The Sustainable Development Vision of TBC Bank – the Concept of Simplifying Life

Aligned with the Environmental, Social, and Governance (ESG) Strategy, TBC Bank prioritizes key areas such as green and social financing, support for small and medium-size businesses and startups, enhanced access to financial and non-financial services, economic empowerment of women, increased participation in information and communication technologies, and educational programs for youth.

These directions serve as the foundation for TBC Bank’s sustainability strategy, underscoring the bank’s commitment to making a lasting, positive impact and actively promote environmental, social, and governance principles within the country and the broader region. TBC Bank’s ESG strategy undergoes annual review and approval by the Supervisory Board, with oversight of its implementation entrusted to dedicated Environmental, Social, and Governance Committees at both the Supervisory Board and Executive Management levels.

Supporting individuals and nurturing their growth are fundamental principles for TBC. Consequently, the idea of simplifying life holds significance within the bank’s sustainable development vision. TBC Bank’s Deputy General Director, Nino Masurashvili, sheds light on these aspects along with other aspects of the bank’s sustainability strategy.

Could you elaborate on the financial products and services you provide, specifically designed with social and environmental considerations? Furthermore, how does TBC Bank incorporate environmental, social, and governance (ESG) principles into its business operations, and what measures is the bank taking to address the challenges related to the environment and, climate change?

Our commitment to simplifying lives is evident in TBC’s ESG initiatives. Supporting individuals and fostering their development stand as the core values for TBC, making the concept of simplifying life integral to the bank’s sustainable development vision. Establishing sustainable business models and enhancing the resilience of individuals, businesses, employees, and society necessitates both financial support and initiatives for awareness, knowledge creation, and sharing. In pursuit of these goals, TBC provides exceptional products and services to its users:

Since 2017, the “Startuper” program of TBC Bank has provided financing and educational programs to the startup companies. Over 55,000 startups have registered in the program, with financing surpassing 110 million GEL.
TBC Bank supports small and medium-sized businesses by granting access to financial resources, including USAID and “Produce Georgia” guarantee resources.
Women entrepreneurs can benefit from a business loan, supported by the European Bank for Reconstruction and Development (EBRD), offering an 80% guarantee for business expansion or implementation of new ideas without collateral.
The newly established ESG Academy, launching next year, will offer diverse training programs to employees and customers. The inaugural course, “Green Awareness and Green Financing” spanning 22 months, is supported by EFSE (European Fund for Southeast Europe) and GGF (Green Growth Fund). The course aims to train 900 TBC employees and 300 retail, MSME, and, corporate customers.

I would like to highlight the significance of the green finance as a pivotal component in building resilience against climate change risks. In the 2023 ESG Strategy, our goal was to increase the sustainable loan portfolio to 1 billion GEL, a target that has already been surpassed with TBC’s sustainable loan portfolio reaching 1.082 billion GEL. Among these, 728 million GEL is dedicated to green or climate-related loans and continues to grow. The key financing directions are:

Financing of renewable energy projects: TBC has supported 42 hydroelectric plants in Georgia, enhancing the country’s clean energy share and contributing to energy security. Additionally, TBC has financed 15 solar power stations with a total investment of 3.3 million GEL from 2021 to 2023.
Financing of energy-efficient constructions: Businesses adopting energy-efficiency criteria during construction contribute to sustainable and environmentally friendly structures. Utilizing energy-efficient resources and solar energy sources not only promotes eco-friendly constructions but also impacts the environment positively, enhances the eco-branding of tourist sites, and increases independent electricity supply.
Funding of climate resilient smart technologies in agriculture: TBC supports the adoption of modern technologies like small-scale weather stations, agro-drones, hail protection nets, and smart irrigation systems in Georgia. Popularizing these technologies and raising awareness among farmers is crucial for the development of sustainable agriculture.
Financing of electric and hybrid vehicles: TBC Bank, as the first commercial bank in the Caucasus region to receive accreditation from the Green Climate Fund (GCF), now has direct access to GCF financing for climate change adaptation and mitigation projects, utilizing available funds to support the financing of electric and hybrid vehicles.

Is the evaluation of environmental and other risks related to sustainable development integrated into contemporary business assessments?

