  • Arçelik aims to increase the ratio of total supplied electricity generated from renewable energy resources to 100% by 2020 (short term target).
  • Arçelik has been working on possible renewable energy production investments and following up the developments in technology and falling costs of renewable energy. Arçelik plans to invest on solar energy till the end of 2020. Arçelik aims to produce 1.4% of total generated electricity in its plants, from solar energy till the end of 2020.

In 2015, Arçelik has supplied 82% of total electricity consumption which is generated by renewable energy sources.

 

Climate Change Risks and Opportunities Management

In Arçelik, Risk Management System is an integrated multi-disciplinary process. Strategic, operational, physical, financial, reputational and environmental risks and opportunities are covered in Arçelik Risk Management System, to the fulfillment of the short and long term goals. Sustainability Committee evaluates corporate risks and opportunities related to climate change. Corporate climate change risks and opportunities are presented by the Sustainability Committee to Risk Management Committee for providing the integrity of corporate main risks.

Risk Management Committee is formed to carry out its activities by making recommendations to the Board of Directors. Concerning the determination and assessment of the risks and opportunities, estimation of their impact to company level, the management of these risks, their consideration in decision-making mechanisms, the establishment of effective internal control systems. The risk and opportunity results are monitored and assessed by the Board of Directors, annually.

In Arçelik, company level risks are mainly strategic and reputational risks which impact the whole company and stakeholders (employees, investors, customers, suppliers and dealers). Asset level risks are mainly operational, financial, physical and environmental risks which effect especially production plants, sales, purchasing, distribution and production engineering departments. Climate Change Coordination Committee identifies the climate change related risks and opportunities at asset level and reports to Sustainability Committee. Sustainability Committee evaluates and prioritizes asset level corporate risks and opportunities. Company level risks and opportunities are identified by Sustainability Committee by considering defined asset level risks. The management process of climate change risks and opportunities are defined in “Sustainability Management Procedure”. Risk and opportunity identification, determination and prioritization method has been defined in "Corporate Risk Management Procedure". The prioritization of the risks and opportunities are based on the Arçelik’s scoring methodology. Climate change related risks and opportunities are being scored and prioritized by the Sustainability Committee. Defined and prioritized risks and opportunities are notified to the Risk Management Committee. Risk Management Committee integrates the climate change related risks and opportunities into the main risks and opportunities of the company. Prioritized risk and opportunity results are monitored and assessed by the Board of Directors, annually. Arçelik Sustainability Committee members are the top level responsible of business processes. Defined and prioritized risks and opportunities are notified to the related department managers. Department Managers develop proactive solutions to handle risks and opportunities and integrate into its business procedures. Plant Directors are responsible to monitor and ensure that the risks are under control and opportunities are being assessed.

In Arçelik, risk and opportunity identification, determination and prioritization method has been defined and published in the "GTP-16718 Arçelik Corporate Risk Management Procedure". The prioritization of the risks and opportunities is based on the scoring methodology, defined by Arçelik. Climate change related risks and opportunities are being scored and prioritized by the Sustainability Committee.

 According to Arçelik’s risk and opportunity scoring methodology, the risks and opportunities are scored (1-5 points) considering financial, reputation, production, human and legal impacts and the max score is defined as impact point. The frequency of the risks and opportunities are also scored (1-5 points). The risk and opportunity points are scored by multiplying frequency and impact point Prioritization is made according to these score points. 

E.g. Arçelik’s some of the high potential risks can be found below:

Risk1: International agreements, legal legislations, air emission and climate change limitations

Risk factor1: Additional investment need; Needs for using Best Available Technology (BAT); Energy cost increases; National GHG mitigation target; Necessity for buying Carbon credits

Risk2: Responsibilities of Emission Reporting

Risk factor2: Failure to obtain GHG emission factors from energy suppliers for Tier 2 reporting

Risk3: Product labelling regulations and standards

Risk factor3: Inability to capture the competition of using voluntary labels (water label, carbon label, eco-label etc.) except energy

E.g. Arçelik’s some of the high potential opportunities can be found below:

Opportunity1: International agreements, legal legislations, air emission and climate change limitations

Opportunity Factor1: Voluntary reporting of GHG emissions

Considering the current status of Turkey, the verification of Arçelik greenhouse gas emission inventory is an opportunity for the company. GHG emissions are being verified by an international independent body since 2010.

Arçelik’s climate change related risks and opportunities have been defined and reported in CDP 2016 report (click here).

