2022 SUSTAINABILITY REPORTONE STEP AHEAD IN THE FUTURE OF MOBILITYELECTRICEVOLUTION

CONTENTS

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
1345

ABOUT THE REPORTLETTER FROM THE CHAIRMAN OF THE BOARD
LETTER FROM THE CEOAN OVERVIEW OF KARSAN AND ITS ECOSYSTEM
8 KARSAN IN BRIEF
9 VISION & MISSION
10 SHAREHOLDING STRUCTURE
11 SUBSIDIARIES
12 SUSTAINABILITY JOURNEY
13 2022 HIGHLIGHTS
13 ESG Indicators (Economic, Environmental, Socialand Governance Indicators)
14 Awards
OUR STRATEGY AND PRIORITIES
16 SUSTAINABILITY APPROACH
18 STAKEHOLDER COMMUNICATION
21 SUSTAINABILITY PRIORITIES23 KEY STRATEGIC ISSUES AND SDGs
23 Occupational Health and Safety
23 Smart and Green Mobility
24 Climate Change and Environmental Management
25 Supply Chain Management
25 Social Development
GOVERNANCE
27 CORPORATE GOVERNANCE STRUCTURE
28 SUSTAINABILITY MANAGEMENT
30 RISK MANAGEMENT AND INTERNAL AUDIT
31 BUSINESS ETHICS
33 WORLD CLASS MANUFACTURING (WCM)
34 WCM Model, Basic Principles and Goals
34 WCM Management Structure
37 CUSTOMER SATISFACTION
38 QUALITY MANAGEMENT

2022 PERFORMANCE
41 OCCUPATIONAL HEALTH AND SAFETY
43 SMAT Audits
43 Occupational Safety Flags Practice
43 Occupational Health and Safety Training Program
44 ELECTRIC VEHICLES
45 e-JEST
45 e-ATAK
46 e-ATA
46 Regeneration Technology
46 e-ATA HYDROGEN
47 AUTONOMOUS e-ATAK
48 WORLD CLASS MANUFACTURING (WCM)
49 R&D AND INNOVATION
50 Karsan R&D Center Management Process
51 Karsan R&D Center Activities
55 Short, Medium, and Long-term Goals of the R&D
Center
57 R&D Directorate
57 Systems Engineering
58 Product and Project Engineering
58 Product Cost Engineering
59 Industrial Design
59 Lean Production Projects
60 CLIMATE CHANGE AND ENVIRONMENT
62 Energy Management
63 Emission
64 Biodiversity
64 Waste Management
67 Water Management
69 HUMAN RESOURCES
69 Human Resources Practices
72 Training and Development Activities
73 Human Rights and Gender Equality
78 SUPPLIER RELATIONS
80 CORPORATE SOCIAL RESPONSIBILITY

APPENDIX
82 PERFORMANCE INDICATORS
89 GRI CONTENT INDEX
97
98

DIRECTORYLEGAL DISCLAIMERKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCE

Dear Stakeholders,
As we present our sustainability report for the year 2022, we are deeply devastated on the occasion of the earthquake
disaster that struck our country and was regarded as the disaster of the century. We are currently experiencing a period ofgreat suffering as we mourn the tragic losses caused by the disaster that struck Kahramanmaraş and impacted the provincesin the vicinity. Our grief is still fresh, and there are serious wounds that require healing... Nevertheless, we are aware of the factthat it is not the right time to remain stagnant for the sake of both our country and our citizens who have been impacted by
the earthquake; rather, we must persist in our efforts to swiftly heal the wounds in solidarity and unity.
As Karsan, we promptly coordinated the provision of basic needs from the onset of the disaster and collaborated with AFAD
to deliver our assistance to the earthquake-affected area. We have developed emergency supply lists by coordinating relief
efforts with our support teams. Our objective was to mitigate the suffering by delivering vital supplies to the affected region.
We are committed to providing our utmost support to the victims of the earthquake, and we diligently strive to collectively
overcome this challenge. We have full faith in the bright future of our country, and we have full hope that we will overcome
these challenging times through unity and solidarity. We are committed to further mobilizing efforts in order to facilitate thehealing process by preserving our faith.

APPENDIXGRI CONTENT INDEXDIRECTORY
2

May God have mercy on our citizens who tragically lost their lives. We extend our heartfelt condolences to our country andalso express our sincere wishes for a swift recovery to those who have been injured.
With Regards,

ABOUT THE REPORTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY3

The 2022 Sustainability
Report thoroughly
analyzed Karsan’s
production operations,with a focus on
incorporating
environmental, social, andgovernance sustainability
principles.
Sustainability is an essential concept that emphasizes thecritical importance of transferring limited resources to future
generations for both institutions and individuals. It encompasses
the responsibility of protecting the environment and public healthas well. The automotive industry, which operates within intense
consumption and production processes, plays a significant andcentral role in managing environmental and social impacts aswell as driving innovations in areas such as energy efficiency.
Karsan Otomotiv Sanayii ve Ticaret A.Ş. is a company thatspecializes in designing cutting-edge mobility solutions for bothpresent and future needs and attaches a strong emphasis on
incorporating sustainability principles into this process. The 2022
Sustainability Report thoroughly analyzed Karsan’s production
activities within the given context, with a focus on incorporating
environmental, social, and governance sustainability principles.
The 2022 Sustainability Report has been prepared as aresource to provide stakeholders and the general publicat large with transparent information regarding Karsan’ssustainability strategies, studies, and latest developments. This
report comprehensively examines the social, economic, andenvironmental dimensions, providing detailed discussions on
the determined sustainability strategies, innovative solutions,management systems, value provided to employees, and social
responsibility projects.
The 2022 Karsan Sustainability Report, released for the third
consecutive year during the 2022 operational period, has been
meticulously prepared in alignment with the fundamental
guidelines set forth by the Global Reporting Initiative (GRI)
organization. Karsan has taken the voluntary initiative to disclose
its sustainability performance to all stakeholders and the generalpublic at large. Furthermore, it was developed within a frameworkthat fulfills the criteria outlined by the United Nations Global
Compact.

The report provides a thorough overview of the Company’s
operations, production processes, and assets for the period
spanning from January 1, 2022, to December 31, 2022.
Furthermore, Karsan’s sustainability priorities encompass its
commitment to the Sustainable Development Goals and targets.
These priorities align with the Company’s corporate policies
and working principles and are established through active
engagement with stakeholders. Karsan Sustainability Reportfor the year 2022 went through a thorough approval process,involving Karsan Sustainability Committee, the General Manager,
and the Chairman of the Board of Directors, prior to its publication.
This report serves as a solid representation of the efforts andcontributions made towards achieving a sustainable future,providing enhanced visibility into the steps taken towards
sustainability. We kindly request that any questions, opinions,and suggestions regarding the report be directed to Karsan
sustainability team at sustainability@Karsan.com.tr.
GRI 2-2, 2-3, 2-5

LETTER FROM THE CHAIRMAN OF THE BOARD

Proceeding even further through our enhanced sustainability
vision...

KARSANSUSTAINABILITYREPORT 2022

We are reshaping and further enhancing our sustainability
vision, taking into account both the awareness of responsibility
sparked by natural disasters and the ongoing transformation
within the automotive industry. We remain committed toconsistently augmenting our contributions to society, nature,and the economy.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
4

Through our sustainable development
journey, “e-Volution,” our goal is
to position Karsan as one of theprominent players in the e-mobility
sector, not only in Turkey but also in
Europe.
Dear Stakeholders,
Early in 2023, Turkey was unfortunately struck by a devastating
natural disaster. The earthquake that struck our eastern andsoutheastern regions of our country had a profound impact, notonly on the 11 provinces within these regions but also on theentirety of our country. We extend our heartfelt condolences toour citizens who have tragically lost their lives in this incident,
our condolences to their families, and we express our sincere
wishes for a speedy recovery to our citizens who have been
injured. Following the disaster, we promptly initiated aid andsupport efforts and stood by the victims of the disaster. We
are committed to providing comprehensive support by closely
monitoring the needs in the affected area. Our hope is that suchdisasters will not occur again in our country.

We have undertaken the social responsibility of addressing
the repercussions of the earthquake disaster. Assuming
this responsibility not only serves as a civic duty but also
demonstrates our commitment to enhancing the social
dimension of sustainability. On this path, we will continue tofulfill our promise to provide the highest level of support to our
citizens.
The automotive industry is currently undergoing a significant
transition, shifting from internal combustion engines toelectric vehicles. This transformation represents not only
a technological evolution but also a crucial stride towards
achieving a sustainable future. As Karsan, we recognize our
responsibility to mitigate carbon emissions and minimize
our ecological footprint by transitioning to green energy. Our
objective is to become the foremost sustainability leader
in both Turkey and Europe throughout this transformative
process. By virtue of our vision to be a pioneer in the cleaner
and more sustainable mobility sector of the future, we havewon prestigious tenders in Europe with our low-emission
electric vehicle models designed by our R&D team. Throughour sustainable development journey, “e-Volution,” our goal
is to position Karsan as one of the prominent players in thee-mobility sector, not only in Turkey but also in Europe. In
addition to our electric models, we are committed to pushing
the boundaries of innovation in sustainability by introducing ourhydrogen-powered and autonomous vehicle models, designed
to further minimize our environmental footprint. We contributeto both the industry and a greener future through our electricvehicles, which are currently on the roads in various countries
across the world.

Our sustainability strategy encompasses more than justtechnological transformation. Due to the significant alliancesigned with Aselsan last year, we have achieved a significant
milestone in establishing an independent domestic and national
supply chain ecosystem, and by transitioning Indonesia’s
public transportation network to electric vehicles, we have also
demonstrated that we act with a global perspective through ourstrategic collaborations.
As Karsan, we are making significant strides towards
establishing ourselves as a global brand. Our efforts arefocused on spearheading the transformation of transportation
infrastructure in numerous European cities through theintroduction of our electric vehicles. As we strive to further
broaden our export markets, we successfully established asignificant presence in the North American market during
the previous year. In this particular context, we have madesignificant progress by pioneering the transformation of public
transportation in Canada through the introduction of e-JEST,
the highly preferred 100% electric minibus model in Europe.
Following our successful expansion into the North American
market, we are currently making preparations to enter theJapanese market with our right-hand drive e-JEST model.
With these accomplishments we have achieved on a global
scale, we have also broken new ground in Turkey. Our signature
on Turkey’s largest export-oriented electric bus agreement
and the production of Megane Sedan we have started incollaboration with Oyak Renault highlight our contribution toeconomic sustainability.
I would like to extend my sincere appreciation to all of ourcolleagues, stakeholders, customers, and esteemed shareholders
who have been with us throughout our 57-year journey inachieving these accomplishments. As we establish our goals forthe future, we remain committed to contributing to a more livableworld by consistently prioritizing the principle of sustainability.
Kind Regards,İnan Kıraç
Chairman of the Board of Directors

LETTER FROM THE CEO

Dear Stakeholders,

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
5

At Karsan, our vision of “One Step
Ahead in the Future of Mobility”
extends beyond the economic
dimension. We are committed toincorporating environmental andsocial sustainability into our vision.

Despite the challenging global economic landscape,we achieved successful performance results during theoperational year of 2022. Nevertheless, the earthquake
disaster in early 2023 prompted us to reconsider thesignificance of life and sustainability. As we worked towards
healing the wounds following the devastating earthquake thatstruck in February 2023, we were reminded of the value ofacting in solidarity throughout our entire society. I wish mercy
to those who lost their lives in this tragic disaster; I wish a
speedy recovery to those who were injured; and I would
like to state that, as the entire Karsan family, we remaincommitted to delivering our utmost support and assistancethroughout this challenging time.
We prioritize projects with a comprehensive approach toensure sustainability.
In alignment with our sustainability vision, we have continued
to establish our position within the automotive industry interms of economic, social, and environmental dimensions
throughout the year 2022. In addition to our investment
in electric vehicle production, as Karsan, we have madestrategic decisions to enhance our contributions to nature,society, and the economy. In line with our strategic goals,
our primary focus lies in projects that encompass a wide
range of perspectives, such as the conversion from internal
combustion engines to electric power, the development ofzero-emission vehicles, the reduction of energy consumption,and the enhancement of the quality of life in society.
At Karsan, our vision of “One Step Ahead in the Future of
Mobility” extends beyond the economic dimension. We
are committed to incorporating environmental and social

sustainability into our vision. Each action taken along
this trajectory has a positive impact on both our businessachievements and our commitment to fostering a sustainable
future.
By ensuring the recycling of 954 tons of waste resulting
from our operations in 2022, we have made significant
progress towards protecting natural resources and ourzero-waste goal. However, our scope extends beyond waste
management. We strive to minimize our environmental
impact in our production processes. To such an extent that,through progressive reduction of greenhouse gas emissions
per production annually, we have achieved an averagegreenhouse gas emission level of 1.47 tons of CO2e/unit
during vehicle production in the year 2022. This performanceis highly commendable, according to industry standards.
Likewise, we have implemented measures to enhance ourwater usage efficiency, resulting in a notable reduction inwater consumption per vehicle production to 8.47 m³/unit.
By increasing our energy efficiency, we reduced our energy
consumption per production to 15.8 GJ/unit in 2022.
As Karsan, we continue to be a part of a sustainableecosystem through our contributions to the public
transportation industry. With the introduction of thecompletely electric e-JEST in 2018, our transformation has
progressed to the point where we are the first and only
brand in Europe to offer a product range of 6 m to 18 m thatis 100% electric. This achievement triggered a sustainabletransformation in public transportation, and we aimed tocreate a clean atmosphere on European roadways throughthe use of zero-emission Karsan vehicles.

LETTER FROM THE CEOKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
6With our hydrogen-fueled e-ATA
HYDROGEN model, which we launchedin 2022, we increase our contribution
to sustainability by investing not onlyin electric but also in alternative fuelsolutions.

We also implement a sustainable growth strategy forexports, a critical component of the economy’s lifeblood.
While we achieved a revenue of TL 3 billion in 2022, 52% ofthat revenue was generated through export operations. The
proportion of electric vehicles in our exports is progressively
rising. In 2022, we observed that 287 of the 297 vehicles
bearing Karsan brand that we exported were electric. The
fact that 600 Karsan electric vehicles are currently travelingin 20 countries in Europe and North America demonstrates
the value we provide to the global economy as well as ourcontribution to nature.
indicates our positive economic and commercial progress
but also sets us on a distinct trajectory as a result of our
responsibility for the environment.
As we strive to minimize carbon footprints, we simultaneously
enhance our global presence.
In our pursuit of shaping the future, we have embraced theprinciple of protecting natural resources, adding value tosociety, and balancing economic growth. With our hydrogenfueled e-ATA HYDROGEN model, which we launched in 2022,
we increase our contribution to sustainability by investing not
only in electric but also in alternative fuel solutions.
We continue our efforts to add value to all segments ofsociety. We are opening the doors to a new era in public
transportation catering to ticketed passengers with ourLevel 4 autonomous electric buses in Norway. These steps
demonstrate the multidimensional nature of sustainability byintegrating social benefits and technological innovations.

We contributed to the transformation of the public
transportation infrastructure in Mersin Metropolitan
Municipality in Turkey by supplying a total of 272 vehicles,
thereby equipping the municipality with the youngest
vehicle fleet. Our entry into the passenger vehicle sector
and subsequent commencement of mass production of the
Renault Megane Sedan, facilitated by our agreement withOYAK Renault, served as further testaments to our capabilities
and flexibility in the automotive industry.
The “Sustainable Bus of the Year 2023” award was bestowed
upon our 12-meter electric e-ATA model, showcasing ourcommitment to sustainability and eco-friendly approach.
Our globally prominent sustainability achievements were
reinforced by being granted the “Europe’s Most Innovative
Commercial Vehicle Brand” award by BRAND AWARDSWINNERS 2022, Global Brands Magazine. Through ourparticipation in the BIST Sustainability Index, we confirmed
our commitment to promoting sustainability within thefinancial arena.
As Karsan, we reinforce our faith in a sustainable future
every year. We continue on our way with the determination
to develop sustainable transportation solutions that willlead societies forward. I would like to extend my sincere
appreciation to all our stakeholders who have accompanied
us, trusted us, and supported us throughout this journey.
Best Regards,
Okan BaşCEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMKARSANSUSTAINABILITYREPORT 2022

HIGHLIGHTS OF THISSECTIONABOUT THE REPORT

Karsan, which is the sole
independent multi-brandvehicle manufacturer in the
Turkish automotive industry,collaborates with its business
partners and licensors todevelop new and derivative
products in accordance with its
vision of being one step ahead in
the future of mobility.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYTHE SOLE INDEPENDENTMULTI-BRAND VEHICLE
MANUFACTURER IN THE
TURKISH AUTOMOTIVEINDUSTRY

Karsan is actively progressing
in its “from idea to market”
journey with “innovative
products and services” in the
public transportation sector,
with a particular focus on
strengthening the Primary
Manufacturer/OEM business line.

Karsan is the first and only
company in Europe that offers
a comprehensive range of fully
electric products, spanning from
6 meters to 18 meters in size.

TL 3 Billion
Net Sales

69%
Asset Growth61,189 units

52%
Share of Exports
in Sales

VehicleCapacity

7
GRI 2-1, 2-6

KARSAN IN BRIEFKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
8

100% ELECTRIC,
FULL e-RANGE
Karsan produces 100% electricvehicles that are designed to meetthe evolving needs of the current
era, featuring innovative designs
that prioritize the satisfaction ofboth businesses and societies.

With a 57-year history in the Turkish automotive industry,
Karsan has established itself as a prominent manufacturer
within the commercial vehicle segment. Since its inception,
Karsan has been engaged in producing vehicles for leading
global brands, as well as for its own brand, within its modern
production facilities. Commercial vehicle production, which
has been operational since 1981, has the capacity to produce
approximately 20 thousand vehicles per year within a single
shift at Karsan’s factory in Hasanağa, Bursa. Hasanağa
Factory, where all kinds of vehicles can be produced, frompassenger cars to heavy trucks, from minivans to buses,
is situated at a distance of 30 km from the city center of
Bursa, encompasses a total area of 203 thousand m2, with 99
thousand m2 designated as enclosed area.
Karsan, which is the sole independent multi-brand vehicle
manufacturer in the Turkish automotive industry, collaborates
with its business partners and licensors to develop new
and derivative products in accordance with its vision of
being one step ahead in the future of mobility. Karsan is
actively progressing in its “from idea to market” journey with“innovative products and services” in the public transportation
sector, with a particular focus on strengthening the Primary
Manufacturer/OEM business line.
At Karsan, the entire automotive value chain is managed
from R&D to production, from marketing to sales and aftersales operations. Karsan produces environmentally friendly
Jest and Atak models under its own brand. In 2018, Karsan
introduced the e-JEST model, followed by the launch of Karsane-ATAK model in 2019, and in 2021, Karsan introduced theAutonomous e-ATAK model, along with the introduction of the
10 m, 12 m, and 18 m models of Karsan e-ATA family. Thus,
Karsan has become the first and sole company in Europe,
providing a comprehensive range of fully electric products
ranging from 6 to 18 meters. The production of 10-12-18 mbuses for Menarinibus is conducted by Karsan. Additionally, asof 2022, Karsan is also engaged in the production of Megane
Sedan cars for the Renault brand. In addition to its vehicle
production operations, Karsan also provides industrial services
in its factory, situated in the Organized Industrial Zone.

GRI 2-1

VISION & MISSIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Our Vision

LETTER FROM THE CEO

Being one step ahead in the
future of mobility.

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEX• Attaining Sustainable
Growth in Europe and North
America• Operational Processes That
Generate Distinction• Becoming a Pioneer inFuture Mobility Technology
and Collaborations

Our Mission
To deliver innovative,
sustainable, and inspiring
solutions and offerings
to meet the needs ofcustomers in the global landtransportation market.

DIRECTORY9
GRI 2-1

SHAREHOLDING STRUCTURE

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORT

Authorized Share Capital: TL 1,500,000,000 (*)
LETTER FROM THE CHAIRMAN
OF THE BOARD

Issued Capital: TL 900,000,000

41.49%

58.51%LETTER FROM THE CEO(*)
The amendment to the articles of association pertaining to the increase of ourCompany’s authorized share capital from TL 900,000,000 to TL 1,500,000,000 has been
duly ratified at the Ordinary General Assembly for the year 2020, which was convened
on 27 May 2021, subsequent to obtaining the requisite permissions. The amendment
to the subject articles of association was officially registered on 14 July 2021 andpublished in the Turkey Trade Registry Gazette (TTSG) on 27 July 2021.

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES

Kıraça Holding

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
10

Other

KARSAN SHAREHOLDING STRUCTURE

The shares of Karsan have been
traded on Borsa Istanbul with theticker symbol “KARSN” since theyear 2000.

Title of the
Shareholder
Kıraça Holding A.Ş.
Group A PreferredGroup B
Other
Group A PreferredGroup B

31.12.2022
Amount of
Shares (TL)
526,618,813
64,028,613
462,590,200
373,381,188
1,554,776
371,826,412

Total

900,000,000

Percentage ofShares (%)
58.51
7.11
51.40
41.49
0.17
41.31
100

31.12.2021
Amount of
Shares (TL)
571,118,813
64,028,613
507,090,200
328,881,188
1,554,776
327,326,412
900,000,000

Percentage ofShares (%)
63.46
7.11
56.35
36.54
0.17
36.37
100

The shares of Karsan have been traded on Borsa Istanbul with the ticker symbol “KARSN” since the year 2000. The indices that the Company is included in as ofthe end of 2022 are BIST All / BIST Metal Goods, Machinery / BIST 100 / BIST Stars / BIST Industrials / BIST Bursa / BIST 100-30
GRI 2-1

SUBSIDIARIESKARSANSUSTAINABILITYREPORT 2022

The following table displays Karsan’s direct and indirect subsidiaries, along with the corresponding share rates as of 31 December 2022 and 31 December 2021. Karsan maintains shares insubsidiaries that operate in various industries at varying percentages. The table presents data pertaining to the fields of operation of the subsidiaries, rates of direct and indirect partnerships, rates
of effective partnerships, and the changes in these rates in comparison to the preceding year.

ABOUT THE REPORTKARSAN SUBSIDIARIES AND PARTNERSHIP SHARESPartnership Shares of the Company

LETTER FROM THE CHAIRMAN
OF THE BOARD

31.12.2022
Company

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES

Field of Activity

APPENDIXGRI CONTENT INDEXDIRECTORY

Direct and IndirectPartnership Ratio

Effective Partnership
Ratio

Direct and IndirectPartnership Ratio

Effective Partnership
Ratio

Karsan Otomotiv Sanayi Mamulleri Pazarlama A.Ş. (*)

Distributor

6.43%

6.43%

6.43%

6.43%

Karsan USA LLC(**)

Sales and Marketing

100%

100%

100%

100%

Karsan Europe SRL

Sales and Marketing

100%

100%

100%

100%

MaaS Global OY

Transportation Solutions

4.57%

4.57%

5.81%

5.81%

Industria Italiana Autobus S.P.A

Bus Production, Distribution
and Marketing

28.59%

28.59%

28.59%

28.59%

Karsan İç ve Dış Ticaret A.Ş.

Domestic and International
Sales and Marketing of
Vehicles and Spare Parts

100%

100%

100%

100%

Karsan North America LLC (****)

Sales and Marketing

100%

100%

-

-

Hervouet Corporate Industry SAS (HCI)

Automotive and Spare Parts
Marketing

50%

50%

50%

50%

Hervouet Corporate Lease SAS

Financial Leasing

50%

50%

50%

50%

(***)

GOVERNANCE

2022 PERFORMANCE

31.12.2021

Due to our Company’s participation in the capital increase of Karsan Pazarlama below the amount corresponding to our current share ratio, the partnership rate was registered in January 2021 and decreased from 25% to 6.43%.
To participate in tenders to be conducted by local authorities in the United States, Karsan has established a New York, United States-based company called Karsan USA LLC, of which it is the sole owner and for which no capital transfer isrequired during the establishment phase. No capital transfer has occurred to the Company, and as such, the Group’s financial position is unaffected.
(***)
Due to the insignificance of the Company’s 4.57% share in MaaS Global OY in the consolidated financial statements, the subject subsidiary and its ultimate transaction cost are reflected in the financial statements. As our Company did notparticipate in the latest capital increase of MaaS, its share decreased from 5.81% to 4.57%.
(****)
To participate in tenders to be conducted by local authorities in the United States, Karsan has established a New York, United States-based company called Karsan USA LLC, of which it is the sole owner and for which no capital transfer isrequired during the establishment phase. No capital transfer has occurred to the Company, and it is not included in the consolidated financial statements due to its inactive status.
(*)

(**)

There is no company in which our Company has a mutual participation relationship exceeding 5%.

11
GRI 2-1

SUSTAINABILITY JOURNEY

KARSANSUSTAINABILITYREPORT 2022

Our sustainability achievements
on a global scale were further
strengthened through ourrecognition as the recipient of
the “Europe’s Most Innovative
Commercial Vehicle Brand”
award by BRAND AWARDSWINNERS 2022 - Global Brands
Magazine.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
12

2020

2021

2022

• World Class Manufacturing (WCM) Environment andEnergy studies have been started.
• The Zero Waste Management System has been
established.
• The Environment and Energy Loss System has beendeveloped.
• The Zero Waste Oil project has been initiated.
• The Autonomous e-Atak vehicle has been launched.
• Collaborative efforts between Karsan and theInternational Labour Organization (ILO) were undertaken
to conduct studies on Gender Equality.
• The initial studies on Corporate Carbon Footprint (ISO14064-3) were conducted.

• ISO 50001 (Energy Management System) certificate has
been obtained.
• The first Sustainability Report has been released(including 2020 activities).
• The Electronic Waste Collection campaign was
conducted in collaboration with TEGV.
• Sustainability Committee and Sustainability Working
Group were established.
• The initial official WCM Audit was conducted.
• The 100% electric e-ATA was launched.
• Karsan Environment and Climate Change Policy wasdeveloped.
• Code of Conduct system was established.
• The first CDP application was made• Membership in the UN Global Compact was attained.

• The implementation of the Zero Waste Management System
has led to a waste recovery and recycling rate of 99%.
• The 2030 Carbon Neutral Route Map was developed.
• Planning has been made concerning the Internal Carbon
Pricing Project.
• Product-Based Carbon Footprint (ISO 14067) research has
started.
• The global average ranking on the CDP was achieved.
• The BIST 100 index B level was reached.
• Solar energy feasibility studies have commenced.
• A current status assessment project on the utilization ofrecycled materials has been initiated.
• A waste battery collection campaign was carried out.
• The e-ATA HYDROGEN vehicle was launched.
• The Sustainable Bus Award was received.
• Included in the Borsa Istanbul Sustainability Index.

2022 HIGHLIGHTS
ESG Indicators (Economic, Environmental, Social and Governance Indicators)
KARSANSUSTAINABILITYREPORT 2022

TL 3 billion

ABOUT THE REPORTIn 2022, Karsan experienced anotable increase in its turnover,reaching an approximate value of
TL 3 billion.

69% Asset
GrowthKarsan concluded 2022 with agrowth rate of 69%.

Karsan generates 52% of its overallturnover from its export operations.

20 Distinct
Countries

52%

LETTER FROM THE CHAIRMAN
OF THE BOARD

Approximately 600 Karsan electricvehicles are currently in operationin 20 distinct countries globally,
encompassing France, Portugal,
Romania, Italy, Germany, and Spain.

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

1,394 m2

61,18915.8

954

Karsan possesses a prototype
workshop and an ElectricalElectronics Laboratory that jointly
operate with the R&D Center,encompassing a total area of 1,394m2.

Karsan’s production capacity
increased by approximately 81%
compared to 2021 and resulting inreaching 61,189 units of vehicles
in 2022.

Karsan’s consumption of energy
per unit of production had aconsistent downward trend over
the years, ultimately reaching avalue of 15.8 GJ per unit in 2022.

Karsan ensured the recycling of
954 tons of waste resulting fromits operations in 2022.

1.47

8.47

1,860

4,032

Karsan has achieved a progressive
reduction in greenhouse gas
emissions on an annual basis,
resulting in an average of 1.47 tonsof CO2e/unit of greenhouse gas
emissions per vehicle productionin the year 2022.

Karsan has achieved a gradualreduction in water consumption
per production year by year,
resulting in an average water
consumption of 8.47 m3/unit per
vehicle production in 2022.

The employee count at Karsan has
consistently grown over the years,
resulting in a giant family of 1,860
people by the conclusion of 2022.

