We are a Georgia focused investment platform, aiming to deliver on 4x20 strategy

Social Matters

 

The Group considers the interests of its main stakeholders, which include customers, shareholders, employees, lenders, and society at large in the development of processes to improve its strategy and operations.

We strive to contribute positively to society across the entire scope of our business activities by developing socially oriented products and services, implementing responsible approaches to our business operations, and carrying out sponsorship and charity activities.

Socially oriented products and services
Corporate Banking

In order to efficiently manage its indirect environmental and social impact, the Bank has prioritised the integration of sustainable finance principles into its credit risk management procedures. In 2013, the Bank updated its Environmental and Social Risk Management Procedures to ensure proper application of appropriate risk-based and sector-specific environmental and social risk assessment practices to its commercial lending activities. In 2014, the Bank actively started to put these procedures into practice. It has defined priority targets, and promotes environmental and social risk management activities accordingly. The Bank ensures that it takes a consistent approach to evaluating and managing environmental, human, and health & safety risks associated with financed projects. These procedures are now being integrated into the Bank’s credit risk management process, and will soon be applied routinely to all commercial transactions. In all that the Bank does, it strives to find sustainable solutions that make good business sense to clients and minimise their social and environmental impact.  

The main objective of the Environmental and Social Policy is to increase environmental and social benefits for our clients. Through the Environmental and Social Risk Management Procedure, the Bank enhances clients’ ability to be in compliance with national environmental and social regulations and to adopt relevant best international practices. The Environmental and Social Policy and Risk Management Procedures, along with other tools necessary for their implementation, comprise the core components of the Bank’s Environmental and Social Risk Management System (ESMS). Under this system, the Bank endeavours to become an environmentally friendly financial institution. 

The Bank has appointed an Environmental and Social Coordinator, responsible for ensuring the proper operation and maintenance 
of the ESMS, and will appoint an Environmental and a Social Risk Manager, responsible for the practical, day-to-day implementation of the Bank’s ESMS.

We implement the following procedures to ensure the operation and maintenance of the ESMS:

  • We refrain from financing environmentally or socially sensitive business activities mentioned in the exclusion lists of Development Finance Institutions such as the EBRD, IFC, DEG, FMO, and ADB.
  • We aim to assess the relative levels of environmental and social risk associated with clients’ businesses. We require certain customers to implement specific environmental or social action plans to avoid or mitigate their environmental and social impacts and adhere to specific monitoring and reporting requirements that we set in order to minimise environmental and social risk. These requirements are included as covenants in agreements between particular customers and the Bank.
  • We aim to regularly monitor the environmental and social risks associated with the Bank’s activities, and to assess clients’ compliance with the terms of relevant agreements.

Through ensuring comprehensive environmental and social assessment and action plans, as part of the stable due diligence, the Bank encourages customers to fulfil their environmental and social obligations. It has established a framework for them to achieve high environmental and social standards. In many cases, the Bank’s proper and timely management of customers’ environmental and social risks facilitate them in avoiding financial and legal sanctions during inspections conducted by the state enforcement agency. 

Environmental and social issues are tracked at the project site in cooperation with facility staff, who provide ongoing advice and guidance on good practice and standards, and monitor compliance with the requirements. For environmental and social due diligence of certain high-risk and category A projects, the Bank has contracted independent external experts. As part of its monitoring, the Bank requires each high-risk client to provide it with annual reports on their environmental and social performance and the implementation of applicable Environmental and Social Action Plans; alternatively , clients are visited by Bank staff on a regular basis. In 2014, the Bank conducted extensive Environmental and Social Due Diligence (ESDD) and developed action plans for non-compliant clients.  

The Bank regularly checks legal developments and updates with regard to environmental, health & safety, and labour issues, and places great emphasis on improving ESDD opportunities. 

In 2014, the Bank provided comprehensive opportunities for the development and enhancement of employees’ relevant skillsets. Two Environmental and Social Management training sessions were conducted, with a strong focus on topics such as key E&S risks, requirements of Georgian E&S legislation and IFIs’ E&S policy, compliance monitoring & enforcement, and the Bank staff’s role in efficient implementation of E&S risk management procedures. More than 100 employees participated. 

Other highlights of 2014 included a review of the Environmental and Social Management System. The purpose of the review was to ensure that policy remains fit for purpose, taking into account lessons learned from experience as well as changes in the relevant legislation. The review process began at the end of 2014, and the revised policy document is to be adopted in 2015.  

