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The project adopts the following policy with the intention of preventing or reducing any unfavorable E&S effects of its operations and of leaving a world that is sustainable for future generations with increasing environmental consciousness:

• There will be no financing to excluded activities as defined in the management system in line with the Exclusion List and Sectoral Guidelines of KfW Group, as well as the IFC Exclusion List for FIs;
• ESMS is adequately integrated into the Project cycle to ensure eligible SMEs and the activities and investment projects of the Eligible SMEs, in general, and those that will be financed by the eligible SME Loan proceeds are all screened and associated environmental & social risks and impacts are managed;
• Values, views and rights of the Project beneficiaries and other project-affected parties are respected and strong, open and fair relationships with affected communities are established;
• Sufficient resources are designated to ensure the implementation of ESMS;
• Monitoring of the E&S performance of Eligible SMEs with continual improvement approach through capacity building is conducted;
• Engagement activities are implemented, and project related information is disclosed through appropriate and transparent means considering the needs and expectations of related parties; and
• Cultural background of Project beneficiaries and other project-affected parties are respected, and Eligible SMEs avoid impacts on tangible and intangible cultural heritage.

For the effective implementation of the Foster Project, specific practical responsibilities have been assigned to the relevant parties.

As being the Project Execution Agency, KOSGEB takes the overall responsibility for the implementation of the ESMS of the Project. The implementation tasks are mostly delegated to the PFIs under the Interest/Profit Share Subsidy Mechanism, but to ensure that both the PFIs and Eligible SMEs implement the necessary components of ESMS, KOSGEB will monitor, support and verify the compliance of these Project parties per the ESMS, and will report to KfW.

In order to comply with the E&S requirements of the Project, KOSGEB designated a representative and a Environmetal and Social Officer to have overall responsibility for E&S issues.

KOSGEB’s main responsibilities in the Project are as follows:

In order to manage all these processes, KOSGEB recruited support staff to KOSGEB Provincial Directorates and works in coordination with the mentioned staff as well as the SME Experts working in those Driectorates. In this context, the responsibilities of KOSGEB Provincial Directorates are as follows:

Certain duties have been delegated to the participating banks in the project in order for the Interest/Profit Share Subsidy Mechanism to be carried out efficiently, and KOSGEB has provided the required direction and information. The following duties have been entrusted to banks in this regard:

One of the main objectives of the project is to increase the environmental and social awareness and practices of SMEs, and in this regard, responsibilities of the SMEs are as follows:

Loan/credit requests are evaluated according to the Projects Environmental and Social Policy Exclusion List and Guidelines. The projects included in the Exclusion List are not accepted.

Risk categorisation is carried out for the accepted applications by using the International Environmental and Social Risk Categorization method.

This method classifies projects and SMEs into three classifications;

• High risk (Category A)*
• Moderate risk (Category B)
• Low risk (Category C)

*Projects under the Category A risk group are not accepted.

The following steps will be applied during the Environmental and Social Risk Assessment and Monitoring Process for eligible SMEs:

1. Collecting commitments regarding the following issues during the Project applications;

• Fulfil obligations regarding national environmental legislation
• Fulfil obligations regarding national occupational health and safety legislation
• Comply with principles such as treating its employees honestly and fairly, providing a safe and healthy working environment, non-discrimination, creating appropriate working conditions for the disabled, and not employing child labour
• Use resources efficiently and take the necessary measures to prevent environmental pollution
• Not to take any actions that will adversely affect the health and safety of the community who can be affected by the operations of the SMEs
• Engage with stakeholders and take their suggestions into account if there are E&S risks that affect the society affected by the beneficiary SME activities
• Informing KOSGEB written or verbally in case of an incident/accidents
• Provide all necessary documents and licences during the application
• Commitment of entity to take the necessary precautions on risk in social issues such as environment, employee rights, occupational health and safety

2. Excluded Activities List Check: Elimination of applications containing Excluded activities.
3. Performing Environmental and Social Risk Assessment and Pre-Classification: Determining risk classes (high, moderate, low risk) in line with the sectors and scales of the beneficiary SMEs.
4. Environmental & Social Management Plan: Environmental and Social Plan is created according to the risk classes of the SMEs and Environmental and Social Impact Assessment study is carried out for the applicant sectors those applied to SME Support mechanism.
5. Environmental & Social Management Plan: Providing necessary information and sharing the Environmental & Social Management Plan with the beneficiary SMEs accepted under the SME Support Mechanism.
6. Trainings: Providing and organising trainings by KOSGEB to SMEs and other related parties on Environmental and Social issues during the implementation of the Project.
7. Environmental Social Monitoring: Performing on-site monitoring of SMEs after the allocation of their loan/fund and converting non-compliances related to the above mentioned commitments into action plans.
8. Environmental Social Screening: Ensuring that the E&S risks and impacts have been adequately identified, appropriately managed and submit a periodic reports on the development and implementation of the ESMS.
9. Environmental Social Assessment: Recording Implementation Results of Enviromental and Social Evaluations Annually.

KOSGEB has developed a transparent and comprehensive GRM to collect and resolve concerns, queries, complaints and grievances related to the Project. KOSGEB has adapted its existing communication channels and grievance mechanisms to address inquiries or concerns in line with the Project SEP. The processes regarding the grievance mechanisms are operated through the following channels:

• Application with petition
• Application via CİMER
• Application via given e-mail in the Project website
• Application via KOSGEB Call Centre
• Application through staff at KOSGEB Provincial Directorates

KOSGEB will keep a record of all grievances in a grievance log and is required to work closely with Project Management to resolve the grievances.

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