In the year 2022, Karsan delivered
a comprehensive training
program on sustainability andenvironmental matters, amounting
to a total of 4,032 hours.

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY13

GRI 201-1, 203-2

2022 HIGHLIGHTSAwardsKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
14

Karsan’s notable accomplishments were duly acknowledged through the receipt of prestigious awards in international award programs
held in 2022. Karsan’s brand transformation, striking designs, and innovative approach resulted in winning a total of 8 highly respectedinternational awards in 2022.

OUR STRATEGY AND
PRIORITIESKARSANSUSTAINABILITYREPORT 2022

HIGHLIGHTS OF THISSECTIONABOUT THE REPORT

Karsan has assumed apioneering position inpromoting environmental
sustainability within theautomotive industry. This
demonstrates its commitment
to the environment and its
resolute pursuit to achieveenvironmental sustainability
goals as it continues to lead the
public transport industry in its
transformation journey frominternal combustion engines toelectric.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
15

LEADERSHIP IN THE
AUTOMOTIVE INDUSTRYTO SHAPE A SUSTAINABLE
FUTUREWith the vision of “One Step
Ahead in the Future of Mobility”,
steps are taken in newgeneration transportation, andsolutions that mitigate adverse
environmental impacts andrespond to evolving customer
behavior are developed.

TL 5 billion
Strategic
Priority

8
Contributed
SDG

Driverless Electric andAutonomous Vehicles havefacilitated the developmentof novel public transportation
models with the primaryobjective of optimizing traffic
flow and ensuring the safety ofpassengers.
GRI 3-3

SUSTAINABILITY APPROACH

Karsan undertakes the responsibility of using its leadership
position within the automotive industry in order to shape asustainable future. This responsibility includes not only the
mitigation of adverse environmental impacts and enhancement ofenergy efficiency, but also the promotion of social and economic
sustainability. The year 2022 marked the commencement of aperiod in which this comprehensive sustainability vision began toyield positive outcomes.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Karsan has assumed a pioneering position in promoting
environmental sustainability within the automotive industry.
This demonstrates its commitment to the environment andits resolute pursuit to achieve environmental sustainability
goals as it continues to lead the public transport industry in its
transformation journey from internal combustion engines toelectric.

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

The fully electric vehicles
developed by Karsan attempt
to minimize their environmental
impact by entirely reducing
emissions. Additionally, theyplay a crucial role in promoting asustainable energy consumption
model by considerably improving
energy efficiency.

The development of the fully electric e-JEST and e-ATAK
models serves as a concrete illustration of our vision. Thesevehicles attempt to minimize their environmental impact byentirely reducing emissions. Additionally, they play a crucialrole in promoting a sustainable energy consumption model byconsiderably improving energy efficiency. This demonstrates
Karsan’s commitment to minimizing its environmental impact aswell as improving energy efficiency.
Furthermore, Karsan has expanded its product range byintroducing the 12 m e-ATA HYDROGEN model, which incorporates
hydrogen fuel cell technology. This strategic move serves toreinforce Karsan’s commitment to sustainable energy resources.
The utilization of hydrogen fuel cell technology, which acts as acarbon-free energy solution, plays a significant role in promoting
environmental sustainability. This step further reinforces Karsan’s
dedication to achieving environmental sustainability goals andadvancing future technologies that are environmentally friendly.
Karsan places social sustainability as an essential core of its
corporate values and business strategy. It prioritizes the rights
and welfare of its employees and is committed to ensuring

fair compensation, safe working environments, and equal
opportunities. This not only enhances employee motivation andsatisfaction, but also fosters a positive organizational culture andempowers employees to take full advantage of their talents andpotential.
Karsan aims to cultivate robust and positive relations with local
communities. This includes engaging in community services,supporting social responsibility projects, and making financial
contributions to the local economy. This approach illustrates
Karsan’s commitment to generating social value and positively
influencing society at large.
Furthermore, in its capacity as an established leader in the public
transportation industry, Karsan aims to enhance the accessibilityof sustainable transportation alternatives for diverse communities.
This way, it both promotes environmental sustainability
and contributes to the economic and social development ofsocieties. This further strengthens Karsan’s commitment tosocial sustainability goals and its contribution to the progressof societies. Karsan adheres to strict standards regardingtransparency and ethical business practices. Thus, it supports
sustainability in the governance dimension. The Company
is committed to maintaining ethical accounting practices,
combating corruption, and fulfilling its responsibilities towards all
its stakeholders. The board of directors maintains its commitmentin this regard by regularly reviewing its sustainability goals andstrategies.
Karsan recognizes the significance of effectively managing risks
and opportunities associated with sustainability matters. The
primary objectives of risk and opportunity management are theefficient execution of Company strategies, precise identificationof risks and opportunities along with their corresponding financial
implications, mitigation of risks whenever feasible, minimizationof their impacts if mitigation is not possible, the pursuit ofopportunities, and reinforcing its pioneering and innovative
structure. Progress is achieved in alignment with sustainability
agendas while pursuing these goals.

16
GRI 2-22, 205-1, 205-2, 205-3

SUSTAINABILITY APPROACH

KARSANSUSTAINABILITYREPORT 2022

Karsan, a publicly traded company
on Borsa Istanbul, is committed to
implementing internationally recognizedcorporate governance principles in its
management structure. The Company’s
responsibility to create value for its
stakeholders and compliance withpertinent laws both serve as the driving
forces behind this commitment.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
17

Karsan aligns its sustainability report with the Global Reporting
Initiative (GRI) Standards, thereby demonstrating its commitment
to the United Nations Sustainable Development Goals (SDGs). Thisapproach establishes the sustainability priorities of the Company
as determined through the active engagement of both internaland external stakeholders, serving as the main framework forthe report. Identified issues are assessed not only in terms of thesignificance of the impact but also in terms of where in the value
chain the impact occurs.
Karsan believes that the effective implementation of sustainability
management significantly contributes to the attainment andfuture realization of its objectives. In this context, organizational
units are developed to effectively coordinate identified
targets, plans, required actions, and inspections, resulting in a
restructuring of the management framework. This supports both
its long-term success and its positive impact on society at large
and the environment. This approach serves as the foundation for
Karsan’s achievement in attaining a turnover of TL 3 billion witha growth rate of 43% in the year 2022 and generating 52% of its
turnover from export operations.

Corporate GovernanceKarsan, a publicly traded company on Borsa Istanbul, iscommitted to implementing internationally recognized corporate
governance principles in its management structure. The
Company’s responsibility to create value for its stakeholders andcompliance with pertinent laws both serve as the driving forces
behind this commitment. In this particular context, diligent efforts
are being undertaken to achieve the utmost level of compliancewith the Corporate Governance Principles established by the
Capital Markets Board (CMB). In accordance with the principles
of corporate governance, several corporate policies have beendeveloped in the past reporting periods. These policies include
the Information Policy, Stakeholders Policy, Remuneration Policy,
Profit Distribution Policy, Code of Ethics, Donation and Aid Policy,
and Compensation Policy for Employees. The implementation ofthese policies throughout the activities is diligently monitored.
Upon the release of the Communiqué by the Capital Markets
Board (CMB) in late 2020, the incorporation of the Sustainability
Principles Compliance Framework has become an integral partof Karsan’s corporate governance compliance requirements. In

this particular context, activities, performance, and targets onenvironmental, social, and governance aspects are disclosed
within the scope of the Corporate Governance Compliance Reportthrough the Annual Activity Report.
Board of Directors and Senior Management Structure
The Elective General Assembly meetings are convened withthe active participation of Karsan shareholders. The Board of
Directors, comprising members appointed for certain terms,
is regarded as the ultimate governing body responsible formaking key decisions within the Company. As of 2022, Karsan
Board of Directors comprises nine members, excluding the CEO.
All members, with the exception of the CEO, meet the nonexecutive member criterion set by the Capital Markets Board(CMB), and three members fulfill the independence criteria.
During the current reporting period, the Board of Directors
consists of one woman member.
To enhance the effectiveness of the Board of Directors’
duties and comply with the Corporate Governance Principles
established by the Capital Markets Board (CMB), theimplementation involves the Early Detection of Risk Committee,
Audit Committee, and Corporate Governance Committee,
reporting to the Board of Directors. The Corporate GovernanceCommittee assumes the responsibilities of the Nomination
Committee and Remuneration Committee as well.
The responsibility of ensuring compliance with sustainability
principles throughout the organization and the effectivenessof sustainability management was added to the duties of
the Corporate Governance Committee with a change madeduring the reporting period. The committees are chaired byindependent board members. The functions of Chairman of
the Board of Directors and CEO are held by distinct people, andthe CEO is regarded as the highest executive officer within theorganization and performs this duty in collaboration with senior
management. As of the reporting period in 2022, the Company’s
senior management comprises a total of 12 managers, with one
individual being a woman.
GRI 2-22, 201-1, 203-2

STAKEHOLDER COMMUNICATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

Karsan places great emphasis on the significance of establishingeffective communication channels with its stakeholders
throughout its corporate sustainability journey. Recognizing the
expectations and opinions of stakeholders and incorporatingthese perspectives into business strategies is widely regarded
as a crucial task. At Karsan, we place a strong focus on fosteringrobust communication with our stakeholders. We strive to fully
understand their expectations and effectively communicate oursustainability strategy. Furthermore, we consistently engage
with our stakeholders through the designated communication
channels outlined within this framework. We emphasize
the significance of the support and feedback received fromour stakeholders, as it serves as a source of inspiration andmotivation in our pursuit of sustainability. In line with this, oursustainability report aims to provide comprehensive information,

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYEFFECTIVE
COMMUNICATIONWITH STAKEHOLDERS
Karsan strongly emphasizes
the significance of effective
communication with its
stakeholders throughout
its corporate sustainability
journey.

share our progress, and ensure that you are well-informed andup-to-date on our sustainability efforts.
Karsan engages in effective stakeholder communication througha variety of channels, including regular meetings, surveys, andpublic consultations. The Company convenes meetings withinvestors, analysts, and portfolio managers subsequent to therelease of financial reports as well as important developments.
Feedback and queries from stakeholders are received throughe-mail and telephone communication channels, and appropriate
actions are promptly taken in response. The input of stakeholders
has a significant impact on the decision-making processes
and policies of the Company. For instance, the passenger’s
feedback regarding the usage of our Karsan brand vehicles was
promptly communicated to our production units, and appropriate
actions were expeditiously implemented. Stakeholder conflicts

are effectively addressed through the utilization of process
and road maps developed by our Human Resources and Legal
Consultancy departments.
Additional information regarding the processes and methods
employed by Karsan to effectively engage with stakeholders isprovided below:• Investor meetings: Karsan arranges regular meetings withinvestors. During these meetings, comprehensive details
regarding the Company are presented, and inquiries frominvestors are addressed.
• Investor presentations: Karsan conducts presentations forinvestors. During these presentations, extensive informationis shared regarding the Company’s financial performance,
strategies, and future plans.
• Stakeholders have the option to communicate with Karsan
through both telephone and e-mail channels. Stakeholders
have the opportunity to submit their inquiries, requests, andfeedback to the Company through these communication
channels.
• Feedback management: Karsan conducts an evaluation of the
feedback received from stakeholders. The feedback provided
by individuals has a significant impact on the decision-making
processes and policies of the Company.
• Conflict management: Karsan employs a range of
mechanisms to resolve conflicts with stakeholders. The
management of these mechanisms is managed throughprocess and road maps prepared by our Human Resourcesand Legal Consultancy Units.
During the process of establishing its sustainability strategy,
Karsan places a strong emphasis on prioritizing the expectationsof its stakeholders and enhancing engagement with them. The
guidance for determining sustainability priorities was obtained
through the input of 125 company representatives and almost
50 external stakeholders, who shared their opinions andperspectives on the matter.

18
GRI 2-15, 2-16, 2-29

STAKEHOLDER COMMUNICATIONKARSANSUSTAINABILITYREPORT 2022

Stakeholders

Stakeholder Expectations

Communication Channels

Board of Directors

Achievement of Company goals, sustainablegrowth, effective management

Regular meetings, e-mails, internal
communication tools

ABOUT THE REPORT

Employees
LETTER FROM THE CHAIRMAN
OF THE BOARD

Customers
LETTER FROM THE CEO

Suppliers
AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Business Partners

Collaboration, reliability

Joint projects, meetings, e-mails, contracts

Kıraça Holding

Financial performance, strategic alignment,risk management

Management meetings, e-mails, official
communication channels

Investors andShareholders

General assembly meetings, annual reports,
Sustainable financial return, transparency, risk
investor relations website, financial reporting
management
tools

Public Institutions

Legal compliance, regulatory reporting, social
contribution

Official reporting, regulatory surveillance, permits
and licenses

Society and Environment

Social contribution, environmental
responsibility, transparency

Social responsibility projects, community events,
media, press releases

Media

Up-to-date and accurate information,accessibility, transparency

Press releases, media events, social media,
websiteNGO's

Social contribution, environmental
responsibility, collaboration

Joint projects, meetings, e-mails

OUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
19

Internal communication systems, ergonomics
Secure employment, fair remuneration, career
risk analysis, OHS risk analysis, e-mail, meetings,
development, healthy work environment
training programs, performance reviews
Customer service, sales and marketing teams,
High-quality products, competitive pricing,e-mails, phone calls, website, social media
effective customer service
platforms
Honest and transparent business relationships,
Supply chain management, e-mails, meetings,
consistent and secure business opportunities,
contracts
open and effective communication

The determination of stakeholder expectations andcommunication channels is facilitated through the utilization of
the Stakeholder Communication Table. In this process, ongoinginteraction with our stakeholders is highly encouraged. This
interaction facilitates the assessment of stakeholder perspectives,
comprehension of expectations, and subsequent alignment ofstrategies.
Through holding regular meetings with our Board of Directors, ashared vision is cultivated with our stakeholders pertaining to theachievement of Company goals and sustainable growth. Thesemeetings facilitate robust collaboration through the exchange of
information and consideration of stakeholder perspectives.
The significance of maintaining excellent communication with
our employees for the long-term viability of our organization is
widely recognized. To ensure this, we consistently engage incommunication activities through our internal communication
systems, addressing various topics including secure employment,
fair remuneration, career development, and a healthy work
environment. Feedback and suggestions are acknowledged andgiven due consideration, fostering an ongoing discussion aimed atenhancing our business processes and policies.
The need for good communication with our customers isemphasized as an essential component of our sustainability. We
actively employ a range of communication channels to gain anunderstanding of customer expectations and deliver high-quality
products, competitive pricing, and effective customer service.
We maintain regular engagement with our customers throughmany channels, including the customer service team, sales andmarketing department, website, social media platforms, anddirect communication.
We place utmost importance on the principles of honesty,transparency, and ongoing collaboration in our interactions with
our suppliers. We establish a continuous network of collaborationand interaction with our suppliers via contracts, supply chain
management, regular meetings, and e-mail correspondence.
By fostering collaboration, we are able to comprehend the
expectations of our suppliers and disseminate our sustainability
strategy across the entire value chain.
GRI 2-7, 2-16, 2-29

STAKEHOLDER COMMUNICATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

The enhancement of communication with
non-governmental organizations (NGOs)
is consistently achieved through joint
projects, meetings, and emails pertaining
to social contribution, environmental
responsibility, and collaboration. This
comprehensive communication network
ensures the establishment of a solid andeffective communication channel with all
relevant stakeholders.

Communication with business partners is maintained on thebasis of dependability and collaboration, with an emphasis on
relationship development via joint projects, meetings, e-mails,
and contracts. Through management meetings, e-mails,
and official communication channels, we maintain regularcommunication with our primary shareholder, Kıraça Holding,on financial performance, strategic compliance, and risk
management.

Social contribution and environmental responsibility arecommunicated through community events, press releases,social responsibility projects, media and press releases in
our interactions with society and the environment. Ongoing
communication is maintained via the website, press releases,
media events, and social media, in adherence to the principlesof transparency, accessibility, and provision of up-to-date andaccurate information to the media.

Regular and up-to-date communication is upheld withshareholders and investors regarding sustainable financial
return, transparency, and risk management via financial
reporting tools, investor relations website, general assembly
meetings, and annual reports. Legal compliance, regulatory
reporting, and social contribution information are conveyed
to public institutions via official reporting, regulatory
surveillance, licenses, and permits.

The enhancement of communication with non-governmentalorganizations (NGOs) is consistently achieved throughjoint projects, meetings, and emails pertaining to social
contribution, environmental responsibility, and collaboration.
This comprehensive communication network ensures theestablishment of a solid and effective communication channel
with all relevant stakeholders.

20
GRI 2-16, 2-29

SUSTAINABILITY PRIORITIES

completion of this bilateral evaluation, a comprehensive
assessment has yielded a total of 26 material issues, all ofwhich have been incorporated into the prioritization matrix.
Karsan has classified the material issues necessary to achieve
its sustainability goals into three distinct levels. First-degreematerial issues include a range of important considerations,such as customer satisfaction, traffic and passenger safety,
R&D/Product Development/Innovation studies, epidemic
management, and employee rights. Our first-degree priorities
encompass the efficient utilization of raw materials, ethicalprinciples and practices, occupational health and safety,
financial performance of the Company, prevention ofbribery and corruption, and employee training and career
management. There are several factors that contribute to
identifying the most critical and effective areas in our businessprocesses and operations, including employee satisfaction,energy efficiency management, employee retention, local
procurement, digitalization and IoT, corporate governance,
equal opportunity and diversity, inclusion, renewable energy
generation, and advanced technology utilization.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY21

At Karsan, where 26 material
issues are included in theprioritization matrix, the material
issues determined to achievesustainability goals are classified inthree distinct levels.

At Karsan, the establishment of sustainability priorities isachieved through the implementation of a comprehensive
procedure. This procedure has been developed inaccordance with identified needs and expectations, taking
into consideration the perspectives of various stakeholders
and adhering to the guidelines set forth by GRI Standards.
The determination of sustainability priorities was based on
evaluations conducted within the framework of assessing
impacts, risks, opportunities, and expectations. A total of 125
company representatives and approximately 50 external
stakeholders were involved in this process. Throughout theprocess of establishing and implementing sustainability
priorities, consistent communication and collaboration withstakeholders was ensured. Updates on sustainability efforts anddevelopments were regularly shared. As an integral componentof this procedure, the sustainability report is regularly released,
providing transparent information regarding the sustainability
goals and improvements made in attaining them.
The strategic significance of the material issues and theirrelevance to stakeholders have been determined througha meticulous and thorough analysis process. Following the

The second-degree material issues identified at Karsan
include the contribution to the local economy, World Class
Manufacturing (WCM), contribution to the economy of thecountry, protection of biodiversity, complaint mechanisms,
climate change and greenhouse gas management, water
management, adherence to Environmental, Social, andGovernance (ESG) principles in corporate procurement,
creating a positive social impact, and employee performance
management. These topics represent our ongoing efforts tooptimize the social, environmental, and financial impacts of ourbusiness operations and goals.
Third-degree material issues determined by Karsan include
relations with the local community, contribution to society,information security management, local employment, and thecreation of employment. These matters significantly contributeto the emphasis on community relations, data security, andlocal employment efforts. Simultaneously, these matters serveas the foundation for achieving long-lasting and sustainablegrowth and success. The three priority levels outlined by Karsan
serve as guiding principles for its sustainability journey and play
an essential role in shaping future strategies.
GRI 3-1, 3-3

SUSTAINABILITY PRIORITIESKARSAN PRIORITIZATION MATRIX – 2022

KARSANSUSTAINABILITYREPORT 2022

In the course of identifying the priorities inside Karsan
Prioritization Analysis, a series of question sets were
distributed to a total of 255 stakeholders and 15
employees holding managerial positions or higher. A
workshop was convened with the purpose of assessing
the responses to these questions. The priorities identified
through the survey results were categorized as 1st, 2nd,
and 3rd degree priorities by the senior management who
participated in the workshop. These prioritizations were
subsequently entered in the Prioritization Matrix.

10

Traffic and Passenger Safety

ABOUT THE REPORTLETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES

Significance for Stakeholders

LETTER FROM THE CHAIRMAN
OF THE BOARD

Customer Satisfaction
R&D

8

Epidemic Management
Waste
Local Economy
WCM

Technology

Investment

Employee Rights
Raw Materials
EthicalOHS

Procurement
Renewable Energy
EnergyEqual Opportunity
CG
DigitalBribery
Local Procurement Career
Employee Retention
Training
Water
Procurement ESG
Biodiversity
Social Impact

Waste water

Gender equality
Economy6

Local Community

Information Security
Contribution to Society

5

Employment

Local Employment

GOVERNANCE
4

5

6

7

1st Degree Material Issues

GRI CONTENT INDEXDIRECTORY
22

9

10

Impact on Corporate Success

2022 PERFORMANCEAPPENDIX

8

Customer Satisfaction
Traffic and Passenger Safety
R&D/Product Development/Innovation
Studies
Epidemic Management
Employee Rights
Efficient Utilization of Raw Materials
Ethical Principles and Practices
Occupational Health and Safety
Financial Performance of theCompany
Prevention of Bribery and Corruption,
Employee Training

Employee Career Management
Employee Satisfaction
Energy Efficiency Management
Employee Retention
Local Procurement
Digitalization and IoTCorporate Governance
Equal Opportunity, Diversity, andInclusion
Renewable Energy Generation
Advanced Technology Utilization

2nd Degree Material Issues

3rd Degree Material Issues

Contribution to Local Economy
WCM
Contribution to the Economy(Country)
Protection of Biodiversity
Complaint Mechanisms
Climate Change and Greenhouse Gas
Management
Water Management
Adherence to ESG principles in
Corporate Procurement
Creating a Positive Social Impact
Employee Performance Management

Relations with Local Community
Contribution to Society
Information Security Management
Local Employment
Creation of Employment

GRI 3-1, 3-2, 3-3

KEY STRATEGIC ISSUES AND SDGs

KARSANSUSTAINABILITYREPORT 2022

Occupational Health and Safety

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Karsan ensures that the health and safety of every employee
are protected in all of its production facilities as well as
operational areas. The objective is to establish a safe work
environment for our employees by taking into account“Decent Work and Economic Growth,” the eighth Sustainable
Development Goal. These two spheres are integrated throughcollaborative efforts with the Environment, Energy, andSustainability departments and the Occupational Health and
Safety Department.
Occupational health and safety is regarded as the top
priority in all corporate operations at Karsan, and the joint
participation and responsibility of all Karsan employees havebeen established in this regard. To ensure the systematic
execution of this responsibility, adherence to the globally
recognized ISO 45001 Occupational Health and Safety System
Standard is maintained. Repeating WCM applications andregular external audits on a yearly basis ensures system
reliability.
Internal audit professionals in Karsan conduct certification
audits for ISO 45001 and WCM Step, while the Ministry of
Family, Labor, and Social Security of the Republic of Turkey
conducts inspections randomly.

The implementation of occupational health and safety
policies and strategies in Karsan is in direct alignment with
the Sustainable Development Goals (SDGs), which are goals
established by the United Nations. The 8th Sustainable
Development Goal (SDG), “Decent Work and Economic Growth,”
provides the clearest illustration of this alignment. This goal
aims to ensure that all employees have safe and secure jobs
and to achieve economic growth equally. By securing thehealth and safety of its employees and providing a safe work
environment, Karsan contributes to this goal.
Furthermore, the integration of the Occupational Healthand Safety Department with the Environment, Energy,
and Sustainability departments enables a comprehensive
approach to addressing sustainability objectives. Thisapproach also aligns with the 7th SDG “Access to Affordable
and Clean Energy”, the 13th SDG “Climate Action” and the 12th
SDG “Responsible Production and Consumption”.
The implementation and supervision of occupational healthand safety policies in accordance with the ISO 45001 standard
serve as proof that Karsan has adopted international bestpractices. This aligns with the 17th SDG, “Global Partnershipfor Sustainable Development,” and demonstrates that Karsan
is committed to attaining sustainable development goals
through adherence to international standards and working
with global partnerships.
The ongoing evaluation and audit procedures of Karsan
ensure the efficacy and continual improvement ofoccupational health and safety policies. This aligns withSDG 9 “Industry, Innovation and Infrastructure” and SDG
12 “Responsible Production and Consumption”, as theseprocesses demonstrate that Karsan promotes sustainable andresponsible production through continuous improvement andinnovation.

Smart and Green Mobility

Karsan strives to provide greener, safer, and smarter mobility
solutions on a global scale by leveraging its innovative
design and engineering capabilities and robust research anddevelopment infrastructure. Studies are being performed to
implement innovative approaches in this specific field. The
rapid progress of digitalization has led to a concentrationof investments in R&D and innovation initiatives, focusing
on the goals outlined in Sustainable Development Goal 9,which pertains to Industry, Innovation and Infrastructure, as
well as Sustainable Development Goal 12, which pertains to
Responsible Production and Consumption.
Under the vision of “One Step Ahead in the Future of Mobility”,
new generation transportation steps are taken, and projects
that have mitigated environmental impacts and can address
behavioral changes of our customers are developed.
Considerable emphasis is placed on the challenges that may
arise in terms of mobility due to global population growth andurbanization, as well as the development of environmentallyfriendly and accessible options for transportation. By virtue of
our Driverless Electric and Autonomous Vehicles, new public
transportation models are being developed with an objectiveof optimizing traffic and passenger safety.
By means of the Autonomous e-Atak project,, which shapes
the future of transportation, our country is represented in theinternational market in the best way and we contribute to thedevelopment of “Sustainable Cities and Communities” (Goal11). In this journey, the significance of the goal of “Partnerships
for the Goal” (Goal 17) is acknowledged and efforts are made toestablish partnerships on a national and international scale.

23
GRI 3-3, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 416-1,

KEY STRATEGIC ISSUES AND SDGs

KARSANSUSTAINABILITYREPORT 2022

Climate Change and Environmental
Management

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Effective management of environmental impacts is one of
Karsan’s key sustainability priorities. The management ofenvironmental impacts is among the fundamental aspectsof the WCM methodology. Climate change is one of the
major acute and chronic risks encountered in recent years.
Numerous scientists, policymakers, industry organizations,and independent organizations from around the globe propose
a variety of sanctions, regulations, and measures to address
this issue.
Karsan, being a significant player in the automotive industry
and a leader in electric vehicle production, is aware of therisks associated with climate change and considers its
responsibilities in this regard with the utmost seriousness.
Electric vehicles provide an effective solution to climatechange by significantly reducing carbon dioxide emissions.
The automotive industry, being a prominent sector
characterized by the prevalence of fossil fuel vehicles,
significantly contributes to the emission of greenhouse gases.
Nevertheless, Karsan’s emphasis on fully utilizing electricvehicles contributes much to mitigating this environmental
impact. Climate change-induced extreme weather
phenomena may also have an impact on the dependability
and lifespan of vehicles. As a consequence, Karsan develops
and implements innovative vehicle design solutions with theaim of enhancing climate resilience and optimizing energy
efficiency.

Karsan manages these risks within the framework of
its Environment and Climate Change policy, identifying
environmental risks and opportunities and incorporating theminto company operations. Furthermore, it develops numerous
solutions to boost energy efficiency and reduce emissions
to almost zero in the future by acting in accordance with thegoals established by the sustainable development strategy.
These goals include effective energy, water and waste
management, fuel efficiency, reducing direct and indirectemissions, and reducing environmental impacts through theuse of environmentally friendly raw materials. Steps havebeen taken focusing on the UN Sustainable Development
Goals. This situation shows Karsan’s commitment tocombating climate change and its commitment to lead in thisregard.
Efforts have been made within the organizational structure
to effectively manage sustainability issues. As Karsan,
our primary emphasis lies in the pursuit of overall goals
while actively addressing both direct and indirect impacts.
The objective is to raise awareness about sustainability,
specifically focusing on Goal 12, which pertains to“Responsible Production and Consumption”.
Efficiency in raw material and resource consumption was
ensured, thus supporting customers in reducing their negative
impact on the environment. Therefore, Goal 13, which focuseson “Climate Action,” has emerged as one of the priority goals.
Under the framework of Goal 17, “Partnerships for Goals,”significant efforts have been made to foster collaboration andcollective effort in order to establish a sustainable world atlarge.