The Bank continues to make progress towards its objectives and in ensuring efficient implementation of the Environmental and Social Management System. The Bank will continue to conduct business with due consideration to environmental protection and contribute to the creation of a sustainable society. The Bank will help increase clients’ benefits through proper, active implementation of the Environmental and Social Policy. 

The Bank also continues to support Georgia’s emerging economy by financing industries that are strategically important to the development of the entire nation.

Infrastructure development 

Infrastructure development remains a key financing and guarantee-granting theme for the Bank, with almost $47 million committed to constructing and rehabilitating the land-reclamation system, improving sanitary conditions for IDP, improving specific infrastructure for the European Youth Olympic Festival 2015, rehabilitating water supply and wastewater systems, constructing refugee settlements, constructing and rehabilitating of highways, local municipal roads, and bridges, building a new multipurpose shopping centre, and constructing and rehabilitating recreational/sport facilities and historical buildings.  

Of the US$47 million, some US$7.5 million is committed to the construction and rehabilitation of highways and municipal roads to provide easy access to the regions and enhance road safety standards. 

The tourism sector has become a vital part of Georgia’s economy, as demonstrated by its significant growth since 2000. In 2014, the Bank continued to finance Georgia's hospitality sector by providing loans for hotel construction in Batumi (US$8 million) and Borjomi (US$2.2 million). 

Georgia’s hydropower sector holds significant development potential. In 2014, the Bank financed the construction of a hydropower plant (HPP) as well as equipment purchases via letters of credit (LCs). The bank financed two  HPPs totalling US$8.83 million, one with installed capacity of 9.4MW and annual production of 50MWH, the other with installed capacity of 1.94MW and annual production of 8.6MWH 

We have also provided financing for “Georgian Water and Power” (GWP) totalling $22 million. GWP is a leading company on the water supply market of Georgia and the South Caucasus. The company delivers drinking water to Tbilisi and its neighbouring areas, and provides wastewater services to the capital. The loan will enable GWP to provide 24-hour water supplies to the population and rehabilitate the sewage system in order to eliminate effluent discharge into the Kura River.

The Bank endeavours to finance projects that provide millions of people with access to safe drinking water, sanitary waste water disposal services, well-maintained urban roads, as well as other types of project that provide important sustainable development benefits to households and enterprises across the country. 

Healthcare and education support. Continuous improvement in medical services in Georgia remains a top priority for the country’s strategic development. In 2014, the Bank financed the construction of unique medical facilities that will provide neurosurgery, traumatology, paediatric, aesthetic, oncology, and emergency treatment in the Tbilisi, Kutaisi, and Samtskhe regions; the financing came to US$36.12 million.

Information and communications technology 

The Bank financed the leading fixed-line telecommunication service provider in Georgia, which offers internet, IPTV, voice IP, and fixed line communication services, totalling US$24 million for the purpose of 4G/LTE development. This investment will help internet penetration into the regions . Also, the bank has approved credit to a communication and security systems integrator and products supplier totalling US$3.17 million for a turnkey digital terrestrial TV network project, which will contribute to developing tourism in Borjomi.

Retail Banking

Bank of Georgia continues to develop and offer a wide range of socially oriented financial products and services that offer value to individuals and SMEs by meeting their respective needs.

Express Banking
The Georgian banking sector is still experiencing difficulties overcoming economic and geographical barriers to expanding its financial services in remote regions and among low-income parts of the population. To address this issue, we have developed our Express Banking service: 
  • As of 31 December 2014, a network of 2,239 Express Pay terminals, 60 Express, and 24 Metro branches were located across the country, including in remote mountainous regions. 
  • Express financial products such as Express Card, Express Deposit and Express Loan. These products are straightforward, and easily accessible and affordable to a segment of the population that might otherwise not have access to banking products and services. Since its launch in December 2011, the Express Banking service had attracted  562,963 clients by 31 December 2014, of which 206,729 were attracted in 2014 alone.

As part of the Express Banking service, we prioritise improving our clients’ financial literacy. At every Express branch, existing and potential customers can receive free financial advice and educational support. The Bank plans to launch educational events at flagship branches in 2015, where customers will have the opportunity to learn how to plan their budgets, set financial goals, assess financial risks, manage cashflows, and use financial instruments. 