 

Engagement with Policy Makers

The matters we have been engaging directly with policy makers can be found below:

Energy Efficiency

Corporate Position: Support

Details of engagement:

·     Arçelik supported the "En-Ver (Energy Efficiency) Project” launched in collaboration with T.R.Ministry of Energy and Resources as the corporate sponsor."En-Ver Project” is in cooperation with public, private sector and NGO's, for the purpose of raising awareness for using energy efficiency at all segments of society and sectors.

·       Arçelik was a partner to Market Transformation of Energy Efficient Appliances (EVÜdP) in Turkey. EVÜdP Project started in 2010 and completed by the end of 2015. UNDP, GEF, T.R. Ministry of Science, Industry and Technology and T.R.Ministry of Energy and Natural Resources Directorate General of Renewable Energy and TÜRKBESD are also members of the Project. The aim was to enhance the strategy and infrastructure of transformation towards more energy efficient household appliances thus reducing domestic electricity consumption and decreasing greenhouse gas emissions.

·       Arçelik participates and gives comment on the preliminary phase of EU regulations on energy efficiency, labelling and F-Gas by the membership in CECED (European Committee of Domestic Equipment Manufacturers). Arçelik is a member of European Committee of Domestic Equipment, since 2002.

·         Arçelik has a close relationship with all relevant ministry departments and work together on the preliminary phase of EU regulations to Turkish regulations system. Arçelik took part in the consultation of Turkish energy labelling and eco-design directives, which are published in official journal, dated 22 June 2012.

·     In order to increase energy efficiency in products and production, joint works with both governmental agencies and universities are performed. Projects are carried out with TÜBİTAK (The Scientific and Technological Research Council of Turkey), energy efficient product and production technologies are developed. Projects are carried out also under European Union 7th Framework Program.Arçelik also has a close relationship with ministry of Science, Industry and Technology and work together on energy efficiency and energy regulations in industrial electric motors.

·         Arçelik has supported the project Transformations of Energy Efficiently Motors in SMEs supported by UNDP, and leaded the establishment of “Electric Motors Producers Association” in Turkey.

 

Climate Change

Corporate Position: Support

Details of engagement:

  • Arçelik takes part in the working group which has been established by the Ministry of Environment and Urban Planning&UNIDO. The group is working on the technical specifications of determining, collecting and disposal of the Ozone Depletion Substances that are banned for usage.
  •  Arçelik became a member of Climate Platform of Turkey which is established as an independent non-profit initiative for providing support for operations to combate climate change,in cooperation with REC(Regional Environmental Center)Turkey and TÜSİAD (Turkish Industry and Business Association).
  • Arçelik considers climate change as an important risk for world's sustainability, maintains its support to local and international projects executed by business world both in Turkey and in international arena. In this scope,Arçelik signed "The 2 oC Challenge Communiqué" prepared by Corporate Leaders Network (CLN) including Turkey and signed by more than 200 corporate officers operating in various industries in 29 countries.Arçelik gave comments on the draft regulation of Turkish Monitoring and Reporting Directive,in 2012.
  • Arçelik made a joint study with Ministry of Energy and Natural Resources Directorate General of Energy Affairs to calculate regional diffraction of emission factor to reduce risk of reflection of such uncertainty to GHG emissions.
  • Arçelik former CEO Mr. Levent Çakıroğlu has been the President of the Turkish Corporate Leaders Group on CC, he represented Turkey in the World Climate Conference (WCC)  2012. Having also participated in the World Climate Summit held in Warsaw 2013.
  •  Arçelik also actively participated in work groups at the Ministry of Environment and Urbanization ahead of the WCC realized in Lima in 2014.
  • Arçelik participated in the WCC held in Paris and represented Turkey in 2015.
  •  Arçelik represented Turkey in two different panel sessions in COP21. In “Focus on initiatives - Fuel Efficiency and Appliances” session organized by SE4All Initiative of UN and World Bank(WB), Arçelik CCO for Global Sales, Mr. Ragıp Balcıoğlu, attended as a speaker. Mr. Fatih Özkadı, Arçelik Sustainability and Corporate Affairs Director, attended as a speaker in “The Game Changer - Interactive Energy Efficiency Accelerator” titled panel hosted by U4E initiative of UNEP and GEF.
  • Arçelik CEO, Mr. Hakan Bulgurlu, attended the "Dialogue for Climate Action" event in Vienna in May 2016, which was launched by the World Bank in order to increase dialogue on this matter, within the frame of COP21 goals. Arçelik signed 'The Principles for Dialogue on Climate Action' in scope of this event.
  • Arçelik made commitments to «Paris Pledge for Action» of Cambridge University and “Responsible corporate engagement policy” of “Road to Paris 2015 Project”.
  • WEEEs (waste of electrical and electronic equipment), such as refrigerator, air conditioner, etc. may contain ODS which have high global warming potential (GWP). The gases must be properly extracted and treated in an environmental-friendly way. Arçelik made a joint study with the Ministry of Environment and Urban Planning to publish the “WEEE Regulation” in Turkey.