The environmental management activities were conducted inaccordance with the ISO 14001 Environmental Management
System Standard. Karsan Environmental Policy, which
encompasses environmental management principles, isavailable for access on the Company’s official website. All
activities are conducted in accordance with establishedprinciples, with a focus on mitigating environmental
impacts. The maintenance of system reliability is ensured
by conducting regular independent external audits andcertification activities.
Additionally, it is inspected by the Ministry of Environment,
Urbanization, and Climate Change of the Republic of Turkey
as well. During the reporting period, there were no instancesof complaints, legal actions, or any form of financial orin-kind penalties filed as a result of non-compliance withenvironmental legislation. The primary objective for theupcoming period is to incorporate the ISO 50001 Energy
Management System Standard into our management system
portfolio starting in 2021, alongside the existing ISO 14001
Standard. In this context, all requisite preparations wereconducted and training activities were executed during thereporting period.
Environment and energy management, which is an essential
part of the risk management process, is carried out througha distribution of responsibilities starting from the Board of
Directors and extending to the production units. Managers
responsible for environmental and energy management
processes also operate in the main production units. Within
the scope of sustainability management studies, teams
have been established to address environmental and energy
management issues. Environmental and energy management
performance has also been considered part of the WCM
methodology and is instrumental in assessing both thecorporate and individual performance of managers across alllevels, from senior management to field operations.

24
GRI 2-25, 3-3, 201-2, 201-3, 301-1, 301-2, 301-3

KEY STRATEGIC ISSUES AND SDGs

KARSANSUSTAINABILITYREPORT 2022

Supply Chain Management

Social Development

The recent production disruptions experienced in theautomotive industry due to shortages of raw materials
and semi-finished products have provided Karsan withthe opportunity to further emphasize the significance of
uninterrupted value creation. As this experience shows,importance is attached to every link of the value chain for
an uninterrupted, efficient, and evolving value creation andpreservation process. Karsan has effectively managed the value
chain in its entirety, ensuring uninterrupted production activity
even in challenging circumstances. Karsan perceives suppliers
not solely as production actors from which goods or services
are procured but rather as strategic business partners that
contribute value. Karsan prioritizes sustainability in its supply
operations and product preferences; an inspection process is
implemented for both suppliers and purchased products, which
ensures the Company’s ongoing progress and improvement.
Within the scope of the studies that gained momentum with
the Green Procurement Workshop, it is aimed at evaluating
and developing suppliers in terms of both environmental,
technological, and social aspects. For this reason, Goal 12“Responsible Consumption and Production”, Goal 8 “Decent
Work and Economic Growth” and Goal 17 “Partnerships for Goals”
have been included among Karsan’s priorities.

With over 50 years of expertise and flexible production capacity
in the automotive industry, Karsan has been a pioneer indelivering solutions in design, engineering, and production
policies to prominent global brands and has produced
commercial vehicles. Within the scope of activities carriedout on a national and international scale, R&D projects haveplayed a significant role in the development of the know-how
of the domestic automotive industry, and local alternative
solutions were provided to the country’s transportation needsby adopting smart mobility approach. In addition, it contributes
to the country’s economy through the augmentation of export
inputs and the cultivation of a highly skilled workforce. Within
this particular context, it is worth noting that 52% of operational
activities in the year 2022 were derived from export revenues,
resulting in a substantial inflow of foreign exchange into ourcountry. It is believed that these competencies and activities
make significant contributions in line with Goal 9: “Industry
Innovation and Infrastructure”. This contribution and support
are among the targets outlined in Goal 8: “Decent Work andEconomic Growth”, which focuses on contributing to theprovision and increase of qualified employment. The corporate
culture shaped by the non-discriminatory Human Resources
policy is among Karsan’s primary goals, with the intention ofdisseminating this culture to all stakeholders and society atlarge. In this regard, within the scope of the “Model for theDevelopment of Gender Equality in Companies” agreement
signed with the international labor organization in 2019, aparticular goal was established to achieve an annual increaseof at least 2% in women’s employment compared to theprevious year. In light of these studies, it is essential to both set
an example for society and disseminate this perspective acrossthe entire value chain. In this direction, Goal 5 “Gender Equality”,
which is the SDG for the purpose and targets, has been adopted.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
25

Karsan’s Strategic Priorities and SDGs
When establishing its business strategies, Karsan placesconsiderable emphasis on the Sustainable Development
Goals (SDGs). The strategic priorities of the Company
encompass a variety of areas, including society, theenvironment, the supply chain, and occupational healthand safety. Karsan effectively incorporates sustainable
development goals when determining its strategic
priorities. This effort not only assists the Company inattaining its business goals but also contributes to thebroader goal of promoting sustainability for the future.

Contribution of Karsan’s Strategic Priorities to Sustainable
Development Goals
Karsan's Strategic Applicable SDGs
Priorities
SocialDevelopment
Supply Chain
Management
Climate Change
and Environmental
Management
Smart and Green
Mobility

Occupational
Health and Safety

GRI 301-1, 301-2, 301-3

KARSANSUSTAINABILITYREPORT 2022

HIGHLIGHTS OF THISSECTIONABOUT THE REPORT

Karsan employs a dynamic
corporate risk management
program that is structured inaccordance with the principlesof CMB Corporate Governance,
ISO 31000 Standard, and COSO
Corporate Risk Management
systematics. This program
ensures that the Company
achieves its goals andstrategies, accurately identifies
and responds to risks, andminimizes the impact of thoserisks.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
26

GOVERNANCE

HEALTHY GROWTH WITH
ROBUST CORPORATEVALUES AND MANAGEMENTCAPABILITY

Karsan has adopted the WorldClass Manufacturing (WCM)system in order to implement
the principles of excellence
and continuous improvementin production using a globally
recognized system within its
industry.

292022 WCM
Score

12 People
SeniorManagement

Management Systems

ISO 9001 and IATF 16949 Quality
Management
ISO 14001 Environmental Management
ISO 45001 Occupational Health and Safety
ISO 50001 Energy Management

CORPORATE GOVERNANCE STRUCTURE

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXThe Board of Directors is composed of members appointed
to serve for specific terms during elective General Assembly
meetings attended by Karsan shareholders. All members of
Karsan Board of Directors, comprising a total of nine members
as of 2022, with the exception of the CEO, fulfill the nonexecutive member requirements set by the CMB. Additionally,
three members satisfy the criteria for independence. Asof our reporting period, one woman member serves on
the Board of Directors. To enhance the effectiveness of
the Board of Directors’ duties and adhere to the Corporate
Governance Principles outlined by the Capital Markets
Board (CMB), the Early Detection of Risk Committee, Audit
Committee, and Corporate Governance Committee, which
report to the Board of Directors, have been established. The
Corporate Governance Committee is responsible for fulfillingthe functions of both the Nomination Committee and theRemuneration Committee.

Structure of the Board of Directors

During the reporting period, an amendment was madeto include the responsibility of ensuring compliance withsustainability principles across the entire organization within
the duties of the Corporate Governance Committee. The
chairmanship of the committees is assumed by independent
members of the Board of Directors. The responsibilities of the
Chairman of the Board of Directors and the CEO are fulfilled byseparate individuals. The CEO, as the highest-level executive,
assumes overall responsibility for the Company’s operations
and collaborates with the senior management team to
execute these responsibilities effectively. As of the year 2022,
the Company’s senior management comprises a total of 12
managers, with one of them being a woman.

Senior Management

Position

Year of Assignment

Profession

Okan Baş

CEO

2016

Mechanical Engineer MSc

Deputy General Manager,
Finance2019

Economist

Ahmet Muzaffer Arpacıoğlu (***) Deputy General Manager,
Domestic Market Sales andExternal Relations

2020

Business Administrator

Alper Bulucu

Deputy General Manager,
Industrial Operations

2020

Mechanical Engineer

Deniz Çetin (****)

Deputy General Manager,
Exports

2020

Mechanical Engineer

Ahmet Özgür Doğan

Director, Supply Chain

2021

Industrial Engineer

Aslı Ör Arkunkütak

Director, Marketing & Export
Operations

2017

Business AdministratorBarış Hulisioğlu

Director, R&D

2017

Mechanical Engineer

Ergün Koru

Director, Purchasing

2021

Mechanical Engineer

Hazım Kubilay Dinçer

Director, Aftersales and Spare 2017
Parts

Mechanical Engineer

Mustafa Tükenmez

Director, Quality

2022

Mechanical Engineer

Mücahit Korkut

Director, Human Resources

2018

Mechanical Engineer(*)

Kenan Kaya (**)(*)
Mr. Okan Baş is also the Chairman of the Board of Directors of Karsan Europe Srl., Chairman of the Board of Directors of Karsan İç ve Dış Ticaret A.Ş. andCompany Manager of Karsan USA LLC.
(**)
Mr. Kenan Kaya is also the Deputy Chairman of the Board of Directors of Karsan İç ve Dış Ticaret A.Ş., the Board Member of Karsan Europe Srl. and the Board
Member of Hervouet Corporate Industry SAS.
(***)
Mr. Ahmet Muzaffer Arpacıoğlu is also the Executive Member of the Board of Directors of Karland A.Ş.
(****)Mr. Mr. Deniz Çetin is also a Board Member of Karsan İç ve Dış Ticaret A.Ş., a Board Member of Karsan Europe Srl, and a Board Member and General Manager of
Hervouet Corporate Industry SAS.

DIRECTORY27
GRI 2-9, 2-12, 2-13, 2-14, 2-17, 2-18, 3-3, 405-1

SUSTAINABILITY MANAGEMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY28

In 2020, Karsan launched a sustainability management
development project, which led to the identification of its
sustainability priorities and the restructuring of its managerial
process for sustainability. Sustainability management ishandled by the Corporate Governance Committee, which
continues its activities by directly reporting to Karsan
Board of Directors. Ensuring compliance with sustainability
principles and presenting recommendations to the Board of
Directors to improve sustainability practices are carried out
by the Corporate Governance Committee. The transformationof sustainability management into strategic activities is acollective responsibility of all business units and is under theleadership of the CEO.
In 2021, our sustainability priorities at Karsan were
determined, and the sustainability management process
was restructured. The Corporate Governance Committee
is responsible for the execution of our sustainability

management. This committee functions under the directsupervision of Karsan Board of Directors. The Corporate
Governance Committee has been assigned the responsibilityof overseeing compliance with the sustainability principles
outlined in the CMB legislation and providing the Boardof Directors with recommendations aimed at enhancing
sustainability practices. This committee reports sustainability
KPIs and provides the Board of Directors with periodic
updates on the progress of sustainability efforts. The taskof transforming sustainability management into strategic
initiatives falls within the purview of all the units, operating
under the leadership of the CEO.

In 2021, our sustainability priorities
at Karsan were determined, andthe sustainability management
process was restructured.

This ensures a concentrated study of the matter through theassessment and guidance of our sustainability management
priorities, strategies, actions, and activities. All of our units
collaborate diligently to enhance our environmental, social,and governance performance under this coordination.
GRI 2-9, 2-12, 2-13, 2-14, 2-17, 2-18

SUSTAINABILITY MANAGEMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYOur Karsan Sustainability Committee makes strategic
decisions for the management of sustainability issues,establishes company goals, and determines the appropriate
investment and implementation plans in accordance with key
goals set by the Board of Directors. Under the chairmanshipof the CEO, this committee undertakes its work with the
involvement of the Deputy General Manager of Industrial
Operations, the Investor Relations unit, and senior managers
from relevant units.
The Sustainability Working Group was established withthe participation of managers from all key business units,
and it translates the Sustainability Committee’s goals andstrategies into action plans and implements actions toenhance performance. As of 2022, the Environment, Health,and Occupational Safety Management unit is in charge of thissustainability structure. The Sustainability Working Group’s
work continues under the leadership of the Environment,
Health, and Occupational Safety Manager; four new teammembers have joined this year, and the competences of those
responsible from the respective units are being developed.
The assessment and governance of sustainability
management priorities guided the implementation ofstrategies and activities. All units persisted in their concerted
efforts to enhance environmental, social, and governanceperformance under this coordination. Karsan Sustainability
Committee plays an active role in the processes of taking
strategic decisions for the management of sustainability
issues in line with the key goals set by the Board of Directors,
establishing company goals, and deciding on the appropriate
investment and implementation programs. The committee
is composed of relevant senior managers under thechairmanship of the CEO.

Corporate Sustainability Management Structure
Karsan Board of Directors

CEO

Corporate Governance Committee

Sustainability Committee

Sustainability Working GroupAt Karsan, the Board of Directors and CEO serve as thehighest-level decision-making authorities. The Corporate
Governance Committee, operating directly under Karsan
Board of Directors, is responsible for sustainability
management and provides recommendations to enhancesustainability practices. Furthermore, compliance with thesustainability principles outlined in the CMB legislation is
ensured by this committee.

activities that enhance performance in this regard. The WorldClass Manufacturing (WCM) business unit is in charge of thesustainability structure and the activities of the Sustainability
Committee and Sustainability Working Group units. Karsan’s
future sustainability activities encompass the objective of
supporting the sustainability management structure throughthe establishment of diverse management platforms thatincorporate external stakeholder perspectives.

The formation of the Sustainability Working Group involved
the active engagement of managers from all business
units and is focused on translating the goals and strategies
established by the Sustainability Committee into actionable
plans. Additionally, efforts are being made to implement

29
GRI 2-9, 2-12, 2-13, 2-14, 2-17, 2-18

RISK MANAGEMENT AND INTERNAL AUDITThe governance practices of Karsan are built upon risk
management and internal auditing. These activities are
executed in a coordinated manner across all departments
within the purview of the Board of Directors, under theguidance of the Corporate Risk Management and Internal Audit
Department. The management of potential risks within Karsan
is the responsibility of the business units. To ensure effective
control, Karsan Corporate Risk Management and Internal Audit
Department carry out control activities through surveillance andreporting functions.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

The Early Detection of Risk Committee and the Audit Committee,
which have been established as subcommittees of our Board of
Directors, hold the responsibility for supervising and assessing
Karsan’s corporate risk management and internal audit systems
and activities. The functional management of these processes
is performed by our Corporate Risk Management and Internal
Audit department. The outcomes are subsequently reported to
the CEO and pertinent committees.

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
30

Karsan employs an internationallyrecognized and regularly updated
risk management model, such as
the COSO internal control model.

Karsan employs a corporate risk management program thatis designed within the framework of COSO Corporate Risk
Management systematics, ISO 31000 Standard, and CMB
Corporate Governance Principles. This program is alignedwith the Company’s strategies and goals, aiming to effectively
identify and address risks as well as mitigate risks that occur.
At Karsan, there is a recognition of the significance of corporaterisk management and internal audit. Consequently, policies
and principles are formulated with a focus on internal control
awareness. The execution of related procedures is conductedwith due regard for the idea of internal control. The executionof internal audit activities aligns with the corporate values
and commitments of the Company’s operations, policies,
procedures, management standards, and legal regulations,and it is aimed to accurately, promptly, and reliably document
financial, managerial, and business information.

Karsan employs an internationally recognized and regularly
updated risk management model, such as the COSO internal
control model. This model is utilized to assess the risks
associated with their financial aspects. Furthermore, anassessment is conducted on the potential risks that may arise
within the context of environmental, social, and governancesustainability. Specifically, environmental risks, climate risks,and energy risks are reviewed annually and incorporated into
the comprehensive annual corporate risk analysis.
The technology-related risks of Karsan were subject tocontinual assessment, and the findings of these assessments
were communicated to senior management during
management information sharing meetings. Following theassessment, various actions were implemented, including
conducting system leak tests, developing emergency plans to
mitigate interruption risks, and enhancing firewalls to protect
against any possible attacks.
Karsan maintains continuous monitoring and assessmentof potential risks pertaining to ethical violations, child labor,
and human rights. In this particular context, the acquisitionof data pertaining to ethical violations proceeds through theanonymous complaint e-mail notification channel (etik@karsan.com.tr), while control mechanisms are implemented
with the aim of preventing financial losses. Karsan adheres tothe regulations and guidelines pertaining to the employment
of individuals below the age of 18, ensuring that no workers
of such age are employed. Furthermore, as part of its Human
Resources policy, Karsan is committed to refraining from
employing individuals through coercion or involuntary means.
Karsan demonstrates firm commitment to complying with
relevant national and legal regulations, as well as the standards
established by the International Labor Organization (ILO), theUniversal Declaration of Human Rights, and the United Nations
conventions. This commitment is reflected in the integration ofthese guidelines into its corporate risk management processes,with the ultimate goal of continually enhancing its social
sustainability practices.
GRI 2-23, 2-24, 3-3, 207-1, 207-2, 207-3, 207-4

BUSINESS ETHICS

The Ethics Committee, chaired by the CEO of Karsan, maintains apermanent membership consisting of the HR Director and Legal
Coordinator. Additionally, relevant senior managers are invited
to participate in committee meetings on the basis of individual
cases. The committee’s objective is to promote adherence toethical principles within the organization. It achieves this byconducting general assessments of behavior, investigating
instances of ethical violations, and monitoring the implementationof the necessary and preventative measures.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Karsan establishes its relationships
with business partners,
employees, suppliers, customers,
and all relevant institutions
and organizations by adhering
to globally accepted ethicalprinciples.

Karsan establishes its relationships with business partners,
employees, suppliers, customers, and all relevant institutions andorganizations by adhering to globally accepted ethical principles.
No compromises are made with regards to the implementationof these rules, and we do not exhibit indifference towards
adverse situations. The implementation of business ethics rules
is overseen by Karsan Code of Ethics document, which is madeavailable on our website for convenient access and information
retrieval by all relevant stakeholders.
It is now obligatory for all managers and employees inside ourorganization to adhere to our ethical principles in all aspects ofoperations. It is expected that there will be a convergence of
ethical norms among all parties involved in the collaboration.
Karsan Code of Ethical Conduct and Implementation Procedure
has been established with the aim of ensuring adherence to theoperational principles of our ethical guidelines.

The formulation of our ethical standards was based on respectfor human rights. The UN Universal Declaration of Human Rights
and pertinent laws of the International Labor Organization are
utilized as a basis for reference. Furthermore, a firm stancehas been taken in combating bribery and corruption throughthe implementation of a zero-tolerance policy. In accordancewith established rules, it is compulsory that both employees
and management refrain from requesting or offering bribes, or
gifts, privileges, or facilitation payments from or to third parties
that have a significant financial value that may be perceived asbribes. It is required of our employees who come across such asituation to promptly report the incident. Employees are provided
with the assurance that they will not be subjected to pressure
when adhering to ethical guidelines and reporting instancesof misconduct. In the year 2022, the Ethics Committee did notreceive any applications or notifications pertaining to humanrights violations, bribery, or corruption.
Statement of Compliance with Legal Requirements and Karsan’s
Code of Ethical Conduct:
As a minimum standard for its operations, Karsan acknowledges
and complies with the applicable legal regulations of thecountries in which it conducts business, pertinent internationallaw principles, and business ethics standards.
As an extension of this principle, the “Karsan Code of EthicalConduct” is presented as confirmation that the operations of
the Company will be conducted in a manner that is transparent,
accountable, responsible, and fair. The Company guarantees
compliance with all rules and procedures outlined in Karsan Codeof Ethical Conduct and the company policies that are associatedwith this statement.

31
GRI 2-23, 2-24, 2-26, 205-1, 205-2, 205-3, 206-1

BUSINESS ETHICSKARSANSUSTAINABILITYREPORT 2022

Karsan exhibits a notable commitment to upholding the rules
established by the OECD Multinational Enterprises Guide andthe principles delineated in the UN Global Compact within its
operational pursuits.
The scope of implementation:

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

Karsan Code of Ethical Conduct applies to all individuals affiliatedwith Karsan, including managers, employees, subsidiaries witha majority ownership stake, representatives, suppliers, andcommercial partners such as dealers and approved services.
All pertinent stakeholders are required to adhere to all procedures
and directives established in alignment with this statement, withthe aim of safeguarding the corporate identity and reputation.
Hence, it is imperative that all pertinent stakeholders, particularly
Karsan management and employees, possess the requisite
proficiencies in their respective domains of expertise and refrainfrom engaging in conduct and activities that may compromise
the reputation of the organization.
Karsan Code of Ethical Conduct document is made available
in a digital format on the official website of Karsan, ensuring
accessibility to all whom it may concern. (https://www.karsan.
com/tr/kurumsal/karsan-hakkinda/etik-kurul-ve-etik-kurul-ileiletisim-politikasi)
Karsan’s strategic objective is to institute a success-driven
operational framework that has its basis in the Company’s culture.

2022 PERFORMANCEAPPENDIX

To establish a corporate culture, Karsan published the “Positive
Leaders Manifesto” as part of the “Karsan Positive” culture. In thiscontext, the developed vision and strategy were reviewed, anda business strategy that concentrated on the Company and its
employees was formulated.

DIRECTORY

It implements performance management, technical competencedevelopment and training planning based on the management
systematic based on objectives. Senior management of theCompany convenes annually in November and December for
catchball meetings to discuss the “vision”, “five-year strategy”,
and “company priorities” for the upcoming year.

32

As a result of these meetings, participants are required to input
objectives into the Objectives and Key Results (OKR) system,GRI CONTENT INDEX

wherein they will collectively strive towards a shared objective
based on the overarching vision and strategy. Within thisorganizational framework, the establishment of objectives isundertaken for several hierarchical levels, including the Company,
Deputy General Managers, Directors, Managers, Supervisors, andExperts.
Ensuring transparent communication in strategy and target
dissemination is of utmost importance for Karsan. The systemallows all employees to access and view the target card of each
employee at every level within the Company, along with theirrespective impacts on the target card. In this system, where
achievements are visible and acknowledged by all stakeholders, it
is possible to establish shared objectives that promote teamworkand effective communication.
All employees at Karsan are capable of performing their duties
in a manner that aligns with the Company’s strategy andoverarching objectives. This hierarchical structure ensures that
employees are focused on achieving the Company’s primarygoals.
Training development plans are established on an annual basis,
contingent upon the primary strategic objectives and priorities of
the Company. Once performance targets have been established,development cards are generated for employees. Everydevelopment card that is generated is associated with a certain
job description, company priority, or technical competency. The
70-20-10 rule is adhered to in this particular situation. Education
comprises only 10% of the overall process of learning. Within
the 20% part, individuals have the opportunity to seek guidancefrom a mentor who is affiliated with the Company. Additionally,
active participation in the project group is encouraged. In the
70% part of learning, it is expected that the acquired training will
be put into practice. The aim of this approach is to facilitate theinternalization of acquired knowledge through the utilization of
objectives and strategies, resulting in mutual benefits for both thefactory and the individual.

the entire organizational structure, assumes the responsibilityof establishing the goals and Key Performance Indicators (KPIs)
for both themselves and their respective teams, all of which
are aligned with the overall goals and strategic direction of theCompany. KPIs are subject to monthly monitoring by the CEO. The
goals of senior management are established during the strategy
and vision workshop held at the beginning of the year. These
goals are subsequently monitored through the OKR system, whichis uniformly implemented across all employees.
During company communication meetings, the senior
management of Karsan consistently reiterates its main goals andstrategy to all employees on a quarterly basis and they provide
updates on the current status and future plans.

As a minimum standard for its operations,Karsan acknowledges and complies with theapplicable legal regulations of the countries
in which it conducts business, pertinentinternational law principles, and businessethics standards.

To facilitate the dissemination of the Company’s strategy andits effective communication among managers and higher
employees, OKR trainings convey what the Company’s main goals
are and how to connect them end-to-end. Within this particular
context, it is considered that every manager, spanning across
GRI 2-23, 2-24, 2-26, 3-3

WORLD CLASS MANUFACTURING (WCM)

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXWORLD CLASSMANUFACTURING
The World Class Manufacturing (WCM)system was implemented in 2018 withthe aim of enhancing competitivenessin production via systematic
improvement and development.

The origins of continuous improvement initiatives within
Karsan operations can be traced back to the year 2003.
Following the implementation of the ISO 9001 Quality
Management System in 2003, the Company subsequently
adopted the ISO 14001, IATF 16949, and OHSAS 18001 systemstandards, respectively. The implementation of Lean Teamand Kaizen practices commenced in 2004.

2003
ISO 9001

2004
ISO 14001

2004
Lean
Production

The World Class Manufacturing (WCM) system was
implemented in 2018 with the aim of enhancing
competitiveness in production via systematic improvementand development. The objective of this decision is to include
Karsan’s principles of excellence and continual improvementin production within a commonly recognized systematic
framework in our industry and on a global scale.

2008

2007 OHSAS 18001 2020
ISO 16949

2021
ISO 50001

WCM

DIRECTORY33
GRI 3-3

WORLD CLASS MANUFACTURING (WCM)

KARSANSUSTAINABILITYREPORT 2022

OCCUPATIONAL SAFETYQUALITY

WORKPLACE ORG.

MAINTENANCELOGISTICS

Total Quality Control (TQM)

Total Industrial
Engineering (TIE)

Total Productive
Maintenance (TPM)

Just in Time Production (JIT)

FOCUS

Improved Quality

Productivity

Technical Efficiency

Service Level

TARGET

Zero
Defects

Zero
Waste

Zero
Failure

Zero
Stock

WASTE & LOSS ANALYSISABOUT THE REPORTMETHODS AND STANDARDSLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESZERO ACCIDENT

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYWCM Model, Basic Principles and Goals

WCM Management Structure• Occupational Safety (S): Elimination of any workplace
accidents• Quality (Q): Achieving the highest standard of production
quality on a global scale• Cost Waste (C): Enhancing efficiency and minimizing costs
through the reduction of losses• Delivery (D): Decreasing the duration of the delivery flow inorder to fulfill customer demands

The responsibility for managing these activities and ensuring
effective implementation and monitoring throughout theCompany lies with the Workforce Planning and WCM Directorate.
The first focus of WCM is to ensure the active involvementof all employees. It is crucial at this point to encourage all
employees to actively identify challenges and generate viable
solutions.

In this methodology, it is crucial to promptly address the
problems identified, develop permanent solutions, attain thegoals set forth, continuously enhance performance, advance,and concurrently foster a culture of shared success.
The second and paramount focus is to thoroughly identify
waste and losses and subsequently devise and implement
prompt solutions.

34
GRI 3-3

WORLD CLASS MANUFACTURING (WCM)

KARSANSUSTAINABILITYREPORT 2022

Lean, Agile and Flexible World Class Manufacturing Management

ABOUT THE REPORT

FOCUS

SafetyFinancial
Performance

Customer

Zero Accident

Elimination ofLosses

Product Quality

Safe Work
Environment

Healthy Workplace

Competent
Employee

Cost Reduction

Just in Time
Production

Sustainable
Equipment

AchievingOperational
Excellence

Developing
Knowledge

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESVISIONMISSION

Operation

Organization

STRATEGYWORLD CLASSMANUFACTURING(WCM)
MOTIVATION

Instantly
Identifying Losses

GOVERNANCE

Zero Stock

Resource
Management

Prioritization

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Karsan manages a comprehensive set of 20 aspects
within the scope of WCM, consisting of 10 technical and 10
managerial elements, employing the “7 Steps” methodology.
If waste is detected, the steps of using the appropriate method
to eliminate it and standardizing systematic improvement inaccordance with the established goals are followed.

As part of WCM practices, a comprehensive annual survey
is conducted across the entirety of the factory. Karsan
conducted an evaluation of the 314 feedback responses
obtained during the 2022 survey study, wherein areas forpotential improvement were identified and action plans were
established.

Karsan manages a comprehensive
set of 20 aspects within the scope ofWCM, consisting of 10 technical and 10
managerial elements, employing the “7
Steps” methodology.

35
GRI 3-3

WORLD CLASS MANUFACTURING (WCM)

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORT

1

2

3

4

WORKPLACEORGANIZATIONQUALITY SYSTEM

MAINTENANCE
SYSTEM

LOGISTICS SYSTEM

Significant goals in the WCM system

LETTER FROM THE CHAIRMAN
OF THE BOARD

In 2021, Karsan achieved a notable accomplishment byattaining a score of 19 points in its initial official WCM audit.
As a result of the 2022 audit, the Company’s score increased
to 29.

METHODSLETTER FROM THE CEO

STANDARDS AND TOOLSAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Karsan’s objective is to attain the Bronze Factory level by
providing competitive production prerequisites in the shortterm, with the subsequent goal of advancing to the Silver
Factory level.

AUDITINGOUR STRATEGY AND
PRIORITIESMANAGEMENT

Upon successfully accomplishing these steps, the next goal
is to attain the designation of Golden Factory by reaching thelevel of world leaders in the industry in terms of quality, cost,and delivery.