As the leading financial institution in Georgia, TBC Bank plays a pivotal role in influencing the country’s economy, business sector, employment, and social progress. Recognizing this responsibility, the company systematically incorporates sustainable development considerations into significant decision-making processes. TBC has explicitly identified unethical and harmful activities that it refrains from supporting.

In every commercial transaction, TBC Bank prioritizes the adoption of an organized and systematic approach by customers to environmental and social risk management. This involves adherence to both local and international environmental, health, safety, and labor regulations and standards. TBC’s environmental and social risk assessment framework aligns with the guidelines set by the international institutions such as EBRD, IFC, DEG, and ADB.

Furthermore, TBC actively advocates for the integration and observance of environmental and social standards in procurement practices. Since 2019, the bank has extended its scrutiny to include environmental and social risks related to suppliers. This screening process assists TBC in making informed decisions about collaborations with companies in the supply chain.

According to the National Bank of Georgia’s report, five Georgian banks are currently offering loans in line with the sustainable taxonomy. What are the primary challenges faced in this initiative?

Nearly a year has passed since the enactment of the NBG Green and Social Taxonomy Regulation, and TBC has actively engaged in its implementation during this period. It’s worth noting that TBC initiated financing in the green and social sector as early as 2008, providing the first green loan within the framework of an EBRD program. However, not all financial institutions share similar years of experience and expertise in our banking sector, necessitating more time for them to adopt the regulation. Despite our aspirations and experience, the process of introducing and disseminating a sustainable taxonomy is accompanied by various challenges, some of which I will outline:

Consumer Awareness: There is a significant lack of business and public awareness regarding climate change, its associated risks, and opportunities. This lack of awareness impacts the willingness of individuals and businesses to actively participate in the transition to a low-emission economy. In developing economies, short-term goals often take precedence, making it crucial to involve financial experts, scientists, and government agencies in conducting research and multi-sectoral analysis to establish a long-term vision. Addressing this challenge can be facilitated through the initiation of long-term awareness campaigns, particularly in collaboration with partner International Financial Institutions (IFIs). TBC has taken steps in this direction by establishing the ESG Academy to enhance awareness among the employees and the customers.

Availability of Green Financing: To address and mitigate the consequences of climate change, affordable financing is essential for various sectors in Georgia, including agriculture, transport, buildings, construction, and the energy sector. Additionally, there is a need to promote energy efficiency and smart agriculture technologies, as well as effective waste management. Currently, obtaining targeted financing from international financial institutions, such as the European Bank for Reconstruction and Development (EBRD) program or GCF accreditation (which TBC already possesses), serves as a primary means to overcome these challenges.

Lack of Data and Reliability: Challenges arise from the insufficient availability and reliability of climate-related data. Developing a metric to translate climate change results into financial indicators is necessary. To address this, a potential solution involves initiating the establishment of international standards for information disclosure, aligning with recommendations from entities like the Task Force on Climate-related Financial Disclosures (TCFD). Collaborative efforts between international and local organizations, the creation of a task force focused on ESG issues in conjunction with regulators, and coordinated efforts to eliminate existing challenges can further contribute to overcoming data-related obstacles.

Why does the development of sustainable financing hold paramount importance for both the country and society? Also, with far-reaching implications does it have for the development of the investment climate.

Sustainable financing plays a pivotal role in enhancing businesses’ energy efficiency, thereby bolstering the profitability of their operations and increasing resilience to climate change risks. Moreover, it encompasses the financing of modern technologies, enabling businesses to create digital products with export potential, expanding beyond local markets to international arenas. Through the digitization, businesses can cultivate more sophisticated models, broaden their customer base, and foster effective business development.

Investing in educational and awareness-raising initiatives, coupled with knowledge-sharing with local and international experts, facilitates the development of expertise that elevates the quality of services and products. Funding directed towards these areas not only facilitates the creation of new businesses, but also fosters the growth of existing ones. The presence of well-developed businesses significantly influences the investment climate. Sustainable business models and practices instill greater interest and confidence among investors, thereby contributing to an increase in the volume of financing and investment attracted to Georgia.