 

Product Transformational Initiatives

In consideration of product life cycle assessment, GHG emission emitted during to use of the products is more higher.(94-95% consumer use,<4% production and raw material supply,<0.1% product logistics).

Operations aimed at developing product energy efficiency have great importance in terms of ensuring GHG emission mitigation at national and international level, the environmental impact of the products generated in usage phase. Therefore, R&D carries out studies on product energy efficiency development.The share of our environmentalist products, developed with our innovation approach, in production increases with each passing year. By means of the difference we create in this direction, our environmental impact is reduced, while also providing a significant competitive advantage. In this scope, we have allocated resources worth 47,057,582 TL to environmentally friendly product research and development studies in 2015. In 2015, a total of 171,264.37 GJ energy gain was ensured with energy efficient products produced in all Turkey operations, as against 2014.

Avoided emissions represent customers’ Scope 2 emissions. The details can be found below:

In 2015, in television production, the share of A++, A+ and A class energy efficient products in total production was realized as 99.8%. The level of energy consumed per unit product that was achieved in 2014 was also preserved in 2015.

Stand-by power consumptions were reduced to levels ranging between 0.12W and 0.29W, ensuring energy savings by 38.6% in stand-by power consumption through this improvement.

The annual average energy consumption per product was reduced by 0.3%** at our Cooking Appliances Plant, by 2% at our Washing Machine Plant, by 0.8% at our Dishwasher Plant, and by 6.6% at our Dryer Plant, as against the year 2014. While the share of high energy efficiency products in total production was increased at our Washing Machine Plant, the share of A class heat pumped products at our Dryer Plant increased from the level of 24.3% to 33.9%.

Some of the energy saving products produced in 2015 are as follows:

  • A+++ No Frost Cabinet Style Refrigerator
  • A+  Energy Class 90 cm Wall Type Hood
  • A+++ -30% Energy Efficient No Frost Combi Refrigerator
  • 55” UHD A+ Smart TV
  •  A++ Energy Class Built-in Oven
  •   A+++ -70% Energy Efficient Washing Machine
  • 75% Energy Efficient Cold Wash Program Washing Machine
  • A+++ -10% Energy Efficient Dryer Machine

Since 1995, energy consumption of refrigerator, washing machine, dryer, TV, dishwasher, oven are reduced in the ratios of 72%, 84%, 72%, 66%, 52% and 53%.

With EVÜdP (Market Transformation of Energy Efficient Appliances) project, EU ecodesign and energy labelling regulations for washing machine, dishwasher, oven, hob, hood, refrigerator, freezer, air conditioners, dryer and television implemented to Turkey in 2011 at the same time with EU.  Under the EU harmonization efforts, non-energy efficient refrigerator, washing machine and dishwasher are banned in 2011. In this way products are placed on the market as of today are 2 times more efficient compared to 2010. Thanks to the regulations put into force, 9 TWh of energy has been saved since 2011. For implementing EU regulations to Turkish legislation; coordination between Science, Industry and Technology Ministry and the producers have created.

Arçelik has become a partner to the United For Efficiency (U4E) Project led by UNEP. Arçelik supports market transformation towards Energy Efficient Appliances and Equipment globally. In this context, Arçelik supports development of estimates on the benefits and policy status of the transition to energy efficient household refrigerators, particularly in the Republic of South Africa and Thailand. Arçelik contributes to the development of performance standards, monitoring and verification schemes, test methods and the installation of test facilities for energy efficient refrigerators and give support to the global action campaign to promote the global transition to energy efficient refrigerators particularly at developing countries. The contribution will take different forms such as technical expertise and market insights to be provided, for instance, to meetings of the global multi-stakeholder platform, technical task forces and high level and expert discussions.We have developed a “Arçelik Energy Efficient Refrigerators Grouped Project”. It is a voluntary emission reduction Project, because there is not any regulatory emission trading scheme in Turkey and so that there are no allowances allocated or purchased in scope of our Project.