TECHNICAL

GOVERNANCE

2022 PERFORMANCE

1 Occupational Safety

GRI CONTENT INDEXDIRECTORY

Organizational

6 Quality Control

11 Managerial Ownership 16 Competency

7 Logistics

12 Clarity of Goals

17 Time and Budget

3 Focused Improvement 8 Product Management 13 WCM Roadmap

Early Equipment /18 Dissemination

Independent Activities

9 HR Development

14 Competent Employees 19 Level of Details

Professional

10 Energy

Waste and Loss

APPENDIX

Throughout the designated reporting period, the production
facility successfully attained all of its established goals
pertaining to transformation improvement and Kaizen. Within
the framework of the Recognition and Appreciation system,
employees who demonstrated exceptional performancethrough their dedicated efforts were duly acknowledged andrewarded.

2 Analysis

4 (BB and İYO)5 Maintenance

Environment andLevel ofIn 2021, Karsan achieved a notableaccomplishment by attaining a score of 19
points in its initial official WCM audit. As aresult of the 2022 audit, the Company’s scoreincreased to 29.

Appointment ofOrganizational

15 Ownership

20 Employee Motivation

36
GRI 3-3

CUSTOMER SATISFACTION

Within this particular context, the effort to ensure customer
satisfaction is approached from multiple dimensions, overseen
by a sizable organization structured under the purview of theAfter-Sales and Spare Parts Directorate.

KARSANSUSTAINABILITYREPORT 2022

11 dealers and 76 authorized services in Turkey, as well as 13
dealers and authorized services abroad, serve customers.
Consumers, users, and customers may vary in accordancewith the products produced. Therefore, ensuring customer
satisfaction necessitates fulfilling the collective expectationsof these different groups. Through a variety of channels, theexpectations as well as the demands of these stakeholder
groups with diverse motivations are attentively considered,and every effort is made to fulfill their needs. The main goalof the after-sales teams is to promptly address customer
requests and complaints and provide constructive solutions.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYWith over 57 years of experience, Karsan has solidified its
achievements in the Turkish automotive industry in theEuropean and North American markets in the previous 5
years, with the vision of being one step ahead in the future ofmobility, and is pioneering the electric transition. It remains
the first and sole provider in Europe offering a wide array of
products ranging from 6 m to 18 m.. e-JEST has consistently
held its position as the market leader in Europe for the
past 3 years, while e-ATAK has also maintained its market
leadership in Europe for the past 2 years. Passengers are
currently being transported in Stavanger, Norway, utilizing theAutonomous e-ATAK vehicle, marking a significant milestone
in global transportation. The latest addition to our range ofelectrical products, e-ATA HYDROGEN, was introduced inGermany this year. Karsan, where a potent R&D team andproduction power are constantly monitoring technology,
is constantly developing. By virtue of demo vehicles in avariety of locations, customers are offered experience withoutpurchasing, and products and services are developed byrecognizing their needs. The after-sales team manages
customer satisfaction processes with the utmost care andattention, and customer satisfaction is always prioritized.
Karsan enhances and moves the brand forward year afteryear. In this sense, studies are continuing rapidly. In thisprocess, Karsan reinforces its leading position in the industry
through its innovation, sustainability, and customer-centric
approach.
Ensuring consumer satisfaction is of paramount importance in
Karsan’s business operations. The assumption of responsibility
is undertaken with the objective of cultivating consumer
confidence and facilitating the enhancement of their qualityof life. The studies conducted on the development of customer
satisfaction align with the organization’s Quality Policy, whichseeks to fulfill customer expectations. Through a commitment
to continual improvement in these processes, the organization
has successfully enhanced both quality and efficiency to adegree that enables it to compete on an international scale.

In this context, customer demands are regarded as themost essential factor when it comes to the redesign ofservice models. For instance, as a commercial vehicle
producer, Karsan’s customers utilize the vehicles for urban
transportation or commercial passenger transportation
services rather than for personal use. Therefore, the working
hours are determined based on the periods of highest
customer vehicle usage. To prevent them from losing this time
due to maintenance work, night hours and on-site services
have been initiated. In this way, customers’ vehicles are kept
operational at all times, preventing them from experiencing
trip losses.

11 dealers and 76 authorized services in
Turkey, as well as 13 dealers and authorized
services abroad, serve customers.

37
GRI 3-3

QUALITY MANAGEMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY38

CREATIVE,SUSTAINABLE AND
INSPIRING SOLUTIONSThe Quality Policy established by
Karsan serves as the foundation
for the principles of quality andexcellence, encompassing the basic
principles of quality management
practices.

Creative, sustainable, and inspiring solutions and suggestions
are provided to fulfill the needs of customers in the global landtransportation market. In accordance with the Company’s
vision of becoming a preferred company on the global
market, utmost importance is placed on process and productsafety, and continuous efforts are made to enhance thequality standard. The Quality Policy of Karsan serves as thefoundation for the organization’s understanding of excellenceand quality and encompasses the basic principles of quality
management.
The Quality Management strategy of Karsan is implemented
in alignment with the value chain. By utilizing the process
approach, the Company strives to enhance the quality of
its products, services, and processes throughout every stepof the way, from procurement to after-sales. These studies
are conducted with the management and coordination of
the Quality Department, which is structured in accordancewith business processes and reports to the CEO. Karsan
conducts its operations in adherence to the ISO 9001 Quality
Management Standard and the IATF 16949 Automotive Quality
Management Standard. Throughout the design and production
stages, FMEA-SPCMSA application tools are utilized toconsistently enhance the quality focus.
At Karsan, the assessment of compliance with standards
is conducted through internal audits. Internal audits are
performed on the processes within the scope of the Quality
Management system using a web-based application. The
frequency of these audits is determined based on risk
analyses, with a focus on ensuring customer satisfaction.
The identified findings observed during the audits arerecorded and monitored using the web-based nonconformity
management system. External audit studies carried out by
independent and accredited organizations guarantee theQUALITY MANAGEMENT

reliability of Karsan’s quality management systems. The
process of quality certification involves conducting external
audits and performing re-certification assessments every
three years for ISO 9001 and IATF 16949 standards.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXAs part of the digitalization efforts
for quality activities, Karsan has
successfully implemented a projectutilizing the Quality Tracking System(QTS) to manage the quality data
pertaining to the vehicles produced by
Karsan.

At Karsan, the concept of quality management is regarded
as a domain of ongoing enhancement, wherein efforts are
made to enhance performance by translating the outcomes
derived from audit and risk identification studies into practicalimplementation. Several processes were implemented within
the specified reporting period in this context. In addition to
the implementation of quality management systems, theCompany adheres to many standards and methods in orderto ensure effective operations. These include the ISO 14001
Environmental Management System Standard, the ISO
45001 Occupational Health and Safety System Standard,
and the ISO 50001 Energy Management Standard, as wellas the adoption of Lean Production, Kaizen, and World Class
Manufacturing methodologies. The objective of employing
these methodologies is to ensure that the total quality
approach prevails in various processes and to systematize
continual improvement efforts.
Quality Tracking System
The implementation of a project utilizing the Quality
Tracking System has been undertaken within the context
of the digitalization of quality operations. This project aims
to effectively manage the quality data pertaining to thevehicles produced by Karsan. The design of this system isbased on the categorization of vehicles into zones and theestablishment of an error-coding infrastructure that is tailoredto the specific product range. Errors detected by employees
are automatically recorded through error codes that are
specifically designed based on the corresponding vehicle
region, detection location, and error description.

The barcode scanning process is utilized to indicate thecompletion of operations at stations indicated by the online
line tracking application of vehicles. This process effectively
prevents errors recorded in the system from being acceptedwithout undergoing necessary corrections. The system
records and reports information on a daily, weekly, andmonthly basis to effectively monitor the quality performanceof the vehicles.
Adhesive Bonding School
The Adhesive Bonding Schools project was initiated in 2020
with the objective of attaining a zero-defect rate in adhesive
bonding processes, while simultaneously enhancing productquality and process adequateness. As part of this project,a total of three training sessions were conducted in 2021
for quality and production operators who are responsible
for assembly line operations. A comprehensive training
program was designed, consisting of both theoretical andpractical components, with a total duration of 72 hours.
The primary objective of this training was to enhancethe employees’ understanding and adherence to quality
standards specifically related to bonding processes. In total,
18 employees participated in these training sessions. The
ongoing planning for bonding training sessions is set tocontinue throughout 2022, with the intention of extending
them into the year 2023.
Assembly DOJO Zone
The Assembly Hands-On Training Zone, which wascommissioned in 2021, facilitated the execution of WCM
practices and new on-the-job activities in accordance with
the quality management goals at Karsan. The objective of thisprogram is to provide employees with hands-on training inassembly production operations, with the aim of minimizing
potential risks related to quality and occupational safety.

DIRECTORY39
GRI 203-1, 3-3

2022
PERFORMANCEKARSANSUSTAINABILITYREPORT 2022

HIGHLIGHTS OF THISSECTIONABOUT THE REPORT

Karsan endeavors to mitigate
work-related injuries and healthimpairments among employees
and stakeholders by implementing
the World Class Manufacturing
strategy and a proactive
occupational safety approach.
This is achieved through the active
involvement of all employees andthe cultivation of a shared senseof responsibility.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES

Karsan assumes a significant
role in improving air quality andmitigating carbon footprints within
urban areas through the utilizationof electric and low-emission
vehicles.

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYGLOBAL ACHIEVEMENT
THROUGH R&D AND
INNOVATION COMPETENCY

Karsan consistently engages inthe development and improvementof its operations in environmental
and energy management.
This includes the utilization of
eco-friendly materials, effective
waste management and recycling
strategies, as well as the
reduction of vehicle emissions andoptimization of fuel efficiency.

1.47 tons
CO2e/unit
Average
Greenhouse
Gas Emission

8.47 m3/unit
Average Water
Consumption

954 tons
Recycled
Waste

17,501 person-hoursOHS Training

40
GRI 2-25

OCCUPATIONAL HEALTH AND SAFETY

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXA HEALTHY AND SAFE
WORK ENVIRONMENT
Establishing a culture that prevents
work accidents and occupational
diseases, and fostering a healthyand safe work environment are
regarded as some of the most criticalresponsibilities of all members of the
management team and employees.

According to Karsan, employees are considered the mostvaluable asset throughout the entire production andmanagement stages. Through the active involvement of
all employees and the cultivation of a shared sense of
responsibility, Karsan strives to prevent work-related injuries
and impairments in the health of employees and all otherstakeholders, in line with the proactive occupational safety
approach and the World Class Manufacturing approach.
Occupational health and safety (OHS) is regarded as an
intrinsic component of the corporate culture in Karsan.
Increasing OHS awareness, controlling risks, establishinga culture that prevents work accidents and occupational
diseases, and fostering a healthy and safe work environment
are regarded as some of the most critical responsibilities of all
members of the management team and employees.

Karsan successfully completed the TSE-conducted Integrated
Management System audit in 2022, demonstrating fullcompliance with the system requirements. The managementof all occupational health and safety (OHS) processes adheresto the ISO 45001 Occupational Health and Safety Management
System Standard. Additionally, annual work plans aredeveloped to set targets for both units and individuals
regarding OHS matters. At Karsan, the Occupational Safetyunit operates within the framework of Environment, Health,and Safety Management and reports to the Industrial Deputy
General Manager. The OHS Board convenes every two months
to assess the effectiveness of safety processes and facilitate
ongoing decision-making activities in terms of occupational
health and safety.

DIRECTORY41
GRI 3-3, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 416-1,

OCCUPATIONAL HEALTH AND SAFETY

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Occupational Health and Safety
Occupational Health and Safety

Unit

2020

2021

2022

Number of Accidents

6

21

25

Number of Fatal Cases

0

0

0

Number of Occupational Diseases

0

0

0

Absence due to Accidents

Days

15

129

97

Lost Workday Rate

%

0.01

0.07

0.03

Accident Frequency Rate

%

3.4

10.7

8.6

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY42

At Karsan, the management of risk assessment studies related
to occupational health and safety (OHS) is efficiently conducted
as a dynamic process. Unsafe conditions identified within workzones are appropriately documented on the M-Files platform.
The system supports the assignment allocation process, allowing
for ongoing monitoring of action processes and performance
following the identification of risks.
The Megane project, which was commissioned at Karsan in 2022,
has the primary objective of substantially reducing accident
rates. When considering accident statistics, it is evident that thepositive impacts of the Megane project are starting to manifest,
after excluding the influence of reduced working hours during the
pandemic period. This suggests that Karsan has made notable
progress in its occupational health and safety performance,
resulting in enhanced effectiveness of its occupational safety
practices. This demonstrates that Karsan’s commitment tosafeguarding the health of its employees aligns with OHS
principles that the Company has embraced as an integral part ofits corporate culture.
In the recent production projects undertaken in 2022, extensive
efforts were made to ensure the successful implementation ofeffective risk management and subcontractor management
procedures throughout the installation of new production lines.
As a result of these efforts, the projects were executed with arecord of “Zero Occupational Accidents”. During the design phaseof newly established lines and workflows, occupational safetyassessments were conducted. The installation of production lines
was carried out with a focus on achieving the maximum level ofsafety by effectively managing risks at their source.
The levels of awareness regarding occupational health and safety(OHS) among employees and contractor company employees
are consistently being enhanced. This is achieved through theorganization of training programs and the establishment anddissemination of an OHS culture through various practices.

At Karsan, the management ofrisk assessment studies related tooccupational health and safety (OHS)
is efficiently conducted as a dynamic
process. Unsafe conditions identified
within work zones are appropriately
documented on the M-Files platform.

Karsan actively engaged in the “Journey to Zero Accident” project,which was implemented with the support of MESS-TİSK. The
identification and control of unsafe conduct, a primary contributor
to workplace accidents, has emerged as an essential aspect ofattaining the target of zero accidents. In this particular context,
the OHS Detection System that utilizes artificial intelligenceestablishes a connection with existing cameras and provides
support in terms of OHS and facility management. This system
operates continuously, monitoring work areas 24/7, granting
access to notifications regarding violations in real-time, andfacilitating the development of compliance procedures.

GRI 2-8, 3-3, 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 416-1

OCCUPATIONAL HEALTH AND SAFETY

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY43

In terms of emergency management, Karsan consistently reviews
its emergency procedures and assesses their effectiveness inreal-life situations via emergency drills. Scenarios are formulated
in accordance with possible emergency situations that may
occur within work areas, and both scheduled and unscheduleddrills are conducted with the active participation of employees.
Within the framework of training and awareness-raising activities,
Karsan is aware that on-the-job discussions are the most effectivemeans of achieving the target of “zero occupational accidents.”
With these remarks provided by production unit managers at thestart of each shift, the organization seeks to maximize employees’
OHS awareness and competencies. To ensure consistency at thislevel, ongoing and diverse training is provided.
The implementation of the Occupational Safety Captain program,which was initiated in 2022, allowed field workers to take on the
responsibility of ensuring occupational safety within production
teams comprising 8–15 individuals for a duration of two weeks.
The designated captains are equipped with hats and armbands
that are specifically provided to them for the duration of theirduty. They monitor their work areas for any instances of nonconformities and unsafe conduct that may arise during thecourse of their work.
Occupational safety theater is an interactive training method
employed to address and rectify unsafe conduct while
simultaneously fostering a robust occupational safety culture.
With scenarios created in accordance with Karsan production
processes, employees experience learning about occupationalsafety as part of the game.
In pursuit of standardization studies, Karsan occupational safetyunit developed the “Karsan Standards Booklet” to safeguard
information and ensure an effective first-step security measure.
The aim of this booklet is to guarantee adherence to legal
and institutional requirements regarding established layouts,
practices, and standards pertaining to facilities, machinery,equipment, and visual management.

SMAT Audits
The SMAT audit, conducted as part of the WCM studies, is an OHS
audit study that focuses on training and development. The audit
includes the involvement of managers, office employees, and field
operators at Karsan. The audit process is conducted in designatedregions as part of this implementation, adhering to the annual
audit agenda. Employees who have received SMAT audit training
systematically compile SMAT audit cards and query lists. Auditors
initially conduct an observation of the operations at the station
undergoing audit. Following the interviewing process, the operator
provides input regarding occupational safety risks and bestpractices. Risks that are detected after the audit are transferred
into the web-based quality management system, where they aresubsequently monitored.

Occupational Safety Flags Practice
The Occupational Safety Flags practice leads to an enhancementof OHS awareness and motivation among both Karsan employees
and contractor company employees. Furthermore, this practicehas effectively established and disseminated a culture of OHS
throughout the organization. This method, which is included in
WCM studies, is based on the visualization of work lines with andwithout accidents. Within the scope of this practice, blue flags
are displayed on the body and assembly lines for work linesthat have not experienced an accident in the last 3 months, andorange flags are used for work lines that have encountered an
accident. This method facilitates the dissemination of a sense of
positive competition and motivation, thus encouraging a cultureof accident prevention.

Occupational Health and Safety Training
Programemployees at Karsan are able to work in a safe and healthy
environment but also contribute to preventing potential work
accidents and health issues that may arise from work-related
activities.
In the year 2019, Karsan conducted a total of 9,142 personhours of OHS training for its employees. These training sessions
focused on how to manage health and safety risks that may be
encountered in the workplace, how to prevent these risks, andhow to minimize occupational accidents that may occur.
OHS training program was carried forward into the year 2020,
during which an overall total of 8,280 person-hours of training
was delivered to our employees.
In the year 2021, there was a slight decline in the duration of the
training program compared to the preceding year. Specifically, a
training program spanning 2,548 person-hours was conducted.
This situation suggests that in response to the global impactof the pandemic, certain measures have been taken, such asdelivering certain parts of the training through online platforms or
shortening the time of the training program.
Nevertheless, in the year 2022, there was a notable increasein the duration of the training program, with a substantial riseto 17,501 person-hours. This increase serves as evidence of
Karsan’s ongoing commitment to OHS training programs, with acorresponding progressive rise in investments in the area.
Occupational Health and Safety Training Program
Occupational Healthand Safety Training
Sessions

Unit

2020

2021

2022

For Company
Employees

Person/hours

8,280 2,548 17,501

Karsan places great emphasis on OHS. This situation is further
demonstrated by the Company’s investments in OHS training
programs. These training programs not only ensure thatGRI 403-1, 403-2, 403-3, 403-4, 403-5, 403-6, 403-7, 403-8, 416-1

ELECTRIC VEHICLESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY44

A STRATEGY FOR
PRODUCING CLIMATEFRIENDLY PUBLIC
TRANSPORTATIONVEHICLES
Karsan’s numerous models are activein the electric vehicle industry, inline with the Company’s strategy for
producing electric, climate-friendly
public transportation vehicles.

Karsan’s numerous models are active in the electric vehicleindustry, in line with the Company’s strategy for producing
electric, climate-friendly public transportation vehicles. Karsan
plays a critical role in improving air quality and reducing carbon
footprints in urban areas through its electric and low-emission
vehicles. This approach benefits from both environmental andeconomic sustainability provided by low operating costs. It isalso reviewing pricing strategies to ensure that electric vehicles
reach wider segments of the public, thus contributing to social
sustainability. In the meantime, Karsan develops and adopts
sustainable business models regarding the utilization andproduction of electric vehicles. These models strive to reduce
waste and resource consumption in compliance with circular
economy principles while also encouraging energy efficiency
and the use of renewable energy resources.
In 2022, customer, user, and consumer demands and needs
shaped Karsan’s services and policies, having a substantial
impact on areas such as the accelerating electric vehicle(EV) transformation, the next technology phase hosted byhydrogen, and autonomous vehicle technology. European urban
bus market projections are evolving in parallel with Karsan’svision, and it is evident that interest and demand for electricand hydrogen-powered vehicles continue to increase. Recent
developments have provided evidence that buses poweredby internal combustion engines will cease to exist entirely inthe future. The most exemplary instance of this argument is
the European Commission’s mandate that city buses operate
entirely on a zero-emission basis by 2030. Besides, there isa surge in interest in autonomous technology. The prevailingmarket attitude is to eliminate the need for drivers on buses inorder to reduce costs. It is projected that investments and R&D
efforts related to autonomous technologies will increase in linewith this trend. Consistent with these developments, Karsan
remains committed to providing sustainable transportation
solutions and maintains its prominent position in the industry
through its innovative approaches.

GRI 2-25, 3-3

ELECTRIC VEHICLESKARSANSUSTAINABILITYREPORT 2022

e-JEST

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Karsan has successfully established a prominent presence inthe electric vehicle market through the introduction of e-JEST.
This particular product emerged as a result of the Company’s
research and development efforts initiated in 2015, in linewith Karsan’s strategy to provide electric public transportation
vehicles that are climate-friendly, hence catering to the global
market. The primary objective of this project is to produce
an electric vehicle capable of attaining a minimum range of
200 km when fully charged. Additionally, the vehicle should
possess a maximum charging time of 2 hours on AC charging.
Furthermore, it should accommodate a passenger capacityof 22 individuals, conforming to Class A standards, and offer
the same level of comfort features and options as currently
available diesel vehicles. To attain this objective, modifications
were implemented on the powertrain, electrical - electronic
and trim components, based on the JEST diesel platform.
Consequently, the e-JEST model was produced. To date, thecumulative distance covered by the exported e-JEST vehicles
exceeds 1 million kilometers.
Karsan, a pioneer in the transformation of public transportationin Europe, achieved the status of the top-selling electricminibus in Europe for the years 2020, 2021, and 2022 with
the introduction of the e-JEST model in 2019. Due to thisachievement, Karsan has been widely acclaimed as themarket leader of electric minibuses in Europe for the past threeconsecutive years. The e-JEST, the first electric model from thebrand, has superiority in the European electric minibus market.
Based on the findings of the 2022 European Minibus Market
Report within the weight range of 3.5-8 tons, it has been
observed that Karsan e-JEST has maintained its position as
the leader in the electric minibus market, commanding asignificant market share of 28%, as in the last two years. It has
been determined that the electric minibus market in Europe is
projected to experience substantial growth of 84% in 2022, incomparison to the preceding year, and it is emphasized thatthe market volume has almost doubled in just one year. Karsan
e-JEST has established a strong presence in various markets,
including France, Romania, Portugal, Bulgaria, and Spain.
Karsan e-JEST has been identified as one of the four electricminibuses that are sold in the European market.
The e-JEST showcases exceptional maneuverability andpassenger comfort, supported by its BMW-manufactured
electric motor that generates 170 HP power and 290 Nm torqueand provides a range of up to 210 km. The E-JEST is equippedwith a regenerative braking system that allows for energy
recovery, resulting in a 25% self-charging capability for its
batteries. The e-JEST is equipped with a comprehensive rangeof features to enhance the driving experience. These include
a fully digital instrument panel, keyless start functionality, a
USB port, and the option for a Wi-Fi-compatible infrastructure.
Additionally, the e-JEST offers a 4-wheel independent
suspension system, ensuring a comfortable ride similar tothat of a passenger car. These features serve as evidence that
Karsan provides high-tech mobility solutions with the vision of
being “One Step Ahead in the Future of Mobility” and making a
positive impact on sustainability.

e-ATAKThe e-ATAK project was launched by Karsan in 2018, following
the e-JEST project. The objective of this project was to produce
a Class I vehicle with a seating capacity of 52 passengers thatis both comfortable and has a minimum range of 300 km on
one full charge with a maximum charge time of 3 hours on
DC. In the framework of this project, a groundbreaking electricvehicle was produced, boasting a capacity of 8 m and 11 tons.
The electric motor, battery, electronic software, and styling workof the vehicle were also carried out by Karsan. The Company
conducted engineering verification and development studies, aswell as the requisite studies for process verification.
Karsan, a company that is making significant progress inestablishing itself as a global brand in the public transportationindustry, has become the choice of Europe due to its advanced
technology products. Ambitious products are produced within
the minibus, midibus, and bus segments, and a leading role isplayed in the electric transformation of public transportationin Europe. Karsan e-ATAK, a highly prominent model within thebrand’s lineup, continues to establish a strong reputation in
Europe due to its outstanding sales performance.
The market leadership achieved in the European electric
midibus segment in 2021 was repeated in 2022. Based on
the findings of the Wim Chatrou-CME Solutions report, Karsan

45
GRI 203-1

ELECTRIC VEHICLESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
46

e-ATAK has emerged as the top-selling vehicle within its classin the European market, with a total of 113 traffic registrationsin the year 2022. e-ATAK, an established leader in the electric
midibus market, witnessed significant growth in its market
share from 30% in 2021 to 40% in 2022. This achievement
has solidified e-ATAK’s position as the leading company in the
midibus segment in Europe for the second consecutive year.
Karsan e-ATAK model, which operates 100% on electricity, has
become one of the most preferred electric midibuses across
many European countries. It has been sold to various European
markets, including France, Romania, Italy, Spain, Portugal,
Greece, and Luxembourg, where the largest electric bus fleet
in the country consists of e-ATAKs. The utilization of it has
experienced a rise in Luxembourg, particularly in the context ofintercity transportation.
The e-ATAK model, which was launched in 2019, hasexperienced significant sales success since its initial release,
and Karsan brand has garnered increased interest due to its
consecutive two-year segment leadership in the European
market. The e-ATAK model, which also has an autonomous
version, has achieved market leadership for two consecutive
years. The “Karsan Autonomous e-ATAK”, the first level 4
autonomous electric bus ready for actual road conditions in
America and Europe, provides public transportation services inboth Norway and the United States. A significant achievement
has been accomplished by becoming the first autonomousvehicle to transport passengers along a standard route inEurope as well as the United States.
Karsan e-ATAK offers a range of 300 kilometers, positioning it as
the top performer within its class through the utilization of BMW
batteries, which possess a substantial capacity of 220 kWh.
The e-ATAK vehicle, with a length of 8.3 meters and equippedwith a 230 kW electric motor, has the capability to be charged
within 5 hours using alternating current charging units and ina shorter duration of 3 hours when utilizing fast charging units.
These achievements serve as an indicator of Karsan’s ongoingleadership in the European public transportation market.

e-ATA

e-ATA HYDROGEN

Following the successful launch of the e-JEST and e-ATAK
vehicles, Karsan initiated the e-ATA project in an effort toexpand the range of its products to include electric heavycommercial passenger buses. In the 12 m bus segment, avehicle featuring a modern design that is both competitive
and adaptable to various markets is being developed throughthis project. Karsan designed and engineered the e-ATA,
which was prepared for mass production in 2021 as a 100%
electric, fast passenger loading and unloading feature,
low-floor, silent, efficient, economical, and environmentallyfriendly transportation solution. In addition, Karsan signed thelargest electric bus export agreement in Turkey. The Company
expanded its product portfolio to include the e-ATA vehicle inlengths of 10–12 and 18 m, thereby becoming the first and solecompany in Europe to offer an entire product range spanningfrom 6 m to 18 m.

In 2022, Karsan Research and Development Center
introduced the e-ATA HYDROGEN to its portfolio of innovative
products, thereby demonstrating its ongoing commitment
to encouraging innovation within the industry. Upon
analyzing worldwide market data, it becomes evident thatthe international community is actively prioritizing theadvancement of novel technologies aimed at fostering
sustainable production practices for public transportation
vehicles. While hydrogen-powered public transportation
vehicles are at the THS 5–THS 6 level on a global scale, Karsan
has made progress in elevating this technology to the THS
8–9 level in our country.
Karsan holds a patent and has submitted a design registration
application for e-ATA HYDROGEN. Based on Karsan’sachievements in the development of innovative products andengineering studies, it is widely believed that the Jest andAtak vehicles have the potential to attain market leadership
positions in Europe in terms of this new technology.

GRI 3-3

ELECTRIC VEHICLESKARSANSUSTAINABILITYREPORT 2022

Some features of the vehicle developed within this framework
are listed below:

electric steering system known as “Drive by Wire” technology,
developed by Karsan.

• Vehicle range is designed to be 480 km and above.

The design and engineering work for this vehicle was conductedby teams from Karsan, while the collaborative development of
the software essential for autonomous driving was undertakenwith the Turkish company ADASTEC. As of 2021, autonomous
e-ATAK, for which all testing was concluded during the reporting
period, was ready for mass production.

• Vehicle passenger capacity is determined as 95 people.
ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD• Maximum speed is set at 80-100 km/h.