Youth support

We have developed a wide range of financial products to support young people in Georgia. For example, the specific conditions of the Child Deposit provide parents with the opportunity to plan for their children’s future. Starting from a minimal GEL 10, a deposit can be opened for two years minimum at any time from a child’s birth until the age of 18. The annual interest rate (9.25% for GEL and 3.25-5.25% for foreign currency) is added to the initial deposit. We opened approximately 4,000   child deposit accounts in 2014.

The Bank also offers specialised products aimed at allowing young people to receive secondary and higher education. Examples include school and student loans with favourable terms that do not require any financial guarantees or collateral. School and student loans granted in 2014 totalled a respective GEL 130,148 and GEL 176,578.

Another example of a product supporting young people is a student card which offers special benefits to students of Georgian universities. These include discounts on public transport, a 2% interest rate on sums  held on the card in GEL and 1% for those in foreign currency, and free remote banking services. The Bank issued 82,722 such cards in 2014. In addition, every three months, the Bank awards 20 holders of student cards with three-month scholarships to encourage students to use financial products and support them during their studies. 

SME support

We continue to provide financing to SMEs, a backbone of the Georgian economy that ensures sustainable development of our country. In addition to our own micro-financing and SME loan programmes, we participate in various programmes to support entrepreneurs. In 2014, the Bank partnered with the non-profit Agricultural Projects Management Agency, which supports agricultural SMEs. Together, we co-financed agricultural loans at fixed annual interest rates which were significantly lower than previous loans received by other SMEs. In 2014, the total amount of Bank loans issued to SMEs was GEL 767.4 million, of which GEL 63.4 million was issued to female entrepreneurs. 

Combined with supporting SMEs financially, the Bank also plans to organise educational events and provide financial and business knowledge-related advice to entrepreneurs to enhance their finance management skills and ensure sustainable development of their businesses. For example, the events planned at the flagship service centres mentioned above will provide entrepreneurs with skills in accounting, drafting legal documents, business development, sales and marketing. 

The environmental and social risk management process for SME clients is embedded throughout the Bank’s activities. By implementing comprehensive environmental and social risk assessment and action plans, we encourage SME clients to comply with national environmental and social legislation and to achieve high environmental and social standards. During site visits, we provide advice on good practice and standards in this area, update clients on environmental, health & safety, and labour issues, and monitor compliance with E&S legislation. In many instances of non-compliance, our timely management of the client’s environmental and social risks facilitate avoidance of financial and legal sanctions during inspections conducted by the state enforcement agency. 


Mass-market retail

Energy efficiency consumer and mortgage loans have also been provided to various groups of retail customers, including households and drivers, for energy conservation purposes. For example, the favourable terms of the instant energy instalment included the option for a borrower to receive a 10% subsidy of the principle loan amount.

Affordable housing 

The Georgian real estate market is currently vulnerable to various economic and financial uncertainties. Numerous construction projects remain unfinished for long periods of time, while there is strong and growing demand from the population for housing. In response to this increasing demand, the Group’s real estate development business, m2 Real Estate, was established in order to offer affordable housing to the emerging middle class in Georgia, especially young families. m2 Real Estate has completed its second successful project for the development and sale of affordable residential apartments. 

The Company uses an innovative design and construction processes, with each square metre being distributed efficiently and fitting customers’ requirements and wishes. As few customers can afford to buy flats larger than 100 square metres, the company works continuously to optimise the size of the apartments to meet the current demand of its customers without compromising on the apartments’ convenience and usability. A large segment of the Group’s customers comprises young Georgian families. We believe that by continuing to offer affordable housing, we are helping significantly to enhance the quality of their lives.

Healthcare and health insurance

JSC Medical Corporation EVEX (EVEX), a network of clinics and hospitals, constitutes the Group’s healthcare services business. EVEX covers more than 67% of the Georgian population, predominantly in Western Georgia. Its clinics are located across the country and provide access to high-quality medical services, including to those living in remote mountainous regions. The accessibility of medical services is ensured by scheduling regular visits by specialists to small towns and villages and by providing patients with transportation to larger clinics in urgent cases and when more sophisticated treatment is required. 

EVEX also provides regular free medical examinations at various locations across the country, including Batumi, Khulo, Keda, Shuakhevi, Poti, Kvareli, and Telavi. In addition, EVEX specialists provide free medical services, including examinations and treatments for socially and economically disadvantaged sections of the population. In cooperation with other healthcare institutions, EVEX arranges free blood transportation and donations for its patients.

The Group’s health insurance business is represented by Imedi L, which participated in the state insurance programme in 2014 . Through this programme, it served  more than 400,000 policyholders from below the poverty line, the elderly, children below five years of age, students, teachers, and refugees.