The project activity is manufacturing enhanced energy efficient refrigerators by applying advanced technologies and selling them to Turkish customers.  The Project crediting period is 10 years (2012-2022) and the estimated average emission reductions resulting from this project is estimated around 1.8 million tCO2e, totally (The project is currently at the approval stage by the related authorities, the estimation was based on the assumptions made in line with the CDM methodology).  The validation process and registration phase have been completed. Now the verification is under process.In refrigerators, R134a replaces with R600a which is an environmental friendly gas. Arçelik is the first white goods manufacturer which produced CFC-free refrigerators in Turkey. Thanks to transition projects of environmental friendly gas usage, GHG effect per refrigerator is 1 over 222 of 1995 GHG emissions,  we ensured 280.000 tonnes eCO2 GHG only with coolant gas.

GWP (Global Warming Potential) (100 year) of R134a GWP is 1300, and R600a GWP is 8. GWP of R134a is 162 times higher than GWP of R600a. To calculate GHG emissions reductions, we use grid emission factor as 0.532 ton/kwh and calculation method as "activity data x emission factor".

Arçelik Energy Efficient Refrigerators Grouped ProjectWe commenced basic infrastructure operations to enter voluntary carbon trade in the future period. Since Green Climate Fund steps in 2012 we constantly compile information about future carbon markets. We plan advanced level operations so that our Company will benefit to a maximum level from carbon trade both at home and abroad.

As a start in line with this strategy, we have developed a “Arçelik Energy Efficient Refrigerators Grouped Project”. It is a voluntary emission reduction Project, because there is not any regulatory emission trading scheme in Turkey and so that there are no allowances allocated or purchased in scope of our Project.

The project activity is manufacturing enhanced energy efficient refrigerators by applying advanced technologies and selling them to Turkish customers.  The Project crediting period is 10 years (2012-2022) and the estimated average emission reductions resulting from this project is estimated around 1.8 million tCO2e, totally (The project is currently at the approval stage by the related authorities, the estimation was based on the assumptions made in line with the CDM methodology). The validation process and registration phase have been completed (Registry: APX; Project ID:1117). Now the verification is under process.

For the comprehensive and detailed information about the management of climate change in Arçelik, please see Arçelik A.Ş. Sustainability Report 2015.

Operational Transformational Initiatives

  • Arçelik A.Ş performs energy management systematically in compliance with ISO 50001 Energy Management System standard. Arçelik A.Ş. had started its efforts to make its energy management system comply with ISO 50001 Energy Management System standard as of March 2012 and has been entitled to receive the certificate upon satisfaction of all requirements of this system at all domestic plants and Sütlüce Head Quarter Campus in Turkey and the plants in Romania, Russia and China. Arçelik A.Ş. was the first company having ISO 50001 Energy Management System certificate, which is based on the sustainable and efficient use of the energy consumed within the scope of activities, in its sector in Turkey.
  • We have realized 99 energy efficiency projects in our Turkey operations during 2015. Through energy efficiency projects we have actualized in 2015, we achieved 46,914 GJ energy saving and a reduction of 5,217 ton CO2e in our greenhouse gas emissions.
  • As part of our strategy for combating climate change that we identify in accordance with our corporate responsibilities, we minimize our carbon footprint through energy efficiency practices and renewable energy source use. In 2015, we have reduced our direct greenhouse gas emission approximately by 23%, our indirect greenhouse gas emission by 78%, and our total greenhouse gas emission approximately by 51% compared to base year 2010.
  • With the practice we actualized for the first time in 2012, we continued purchasing energy generated from renewable energy sources in 2015. The purchasing rate of electricity generated from renewable energy sources which was realized as approximately 1% in 2012, 28% in 2013, and 78% in 2014 was increased to the level of %82 in 2015, preventing 83,553 ton CO2e greenhouse gas emission. We have increased the rate of electricity generated from renewable energy sources in our total electricity consumption to the level of 82%.
  • Energy audits were carried out by a private consultancy firm in 2015 which is compulsory for factories that have energy consumption over 5000 TOE, according to Energy Efficiency Law and related regulations. Besides, “Energy efficiency internal audit” project was implemented in order to increase the effectiveness of energy efficiency efforts and provide the coordination between all Arçelik plants. With this project, energy audits of 7 Arçelik plant in Turkey was carried out in 2015.  We aim to expand this project to our abroad plants in 2016.
  • As a result of the efforts made by Arçelik A.Ş. in energy efficiency field, 10 manufacturing plants in total, were awarded with "Platinum" certificate top level in "Energy Efficient Green Factories''.
  • For our targets and other implementations on operations, please see explanations under “Climate Change Related Targets” subtitle on this page.
  • Arçelik established two recycling facilities in Bolu and Eskişehir, fulfiling the requirements within the framework of the Regulation for the Control of Waste Electric and Electronic Equipment (WEEE). Arçelik is one and only company in its sector which has its own recycling plants. At Eskişehir facility, refrigerators, coolers, air conditioners are recycled and CFC (chlorofluorocarbon) gases harmful for the ozone layer are collected with a closed system; while at Bolu facility all large white goods, except refrigerators, coolers and air conditioners, as well as small household appliances are recycled. The recycling of old products at the facilities, which were engaged as of 2014 yearend, was also continued in the reporting period. The energy gain achieved through the recycles realized since the facilities first became operative is equivalent to the annual energy generation of six 2.5 MW wind turbines.