AUTONOMOUS e-ATAK

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
47

With the emergence of the transition to driverless vehicle
models in recent years and the projected increase in demandin the near future, particularly in public transportation, Karsan
intends to introduce a product that incorporates an autonomous
driving system into the e-ATAK vehicle segment. The initiation ofthis project took place in 2019 with the objective of developing
a cutting-edge product within its specific market segment by
equipping the e-ATAK vehicle with advanced driver-assistancesystems (ADAS) and Level-4 autonomous driving features.
A Level 4 autonomous driving feature refers to the capabilityof a vehicle to independently perform all of its dynamic driving
functions within a pre-defined area without requiring any driverassistance. In this particular context, the vehicle is required
to possess the capability of autonomously controlling thesteering wheel when necessary, through the utilization of CAN
communication, without any reliance on mechanical force.
To address this requirement, the vehicle is equipped with an

Autonomous e-ATAK, which will be the first product of its
segment in both the European and US markets, appears to holdsignificant potential. At present, rather than fully autonomous
Level-5 technology, which lacks a global legal regulatory
framework, Level-4 Autonomous e-ATAK is considered. This
technology is already prevalent in several countries and isanticipated to gain widespread adoption in the near future. It
provides driverless navigation under supervision in a predefined environment and route, incorporates functionalities
compatible with public transportation modes, and is permitted
to operate in the same traffic environment as the vehicles withdrivers.
Autonomous e-ATAK, which has an infrastructure that canbe equipped with Level-5 driving features with the advanced
technology owned by Karsan, has the goal of producing
pioneering autonomous electric vehicles in other segments as aconsequence of the knowledge gained during the Autonomous
e-ATAK project.
Karsan considers the fact that it was sold to Romania
immediately following its introduction and that exports to
the United States are also planned to be the most significant
indicator of the near-term potential of autonomous vehicles andautonomous e-ATAK.
Karsan established a new paradigm in Europe in 2022 byintroducing technologically advanced mobility solutions,guided by the vision of being “One Step Ahead in the Futureof Mobility.” Level 4 autonomous electric bus “Karsan Otonom

e-ATAK”, developed in collaboration with Karsan’s technology
partner ADASTEC, has started to provide public transportation
services in Stavanger, Norway. Stavanger hosted the official
opening ceremony of Karsan Autonomous e-ATAK, the firstbus in Europe to transport passengers within a city using
autonomous technology. Autonomous e-ATAK is capable oftraveling at 50 km/h autonomously in any weather condition,
day or night. Without a driver present, every task that would
ordinarily be performed by a bus driver is executed. This
includes approaching the stops along the route, managing thegetting off and boarding procedures, and offering direction
and control at intersections, crossings, and traffic signals.
The opening ceremony for official use was held in the cityof Stavanger. With the e-Volution vision of Karsan, thedevelopment of future technologies has already commenced.
A variety of innovative technologies, including LiDAR sensors,
have been positioned across the autonomous e-Atak to enable
it to detect its surroundings without the driver’s presence. These
technologies are among the features of Autonomous e-Atak,which is capable of traveling along a predefined route without adriver. This project, which is a first in Europe, is regarded as animportant milestone due to the fact that it will be at the forefrontof tomorrow’s transportation and will contribute to the mobilityof the future.
Regeneration Technology
Regeneration technology is a technological feature that
Karsan uses for its electric vehicles. This technology allows
the vehicle’s existing kinetic energy to charge the batteries
via the electric motor when the foot is released from theaccelerator pedal and the brake is not applied. Regeneration
technology developed by Karsan provides 15% energy
savings in standard drives, spanning from 100% charge to
0% charge. This way, the vehicle can cover an additional
45 kilometers without requiring charging. By virtue of thisenergy savings, the operational duration of the vehicle on its
designated route is extended.
GRI 3-3, 203-1

WORLD CLASS MANUFACTURING (WCM)

in 2022. A comprehensive analysis was conducted on nonergonomic activities within production areas, resulting in a 100%
improvement in these activities.

KARSANSUSTAINABILITYREPORT 2022

After the implementation of measures to eliminate nonergonomic activities in 2021 and conducting studies to improve
the NVAA, notable enhancements in productivity were recorded
in 2022. As a result of these improvements, the productivity inthe designated model area witnessed an increase of 21.6%.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

The Recognition and Appreciation System developed in 2021
had significant impacts on the motivation levels of Karsan
employees and the widespread adoption of the WCM culture in
2022. Throughout this time frame, there has been an increasein the participation rate, which climbed from 62% to 81%.

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY48

The second WCM Audit conducted inJuly 2022 yielded a 10-point increasein Karsan’s score, resulting in a scoreof 29.

In the context of Karsan, the year 2022 has witnessedsignificant developments in projects executed using the“Compass Room” methodology. The implementation of theAgile Board was transitioned to enhance responsiveness andeffectiveness in adapting to changing conditions. The total
number of completed projects, which was 123 in 2021 increased
to 127 in 2022.
Karsan implemented the Quality Assurance Matrix (QAM) in
2021, which led to significant improvements in the system’s
performance in 2022. The number of attacks targeting 281
out of 756 projects in 2021 has increased to 883 out of 1,104
failures in 2022. During this process, the attack rate exhibitedan increase from 37% to 80%.
In the context of WCM, the implementation of the 11-point
method and Muri analysis, which were introduced in 2021,
have proven to be effective in optimizing production processes

In accordance with the Key Performance Indicators (KPIs)
outlined in the WCM report card, the top-performing teams of
the quarter were identified and rewarded as part of the “Teams
Competing” initiative for 2022.
The second WCM Audit conducted in July 2022 yielded a
10-point increase in Karsan’s score, resulting in a score of 29.
The primary driver of this upward trend can be attributed to theheightened levels of knowledge and cultural proficiency among
every employee of the organization, ranging from the director
to field staff.
In pursuit of attaining the Bronze Factory level, Karsan has
taken steps in 2022, including improvements to the loss
collection system and the expansion of training areas, with theaim of accomplishing this objective.
In line with the goal of achieving the designation of the Golden
Factory, Karsan initiated the utilization of advanced vehicles in2022. However, becoming a Bronze and Silver factory has been
determined as the priority stages to achieve this goal.

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
49

With the vision of “One Step Ahead in the Future of Mobility,”
Karsan’s R&D Center is currently directing its 2027 strategies
towards innovative product development studies to support
the sustainable growth of Karsan Brand as a key player inboth the European and North American markets. Karsan R&D
Center is dedicated to producing 100% electric vehicles thatcater to the evolving needs of various countries and evencities. With the innovative designs it develops by focusing onsocial prosperity through strategic international partnershipagreements, it develops sustainable and environmentallyfriendly products for the entire world. In addition to its
innovative approach to new product development, theCompany actively promotes environmental sustainability
by reducing its carbon footprint by up to 30% through theuse of environmentally friendly products. This contributes
to the dissemination of awareness regarding sustainable
environmental protection within society. Karsan isstrategically directing its robust financial resources towards
the digitalizing world with its Value-Creating, Continuously
Developing, Global and Competent Organizational structure,

Karsan continues to lead the industry by virtue of its
innovative DNA by enhancing its competitiveness across all
operational processes and developing electric autonomousvehicles with the help of future mobility technologies andinternational collaborations. The primary policy of Karsan R&D
Center is• to establish itself as an environmentally conscious
company that promotes sustainable production practices
through the development of vehicles utilizing recycledmaterials,• the utilization and development of lightweight components,• the reduction of carbon and water footprints associatedwith the products under development.
Furthermore, the main goal of Karsan R&D Center is totransform into a market-leading Innovation Center by the year
2027.

SMART MOBILITYSYSTEMSDue to the significant emphasis
placed on R&D as well as innovation,
alongside the robust infrastructure weestablished, our organization strives
to develop mobility systems thatare environmentally friendly, safe,
and smart, shaping the future of not
only our country but also the global
community.
GRI 203-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

Karsan R&D Center Management Process

1

2

3

4

5

Development of a Project
Plan

Conceptual Feasibility

Economic Feasibility

Project Approval Stage

Engineering Approval Stage

LETTER FROM THE CEO• Preparation of the project’s
preliminary scope, timetable,
and budget.

• Identification of requirementsthat determine the subject
matter of the project• Updating the project’s scope,
timetable, and budget.

• Conducting preliminary virtual
analysis tests• Literature, patent, andcompetitor analysis• Performing project planningand budgeting• Identifying the components
required for the project design.

• Production of prototypes

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM• Research on Target Market• Identification of the project
team

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARDOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCE• Determination of innovative
management of the project• Identification of the equipment,
resources and application area
requirements for the project• Articulating the anticipatedtargets or benefits of the
project using specific andquantifiable metrics.

• Defining the targets of the
project’s sub-work packages.
• Updating the advantages ofproject objectives.
• Performing preliminary design
studies• Defining conceptual design
studies• Development of a prototype
production plan.

APPENDIX• Creation of Critical/Security
components inventory• Development of the project’s
risk management plan

GRI CONTENT INDEX• Development of the virtual andphysical test and verification
plan of the project

DIRECTORY
50• Updating the project’s scope,
timetable, and budget• Detailing the design works• Current level prototype
production• Performing physical tests• Completion of producibility
inquiries• Design freeze

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
51

Karsan R&D Center Activities
In 2022, Karsan R&D Center continued its projects and studies
developed in line with the vision of our corporate strategy“One Step Ahead in the Future of Mobility”.
R&D Center Projects
Prior to commencing a project, Karsan R&D Center conducts
comprehensive pre-feasibility operations pertaining to therespective project. Pre-feasibility studies consist of thefollowing stages:• The present technical situation is assessed by conducting
literature reviews and research on Intellectual Industrial
Property Rights.
• The development of the competency matrix essential to theproject is completed.
• The project budget and project plan were both established.
• The project is presented to the management, and theirapproval is obtained.
The duration of these studies typically spans aroundthree months, during which the necessary preparations
for the project’s infrastructure are undertaken. Productdevelopment processes are conducted at Karsan R&D
Center in adherence to business strategies. The market thatwill be targeted in accordance with the “One Step Ahead in
the Future of Mobility” vision is determined at the meetings
conducted at the conclusion of each year with the purposeof effectively implementing the 2027 strategies. Strategies
that are consistent and pervasive across the organization
are reflected in the target cards of the R&D Center staff,
thereby guaranteeing the effective execution of corporate
strategies. The R&D Center developed 13 projects consistent
with company strategies in 2022. While one of these projects
was successfully concluded in the middle of the year, theinspection and development stages of two others, whichwere entitled to receive support from the HAMLE Department,

remain ongoing. The progress of the remaining 10 R&D Center
projects is ongoing in 2023. At the automotive exhibitionin Hannover, our FuelCell vehicle, which has been granted
investment support from the HAMLE Department, wasofficially introduced to the global community and received
significant attention. The work we have undertaken to support
the development of sustainable products as part of our projectstudies has been submitted for Intellectual and Industrial
Property Rights in 2022. It is thought that the patent withapplication number 2022/021694 “WASHER WATER (WIPER
WATER) FILLING MECHANISM FOR FUEL CELL (FUELCELL,HYDROGEN) VEHICLES”, is important both in terms of reducing
the water footprint and in terms of new fuel technologies inour country. In addition, after the introduction of this vehicle
to the world, technical presentations were made to the units
affiliated with the ministry (especially the unit that follows
new fuel technologies). This technology, which is expected
to be incorporated into the technology of the future and iscurrently under consideration in Europe as green hydrogen,has been developed by the dedicated team at Karsan R&D
Center. To facilitate the commercialization of the ongoingvehicle development project, collaborative efforts with ourmarketing department are being continued. The new 5-8 m
low-ceiling platform development project, which was granted
additional R&D and investment support, is also ongoing.
The project is progressing successfully. It is widely believedthat these vehicles, which have been designed with readymade autonomous infrastructure, will rapidly establish theirpresence in the market. Through the projects it develops,
Karsan R&D Center ensures the development of not only its
own employees and the Company’s strategies, but also its
suppliers. In line with the R&D Center 2027 strategies, EU
project work has accelerated in 2023. As of 2023, a total of
13 meetings were conducted with various companies during
2 B2B consortium establishment events, and the strategic
consistency of 4 Horizon Europe Projects with the Company
was assessed. As a result of these assessments, applications
were submitted for one Innovation Action call and one
Research and Innovation Action call. To bolster the Company’s

In line with the R&D Center 2027
strategies, EU project work has
accelerated in 2023.

GRI 2-25, 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

success in EU projects, training programs on Horizon Europe
Proposal Building and Financial Reporting were received,
and studies on dissemination within the R&D Center were
initiated. To enhance the Company’s engagement in Horizon
Europe projects, extensive research was conducted to identify
relevant networks, followed by the organization of meetings
with their respective leaders. Based on the findings of theresearch and budget analyses, the decision was made tojoin the ERTICO network, as it aligns well with the Company’s
strategic objectives. Subsequently, the initiation of themembership procedure was undertaken. In addition to theprojects currently applied for, call research and consortium
studies continue.
University - Industry Collaboration

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY52

The progress of Karsan R&D Center is achieved by integrating
collaborative efforts into all aspects of its activities. Universityindustry collaboration stands out as the most important
aspect. One essential strategy is to establish academic
partnerships, particularly in the context of conducting
research on innovative products that it aims to develop. Since
obtaining accreditation from the ministry, Karsan R&D Centerhas continued its activities through collaboration agreementswith numerous universities. The number of these studies has
exponentially increased in 2022, and their scope of work has
been broadened through the signing of special protocols. The
2022 university-industry collaborations established by Karsan
R&D Center are listed below.
• Bursa Uludağ University Mechanical Engineering Long-Term
Internship Program• Bursa Uludağ University Electrical - Electronics Engineering
Long Term Internship Program• Bursa Uludağ University Automotive Engineering Long Term
Internship Program• Bursa Uludağ University Gemlik Asım Kocabıyık Vocational
School Hybrid and Electric Vehicles Technology
Collaboration protocol (Within the scope of this protocol,

students will have the opportunity to gain practicalexperience in Karsan production field during their education
and receive training from managers from the R&D Center,
which will be conducted at the university.)• Protocol signing with Bursa Uludağ Vocational School• TÜBİTAK 1505 Autonomous vehicle software development
studies with Bursa Uludağ University OTAGG working group• Yıldız Technical University Electrical and Electronics
Engineering Long Term Internship Program• Bursa Technical University PhD Advisory (Mustafa Alper
Balım) Assoc. Prof. Cemal Hanilçi• Bursa Uludağ University Doctoral Education (Onur Erol)
Assoc. Prof. Hande Güler Özegül• Bursa Uludağ University Doctoral Education (Orhan
Dedeoğlu) Assoc. Prof. Hande Güler Özegül• Our Product Project Manager İbrahim Egemen AKGÜL
instructed the Transfer and Commercialization ofTechnology course in the Science 6002 course of Uludağ
University Institute of Science and Technology.

Collaboration with Technology Transfer Offices
In 2022, Karsan R&D Center engaged in discussions withnumerous technology transfer offices regarding its projects
planned to be applied for both national and international
phases. Negotiations were conducted within this framework
to secure inclusion in consortiums, particularly for projectapplications within the European Union, by leveraging the
networks of technology transfer offices. Below is the list of
TTOs contacted in this context:• METU TTO• BİLKENT TTO• HACETTEPE TTO• TOBB TTO• BURSA ULUDAĞ TTO• BURSA TTO• ISTANBUL TEKNOPARK• OSTİM TTO
In this context, ongoing endeavors are being made to facilitate
negotiations and identify potential areas of collaboration.
GRI 2-28, 3-3, 417-1

R&D AND INNOVATION

Industry-Industry Partnerships

KARSANSUSTAINABILITYREPORT 2022

Karsan R&D Center engages in ongoing research anddevelopment endeavors while concurrently establishingstrategic collaborations and partnership agreements with
suppliers who possess expertise in the specific domains thatalign with its developmental objectives. Project development
studies address strategic partner identification efforts throughtwo important methods:

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD• In cases where Karsan lacks expertise in the product orprocess it intends to develop, it engages in a strategic
partnership agreement with a company that possesses
specialized knowledge in this domain.

LETTER FROM THE CEO• Karsan acquires knowledge and expertise throughits engagement in the strategic partnership process
throughout its developmental endeavors, subsequently
sharing this information within the organization.

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES

These two methods not only enhance organizational
proficiency but also bolster the practice of data mining within
the Company. The following is a list of Industry - Industry
Partnership activities conducted by Karsan R&D Center.

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY53

In pursuit of the vision of transforming
Indonesia’s public transportation
system to electric vehicles, Karsan
signed a collaborative agreement with
SCHACMINDO, a prominent Indonesiancompany, CREDO GROUP during
the B20 (Business 20) Summit inNovember 2022.

• OTTONOM Engineering Solutions• Amaris Engineering• BİLTİM Computer aided design• SEGULA Engineering• STEP Engineering and Design Consultancy Services• Continental (United States)• NVIDIA (USA)• BMW• Renault (European Union Projects Partnership)• Sirena Marine• Valeo

Strategic Collaboration for Electric Transportation inIndonesia
In pursuit of the vision of transforming Indonesia’s public
transportation system to electric vehicles, Karsan signed
a collaborative agreement with SCHACMINDO, a prominent
Indonesian company, CREDO GROUP during the B20 (Business20) Summit in November 2022. This memorandum assesses
the export and SKD (semi-knocked-down) production options
for electric minibus and bus transformations in Indonesia.
In the event that the parties successfully reach a final
agreement, this collaboration is anticipated to assume asignificant role in facilitating the electric transformation of
public transportation systems in Indonesian cities, particularly
in Jakarta.
The collaborative project between Karsan and CREDO
GROUP seeks to transform tens of thousands of vehicles in
Jakarta to electric buses by 2030, in line with the targets
set by Indonesia and TransJakarta, the public transportationcompany in Jakarta, to transition to electric buses by 2030.
Furthermore, similar potential is observed in various cities
within Indonesia.
Within the scope of the agreement, we proceed with a twostep plan. Our initial plan entails starting the sale of vehicles
produced in Turkey and then establishing a SKD (semiknocked-down) production facility in Indonesia. This facility
will focus on the completion of right-hand drive vehicles,
which are produced in Turkey. By doing so, we aim to sellthem to neighboring countries.
Karsan garners international attention through its
development of electric models. Awards such as theSustainable Bus of the Year 2023, which it was granted,
particularly with its 12 m electric e-ATA model, are an
indication of the fact that Karsan is on the right track.
Karsan has emerged as a significant participant in the global
electric mobility sector through its transformation projects,
including e-JEST, e-ATAK, and Autonomous e-ATAK, which have
GRI 2-28, 417-1

R&D AND INNOVATION

Karsan prioritizes the professional
development of its R&D Center staff byproviding both internal and external training
opportunities.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
54

been implemented over the past five years. With Karsan’s
collaboration in Indonesia, it aims to introduce electricvehicles under Karsan brand in various markets, including
Malaysia, the Philippines, Vietnam, and Singapore.
2022 Training Programs and Events Attended by Karsan R&D
Center Staff
Karsan places significant emphasis on the technical andsocial development of its employees through internal training
programs as well as by means of external services. A budget
of TL 250,000 has been allotted for the R&D Center staff’s
training in 2022 by our Company, which intends to establish
Karsan Academy in accordance with its 2027 strategies. The
following are some of the trainings that employees at Karsan
R&D Center have completed:• Intellectual and Industrial Property Rights Training• Innovation and Creative Thinking Techniques Training• Project Management Methodology and Implementations PMP Exam Prep.
• Homologation Training• Fundamental Environment/Energy Awareness and Waste
Management• Software and Hardware in Electric Vehicles• New Manager Development Program - Enhancing Employee
Engagement• 7-Step Problem Solving Techniques• Effective Presentation Preparation Techniques – Online• 6 Sigma - Green Belt
• PTS - Problem Tracking System• EBS 5 Brake Systems• 7 Habits of Highly Effective People
The complete list of these training programs has been
submitted to the Additional Documents section of the portal.
Karsan prioritizes the professional development of its R&D
Center staff by providing both internal and external training
opportunities. Additionally, the Company ensures their active
participation in various industry events such as congresses,
symposiums, fairs, etc.

As a result of attending these activities, both projectcompetencies and qualifications were enhanced. Events
attended in 2022 are listed below:• Busworld Turkey 2022
• Eskişehir Technical University R&D and Technology Conference• ADAS & Autonomous Vehicle Technology Expo
• Automotive Industry Association - Automotive Summer Camp
• HP Enterprise Roundtable Discussions (The Role of Artificial
Intelligence and Data-Driven Architecture in Autonomous
Vehicles)• CAA Expo 2022 Fair - Kentucy• 2nd Automotive Technologies Ansys Users Conference• Ansys Advanced Engineering Technology Day• Product Development Technologies of the Future 2022
• Bias-Virtual Analysis Webinar 2022
• Automotive Industry Association Teknopark Ankara Company
Presentation Meeting
The attendance at these events has contributed to thedevelopment of both the R&D staff and the center.
GRI 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

Short, Medium, and Long-term Goals of
the R&D Center

ABOUT THE REPORT

Karsan, which started working on 2027 strategies with thevision of “One Step Ahead in the Future of Mobility”, has short,medium and long term goals listed below.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
55

Karsan R&D Center is an organizationthat actively collaborates withstrategic partners to drive thedevelopment of technology sectorally.
The most important collaborationagreement was made with ASELSAN
in 2022.

Short Term (1-3 years) R&D / Design Strategies• Promoting Industry-University Collaboration: In 2022,TÜBİTAK 1505 and Uludağ University OTAGG signed anagreement. A second protocol involving Uludağ University
Vocational Schools was also signed.
• Collaborating with university automotive communities todevelop new studies: Our managers, who are experts intheir respective disciplines, mentor students and instruct
university courses.
• Application for National Support Programs: Work on our
HAMLE Department-supported projects, one of which
received investment and the other of which received

investment and R&D support, continued in 2022. Following
a visit to our factory by Mr. Hasan Mandal in 2022, our R&D
Center decided to submit applications for international
funds rather than national support funds.
• Raising the R&D Center employees’ level of educationand the number of domestic and international training
programs they will participate in: Karsan Academy tracks
each employee’s annual progress in both their technicaland social domains and sets targets for training on theirdevelopment cards. Their development was supported byallotting TL 582,000 to R&D Employee Training in 2022.
• Submitting 5 separate applications pertaining toIntellectual and Industrial Rights (patent, utility model,
design registration, trademark, and other related areas):
In 2022, Karsan R&D Center conducted specific studies withthe aim of enhancing awareness regarding Intellectual andIndustrial Property Rights. The most important of them was
the training designed in accordance with Law No. 6769 andconducted by R&D Incentive Engineer Murat Güzel. In thiscontext, awareness was enhanced by providing IntellectualIndustrial Rights Training and application training to R&D
Center employees. Following the training, the Incentive
Unit received 16 invention notifications and requests forevaluation. Upon completion of the research reports forthe papers, 9 invention concepts that could be subject toIntellectual Industrial Rights applications were recognized.
In 2022, 5 applications consistent with company strategies
were submitted to the Turkish Patent and Trademark Office.
• Doubling the number of researchers: The number ofcompetent employees has been doubled in 2022.
• Delivering presentations at domestic symposiums andconferences: Karsan R&D Center places significance on
engaging in academic events in order to enhance global
brand recognition and awareness, as well as to elevate thedegree of technological expertise within the market. In thiscontext, many events were attended in 2022. These events
are shared on the designated event page on the portal.
GRI 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY• Development of the R&D Center Project Management
Module: The most important value of Karsan R&D Centeris its commitment to ensuring that every work conductedwithin the center is both sustainable and traceable. For thisreason, ongoing endeavors are being made to ensure thatR&D projects can be tracked through online platforms. The
development of the screen will enable the implementationof in-house data mining processes, thereby facilitating theprotection of proprietary know-how.
• Participating in consortiums in line with European Union
Projects: Karsan R&D Center has made positive strides inapplying for international funds in 2023. The progress in thisparticular domain has been expedited by the engagementof İrem Göymen, the International Projects Coordinatorof Uludağ University. In line with the R&D Center 2027
strategies, EU project work has accelerated in 2023.
As of 2023, a total of 13 meetings were conducted withvarious companies during 2 B2B consortium establishment
events, and the strategic consistency of 4 Horizon Europe
Projects with the Company was assessed. As a result of
these assessments, applications were submitted for one
Innovation Action call and one Research and Innovation
Action call. To bolster the Company’s success in EU projects,
training programs on Horizon Europe Proposal Building
and Financial Reporting were received, and studies on
dissemination within the R&D Center were initiated. To
enhance the Company’s engagement in Horizon Europe
projects, extensive research was conducted to identify
relevant networks, followed by the organization of meetings
with their respective leaders. Based on the findings ofthe research and budget analyses, the decision wasmade to join the ERTICO network, as it aligns well with theCompany’s strategic objectives. Subsequently, the initiationof the membership procedure was undertaken. In addition
to the projects currently applied for, call research andconsortium studies continue.

• Development of high value-added products for various
markets (particularly the US market): The successful
completion of R&D Center projects in 2022 enabled us
to penetrate the American market and produce vehicles
that were well-suited for this market. Strategic studies
and innovative product development efforts continue topenetrate new markets.
Medium Term (3-5 years) R&D / Design Strategies• Shaping R&D projects through collaboration with several
sectors: Karsan R&D Center is an organization that
actively collaborates with strategic partners to drive thedevelopment of technology sectorally. The most important
collaboration agreement was made with ASELSAN in 2022.
In addition, industrial collaborations have been incorporated
within the respective section of the portal.
• Publication of national/international papers or posters:
The employees of Karsan R&D Center actively engage in
events to effectively communicate the innovative products
they have developed and the transformative impact theseproducts have had on the existing technological landscape.
In this context, the events attended and declarations madehave been appropriately recorded and included in therelevant section of the portal.
• Submission of at least 7 Intellectual Industrial Property
Rights applications: Karsan R&D Center maintains its
efforts in terms of Intellectual Industrial Property Rights.
• Development of the ERP Resource Management Module tobe used in the R&D Center: A screen design was developed
where resource controls can be executed via ERP. Liveusage tests of this screen are ongoing.

• Development of projects that will receive support from
European Union Funds (Executive or Business Package)• Publication of articles in national or international journals:
Long Term (5 years and beyond) R&D / Design Strategies• Developing autonomous, lightweight and environmentallyfriendly technology competencies in-house: Work
continues.
• Application for international fund programs: 2 applications
have been submitted. Call investigations continue.
• Providing articles for international publications• Becoming a market-leading company in the field ofelectric and fuel cell vehicles by developing pioneering
projects followed by the industry on international
platforms• Establishment of the R&D Training Center: Negotiations
have been made with TÜBİTAK while preparations forthe application to the 1515 program are in progress.
Additionally, submitting applications to Erasmus+ programs
are targeted.

56
GRI 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

R&D Directorate
Karsan, an industry leader with more than five decades of experience attributed to its skilled and expert employees in their respective fields, is expanding both its workforce and the number ofinnovative projects it develops. Karsan R&D Center, which continued its project operations with 60 researchers in 2020, increased this number to 100 researchers in 2021, and the number of
employees reached 160 people in 2022. The automotive exhibition in Hannover, Germany, in 2022 witnessed the introduction of the e-ATA HYDROGEN (Fuelcell) vehicle by the R&D Center, whose
portfolio of qualified projects and product developments has grown in parallel with its workforce. Furthermore, our e-ATA vehicle was entitled to receive the Sustainable Bus Award in 2022.

E&E Systems

Systems Engineering

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESSYSTEMSENGINEERING

E&E
SYSTEMSE&E SYSTEMDESIGNEDS AND E&E
DESIGN

BODY
ENGINEERING

TRIM
ENGINEERINGCHASSIS SYSTEMSENGINEERING

POWER AND THERMALSYSTEMS ENG.

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

E&E System and EDS and E&E Designs are integral parts of Karsan’s R&D directorate,
responsible for the design of in-vehicle systems. The software-related operations in ourvehicles, batteries, battery charging, and other auxiliary units, as well as parts and processes
such as PDUs and converters, fall under the purview of the E&E System Designs unit.
The EDS and E&E Designs unit holds responsibility for conducting studies on electricalinstallations used in vehicle architecture as well as designing and implementing theseelectrical installations. The Research and Development Directorate at Karsan oversees thecoordination of all activities conducted by these units.

The Systems Engineering unit within our R&D directorate comprises Body, Trim, Chassis
Systems, and Power and Thermal Systems Engineering sections. Body Engineering uses virtual
analysis to test and improve the vehicle frame as they develop the BIW paintless design. TrimEngineering specializes in the engineering and design of both plastic and metal components forvarious areas of a vehicle, including interior and exterior parts. These components encompass awide range of structures, such as seats, grab rails, buttons, windows, exterior covers, and sidepanels. Chassis Systems Engineering focuses on the design, development, and optimization ofvarious components within a vehicle, including but not limited to brakes, steering systems, tires,
axles, and air lines. The Power and Thermal Systems Engineering unit focuses mainly on thedevelopment of vehicle air conditioning, heating, cooling, ventilation, and fire extinguishingsystems. At Karsan, the collective efforts of these sections ensure the production of vehicles
that adhere to the highest quality standards and incorporate cutting-edge technology.