Sponsorship and charity

Among its sponsorship and charity activities, the group focuses on promoting and enhancing access to education, conserving nature, and supporting children with disabilities. The Group’s Sponsorship and Charity Policy includes partnering with Foundations and NGOs to deliver sustainable results and bring about positive change. Our priority is to help address causes, not symptoms. The Group has opted to focus on the three areas of utmost importance for Georgian society. Sponsorship and charity funds are channelled through the Tree of Life Foundation (formerly Bank of Georgia Future Foundation), which in its turn distributes funding via grant competitions, thus assuring transparent and fair financing.


Promoting and enhancing access to education

In 2014, the Bank established Bank of Georgia University, the main goal of which is to provide high-quality financial and business education to various segments of the population. The University welcomed its first intake of Finance MBA students in Fall 2014. The cost of studies were largely subsidised by the Bank, totalling GEL 91,210, allowing the top 10 students to study free of charge and the next 20 to enjoy 0% loans and to start repaying them one year after graduation. In addition to providing high-quality education, Bank of Georgia University offers its students hands-on experience by allowing them to observe various business processes at the Group’s companies. 

In summer 2014, Bank of Georgia’s start-up incubator Vegalab began operating. A total GEL 300,467 was spent on setting up and running the Lab, which provides use of a centrally located office and facilities, training, and mentoring free of charge. Originators (individuals and groups) of 11 business ideas were selected to join the incubator and are currently being reviewed with a view to moving to the next stage, namely capital financing.

In 2013, the Bank became the first Georgian company to cooperate with the Chevening scholarship, one of the most prestigious scholarship programmes in the world, to provide Georgian students with the opportunity to pursue education in the UK. The Group provided GEL 152,710 in total to fund two students in 2014. The partnership with Chevening has been extended to the next year and the Group is looking forward  to selecting up to three students who will continue their Master’s studies in the UK. 

In 2014, the Bank signed a partnership agreement with the prestigious US Fulbright scholarship scheme. Thanks to the Bank of Georgia’s contribution, two students from Georgia will be able to enrol  in a two-year Master’s programme at a US University in 2015.

For the past two years, the Bank has supported a Public Speaking competition organised by the English Speaking Union, Georgia. The competition allows top students in their senior year at a high school or freshmen year at a University to prepare a speech on a predetermined topic and present before a competent jury. The winner is granted a fully paid trip to London to attend the global Public Speaking competition.

Conserving nature

Another priority of the Group’s charity activities is the preservation of wildlife diversity. Since 2010, the Bank has granted US$300,000 to the Caucasus Nature Fund (CNF) to cover the maintenance costs of the Borjomi-Kharagauli National Park (BKNP), one of Georgia's most treasured national parks. In 2014, the Bank donated GEL 176,173 and extended financing to include other protected areas (the CNF is free to decide which protected area to support). 

Supporting children

In 2014, the Bank focused its efforts on supporting children with disabilities – one of the most vulnerable social groups in Georgia. The Bank donated GEL 643,849 to the Tree of Life Foundation, which distributed the funds to relevant NGOs through two grant competitions. To qualify to participate in the competitions, proposals had to focus on sustainable results and effecting change in one of the following areas: providing education, or developing infrastructure for disabled children to foster integration into the society . 

One of the large-scale projects selected through the grant competition involved setting up ramps on all of Tbilisi’s main streets. 

The Bank took steps to involve its employees in the process. The Tree of Life Ambassadors programme offered employees grants of up to GEL 2,000 each to carry out a project of their own to support children with disabilities, care for the environment, or promote education. In 2014, the Bank fully adapted its 14 key service centres in Tbilisi to cater to customers with disabilities, spending a total of GEL 155,541. Adapting the whole branch network is in the pipeline.

EVEX runs a wide range of charitable activities on a permanent basis for children with leukaemia. 

It also regularly gifts personal computers to children from socially and economically disadvantaged large families. Additionally, on religious holidays, we deliver presents to newborns across EVEX’s patient network . 

Back in 2008, the Bank introduced the Orange Santa character as a part of the large-scale New Year campaign. The idea behind the “Letter to Santa” initiative was to give the Bank’s Facebook followers the opportunity to send messages to Santa. “Letter to Santa” was successful in 2014, allowing up to 12 individuals representing socially vulnerable groups to fulfil their most cherished wishes .