For the comprehensive and detailed information about the management of climate change in Arçelik, please see Arçelik A.Ş. Sustainability Report 2015.

 

Collaboration Activities with Suppliers on Climate Change

In line with its "Respects the Globe, Respected Globally" vision, Arçelik manages its environmental impacts systematically in order to fulfil the requirements to protect the ecological balance. “Product Life Cycle Assessment” is the key element of Arçelik’s Environmental Compliance Management practices.

Arçelik reduces the environmental impacts of all the processes from production of raw material to disposal of product, complies with all the environmental law and regulations during the life cycle of product and commits this approach with its Environmental Policy.

As a step of life cycle assessment, supply chain is an important tool to complete the cycle.

In this respect, we have started “Arçelik Supplier Footprint Project”in 2013. Our aim is to calculate our suppliers' carbon footprint according to IPCC Guideline. With this project, in 2014 we have prioritized our suppliers according to the proportion of our total spend they represent. 80% of Arçelik’s total spend (183 suppliers) is considered in our engagement.

For getting information from suppliers, an “Arçelik Supplier Footprint Project Questionnaire” has been prepared and sent. 30% of the suppliers have answered our questionnaire about GHG and these information are considered to calculate GHG emissions of suppliers.

Scope 1 (stationary combustion (natural gas, LPG, diesel, fuel oil, purchased steam, LNG) and mobile combustion (fuel oil, diesel, LPG)) and Scope 2 (electricity) emissions of our suppliers’ production activities of our suppliers have been calculated. Total GHG emission of our suppliers is 171,247 ton eCO2.

In 2013 and 2014 Arçelik’s logistics’ GHG emissions (Scope 3) have been calculated and verified by an independent body at “limited assurance”level. GHG emissions data and assurance report of Arçelik’ s Scope 3 emissions (Logistic) can be found in Sustainability Report 2015.

 

Carbon Neutrality

Arçelik aims to have net zero carbon emission by eliminating its total eCO2 emissions of its domestic production sites until 2040. To achieve the goal, Arçelik plans to implement an internal carbon fee in next two years. Each department of Arçelik will contribute a proportional amount to the carbon fund based on their emissions and determined carbon price. By using funds collected from the carbon fee, Arçelik will invest on carbon reduction projects like energy efficiency projects, renewable energy projects and similar environmental initiatives. Besides creating a fund to support its carbon neutrality target, behavioral change at Arçelik will also be provided by carbon fee. 

For the next few years, Arçelik plans to implement an internal carbon fee. Each department of Arçelik will contribute a proportional amount to the carbon fund based on their emissions and determined carbon price. By using funds collected from the carbon fee, Arçelik will invest on carbon reduction projects like energy efficiency projects, renewable energy projects and similar environmental initiatives. Besides creating a fund to support our carbon neutrality target, behavioral change at Arçelik will also be provided by carbon fee. Arçelik Sustainability Committee is responsible for the coordination of Arçelik’s internal carbon pricing.

For the comprehensive and detailed information about the management of climate change in Arçelik, please see Arçelik A.Ş. Sustainability Report 2015.

 

*It has been decided that, the country-based revenue will be taken into account and used in the calculations of GHG intensity performance due to the conditions of company spread such as plant increase in other countries and the extension plans of GHG external verification process. .Previous year intensity figure is revised according to country revenue. 2014 intensity figure is calculated according to this new approach. For the details, please see our CDP Report 2016 (publicly available).

**All calculations were based on annual production quantity for the relevant year. Product capacity and/or volume were not taken into account.

 

 

 

CONTENTS

Arçelik A.Ş. Sustainability Report 2012