57
GRI 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

Product and Project Engineering

Product Cost Engineering

PRODUCT AND PROJECT ENGINEERINGABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXVEHICLEENGINEERINGAND HMLG

R&D INCENTIVESAND GEOMETRICINTEGRATIONATA PRODUCTPROJECTSHTA PRODUCTPROJECTSNEW PRODUCTPROJECTS

Karsan R&D directorate comprises important sections, including Product and Project
Engineering, Vehicle Engineering and HMLG, R&D incentive and geometric integration, Ata
product projects, HTA product projects, and New product projects.
Our Vehicle Engineering and HMLG unit is accountable for conducting all inspections
throughout the vehicle’s transition from the prototype stage to the mass production stage.
Verifying that the designs created by the designers adhere to the pertinent regulations is
the responsibility of the R&D Incentives and Geometric Integration Unit. This unit additionallyensures the precise and comprehensive documentation of R&D Center activities for theministry and ensures successful audits.
The scope of Ata product projects encompasses comprehensive studies on the development oflong commercial vehicles as well as providing assistance for tenders and new product projects.
Through these projects, encompassing the development of new products, Karsan’s productrange is expanding. These sections consistently and precisely perform their tasks within theframework of Karsan R&D directorate.

Performing
comprehensive costcalculation for thevehicles developed
subsequent to the R&D’s
studiesPRODUCT COST

Providing support ENGINEERING Implementing costto units in thesaving initiatives
execution of costthroughout the
reduction strategies
course of projectfor project-related
development
tasks
studies

Karsan Product Cost Engineering unit performs cost calculations for vehicles developed
subsequent to the R&D Center studies, generates cost reduction solutions during projectstudies, and executes cost-reduction activities. The primary responsibilities of the Product CostEngineering unit include:• Performing comprehensive cost calculation for the vehicles developed subsequent to the
R&D’s studies• Implementing cost-saving initiatives throughout the course of project development studies• Providing support to units in the execution of cost-reduction strategies for project-relatedtasks

GRI CONTENT INDEXDIRECTORY58
GRI 417-1

R&D AND INNOVATIONKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Industrial Design
Our Industrial Design unit actively engages in theconceptualization and advancement of new products andideas. This unit emphasizes not only the aesthetic design but
also the enhancement of the product’s functionality. Karsan’s
objective is to establish a strategic competitive landscapeby producing products that possess a significant level ofvalue addition while maintaining a low cost. Furthermore, anadditional goal we aim to achieve is establishing a strong
brand identity through the implementation of innovative
approaches and fostering a cohesive design language across
our product portfolio.
The industrial design process encompasses several key
stages, including a project brief, thorough analysis, generationof creative themes and ideas, assessment of producibility,
development of a design concept, creation of presentations,obtaining approval or rendering, and ultimately moving
into the production stage. This process is executed using acomprehensive approach that encompasses every stageof our products, from design to production. Karsan plays aprominent role in the development of high-quality functional
products.

Lean Production Projects
Karsan Lean Production unit achieved successful
implementation of a range of strategic and transformative
projects in the year 2022. The objective of these projects is toenhance Karsan’s existing operations and enhance its future
capacity and efficiency. These projects represent significant
milestones in Karsan’s ongoing journey of development andimprovement. They serve as fundamental elements that will
enhance the Company’s future performance and efficiency.

The Six Sigma project is a methodology designed to minimize
process variations and enhance production quality. The
objective of this project is to enhance Karsan’s proficiency
in comprehending and implementing advanced tools andtechniques. This study focused on three projects, one of which
was successfully accomplished.
The SMED (Single Minute Exchange of Die) is a methodology
employed by organizations to enhance the efficiency andflexibility of their production processes. The objective of thisKarsan project is to enhance knowledge of advanced vehicle
technologies, and it has been successfully accomplished,meeting all predetermined targets.
The primary objective of the 5-year CD (Continuous
Development) project is to proactively mitigate potential future
losses. This project entails the establishment of a long-term
strategy within the framework of environment, energy, andengineering (ENV/ENG). It also involves the implementation of
the projects determined during this process.
The OEE (Overall Equipment Effectiveness) System is an
employed methodology for assessing the operational efficiency
of a production line. The objective of this Karsan project is toimprove the measurement system and minimize inefficiencies
in the machines.

Karsan’s objective is to establish a
strategic competitive landscape by
producing products that possess asignificant level of value addition while
maintaining a low cost.

The objective of the Major Kaizen Certification Project is tofacilitate the ongoing enhancement of processes and systems
by bolstering the problem-solving capabilities of employees.
This project aimed to enhance operational efficiency byfostering problem-solving skills, leading to a reduction in losses.

59
GRI 417-1

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Based on the findings of the Global Risks Report released by
the World Economic Forum, the foremost environmental risks
identified in the impact ranking of global risks are “Climate
action failure,” “loss of biodiversity and ecosystem,” “humandamage to the environment,” and “extreme weather events.”
The Turkish Grand National Assembly has officially approved
the Paris Climate Agreement in 2021. This international
agreement, which became effective in 2016, sets the objectiveof limiting the global temperature increase to below 1.5°C.
The European Green Deal has established a climate neutrality
target for the market that encompasses approximately halfof Turkey’s exports by 2050. In response, various initiatives
have been undertaken to formulate strategies and revise legal
frameworks in various areas including industry, infrastructure,
agriculture, digitalization, and finance. This situation gives rise
to a period of global reorganization and transformation.
The goal of mitigating greenhouse gas emissions generated
by transportation activities and achieving carbon neutrality,
as outlined in the Paris Climate Agreement, is widely
recognized as an essential step in identifying and managing

environmental risks associated with the automotive sector’soperations. The factors encompassed in this context involvethe impact of international regulations on the industry,
the transition to electric and alternative fuel vehicles,
and the development of corresponding infrastructure
for these vehicles. At Karsan, our production operations
are conducted in accordance with a comprehensive
system that incorporates the best practices. This systemenables businesses to systematically carry out theiroperations in alignment with the principles of the WorldClass Manufacturing (WCM) Environmental Pillar, ISO 14001
Environmental Management System, and ISO 50001 Energy
Management System certifications.
The WCM Environmental Pillar covers the efficient utilizationof resources, including water, energy, and raw materials,
throughout the production process. It also emphasizes the
avoidance of hazardous raw materials and the reductionof waste generation and pollution levels. At Karsan, weare committed to continuously improving our production
processes to minimize environmental impacts. We take

A comprehensive system thatincorporates the best practices
system enables businesses tosystematically carry out theiroperations in alignment withthe principles of the World Class
Manufacturing (WCM) Environmental
Pillar, ISO 14001 Environmental
Management System, and ISO
50001 Energy Management System
certifications.

60
GRI 2-25, 3-3, 203-1, 301-1, 301-2, 301-3

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

proactive measures to mitigate potential risks and ensure thesustainability of our operations in alignment with these pillars.
Karsan established the Environmental Management System
in 2004, in accordance with the ISO 14001 standard. We
continuously monitor environmental risks and impacts,
while adhering to sustainability principles. At Karsan, audits
pertaining to environmental and energy management are
categorized into two distinct types: internal audits andexternal audits. The evaluation of external audits conductedby the Ministry of Environment, Urbanization, and Climate
Change is based on the legislative framework in place. The
audits for ISO 14001 and ISO 50001 are conducted on anannual basis.

Karsan utilizes a range of standards and methodologies thatserve as the foundation for our environmental and energy
management efforts. The oversight of these activities iscarried out by the Environmental and Energy Engineer,
who reports to both the Deputy General Manager and theEnvironment, Health, and Occupational Safety Management.
Monthly reports are prepared to provide support to all
departments in their efforts to achieve their environmental
and energy management goals.
Karsan spent a total of TL 1,929,475 in 2022 on enhancing
our environmental management system and reducing
environmental impacts. These expenses include wastewater
treatment, wastewater analysis, waste disposal,
environmental management systems, and other related

expenditures. Karsan consistently strives to enhance its
environmental and energy management practices byfocusing on various key areas, including the utilizationof environmentally friendly supplies, efficient waste
management and recycling systems, as well as the reductionof vehicle emissions and enhancement of fuel efficiency.
Karsan Sustainability Performance and Assessments
Karsan submitted an application for the CDP in July 2022,
which resulted in the receipt of a C score on the global
average. Simultaneously, a B score was achieved in the
Supplier Engagement Rating (SER) and was assessed at the“management” level.
According to the Sustainability Index conducted by the
Fortune 500, Karsan has received a sustainability score of “B”.
The Borsa Istanbul Sustainability Index (BIST) data has
been updated in September 2022 to include the activities
conducted by Karsan during the year 2021. The update
resulted in a noticeable increase in the score, reaching 62.14
points, when compared to the previous year. These results
demonstrate Karsan’s significant achievements in terms ofsustainability and its ongoing commitment to furthering its
development efforts.

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY61

The Borsa Istanbul Sustainability Index (BIST)
data has been updated in September 2022.
The update resulted in a noticeable increasein the score, reaching 62.14 points, whencompared to the previous year.

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

Energy Management
The structural regulations implemented in order to achieve
the “goal of becoming a carbon-neutral continent in 2050”
specified in the European Green Deal are of great interest
to Turkish companies, such as Karsan, which realize 80%
of exports to EU countries in the automotive industry. The
continuity of exports in the automotive industry necessitates
the implementation of transformation and regulations in the
EU market, as well as the improvement of product standards
and the adoption of the circular economy model. Karsan
complies with energy management standards in pursuitof a 90% reduction in transportation-related greenhousegas emissions by 2050, which aligns with the European
Commission’s goal of achieving a carbon-neutral EU by 2050.

Karsan is committed to upholding the principles outlined in
Karsan Energy Policy. This commitment includes a steadfast
effort to consistently decrease energy intensity, employ
energy-efficient practices throughout the product designand supply stages, and promote the utilization of renewableenergy resources. Karsan is focused on achieving its
energy targets and ensuring economic and environmental
sustainability, as well as continuity in foreign trade, by
fully complying with energy legislation. In order to achieve
this objective, Karsan implemented the ISO 50001 Energy
Management System in March 2021 and has conductedongoing efforts to maintain compliance with the requirements
outlined in the document. Energy activities have been carriedout systematically since 2021. At Karsan, we utilize a range oftools, including the SCADA Monitoring System, to effectively
monitor and manage our energy and environmental activities.

Energy Consumption
Energy Consumption (GJ)

2020

2021

2022

Direct Energy Consumption (Gj) - Natural Gas

38,106

27,46751,044

Indirect Energy Consumption (Gj) Electricity

31,79832,05044,4642022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYIn 2022, Karsan directed its attention towards addressing
energy losses through the implementation of the SCADA
Monitoring System and a range of energy management
systems, and a total of 836 MWh/year of electricity savings
were successfully attained. This resulted in an overall energy
improvement of 3%. Furthermore, Karsan’s energy consumption
per production, which stood at 17.4 GJ per unit in 2021,
experienced a decrease of 9% and reached 15.8 GJ per unit.
The causes of energy losses are identified and analyzed
within the framework of Karsan’s energy management systemthrough the utilization of the World Class Manufacturing(WCM) system, and all employees promptly document energy
losses in the system. Furthermore, it was determined thatthe operations conducted by Karsan within the paint shop
unit contributed to energy loss. Subsequently, solutions weredeveloped to address the identified energy loss sources.

In 2022, Karsan directed its attention
towards addressing energy losses
through the implementation of the
SCADA Monitoring System anda range of energy management
systems, and a total of 836 MWh/year of electricity savings weresuccessfully attained.

Studies on renewable energy technologies, which
commenced in 2021, were expedited in 2022 with the additionof feasibility studies.

62
GRI 2-23, 2-24, 2-25, 302-1, 302-2, 302-3, 302-4, 302-5

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXEmission

Greenhouse Gas Emissions

In order to mitigate transportation-related greenhouse gas
emissions, the European Green Deal has commenced theenforcement of air pollutant emission regulations for vehicles
that utilize internal combustion engines. In accordancewith these criteria, the objective is to attain a state of zero
emissions for cars, buses, lorries, and trucks across Europe by
the year 2050. To adhere to international emission regulations,Karsan has implemented a range of rules and improvements
in energy and emission management, as well as production
processes.

Greenhouse Gas Emissions (tons CO2e)

2020

2021

2022

Scope 1

1,815

1,454

3,013

Scope 2

3,772

4,015

5,870

TOTAL (Scope 1+ Scope 2)

5,587

5,469

8,884

Category 3

890

25.13

210.62Air Emissions (kg)

2020

2021

2022

SOx (kg/h)

42.27

54.72

47

NOx (kg/h)

4,873

4,628.64

3,427

Particulate Matter (kg/h)

2.55

3.30

2.53

The “Milkrun Project” is a route arrangement study thataims to mitigate vehicle emissions (Scope 3 emissions)associated with transportation routes by the consolidationand standardization of supplier routes. Karsan’s objective is
to increase the proportion of domestic suppliers in order tomitigate carbon emissions associated with the supply chain.
In this project conducted by Karsan, the supplier vehicles
are designed to visit many suppliers in a sequential manneralong a predetermined path, as opposed to engaging inround-trip transportation alone between the main factory
and the suppliers. Upon leaving the empty crates and loading
the required materials into the vehicle, they return to themain factory. By employing this approach, the optimizationof routes is accomplished, leading to a reduction inenvironmental impacts.
Karsan’s objective with this project is to augment the numberof suppliers in 2022 while concurrently reducing carbon
emissions by 1%, commencing in 2023. Detailed studies are in
progress.

Air Emissions

The attainment of these goals is regarded as a manifestationof Karsan’s commitment to mitigating its environmental
impact in order to foster a sustainable future.
Karsan aims to enhance the B/C ratio while minimizing
energy-related carbon emissions (Scope 1 - Scope 2)
through the implementation of the internal carbon pricing
initiative within energy projects. The project is scheduled
to be completed in 2023. As of 2022, Karsan undergoes
verification of its Corporate Carbon Emissions by third-party
organizations.

DIRECTORY63
GRI 2-25, 305-1, 305-2, 305-3, 305-4, 305-5, 305-6, 305-7

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Karsan has adopted the 5R principle,
encompassing waste removal at
the source, waste reduction, reuse,recycling, and energy recovery.

Biodiversity

Waste Management

During the execution of emission activities within Karsan,
measures are implemented to ensure the ongoing protectionof biodiversity and ecosystem services. Our activity areas are
situated within the confines of the OIZ, an area characterized
by the absence of natural life or ecosystem services anda notable lack of biological diversity. Our Akçalar activity
area is situated at a distance of 5 kilometers from Uluabat
Lake, which is a eutrophic lake (with high nutrient content)
in terms of biological production. Additionally, Uluabat Lakeis protected under the International Convention on theProtection of Wetlands, RAMSAR.

Karsan has adopted the 5R principle, encompassing waste
removal at the source, waste reduction, reuse, recycling,and energy recovery. The implementation of the Zero Waste
Management Principle serves as an additional solution
aimed at mitigating the generation of waste subsequent to
the production process. In accordance with this principle,
the implementation of waste removal at the source, waste
reduction, reuse, recycling, and utilization of energy recovery
methods is undertaken with the objective of ensuring that theamount of hazardous and non-hazardous waste reaches zero.

In this particular context, efforts are being made to ensure thepreservation of the lake ecosystem, as well as the natural lifeand biodiversity, in compliance with the Environmental Impact
Assessment (EIA) Regulation during the execution of any new
projects and activities. In the development of strategies for
the Uluabat Lake’s biodiversity, particular attention is paid
to the protection of biodiversity and ecosystem services.
In this context, the measures implemented to ensure thesustainability of biodiversity and natural life are regarded aspart of Karsan’s commitment to sustainability.

Waste that is generated throughout the production stage
and in office environments can be categorized into threemain types: hazardous waste, recyclable waste, and nonhazardous domestic and industrial waste. Hazardous wastes aresegregated, collected, and utilized within energy recovery andreuse processes.
Whereas 100% of the recycling waste generated is recycled,
non-hazardous domestic and industrial waste is utilized
within the scope of energy recovery. In addition to its waste
management policy, Karsan also adheres to its Environment
and Climate Change Policy commitments in its actions within
the framework of waste management.
The organization’s waste management operations support
commitments outlined in paragraph “k” of the Environment
and Climate Change Policy, which include “reducing material
consumption and increasing the use of various materials.”
Karsan ensures that waste is minimized and disposed ofby employing the most environmentally friendly methods
possible through the implementation of articles such as“considering the value chain approach and establishing
applicable waste management procedures” in paragraph 1 of
the Environment and Climate Change Policy. Engaging the
Circular Economy framework in planning enables reducing

64
GRI 2-25, 304-1, 304-2, 304-3, 304-4, 306-2, 306-3, 306-4, 306-5

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
65material consumption and increasing the utilization of recycled,
recovered, recoverable materials, and materials with reduced
environmental impact. This approach has been integrated
with Karsan’s waste management policy under the principle of“Responsible Material Use”.
The battery collection campaign that was executed in 2022
yielded a substantial environmental impact with the collectionof 1,352 batteries. 5,400 m2 of soil pollution, 670,000,000 liters ofwater pollution, and 135 tons of fish deaths were prevented.
Karsan organized an interdepartmental waste league, which
involved a competition encompassing over 50 different types
of waste. This initiative provided practical training and raised
awareness about waste recognition among participants.
Within the framework of the “Value Chain” approach, waste
management is based on waste that is minimized, separated
at the source, and highly recycled. As part of this approach,water-based chemicals have been deployed instead of VOCbased chemicals, and improvements have been made to theapparatus utilized for chemical filling and handling. As a resultof these arrangements, the total amount of hazardous waste
per vehicle was reduced by 1.6 kg/vehicle.
Karsan has successfully achieved a significant reduction in
waste per vehicle, reducing it from 381.3 kg/unit to 230.37 kg/
unit, which represents a 40% reduction. The waste management
activities of Karsan are closely monitored through Karsan
Ecology Report as well as Karsan Non-Hazardous Waste andHazardous Waste Disposal Reports. These monitoring activities
are conducted through internal communication channels. n
encompassing over 50 different types of waste. This initiative
provided practical training and raised awareness about waste
recognition among participants. Within the framework of the“Value Chain” approach, waste management is based on wastethat is minimized, separated at the source, and highly recycled.
As part of this approach, water-based chemicals have been
deployed instead of VOC-based chemicals, and improvements
have been made to the apparatus utilized for chemical fillingand handling. As a result of these arrangements, the total

Waste Components
WASTE COMPONENTS (tons)

2020
Amountof Waste
Generated

2021

2022

Waste Diverted Amountfor Recovery/of Waste
Recycling
Generated

Waste Diverted Amountfor Recovery/of Waste
Recycling
Generated

Waste Diverted
for Recovery/
RecyclingPaper

222.45222.45268.25268.25181.98181.98

Plastics

102.65102.65125.36125.36

59.12

59.12

Glass

0

0

0

0

0

0

Metal

311.46311.46376.477

376.477

237.32237.32

Industrial Sewage Sludge

18.04

18.04

7

7

4.76

4.76

Domestic Sewage Sludge

0

0

0

0

0

0

Other (hazardous)

143.808

143.808126.27126.27360.382360.382

Other

405.49405.49408.95408.95

549.5

549.5

(non-hazardous)

405.49405.49408.95408.95

549.5

549.5

1,203.924

1,203.924

1,319.593

1,319.593

1,393.062

1,393.062

TOTAL

amount of hazardous waste per vehicle was reduced by 1.6 kg/
vehicle.
Karsan has successfully achieved a significant reduction in
waste per vehicle, reducing it from 381.3 kg/unit to 230.37 kg/
unit, which represents a 40% reduction. The waste management
activities of Karsan are closely monitored through Karsan
Ecology Report as well as Karsan Non-Hazardous Waste andHazardous Waste Disposal Reports. These monitoring activities
are conducted through internal communication channels.
The annual reporting of waste management efforts is
conducted for the Ministry of Environment, Urbanization,
and Climate Change. The Ministry is also notified of wastes
falling under the special waste category, including End-of-Life
Vehicles (ELV), Medical Waste, and Waste Oil. The quantities
of both hazardous and non-hazardous waste are reported to
the Ministry via shared folders that are made available to all
employees.

The monthly quantities of water and wastewater consumed
per vehicle, energy, hazardous waste, and recyclable waste
per vehicle are reported on a unit basis. These reports arereadily accessible to all employees through the Environment,
Occupational Health and Safety, and Energy dashboards.

GRI 2-25, 306-2, 306-3, 306-4, 306-5

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

Karsan implemented packaging improvement
projects to ensure that the products procured
from suppliers in cardboard boxes were
replaced with recyclable containers.

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Karsan possesses various certifications and approvals within thescope of waste management. These include the ISO 14001:2015
Environmental Management System, the Industrial Waste
Management Plan Approval, and the Zero Waste Certificate
issued by the Bursa Provincial Directorate of Environment,
Urbanization, and Climate Change. A “Dangerous Goods Activity
Certificate” was obtained due to the utilization of hazardous
substances. Furthermore, compliance with the legislation was
successfully achieved through the acquisition of a “Dangerous
Substance Activity Certificate” at the HOSAB2 Factory in 2021.

Waste Diverted to Disposal
LETTER FROM THE CEO

WASTE DIVERTED TO DISPOSAL (TONS)

2020

2021

2022

Hazardous Waste
AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIX

Incineration (with energy recovery)

105.7679.71

276.75

Sanitary Landfill

0.005

0.041

0.02

105.765

79.751276.77

Incineration (with energy recovery)

143.24140.7

162.06Total

143.24140.7

162.06

2020

2021

2022

Recycling

18.27230.21239.853

Other recovery operations

3.758

23.46748.679

Total

22.03

53.67988.532

Recycling

904.836

1,034.31

865.7

Total

904.836

1,034.31

865.7

Total
Non-hazardous Waste

Waste not Disposed of Through the Recovery Process
WASTE NOT DISPOSED OF THROUGH THE RECOVERYPROCESS (TONS)

Packaging Improvement ProjectKarsan implemented packaging development initiatives
commencing in 2021 and continuing through 2022 to ensurethat the products procured from suppliers in cardboard boxes
were replaced with recyclable containers.
The successful transition of materials utilized in the Jestline, including the driver’s seat, disabled ramp, and sunroof,
from cardboard boxes to recyclable containers has beenaccomplished. This saved 580 kilograms of cardboard on anannual basis.
At Karsan, the ongoing process of eliminating cardboard
boxes is being implemented in the ceiling parts of the OSB
TTF line, resulting in an annual saving of 420 kg of cardboard.
This practice is regarded as a significant step in the pursuit ofwaste reduction aligned with sustainability principles, thereby
protecting natural resources. Furthermore, the implementationof supplier changes, particularly on the Ankara-Sakarya
and Adana-Bursa routes, resulted in an annual reductionof 86,000 km. Due to these savings, there has been asubstantial reduction in the emissions of greenhouse gases.
These changes facilitated the implementation of solid steps
aimed at mitigating greenhouse gas emissions, aligning with
Karsan’s environmentally friendly policies while positively
demonstrating Karsan’s commitment to environmental
responsibility.

Hazardous Waste
GRI CONTENT INDEXDIRECTORY66

Non-hazardous Waste

GRI 2-25, 306-2, 306-3, 306-4, 306-5

CLIMATE CHANGE AND ENVIRONMENT

had substantially decreased its water consumption, to 8.47
m3 of water per production. This represents a 32% decrease
compared to the previous year and is an important step
towards sustainable production. By virtue of Karsan’s water
consumption reduction strategies and environmentallyfriendly policies, it is observed that these developments create
a positive environmental impact. These strategies not only
enhance the operational efficacy of Karsan but also make aglobal contribution towards the protection of water resources.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

The utilization of the Reverse Osmosis technique, an innovativetechnology, is employed within the water production facilities
of Karsan. In this regard, the production lines are supplied withconsistent and desired-quality water, and instant disruptions,as well as the use of waste water and cleaning chemicals, areprevented. The water used in the paint shop was monitored by
the analysis of the laboratory unit and a saving of 1.56 m3 pervehicle was achieved.

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Water Management

OUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

The utilization of the Reverse
Osmosis technique, an innovativetechnology, is employed within thewater production facilities of Karsan.
In this regard, the production lines aresupplied with consistent and desiredquality water, and instant disruptions,as well as the use of waste water andcleaning chemicals, are prevented.

Water resources are under significant strain due to extreme
weather events, damage to ecosystem services, and theincrease in global temperature. Consequently, water has
emerged as a critical indicator of the climate crisis. The
World Water Development 2021 report of the United Nations
indicates that water consumption has increased by 15% overthe past century and by an average of 1% annually. Automotive
industry businesses are required to adopt a responsible water
management approach in their production processes.
Global developments in water resources and consumption
are closely monitored at Karsan, where water management
measures are implemented through a conscious and effective
approach. Our operations utilize water extracted from wells
located within our production facility. The volume of water
utilized per unit of production decreased by 1.2% from 12.7
m3/unit in 2020 to 12.55 m3/unit in 2021. By 2022, Karsan

Feasibility studies have started to reintegrate the low-utilizationquality water discharged from the Reverse Osmosis unit backinto the production process. Once the wastewater utilized in the
production process meets the predetermined threshold values
outlined in the applicable legal regulations, it is subsequently
discharged into the designated wastewater channels as
authorized by the requisite permits.
In accordance with Karsan’s environmental sustainability
goals, the goal of reducing the quantity of wastewater sludge
generated through wastewater treatment, as established in
2020, has been achieved with remarkable success. The quantityof wastewater sludge, previously measured at 0.77 kg per unitof wastewater in 2020, experienced a decrease to 0.46 kg/m3 in
2021, resulting in a reduction of 48.8%. As of 2022, a substantial
reduction of 76.9% has been accomplished. Consequently, there
was a reduction in the quantity of wastewater sludge from 0.46
kg/m3 in 2021 to 0.11 kg/m3 in 2022. This achievement serves asa tangible demonstration of Karsan’s commitment to achieving
its environmental sustainability goals.

67
GRI 2-25, 303-1, 303-2, 303-3, 303-4, 303-5

CLIMATE CHANGE AND ENVIRONMENTKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORT

These developments achieved by Karsan are the result of
its unwavering commitment to the constant improvement
and modernization of wastewater treatment processes
and technologies. These efforts constitute a significant
part of Karsan’s strategic approach towards mitigating its
environmental footprint, concurrently enhancing operational

efficiency, and promoting sustainable practices in waste
management. The implementation of sustainable solutions
serves to solidify Karsan’s commitment to minimizing its
environmental footprint while simultaneously enhancing its
operational efficiency.

Water Consumption and the Quantity of Waste Water Sludge Generated per Production
LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIX

2020

2021

2022

3

Water Consumption per Production (m /unit)

12.7

12.55

8.47

Wastewater Sludge (kg/m wastewater)

0.77

0.46

0.11

3

The results of weekly and monthly analyses of our waterproduction and waste water values, which are conductedwithin the scope of the SCADA environmental management
system, are made available to all employees. In this way,
we contribute to the goal of responsible production andconsumption of water.
A multitude of technologies and strategies are implemented
by Karsan to ensure a precise balance between water
withdrawal and discharge. In addition to its commitment toWater Withdrawal and Discharge by Source

Water withdrawal by source (m /unit)
3

Underground water (m )3

GRI CONTENT INDEX

responsible wastewater management and efficient water
resource utilization, Karsan has demonstrated progress
towards achieving its sustainability goals. The withdrawalof 109,765 m3 of water from groundwater indicates that
Karsan has access to the water resources required to sustain
its operations and production endeavors. Additionally, thedischarge of 44,986 m3 of water into the sewer reflects theimportance Karsan attaches to wastewater management andits commitment to environmental sustainability.

Total water withdrawal (m )
3

2020

2021

2022

12.7

12.55

8.47

36,91345,596

109,765

36,91345,596

109,765

15.70

16,99544,986

In addition to its commitment to
responsible wastewater management
and efficient water resource
utilization, Karsan has demonstrated
progress towards achieving its
sustainability goals.

Water discharge by source (m )3Discharge to the sewer (m3)
DIRECTORY68

GRI 303-1, 303-2, 303-3, 303-4, 303-5, 306-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESHuman Resources Practices

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Encouraging growth together
with employees and all otherstakeholders, Karsan adheresto the principle of a "HumanOriented Approach" throughout
its production and management
processes.

