1. Environmental & Social Requirements of The Project

The Foster Project has developed an Environment and Social Management System (ESMS) based on IFC Performance Standards, World Bank Environmental and Social Standards and KfW Development Bank Sustainability Principles in order to prevent or minimize the possible environmental and social (E&S) risks of the participating sectors.

In this context, it is intended to raise the level of environmental and social awareness among all parties involved in the project, to improve the parties’ knowledge of and adherence to international environmental and social standards, and to develop an environmental social culture within the institutions that is compatible with their capabilities, the nature, and the scope of the work to be done while also complying with local laws.

The ESMS is continuously used to identify, evaluate, manage, and track the E&S risks and impacts of the Project.

2. Environmental and Social Policy of The Project

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.

3. Responsibilities

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:

·        Assessment, selection and monitoring of PFI’s for the Interest/Profit Share Subsidy Mechanism

·        Providing assistance and guidance to PFIs and Eligible SMEs and monitoring,

·        Reporting of Project performance

·        Prepare and implement a Stakeholder Engagement Plan “SEP” to obtain the opinions of all parties of the Project.

·        Develop and implement a Grievance Redress Mechanism “GRM” in order to manage the complaints that may come from outside and within the KOSGEB.

·        Allocating the necessary tools and make arrangements to monitor and carry out the ESMS of SME’s

·        Informing KfW about the possible accidents/incidents of SME’s.

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:

·        Collaborating with SMEs and taking part in necessary trainings for SMEs

·        Managing the incidents in accordance with the Project grievance mechanism in the possible accident/incident and complaints of SMEs.

·        Perform on-site inspections/audits, when necessary, in order to determine whether the E&S conditions in the Eligible SME commitments are fulfilled and prepare necessary reports.

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:

·        Development of Environmental and Social Management System

·        Competence and resources to meet Project requirements

·        Monitoring and reporting of E&S compliance of SMEs

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:

·        Be responsible for the compliance of national environmental, occupational safety and labor law regulations

·        Obtain necessary E&S and occupational health and safety (“OHS”) licenses and permits

·        Use resources efficiently and take the necessary measures to prevent environmental pollution

·        Inform KOSGEB in the event of an accident/incident occuring in the workplace, taking necessary precautions from recurring

·        Provide all necessary documents and information during on-site monitoring conducted by the E&S Specialist and/or SME Specialists in Provincial Directorates of KOSGEB, carry out the necessary actions after the audit if required.

·        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.

·        Do not take any actions that will adversely affect the health and safety of the community who can be affected by the operations of the SMEs.

·        Inform employees about the Project Grievance Redress Mechanism.

4. Environmental and Social Risk Management In Funding Processes

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.

5. Enviromental and Social Risk Assessment and Monitoring Process

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


  1. Excluded Activities List Check: Elimination of applications containing Excluded activities.
  2. 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.
  3. 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.
  4. Environmental & Social Management Plan: Providing necessary information and sharing the Environmental & Social Management Plan with the beneficiary SMEs accepted under the SME Support Mechanism.
  5. Trainings: Providing and organising trainings by KOSGEB to SMEs and other related parties on Environmental and Social issues during the implementation of the Project.
  6. 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.
  7. 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.
  8. Environmental Social Assessment: Recording Implementation Results of Enviromental and Social Evaluations Annually.

6. Grievance Redress Mechanism

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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