What are the advantages of implementing sustainable practices directly within SMEs?

The integration of sustainable practices into small and medium-sized businesses fosters innovation and success in their operations, gradually generating positive effects on the country’s economy.

Key sustainable practices include:

Energy Efficiency: Implementation of energy-efficient measures reduces costs, ensures operational stability, and enhances process efficiency. Process automation and technological advancements contribute to increased business production. By adopting innovative practices, small and medium-sized businesses align with international standards, opening opportunities to explore new markets.

Diversity: Sustainable practices encompass the development of diverse, gender-balanced, and inclusive teams. Diverse teams are geared toward creating innovative products and services tailored to a broad spectrum of needs, thereby expanding the customer base and boosting business profitability.

Resilience to climate and other types of shocks: The incorporation of sustainable practices not only ensures the stable profitability of businesses but also contributes to overall stability and employment growth. The introduction of innovative products and services necessitates the acquisition of new skills and professions within the country. This emergence of new professions is directly linked to job growth, elevating education levels, accumulating competencies, and enhancing people’s living standards.

What should the country do in order to accelerate the transition to a circular economy and what is the role of the private sector in this process?

The shift toward a circular economy presents a significant challenge for our country, requiring a comprehensive and collaborative effort across various sectors. Successfully implementing the circular economy model involves for example, establishing waste separation practices, developing proper infrastructure, building processing plants, and enhancing public awareness. It is crucial to create the products that prioritize recyclability from the initial stages of the production process.

The active involvement of the private sector is instrumental in supporting and financing business models aligned with the circular economy. This includes efficiently utilizing raw materials available in the form of waste in the Georgian environment, promoting their separation and recycling, and supporting relevant infrastructure projects. The private sector representatives can directly engage in waste collection and recycling processes to contribute to the circular economy. Beyond the efficient and profitable use of resources, embracing a circular economy approach aids in pollution reduction and environmental improvement.

Since 2015, TBC has been actively involved in collecting and recycling paper waste, collaborating with a partner company to recycle up to 450 tons of paper. This effort translates to saving approximately 7,650 trees from being cut down. Additionally, as part of a new environmental initiative in the current year, TBC, with the participation of employees and customers, has initiated the collection of plastic waste for handover to a recycling company.

Why is it important to support financial education and what is the role of the private sector? What is TBC Bank doing in this direction?

For several years, TBC has been actively engaged in expanding access to financial education through its digital platforms – www.tbcbusiness.ge and www.strataperi.ge – offering diverse educational courses. The bank proudly hosts the largest business education program in Georgia, with over 5000 participants in 2022. Developed in collaboration with the Asian Development Bank (ADB), the program provides free access to lectures covering technology, digital marketing, human resources, and other relevant topics.

To facilitate businesses in obtaining necessary software, TBC introduced the online platform www.businesstools.ge. This platform serves as a hub connecting developers with users, offering a space to find, compare, and discuss software tailored to various needs, such as accounting, IT management, and project management. Interested parties can register for free through the business support platform www.tbcbusiness.ge to attend trainings or access resources.

TBC actively engages in the projects organized by the National Bank of Georgia. On “World Savings Day” within Savings Week, TBC ESG ambassadors conducted the classes in schools across Tbilisi and various regions, aiming to familiarize students with financial management culture and raise awareness on the issue. Additionally, TBC collaborates with other Georgian commercial banks through the banking association to establish common approaches and communication campaigns, promoting increased public knowledge about financial education, cyber security, and the effective use of banking products.

How important is multi-sectoral cooperation between financial institutions, development organizations and the civil sector in order to facilitate the development of sustainable financing in Georgia?

Collaboration inherently yields a multiplier effect. When financial institutions, organizations, and the civil sector with shared interests and values come together, the positive impact of each entity is significantly amplified. Multisectoral partnerships facilitate the exchange of expertise and knowledge, benefiting all involved parties. Decisions made within these partnerships consider the interests of multiple stakeholders and various important details, ultimately fostering high engagement and the establishment of best results and practices. Simultaneously, sustainability concerns are becoming integrated into the daily activities of more individuals and organizations, laying the foundation for achieving sustainability on a broader scale for the entire country and society.