Karsan adheres to the principle of a "Human-Oriented
Approach" throughout its production and management
processes. Within the framework of Karsan Human Resources
Policy, endeavors are made to encourage growth together
with employees and all other stakeholders. To address bothpresent and future workforce needs, a range of methods
are employed, including competency-based interviews andtechnical interviews. Karsan successfully achieves its goalof creating employment opportunities that align with its corevalues and capabilities through the implementation of thesetechniques.
Our Human Resources Policy has been updated in 2021
to be compliant with the United Nations' conventions, theInternational Labor Organization's (ILO) published standards,
the Universal Declaration of Human Rights, and the prevailing

national legal framework. In order to sustain this compliance,
the incorporation of the phrase "continuous improvement ofpractices" indicates the implementation of a strategy that is
in line with sustainable human resources. By including two
additional articles concerning the prohibition of child laborand daily and weekly work hours, we achieved our goal ofsustainable human resource management. In relation to"Decent Work and Economic Growth," the eighth article of the
Sustainable Development Goals, our human resources policy
now stipulates adherence to the regulations pertaining to theprohibition of employment of individuals below the age of 18
and compliance with the daily and weekly working and rest
periods as outlined in the Collective Labor Agreement andLegal Legislation.
An additional exemplary aspect of Karsan's Human Resources
approach pertains to the provision of equal opportunities
for both male and female employees. In adherence to the69
GRI 2-30, 2-19, 2-20, 3-3, 401-1, 402-1

HUMAN RESOURCES

for the members of the pilot teams, and the work of 2 teams
started in September under the leadership of the agile coach.
While regularly scheduled meetings are held with the project
managers and the agile coach within the Company, theperformances of the pilot teams and the compliance of theagile transformation with Karsan culture are assessed. Later,in the third phase, the "Diffuse" phase, it is planned to realize
the cultural transformation by developing the dissemination
strategy and increasing the number of agile teams.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIES"Gender Equality" principle, the remuneration policy of Karsan
ensures that all employees, irrespective of gender, receive fair
remuneration.

GOVERNANCE

With the Positive Career process at Karsan, the rotationand promotion processes of factory employees within the
Company can be monitored transparently, and selections
are made by independent managers. This demonstrates that
our organization's structure is fair and equitable. The process
by which the organization conducts impact assessments
comprises three stages: target setting, interim assessment,
and year-end assessment. The impact of behavioral
competencies on performance is measured through theseassessments.

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY70

Human Resources matches employees with mentors in the
management team and mentees as part of the "Training
and Development Plans" they create on an individual basis
to meet their mentoring demands and needs. The training
and development processes of employees are under thecommitment of senior management within the scope of the
Human Resources policy.
Agile Working Program
At Karsan, an agile transformation journey is undertaken to
update the business methodology and simplify the processes.
With agile transformation, not only the business model but
also the organizational culture is updated and it is aimed tocreate a new generation methodology.
The agile transformation journey is defined in three phases
within the Company. In the first phase, “Discover”, Agile
Leadership training was provided to the management team.
Then, an organizational assessment survey was conducted,
and one-on-one interviews were held with the stakeholders,
thereby assessing the current status of the organization. In
the second phase, the "Start" phase, a transformation roadmap was created, critical roles were set, and 2 pilot teams
were established in this direction. Training was organized

When allocating tasks among team members, special
attention was paid to prevent individuals at the managementlevel from occupying strategic positions such as Project
Owner and Scrum Master. Additionally, colleagues in theexpert/engineer staff were assigned distinct responsibilities.
Senior management and stakeholders were briefed on work
outcomes, accomplishments, risks, and obstacles duringbiweekly review meetings; this fostered an atmosphere oftrust and promoted a culture of transparent communication,
which facilitated the dissemination of feedback.
Within the scope of dissemination, a successfully completed
project is actively conveyed to all employees in the factorythrough training. A total of 277 people were provided with 4
and 8 hours of training on the subject matter. Through thesetrainings, employees learned the basic principles of agiletransformation, teamwork, transparent communication, focus,
and efficiency and had the opportunity to apply them in their
daily business processes.
Karsan's agile transformation journey is a significant milestone
in implementing a business methodology and enhancing
the management of processes with greater flexibility andefficiency. This journey is an initiative aimed at enhancing theCompany's competitiveness, elevating customer satisfaction,and generating innovative solutions. The agile transformation
has facilitated enhanced collaboration and communication
GRI 2-19, 2-20, 3-3, 401-1, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

among employees, resulting in the establishment of a flexible
and effective work environment aimed at optimizing andenhancing processes.

takes into account our employees' experiences of working
from home or remotely during the pandemic period, with afocus on promoting work-life balance.

The agile transformation journey undertaken by Karsan serves
as the basis for the Company's future growth and development
strategies. Moreover, this transformation has instigated achange in culture that enhances employee motivation and job
satisfaction. The active involvement, support, and collaborationof all employees hold significant value in this process. Throughobservation of the impacts of agile transformation, Karsan
is committed to consistently enhancing its operations andsecuring a successful future for the organization.

Every three years, an employee satisfaction and commitment
survey is conducted in order to establish an environment inwhich our employees may improve themselves and set careergoals that are in line with the needs of the organization. The
previous survey was conducted in 2018, however due to thepandemic, it could not be conducted in 2021 and had to be
performed in 2022. A total of 632 employees took part in
the 2022 employee satisfaction survey. When the gender
distribution of participants was studied, it was discovered that64 female employees and 568 male employees participatedin our survey.

Employee Satisfaction
AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

The agile transformation journey
undertaken by Karsan serves as
the basis for the Company's future
growth and development strategies.
Moreover, this transformation has
instigated a change in culture thatenhances employee motivation andjob satisfaction.

At Karsan, our Positive Career process ensures transparent
monitoring of rotation and promotion processes for all
factory employees. This allows independent managers
to make fair elections within our organizational structure.
Impact assessments are conducted internally within ourorganization. These assessments encompass target setting,interim assessment, and year-end assessment stages. They
enable us to assess the impact of behavioral competencies on
performance.
In accordance with our "Training and Development Plans"
implemented on an individual basis for our employees,
Human Resources fulfills the mentoring requirements andneeds of our employees by carefully matching mentors
from our management team with mentees. The training
and development process for our employees falls under
the purview of senior management's commitment on the
Human Resources policy. Furthermore, our employees havethe privilege of utilizing the "Requests and Wishes" section
on Karsan Pozitif Portal, which is a confidential notification
system about working conditions. Human Resources hasdeveloped a flexible working/remote working procedure that

New Generation Performance System OKR
Karsan aims to implement OKR, a new generation
performance system that contributes to the Company's
primary goals, enables monitoring, and facilitates theestablishment of interrelated shared goals, by the year
2023. This system provides a level of transparency wherein
every employee has the opportunity to access and monitor
the performance metrics of both their colleagues and theorganization as a whole. The OKR framework undergoes
quarterly updates, taking into account company goals andpriorities, and is checked during the same time frame.
Within this framework, the establishment of KRs/KPIs(quantifiable numerical targets) focused on the main visionand departmental goals is set. Furthermore, this platform
fosters the development of individuals and processes,
promotes the adoption of a feedback culture, and facilitates
the digitization of one-on-one discussions. Achievements are
publicly acknowledged through a transparent method. This
performance assessment platform encourages the pursuit ofongoing improvement and fosters a culture of transparency.

71
GRI 2-7, 2-19, 2-20, 3-3, 401-1, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY72

Training and Development Activities
The implementation of effective training and development
programs by Karsan not only yields a clearly visible
enhancement in business performance but also makes asubstantial contribution to its success in achieving sustainability.
The enhancement of behavioral competency has had a positive
impact on business results. This facilitates the more efficientmanagement of business operations and enhances collaboration
as well as coordination within the Company.
Moreover, a clear correlation exists between social
sustainability and financial success. Karsan's practices andpersonal development training programs, with the objectiveof enhancing social dialogue, have resulted in a notable
improvement in employees' commitment and enthusiasm
towards their work. This contributes to increased efficiency
and innovation, hence positively affecting the financial
success of the Company. Due to this reason, a notable surge
in the organization's profits has been observed.
These efforts, which have been recognized through theattainment of prestigious awards, serve as evidence of
Karsan's leadership position within its industry, demonstrating
its ability to concurrently uphold social sustainability
and achieve financial success. This approach, which
simultaneously enhances the personal and professional
development of employees and augments financial
profitability, facilitates Karsan's attainment of permanent andsustainable success within its industry.
Internal and external trainings are planned in line with theneeds of our employees. In the year 2022, the distribution oftrainings conducted can be categorized as follows: 17% pertains
to technical training, 43% focuses on Occupational Health and
Safety, 17% is dedicated to Managerial/Personal Development,
6% is allocated for WCM Techniques, 10% is centered around
Environment/Energy Management Systems, 4% is dedicated to
Quality Management Systems, and finally, 3% is designated forInformation Security Management System.

Joint trainings are executed at Karsan with the intentionof fostering social dialogue. The integration of employees'
paradigms with Karsan Positive is accomplished via personal
development trainings, and in this way, it is aimed atachieving positive results.
Among the results obtained, there are Positive Career results,
and the satisfaction rate of internship processes is recorded.
Additionally, Karsan was deemed worthy of the 2021 StevieAwards Silver Winner within the scope of 'Female Leaders
Development' processes. At the same time, the ILO Social Dialogue
Best Implementing Company Award and the Educorp Awards
Corporate Training and Development Award were also granted.
Leadership Training Program at the Speed of Trust

As Karsan, we launched the "Leadership at the Speed of Trust"training program for our management team with the intentionof enhancing their awareness of trust and integrating it into
the corporate culture for all employees. In 2022, 93 of ourmanagers have completed this training program and they
continue to promote a culture of trust across the organization
An analysis of the feedback obtained from the training groups
revealed that 96.7% of our managers were satisfied with theprogram following completion. The efficacy and influence ofthe "Leadership at the Speed of Trust" training program aredemonstrated by this rate. Ensuring the ongoing provisionof these trainings in the upcoming periods is intended toreinforce the culture of trust in Karsan.

The phenomenon of trust, which increases the motivationof team members and ensures their engagement in allprocesses, also facilitates more efficient collaborations
and sustainable results. Teams and organizations that havea trust-based work culture perform significantly superior
performance compared to those that do not.
GRI 2-19, 2-20, 401-1, 402-1, 404-1, 404-2, 404-3, 410-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY

Human Rights and Gender Equality
Business Ethics Rules and Practices Procedure at Karsan
has been developed in accordance with International Labor
Organization Convention No.190. As stated by Karsan's Zero
Tolerance Policy and Human Resources Policy, all rights
outlined in the UN Universal Declaration of Human Rights
and ILO Conventions are recognized and all rights-bearing
elements, particularly employees, are encouraged to exercise
these rights. The "Human-Oriented Approach" principle
has been adopted at every stage of the production andmanagement processes.
In line with current and future workforce planning, techniquessuch as competency-based interviews, technical interviews,
foreign language exams, personality inventory and reference
checks have been used to accurately assess the skills,
abilities, and fit of each candidate, aligning our workforce
with our organizational needs. In this way, a merit-based
and human rights-respecting process was carried out inthe recruitment process. Ensuring gender and opportunity
equality and preventing any form of discrimination aretaken as a basis in all processes such as employment andpromotion, and merit-based employment is provided.
As per the principles outlined in the Human Resources
Policy, Business Ethics Rules and Implementation Principles,
employees are encouraged to report any incidents byfollowing the designated procedures, and all reported cases
are treated with utmost confidentiality, and prompt actions
are taken to address them appropriately.

Ensuring gender and opportunity
equality and preventing any form of
discrimination are taken as a basis
in all processes such as employment
and promotion, and merit-based
employment is provided.

In addition to addressing gender equality and discrimination
issues, Karsan policies also prioritize the considerationof fundamental human rights issues, including forced orcompulsory labor and child labor, when implementing
activities. As Karsan, we expect that suppliers will also exhibit
the same level of sensitivity towards these sorts of issues. The
enhancement of employees' awareness of human rights is
encouraged.

73
GRI 2-19, 2-20, 3-3, 401-1, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEIn accordance with the Company's established strategies andgoals, investments have been made in human resources tosupport continuous development practices. Employees havebeen provided with an optimal work atmosphere that fosters
personal growth and self-improvement. In this context, a totalof 656 hours was allocated to the delivery of Human Rights
Training sessions under the titles "I Support Equality," "ZeroTolerance to Violence," and "Gender Equality Trainer Training."
These training sessions were conducted across various
facilities located in Bursa, Kocaeli, Mersin, and Istanbul during
the year 2022.
At Karsan, in addition to the decent working conditions
provided in HR processes, the rights and freedoms of
employees, union membership, and collective bargaining

At Karsan, in addition to the decent working
conditions provided in HR processes, therights and freedoms of employees, union
membership, and collective bargaining rights
are respected, and the necessary conditions
are created for them to exercise their rights
and establish efficient communication with
unions organized in their workplaces.

Human Rights Training
2020
Human Rights Training

Bursaİstanbul,

2021
TOTAL

Bursa

İstanbul,

2022
TOTAL

Bursa

İstanbul,

Kocaeli,

Kocaeli,

Kocaeli,

MersinMersinMersinTOTAL

Number of Employees Attending Human Rights
Training
1-Zero Tolerance to Violence

APPENDIX

rights are respected, and the necessary conditions are
created for them to exercise their rights and establish efficient
communication with unions organized in their workplaces.
Employees' rights to organize and collective bargaining are
guaranteed by company policies as well as relevant legal
regulations. The working conditions of our employees who
are not covered by the collective bargaining agreement are
determined within the framework of Labor Law No. 4857,
employment contracts prepared in line with our company
policies, and the provisions of the Collective Labor Agreement(TİS) regarding social benefits. According to 2022 data, 75.32%
of the entire workforce was employed under a collective
agreement.

16

1

17

654

19

673

180

0

180

50

3

53

1,322

38

1,360

656

0

656

2-I Support Equality
3-Gender Equality - Training of Trainers

GRI CONTENT INDEX

Total Human Rights Training Hours Provided

DIRECTORY74
GRI 2-30, 2-19, 2-20, 3-3, 401-1, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARDAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
75

Effectiveness Performance Indicators havebeen created for each item of the "Karsan
Positive Equality Plan", which consists of 57
items in total.

Beneficiaries of the Full-Time Employee Benefits
BY Beneficiaries of the Employee Benefits

LETTER FROM THE CEO

context, as of the end of December 2022, 164 employees
benefited from the developed retirement system. Ensuring
the well-being and satisfaction of employees throughout
and following work procedures is deemed essential, and it isbelieved that this is the key to success.

Furthermore, considering the future of the employees, the BYGroup Contributed Private Pension System has been provided
to those who wish to benefit from it. In addition to thepremium paid by the employees included in this plan, Karsan
also makes a fixed amount of payment and the retirementsavings of the employees continue to be supported. In this

Men

Women

TOTAL

2020

2021

2022

2020

2021

2022

2020

2021

2022

Private Health Insurance

173

207

299

54

71

109

227

278

408

Private Life Insurance

0

0

0

0

0

0

0

0

0

Personal Accident Insurance

0

0

33

0

0

4

0

0

37

Private Pension Contribution

107

97

122

32

32

42

139

129

164

Total

280

304

421

86

103

151

366

407

572

Karsan acknowledges that gender equality provides thepotential to employ a broader talent pool, gain deeper insights
into consumers' needs, and enhance supply security andquality. The achievement of sustainable development andsocial welfare is widely recognized to be contingent upon
the empowerment of women. With this awareness, women's
empowerment in working life is supported and policies areshaped within this framework.

with the International Labor Organization (ILO) and Kıraça
Holding in 2019, continues to be implemented. In this context,
the United Nations (UN) Global Compact, the United Nations(UN) Global Compact Platform, was signed in November 2021.

Policies have been formulated to encompass commitments
towards diversity and equal opportunities, with consideration
given to the Gender Equality Policy, the Zero Tolerance forViolence Policy, and the UN Women's Empowerment Principles(WEPs). The "ILO Model for the Development of Gender Equality
in Companies", which was committed with the protocol signed• To provide a cultural change as a priority, to increase
women's employment with the cultural change, To prepare
improvement plans on issues such as equal voice, inclusive
employment, a work environment free from violence,
and work-family life balance, and to take actions in thisdirection.

The main objectives of the project:• In order to improve equality between men and women at
Karsan, it is intended,"Karsan Positive Equality Team", consisting of an equal numberof women and men working in company level management
and production, was established in order to determine theproject activities, ensure their continuity and monitor them.
The team prepared the business plan of the project in linewith the set targets, as a result of case analyses, employee
survey results, in-depth discussion sessions, and instances
acquired from current business world, and started the process
obtaining the approval of the top management. In order toimplement the planned activities and ensure the continuityof the actions taken, they meet monthly, evaluate the current
status through improvement plans, and determine new
actions if deemed necessary.

GRI 2-19, 2-20, 401-1, 401-2, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEX

continues.

Effectiveness Performance Indicators have been createdfor each item of the "Karsan Positive Equality Plan", which
consists of 57 items in total. The periods in which each item
will be monitored and reported, by which method and bywhom, are defined and activities are completed accordingly.

• Karsan became a signatory of the UN Global Compact
Platform.

In this context,

As a result of Karsan Positive Equality Plan project,• The "Cooperation Protocol in Vocational and Technical
Education" was formally established through the signingof an agreement between the Bursa Governorship and the
Bursa Provincial Directorate of National Education. As aresult of this collaboration, the "Karsan Electric Vehicles
Technology Laboratory" was established, serving as thepioneering facility in the country for providing students withtraining in electric vehicles.

• With the approval of senior management, the Human
Resources Policy was revised, the Gender Equality andZero Tolerance to Violence Policies were established andimplemented, and business processes were revised inaccordance with these changes.

• The first establishment of the "Women Leadership
Development Program" took place at Karsan.

• A collaboration agreement was established by the signingof a protocol with the Mor Salkım Women's Solidarity
Association.

• The Positive Career Process was redesigned andimplemented.
• The Zero Tolerance for Violence Procedure was establishedand subsequently implemented.
• The first female Production Manager of our Company,
which was established in 1966, was appointed.

• The TCE Internal Trainer Team was established at Karsan
with the purpose of providing training to newly recruitedcolleagues.

• With the launch of new projects in 2022, the first female
employees to work on our Company's production lines were
employed. A total of 35 female employees started working
for the production lines, and the employment process• Karsan has officially joined the Women's Empowerment
Principles (WEPs) as a signatory.

• In 2022, 92 female employees were employed and by theend of 2022, our female employee rate increased to 8%.
• In 2022, our rate of female managers has also increased
to 19%.
Established in 2019 by HR with the support of employees
representing various departments and positions, the "Karsan
Positive Equality Committee" continued to conduct genderequality studies across the organization and implement therequired strategies to increase women's employment by
2021. This was accomplished through the execution of 56
activities across five sub-working areas. The Positive Equality
Committee additionally executed the "Development Plan"
in 2021, with the objective of augmenting the workforce
of women by an average of 2% annually until 2026. The
Development Plan specified an annual average female
employment rate of 2%; this objective was accomplished, as
the female employment rate rose to 6.5% in 2021 and 8% in
2022.

Number of Employees by Years
Number of Employees by Years

Men

Women

TOTAL

2020

2021

2022

2020

2021

2022

2020

2021

2022

Domestic

1,001

992

1,709

58

70

151

1,059

1,062

1,860

Total

1,001

992

1,709

58

70

151

1,059

1,062

1,860

DIRECTORY76
GRI 2-7, 2-19, 2-20, 401-1, 402-1

HUMAN RESOURCESKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEX

Within the framework of Karsan Development Plan, changes
were made such as revising the interview questions forrecruitment purposes, introducing a flexible work arrangement
focusing on remote working hours and accommodating
special leave requests, incorporating gender-based reportingin the suggestion system, renaming the locker rooms as
dressing rooms, and refurbishing the breastfeeding room.
At the senior management level, the representation of female
managers stands at a rate of 11%. The female employment
rate in mid-level management positions stands at 23.7%.
10% of the recruitment made in 2022 consisted of female
employees.
Number of Mid-Level Managers
Number of Mid-Level Managers

2020

2021

2022

Women

13

14

14

Men

64

70

45

Karsan conducted the "Gender Equality Trainer Training," "I
Support Equality," and "Zero Tolerance for Violence" seminars,
which were originally scheduled for 2020, delivered to 180
employees in 2022. It is acknowledged that gender inequality
manifests itself in various dimensions, including terminationand promotion, and that compensation and salary policies are
one of them.
In this regard, Karsan conducts the Positive Career processwith Gender Equality and Human Resources Policies and the
Positive Career Procedure developed in order to ensure equalconsiderations in the promotion process and employment
practices. In remuneration and salary policies, the principle ofequal pay for equal work has been adopted. The determining
factor in the Company's salary and remuneration policies is
the work performed, and gender is not considered a factor inthese policies. In accordance with the Korn Ferry Hay Groupmethodology, our Company's compensation system has beencreated by adhering to the job family and level structure.
Although there is no dedicated audit for the remuneration
process, all our payroll processes are audited by Deloitte ona quarterly basis. PwC also conducts audits of the wage andpayroll procedures pertaining to our R&D employees.

By joining forces against gender inequality in the
Positive Equality journey, Mor Çatı Women's Shelter
Foundation products were purchased and contributed tothe empowerment of women. Furthermore, the drawing
competition titled "Labor Has No Gender" organized by Bursa
Organized Industrial Zone Industrialists' and Businessmen's
Association (BOSİAD), one of the important associations in
the city where Karsan's production facilities are located, andBursa Organized Industrial Zone (BOSB), was participated withthe drawings of the children of its employees.

Within the scope of Gender Equality and Zero Tolerance toViolence Policy, a cooperation protocol was signed by Karsan
with Mor Salkım Women's Solidarity Association and Solidarity
Center in order to increase women's employment andcontribute to the fight against domestic violence. The targets
within the protocol, which has a validity period of five years,
are as follows: providing support to employees and employees'
relatives by the association, directing women who receive
service from the association and requesting a job to Karsan's
Human Resources department, employees who are exposed
to domestic violence or witness violence, and benefit fromthe association's violence hotline free of charge. Within theframework of the cooperation protocol signed with Karsan and
Mor Salkım Women's Solidarity Association in 2021, employee
experiences for the 2021-2022 period were analyzed. Theseexperiences are examined by psychologists and legal experts
at the association's hotline and counseling center, which
operate 24/7. Based on these investigations, awareness raising
activities are carried out within Karsan.

The work carried out with the slogan of Positive Equality since2019 was deemed worthy of an award in 2021 by The StevieAwards, Silver Stevie Winner - Achievement in Leadership
Development for Women category and İş Portföy KOÇ-KAM
Women-Friendly Companies Index.

By joining forces against gender inequality
in the Positive Equality journey, Mor Çatı
Women's Shelter Foundation products
were purchased and contributed to theempowerment of women.

DIRECTORY77
GRI 2-19, 2-20, 401-1, 402-1

SUPPLIER RELATIONSKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORYIn 2022, the rate of local suppliers
remained constant at 68%, with acumulative count of 1,797 suppliers
being engaged.

Karsan draws its strength from its network of suppliers
and places significant emphasis on the significance ofcollaborating with local suppliers to foster a more sustainablevalue chain. In 2022, the rate of local suppliers remained
constant at 68%, with a cumulative count of 1,797 suppliers
being engaged. Out of the total number of suppliers, 1,219
are classified as local suppliers. A majority of the supplier
payments belong to local suppliers.

their adherence to various criteria. The evaluation process
encompassed the suppliers' adherence to environmental,
OHS, working conditions, quality, production, and logistics
standards. Additionally, their management practices,
methods, engineering capacity, competitiveness levels, andfinancial structures were assessed. The assessment also
encompassed its compatibility with several systems, notably
IATF 16949 and ISO 14001.

The audit of suppliers that Karsan collaborates with isdeemed crucial for ensuring a high-quality and safe
production chain. Suppliers from whom direct products areprocured are expected to adhere to specific production,
quality, management, and labor standards. The potential
suppliers underwent a preliminary inspection to determine

The packaging improvement projects that were initiated in
2021 and have been ongoing in 2022 demonstrate Karsan'scommitment to environmental consciousness. The primaryobjective of the projects is to reduce the utilization of
cardboard boxes in the packaging of materials procured
from suppliers, while promoting the adoption of recyclable
containers as an alternative.

78
GRI 2-25, 204-1, 308-1, 308-2, 414-1, 414-2

SUPPLIER RELATIONSKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY79

A major transformation has been implemented in the
packaging of a number of essential parts utilized in the Jest
product line. The utilization of recyclable containers has been
implemented in the packaging of various items, including
driver's seats, disabled ramps, and sunroofs, replacing theconventional use of cardboard boxes. As a result of thischange, a total of 580 kilograms of cardboard consumption
per year has been successfully prevented.
A similar change has been made in the packaging of ceilingparts in the OSB TTF line. Continuous efforts are being madeto minimize the utilization of cardboard boxes for the ceilingparts of this line. Consequently, these efforts have resulted ina yearly savings of 420 kg of cardboard.
The packaging improvement projects implemented by Karsan
have had a significant impact on various aspects of theCompany's operations, including material usage, supplierselection, and logistics operations. With the change of supplierfrom Ankara to Sakarya, the Bursa-Sakarya route started to befollowed instead of the Bursa-Ankara route. This change saved
50,000 km per year.
An additional instance that stands out is the supplier change
from Adana to Bursa. By making the transition from Douzhfiber
to Alpin, an additional 800 kilometers were covered on a weekly
basis, leading to annual fuel savings of 36,000 kilometers.
These initiatives are a part of Karsan's efforts to mitigate
its environmental impact and contribute significantly toachieving of sustainability goals.
Prior to commencing collaboration with a company, Karsan
obtained the completion of an evaluation form, which was
subsequently subjected to an audit through the supplierself-evaluation form. This method is used to query suppliers,
and the GADSL Declaration and Social responsibility form isrequired for the company to be registered in the system.

Forklift Elimination Project
The "Forklift Elimination Project" conducted by Karsan is a
study focused on process optimization with the objectiveof enhancing the effectiveness, safety, and productivity of
production lines. The objective of this project is to improve
worker safety and optimize operational efficiency throughminimizing forklift utilization. As of the year 2022, it can beobserved that the implementation of this project has achieved a
success rate of 100% on the Jest line, 99.9% on the Atak line, and
97% on the OSB TTF line.
Forklift Elimination Project: Annual Progress and Success Rates
Time Period Model Area

2020-22021-12021-22022-1

Jest
Assembly
Line
70%
90%
100%
100%

Expansion
Area
AtakAssembly
Line
50%
72%
99%
99.9%

Expansion
Area
OSB TTF
Assembly Line
90%
90%
90%
97%

By examining the table, it becomes more evident how theendeavor has expanded and evolved over the course of time.
As an illustration, the forklift elimination rates for the Jest andAtak lines were 70% and 50%, respectively, during the second
half of 2020. Throughout this time period, the TTF OSB TTF line
achieved this rate of 90%.
The first half of 2021 witnessed a notable surge in the rates offorklift elimination across these lines. The Jest line demonstrated
a significant reduction in forklift usage, with a rate of 90%
elimination. Similarly, the Atak line exhibited a substantial
decrease in forklift dependency, achieving a 72% reduction.
Furthermore, the OSB TTF line also achieved a noteworthy 90%
reduction in forklift usage. During the latter half of 2021, the rateof forklift elimination witnessed a significant rise, reaching 100%and 99% on the Jest line and Atak line, respectively. Within the
OSB TTF line, this rate exhibited a consistent pattern, persistingat a level of 90%. During the first half of 2022, the rates offorklift elimination almost reached their peak. The elimination of
forklifts was seen at a rate of 100% on the Jest line and 99.9% on
the Atak line. Furthermore, this rate experienced an increase to97% on the OSB TTF line.
These developments serve as a tangible illustration of Karsan's
process improvement efforts and its approach that prioritizes
the safety of its employees. The Forklift Elimination project has
been a critical step towards optimizing the balance between
occupational safety and operational efficiency. Karsan aims
to continue this project in the coming years and increase theforklift elimination rate in its entire lines to 100%.
HOSAB2 Dangerous Goods Activity Certificate
As per the Ministry of Transport's Regulation, the acquisitionof a "Dangerous Goods Activity Certificate" was mandatory
for the HOSAB2 Factory, which involved the utilization of
hazardous substances. Compliance with the legislation was
attained by the acquisition of this document.
Milkrun Dissemination Project
Our objective is to achieve a 1% reduction in carbon emissions
beyond 2023 through the expansion of suppliers involved in
the milkrun process in 2022, and detailed studies are ongoing.

The "Forklift Elimination Project" conductedby Karsan is a study focused on processoptimization with the objective of enhancing
the effectiveness, safety, and productivity of
production lines.
GRI 2-25, 204-1, 308-1, 308-2, 414-1, 414-2

CORPORATE SOCIAL RESPONSIBILITY

In addition to generating employment opportunities andeconomic value through its production processes, Karsan
actively supports social development and corporate
responsibility through various projects and donation activities
conducted in the regions where it operates. In the context of
this framework, a range of corporate responsibility projects
were carried out in the year 2022, aiming to add value tosociety, enhance stakeholder awareness, and strive for abetter world.

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Campaign for In-Kind Aid to War Victims
LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEX

A range of corporate responsibility
projects were carried out in the year
2022, aiming to add value to society,enhance stakeholder awareness, andstrive for a better world.

Karsan organized a campaign to provide aid in kind to war
victims who were compelled to abandon their homeland andhave experienced distressing separation from their families,
residences, and cherished recollections in the Ukraine-Russia
War, which broke out on 24 February 2022 and is currently
ongoing. With this campaign, which was initiated to address
the fundamental need of those affected by war, particularly
women and children, seeking shelter within our country, theitems outlined in the list of necessities were provided, and aid
was then distributed to those in need in collaboration with the
Bursa Red Crescent.
Blood Donation Campaign
As thousands of people perish annually due to inadequate
access to appropriate types of blood, Karsan Bursa employees
participated passionately in the 2022 Blood Donation
Campaign, which was organized in collaboration with the
Red Crescent Blood Donation Center, considering the factthat blood donation not only saves human lives but also
improves the donor's health. Each unit of blood donated wastransformed into a sapling as part of this donation campaign.

Women's Day Collaboration with Mor Salkım Women's
Solidarity Association
Karsan contributed to the empowerment of women andchildren on 8 March International Women's Day, by presenting
a donation to the Mor Salkım Women’s Solidarity Association
on behalf of each of its women employees, in opposition togender inequality and violence against women. Within thescope of this donation, a total of TL 23,400 was donated onbehalf of 117 women.
Activities to Raise Awareness Regarding Emergency Support
Lines
Within the framework of awareness activities, framedmagnets featuring information regarding the 24/7 freeemergency support line offered by the Mor Salkım Women's
Solidarity Association were distributed to approximately 1,500
of our employees. Informative posters were hung on ourcommunication boards. In addition, information regarding theEmergency Support Line of the Mor Salkım Women's Solidarity
Association was displayed on the homepage of Karsan
Positive Employee Portal.
We Pursued Charity in the Eker I Run
In the Bursa Eker I Run Race, which was held for the 9thtime in 2022, Karsan Running Team, who dedicated their
run to support children who will benefit from educational
assistance at the TEGV Bursa Education Unit, funded the
1-year education of 115 children with the donations received.
In these challenging times, the Running Team's endeavors toensure that primary school children have a joyful childhood
and are adequately equipped for the future support the social
integration of children.

DIRECTORY80
GRI 2-28, 3-3, 413-1, 413-2

KARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY81

APPENDIXPERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Social Performance
2020

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Number of Employees by Gender and Length of Service

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Number of Employees by Gender and Age

GOVERNANCE

Recently Recruited Employees by Gender and Age

Women

Men

Women

Men

0-5 Years

27

253

44

237

121

878

5-10 Years

23

326

15

323

17

367

10 Years and Above

8

422

11

432

13

464

Total (Gender-Based)

58

1,001

70

992

151

1,709

1,059

Resigned Employees by Gender and Age

DIRECTORY
82

Number of Managers by Gender and Age

1,860

0

0

3

78

4

111

30-50 Years Old

0

0

46

811

82

1,021

Under 30 Years Old

0

0

21

103

65

577

0

1,062

1,860

Over 50 Years Old

0

0

0

3

1

31

30-50 Years Old

2

12

13

25

37

236

Under 30 Years Old

2

9

17

45

53

526

25

103

884

Over 50 Years Old

1

5

0

5

1

22

30-50 Years Old

3

14

0

5

9

78

Under 30 Years Old

1

1

0

0

17

67

Total
GRI CONTENT INDEX

1,062

Over 50 Years Old

Total

2022 PERFORMANCEAPPENDIX

Men

Total

OUR STRATEGY AND
PRIORITIES

2022

Women

Total

LETTER FROM THE CEO

2021

25

10

194

Over 50 Years Old

0

0

2

17

2

30

30-50 Years Old

0

0

12

53

15

159

Under 30 Years Old

0

0

0

0

1

0

Total

0

84

207
GRI 2-7

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Social Performance
2020

ABOUT THE REPORT

Number of Employees with Disabilities by Gender
LETTER FROM THE CHAIRMAN
OF THE BOARD

Hours of Training by Gender
LETTER FROM THE CEO

Training on Equality, Equal Opportunity, Inclusion
AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Training on Sustainability and the Environment
OUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCE

Total Number of Employees Subject to Regular Performance
Review

APPENDIXGRI CONTENT INDEXDIRECTORY83

Man-Woman Employee Median Wage Gap (%)

2022

Women

Men

Women

Men

Women

Men

1

29

1

29

0

33

Total

30
1,780

Total

30
14,503

2,196

16,283
27

Total

8

2,532

43

137

192

126

170.73

3,840
4,032

101

169
150.28

648
656

2,652
104

180.91

46,53752,471

1,288

120

87

Total

5,934

1,360
71

33

14,555

72

56

Total

33

16,751
28.5

16

Ratio of Lowest Employee Wage to Minimum Wage by Gender
(%)

2021

291
392

133.33143.996291

143.996291

Hourly Paid Employees

8.16

-9.13

1.46

Monthly Paid Employees

9.61

8.51

0

Number of Active Suppliers

782

1,654

1,797

Local Supply Rate Based on
Number of Suppliers

75.58

82

67.84

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Social Performance

Beneficiaries of the Employee Benefits

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Women

2020

2021

2022

2020

2021

Private Health Insurance

173

207

299

54

71

Private Life Insurance

0

0

0

0

0

Personal Accident Insurance

0

0

33

0

Private Pension Contribution

107

97

122

Total

280

304

421

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

Men

Total
2022

2020

2021

2022

227

278

408

0

0

0

0

0

4

0

0

37

32

32

42

139

129

164

86

103

151

366

407

572

109

OUR STRATEGY AND
PRIORITIES2020

GOVERNANCEGRI CONTENT INDEXDIRECTORY
84

2022

Hours of Training

Number ofParticipating
Employees

Hours of Training

Number ofParticipating
Employees

Hours of Training

Number ofParticipating
Employees

Developmental training
programs

2,031

107

1,812

114

7,093

287

Sales and marketing training
programs

0

0

0

0

210

15

52

8

0

0

46

4

Training programs for senior
management

1,404

34

789

30

1,622

37

Total

3,487

149

2,601

144

8,971

343

2022 PERFORMANCEAPPENDIX

2021

Training programs and contents Training programs forfor employees and managers
managerial candidates

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Social Performance
2020

2021

2022

Uneducated

0

0

0

Primary School

186

168

220

High School

513

492

984

University and Above

360

402

656

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Number of Women Employees Who Took Maternity Leave

4

2

2

Number of Women Employees Returning from Maternity Leave

4

2

2

OUR STRATEGY AND
PRIORITIES

Number of Employees Who Have Not Left Work in the Last 12
Months After Returning from Maternity Leave

4

2

0

Number of Employees within the Scope of Collective Agreement

805

789

1,401

Numbers of Accidents

6

21

25

Number of Fatal Cases

0

0

0

Number of Occupational Diseases

0

0

0

Absence due to Accident (Days)

15

129

97

Lost Workday Rate (%)

0.01

0.07

0.03

Accident Frequency Rate (%)

3.4

10.7

8.6

Occupational Health and Safety Training Sessions (Person*Hour)

8,280

2,548

17,501ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

GOVERNANCE

Number of Employees by Level of Education

Occupational Health and Safety2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY85

GRI 401-3, 403-9, 403-10

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

Environmental Performance
Environmental Performance

2020

2021

2022

Direct Energy Consumption (Gj) - Natural Gas

38,106

27,46751,044

Indirect Energy Consumption (Gj) Electricity

31,79832,05044,464

Energy Consumption per Production (GJ/unit)

20

17.4

15.8

Savings Attained via Energy Efficiency (GJ)

3,584

4,187

3,009

Total Water Consumption-Water Well (m3)36,91345,596

109,765

12.7

12.55

8.47

Total Wastewater Discharge-Wastewater Channel (m )15,75016,99544,986

Wastewater Sludge (kg/m wastewater)

0.77

0.46

0.11

Total Amount of Waste (tons)

1,210

1,320

1,393

Hazardous Waste (tons)

162

126.27365.30Non-hazardous Waste (tons)

1,048

1,175

1,027.76

Disposed of Waste (kg)

5

41

20

1,209.92

1,088

865.70

Energy Recovery (Waste Incineration)

0141527.34

Amount of Waste per Production (kg/unit)

354.1

381

230.37

Recovery Rate (%)

99.99

99.99

99.99

Direct (Scope 1) Greenhouse Gas Emission (tons of CO2e)

1,815

1,454

3,013

Indirect (Scope 2) Greenhouse Gas Emission (tons of CO2e)

3,772

4,015

5,870

Greenhouse Gas Emission per Production (Scope 3) (tons of CO2e)

880

25.13

210.62

Greenhouse Gas Emission per Production (tons/CO2e/unit)

1.84

1.58

1.47

Segment Sales Data on Average Vehicle Emission Level (grCO2/kWh)597.73296

296

Environmental Management Expenditures (TL)

802,287

627,333

1,929,475

SOx (kg/hr)

42.27

54.72

47

NOx (kg/hr)

4,873

4,628.64

3,427

Particulate Matter (kg/hr)

2.547

3.297

2.5245

Water Consumption per Production (m3/unit)
3

3

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESRecycled Waste
GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY86

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Environmental Performance
WASTE COMPONENTS (tons)

ABOUT THE REPORT

2020

2021

2022

Amount of Waste
Generated

Waste Diverted for
Recovery/Recycling

Amount of Waste
Generated

Waste Diverted for
Recovery/Recycling

Amount of Waste
Generated

Waste Diverted for
Recovery/Recycling

LETTER FROM THE CHAIRMAN
OF THE BOARD

Paper

222.45222.45268.25268.25181.98181.98LETTER FROM THE CEO

Plastic

102.65102.65125.36125.36

59.12

59.12

AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Glass

0

0

0

0

0

0

OUR STRATEGY AND
PRIORITIES

Metal

311.46311.46376.477

376.477

237.32237.32

Industrial Sewage Sludge

18.04

18.04

7

7

4.76

4.76

Domestic Sewage Sludge

0

0

0

0

0

0

Other (hazardous)

143.808

143.808126.27126.27360.382360.382

Other (non-hazardous)

405.49405.49408.95408.95

549.5

549.5

Total

1,203.924

1,203.924

1,319.593

1,319,593

1.393,062

1.393,062

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY87

PERFORMANCE INDICATORSKARSANSUSTAINABILITYREPORT 2022

Financial Performance Indicators
FINANCIAL ABD OPERATIONAL PERFORMANCE

2020

2021

2022

ABOUT THE REPORT

Production Capacity (number of vehicles)

19,870.0

19,930.0

61,189.0

LETTER FROM THE CHAIRMAN
OF THE BOARD

Capacity Utilization Rate (%)

15.63

17.2

31.1

Vehicles Produced (units)

3,106

3,437

6,047

Net Sales Revenue (TL million)

1,615.95

2,100.24

2,994.38

Operating Profit (TL million)

525.08780.499761.495

Gross Profit (TL million)

474.04574.135

850.461

Net Period Profit (TL million)

20.72

98.89

125.546

Net Debt (TL million)

1,407.75

1,872.82

3,052.94

Total Equity (TL million)

728.17993.891,799.09

Return on Equity (ROE) (%)

0.03

0.10

0.07

Total Assets (TL million)

2,716.95

3,737.26

6,301.08

Total Investment (TL million)

112.4596.73

238.766

Incentives Received from Government and Other Organizations (TL million)

145.21-

1.46

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY88

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
89

Statement of Use

Karsan has reported in accordance with the GRI Standards for the period 01/01/2022 to 31/12/2022.

GRI 1 Used
GRI 1: Foundation 2021
Applicable GRI Sector Standard(s)None Apply
For the Content Index - Essentials Service, GRI Services reviewed that the GRI content index is clearly presented, in a manner consistent with the Standards, and that the references for disclosures 2-1
to 2-5, 3-1 and 3-2 are aligned with the appropriate sections in the body of the report.

GRI Standards

Disclosure

Relevant Page Numbers and/or Explanations

GRI 2: General Disclosures 2021

2-1 Organizational details
7-11
2-2 Entities included in the organization’s sustainability
3reporting
2-3 Reporting period, frequency and contact point3
2-4 Restatements of information
There is no restated information.
2-5 External assurance
3
2-6 Activities, value chain and other business relationships 7
2-7 Employees
19, 71, 76, 82
2-8 Workers who are not employees
42
2-9 Governance structure and composition
27-29
2-10 Nomination and selection of the highest governance Karsan acts within the framework of thebodyregulations stipulated by the Turkish Commercial
Code and the CMB regarding the minimum
qualifications required for the election ofmembers of the Board of Directors.
2-11 Chair of the highest governance body
The Chairman of the Board of Directors has no
executive duties.
2-12 Role of the highest governance body in overseeing 27-29
the management of impacts
2-13 Delegation of responsibility for managing impacts
27-29
2-14 Role of the highest governance body in sustainability 27-29
reporting
2-15 Conflicts of interest
18
2-16 Communication of critical concerns
18-20
2-17 Collective knowledge of the highest governance body
27-29

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGRI 3: Material Topics 2021

Disclosure

Relevant Page Numbers and/or Explanations

2-18 Evaluation of the performance of the highest
governance body
2-19 Remuneration policies
2-20 Process to determine remuneration
2-21 Annual total compensation ratio
2-22 Statement on sustainable development strategy
2-23 Policy commitments
2-24 Embedding policy commitments
2-25 Processes to remediate negative impacts
2-26 Mechanisms for seeking advice and raisingconcerns
2-27 Compliance with laws and regulations

27-29

2-28 Membership associations
2-29 Approach to stakeholder engagement
2-30 Collective bargaining agreements
3-1 Process to determine material topics
3-2 List of material topics

GOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
90

Contribution to the Economy (Country)
GRI 3: Material Topics 2021
GRI 201: Economic Performance 2016

3-3 Management of material topics
201-1 Direct economic value generated and distributed
201-2 Financial implications and other risks andopportunities due to climate change
201-3 Defined benefit plan obligations and otherretirement plans
201-4 Financial assistance received from government

69, 7769, 77
Confidential information due to the Karsan policy.
16-17
30-32, 62
30-32, 62
24, 40, 44, 51, 60, 62-67, 78-79
31-32
There are no fines or sanctions in the reporting
period.
52-53, 80
18-20
69, 7421-22
22
There are no significant changes from previous
reporting periods in the list of material topics andtopic boundaries.
21-22
13, 1724
24
Karsan does not have any financial assistancereceived from the government as of the report
date.

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards
Financial Performance of the Company
GRI 3: Material Topics 2021
GRI 202: Market Presence 2016

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEO

Contribution to Local Economy
GRI 3: Material Topics 2021
GRI 203: Indirect Economic Impact 2016
GRI 207: Tax 2019AN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

Local Procurement
GRI 3: Material Topics 2021
GRI 204: Procurement Practices 2016
Prevention of Bribery and Corruption,
GRI 3: Material Topics 2021
GRI 205: Anti-corruption 20162022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
91

Ethical Principles and Practices
GRI 3: Material Topics 2021
GRI 206: Anti-competitive Behavior 2016
Efficient Utilization of Raw Materials
GRI 3: Material Topics 2021
GRI 301: Materials 2016

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
202-1 Ratios of standard entry level wage by gendercompared to local minimum wage
202-2 Proportion of senior management hired from thelocal community

21-22
At KArsan, the standard entry level wage of all
employees is above the local minimum wage.
All members of Karsan senior management are
Turkish Republic citizens.

3-3 Management of material topics
203-1 Infrastructure investments and services supported
203-2 Significant indirect economic impacts
207-1 Approach to tax
207-2 Tax governance, control, and risk management
207-3 Stakeholder engagement and management ofconcerns related to tax
207-4 Country-by-country reporting

21-22
39, 45, 47, 49, 60
13, 1730
30
30

3-3 Management of material topics
204-1 Proportion of spending on local suppliers

21-22
78-79

30

3-3 Management of material topics
21-22
205-1 Operations assessed for risks related to corruption 16, 31
205-2 Communication and training about anti-corruption 16, 31
policies and procedures
205-3 Confirmed incidents of corruption and actions taken 16, 31
3-3 Management of material topics
206-1 Legal actions for anti-competitive behavior, antitrust, and monopoly practices

21-22
31

3-3 Management of material topics
301-1 Materials used by weight or volume301-2 Recycled input materials used
301-3 Reclaimed products and their packaging materials

21-22
24-25, 60
24-25, 60
24-25, 60

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
405-1 Diversity of governance bodies and employees
405-2 Ratio of basic salary and remuneration of women
to men21-22
27
There is no gender-based wage discrimination
at Karsan.

3-3 Management of material topics
406-1 Incidents of discrimination and corrective actions
taken
GRI 407: Freedom of Association and Collective 407-1 Operations and suppliers in which the right toBargaining 2016
freedom of association and collective bargaining may be
at risk

21-22
There are no incidents of discrimination during
the reporting period.
During the reporting period, there are no
incidents of violation of employees’ rights toexercise freedom of association or collective
bargaining or it is under significant risk.
Karsan does not employ child labor in any way.

Equal Opportunity, Diversity, and Inclusion
GRI 3: Material Topics 2021
GRI 405: Diversity and Equal Opportunity 2016

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

Employee Rights
GRI 3: Material Topics 2021
GRI 406: Non-discrimination 2016

GRI 408: Child Labor 2016
GRI 409: Forced or Compulsory Labor 2016

Energy Efficiency Management
GRI 3: Material Topics 2021
GRI 302: Energy 20162022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY92

Water Management
GRI 3: Material Topics 2021
GRI 303: Water and Effluents 2018408-1 Operations and suppliers at significant risk forincidents of child labor409-1 Operations and suppliers at significant risk forincidents of forced or compulsory labor

There are no activities and operations at Karsan
with significant risk for incidents of forced orcompulsory labor in 2022.

3-3 Management of material topics
302-1 Energy consumption within the organization
302-2 Energy consumption outside of the organization
302-3 Energy intensity
302-4 Reduction of energy consumption
302-5 Reductions in energy requirements of products
and services

21-22
62
62
62
62
62

3-3 Management of material topics
303-1 Interactions with water as a shared resource
303-2 Management of water discharge-related impacts
303-3 Water withdrawal
303-4 Water discharge
303-5 Water consumption

21-22
67-68
67-68
67-68
67-68
67-68

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards
Protection of Biodiversity
GRI 3: Material Topics 2021
GRI 304: Biodiversity 2016

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
93

Climate Change and Greenhouse Gas
Management
GRI 3: Material Topics 2021
GRI 305: Emissions 2016

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
304-1 Operational sites owned, leased, managed in,or adjacent to, protected areas and areas of highbiodiversity value outside protected areas
304-2 Significant impacts of activities, products andservices on biodiversity304-3 Habitats protected or restored
304-4 IUCN Red List species and national conservation
list species with habitats in areas affected by operations

21-22
64

64
64
64

3-3 Management of material topics
21-22
305-1 Direct (Scope 1) GHG emissions
63
305-2 Energy indirect (Scope 2) GHG emissions
63
305-3 Other indirect (Scope 3) GHG emissions
63
305-4 GHG emissions intensity
63
305-5 Reduction of GHG emissions
63
305-6 Emissions of ozone-depleting substances (ODS)63
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other 63
significant air emissions
GRI 306: Waste 2020306-1 Waste generation and significant waste-related
68
impacts
306-2 Management of significant waste-related impacts 64-66
306-3 Waste generated
64-66
306-4 Waste diverted from disposal
64-66
306-5 Waste directed to disposal
64-66
Adherence to ESG principles in Corporate Procurement
GRI 3: Material Topics 2021
3-3 Management of material topics
21-22
GRI 308: Supplier Environmental Assessment
308-1 New suppliers that were screened using
78-79
2016
environmental criteria308-2 Negative environmental impacts in the supply
78-79
chain and actions taken

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards
Creating Employment
GRI 3: Material Topics 2021
GRI 401: Employment 2016

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEM

Employee Career Management
GRI 3: Material Topics 2021
GRI 402: Labor/Management Relations 2016
Occupational Health and Safety
GRI 3: Material Topics 2021
GRI 403: Occupational Health and Safety 2018

OUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY
94

Employee Training
GRI 3: Material Topics 2021
GRI 404: Training and Education 2016

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
401-1 New employee hires and employee turnover401-2 Benefits provided to full-time employees that are
not provided to temporary or part-time employees
401-3 Parental leave

21-22
69-77
75

3-3 Management of material topics
402-1 Minimum notice periods regarding operationalchanges

21-22
69-77

85

3-3 Management of material topics
21-22
403-1 Occupational health and safety management system 23, 41-43
403-2 Hazard identification, risk assessment, and incident 23, 41-43
investigation
403-3 Occupational health services
23, 41-43
403-4 Worker participation, consultation, and23, 41-43
communication on occupational health and safety403-5 Worker training on occupational health and safety 23, 41-43
403-6 Promotion of worker health23, 41-43
403-7 Prevention and mitigation of occupational23, 41-43
health and safety impacts directly linked by business
relationships
403-8 Workers covered by an occupational health and23, 41-43
safety management system403-9 Work-related injuries
85403-10 Work-related ill health85
3-3 Management of material topics
404-1 Average hours of training per year per employee
404-2 Programs for upgrading employee skills andtransition assistance programs
404-3 Percentage of employees receiving regularperformance and career development reviews

21-22
72
72
72

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCEGRI Standards
Advanced Technology Utilization
GRI 3: Material Topics 2021
GRI 410: Security Practices 2016
Customer Satisfaction
GRI 3: Material Topics 2021
GRI 416: Customer Health and Safety 2016

Information Security Management
GRI 3: Material Topics 2021
GRI 418: Customer Privacy 2016

Relations with Local Community
GRI 3: Material Topics 2021
GRI 411: Rights of Indigenous Peoples 2016
Contribution to Society
GRI 3: Material Topics 2021
GRI 413: Local Communities 20162022 PERFORMANCEAPPENDIX

Creating a Positive Social Impact
GRI 3: Material Topics 2021
GRI 414: Supplier Social Assessment 2016

GRI CONTENT INDEXDIRECTORY95

GRI 415: Public Policy 2016

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
21-22
410-1 Security personnel trained in human rights policies 72
or procedures
3-3 Management of material topics
416-1 Assessment of the health and safety impacts ofproduct and service categories
416-2 Incidents of non-compliance concerning the healthand safety impacts of products and services

21-22
23, 41-43

3-3 Management of material topics
418-1 Substantiated complaints concerning breaches ofcustomer privacy and losses of customer data

21-22
There is no substantiated complaints concerning
breaches of customer privacy and losses ofcustomer data during the reporting period.

3-3 Management of material topics
411-1 Incidents of violations involving rights of indigenous
peoples

21-22
There is no non-compliance during the reporting
period.

3-3 Management of material topics
413-1 Operations with local community engagement,
impact assessments, and development programs
413-2 Operations with significant actual and potential
negative impacts on local communities

21-22
80

3-3 Management of material topics
414-1 New suppliers that were screened using social
criteria
414-2 Negative social impacts in the supply chain andactions taken
415-1 Political contributions

21-22
78-79

There is no non-compliance during the reporting
period.

80

78-79
Karsan adheres to a strict policy of nonpartisanship and maintains impartiality.

Ommision

GRI CONTENT INDEXKARSANSUSTAINABILITYREPORT 2022

GRI Standards
R&D/Product Development/Innovation studies
GRI 3: Material Topics 2021
GRI 417: Marketing and Labeling 2016

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY96

Epidemic Management
GRI 3: Material Topics 2021
Traffic and Passenger Safety
GRI 3: Material Topics 2021
Employee Satisfaction
GRI 3: Material Topics 2021
Employee Retention
GRI 3: Material Topics 2021
Digitalization and IoT
GRI 3: Material Topics 2021
Corporate Governance
GRI 3: Material Topics 2021
Renewable Energy Generation
GRI 3: Material Topics 2021
WCM
GRI 3: Material Topics 2021
Complaint Mechanisms
GRI 3: Material Topics 2021
Employee Performance Management
GRI 3: Material Topics 2021
Local Employment
GRI 3: Material Topics 2021

Disclosure

Relevant Page Numbers and/or Explanations

3-3 Management of material topics
417-1 Requirements for product and service informationand labeling417-2 Incidents of non-compliance concerning productand service information and labeling417-3 Incidents of non-compliance concerning marketing
communications

21-22
51-59

3-3 Management of material topics

21-22, 41-42

3-3 Management of material topics

15, 21-22, 46-47

3-3 Management of material topics

21-24, 71

3-3 Management of material topics

21-24, 69-70

3-3 Management of material topics

21-24, 39, 60

3-3 Management of material topics

21-24, 27

3-3 Management of material topics

21-24, 44, 52

3-3 Management of material topics

21-24, 33-36

3-3 Management of material topics

21-24, 30, 37, 73

3-3 Management of material topics

21-24, 32

3-3 Management of material topics

21-24, 73-74, 80

There is no non-compliance during the reporting
period.
There is no non-compliance during the reporting
period.

OmmisionDIRECTORYKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORTLETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY97

Headquarters
Hasanağa Organize Sanayi Bölgesi Sanayi Cad. No: 53
16280 Nilüfer / Bursa
Tel: (+90 224) 484 21 70 (25 lines) - 224 280 30 00
Fax: (+90 224) 484 21 69
İstanbul Office
Ordu Cad. Emek Mah. No: 1034785 Sarıgazi / Sancaktepe / İstanbul
Tel: (216) 499 65 50
Fax: (216) 499 65 53
Organized Industrial Zone Plant
Organize Sanayi Bölgesi Mavi Cad. No: 13
16159 Nilüfer / Bursa
Tel: (+90 224) 243 33 10
Fax: (+90 224) 243 74 50
Organized Industrial Zone 2nd Plant
Hasanağa Organize Sanayi Bölgesi Sanayi Cad. No: 40
16280 Nilüfer / Bursa
Tel: (+90 224) 484 21 70

LEGAL DISCLAIMERKARSANSUSTAINABILITYREPORT 2022

ABOUT THE REPORT

Karsan Sustainability Report (Report) has been created by Karsan Otomotiv Sanayii ve Ticaret A.Ş. ("Karsan") in compliance with the GRI Standards. The report contains information and opinions provided
by Karsan, which may not be comprehensive. The data included in this report has not been independently verified for the purpose of this report. This report is provided solely for informational purposesand should not be relied upon as the sole basis for making any investment decisions. The content provided in this report should not be interpreted as an offer or any portion thereof for the sale of Karsan
shares, nor should it be considered an invitation to engage in such a sales process. The publication of this report does not establish a legal relationship in this regard. As of the period of preparing
this report, it is believed that all information and related documents are accurate. The information is disclosed in good faith and is based on reliable sources. However, Karsan does not make any
statement, guarantee, or commitment regarding this information. Karsan and its affiliated companies, as well as their board members, consultants, and employees, hereby disclaim any responsibility
for the information or communication contained in this report. Additionally, they disclaim all responsibility for any loss or damage that may result from a person relying on or not having access to theinformation in this report, whether directly or indirectly.

LETTER FROM THE CHAIRMAN
OF THE BOARD

LETTER FROM THE CEOAN OVERVIEW OF KARSAN
AND ITS ECOSYSTEMOUR STRATEGY AND
PRIORITIESGOVERNANCE

2022 PERFORMANCEAPPENDIXGRI CONTENT INDEXDIRECTORY98

Sustainability and reporting consultancy,
content development, Turkish and English
editing, and design

T: +90 212 227 0436
www.tayburnkurumsal.com
Brands & Reputations.