The Istanbul-based Hergüner Bilgen Üçer law firm has produced the first of a planned series of videos on ESG, and in particular its importance on how Turkish businesses will operate generally, and how they will have to adapt to certain European Union legislative requirements such as the Carbon Border Adjustment Mechanism. In this first video in the series, that is in Turkish but has English language subtitles, senior partner Ümit Hergüner, and partners Zeynep Tor and Deniz Tuncel, explore the main components of ESG. Mr. Hergüner, who has extensive experience in ESG and has been a leading proponent of its adoption in Turkey since its inception, explains how ESG emerged from the principles of good corporate governance. ESG is in some ways an expansion of corporate governance to give it a wider focus.
In the video, which is formatted as a three way discussion among the partners in the Hergüner firm, ESG is examined in general terms, as the partners look at how the concept of ESG developed first from the United Nations Global Compact that came out in 2004, which advocated for businesses to pay more attention to the social rights of all stakeholders, including employees, the environment, and society at large. The Global Compact also stressed the importance of sustainability as a key business goal. In 2011, the United Nations presented a new document that addressed the relationship between companies and employees from a human rights perspective, Guiding Principles on Business and Human Rights. This document provided a guide on companies and human rights, outlining how businesses can respect human rights. Following this, the United Nations requested the International Bar Association (IBA) to rewrite the guidelines for lawyers in order to guide lawyers and legal advisors in advising companies on how to manage the relationship among these various objectives. In Turkey the Turkish Industrialists and Businessmen's Association used the OECD's 1999 guidelines to develop a model for best practices in the country. These initial efforts were expanded upon after a group of leading lawyers, including Mr. Hergüner established the Turkish Corporate Governance Association. Over time, the Association began to examine the ESG management model. The video examines the foundation of the Turkish Board of Directors Members Association that sought to educate board members on their pivotal role in implementing corporate governance principles, now commonly referred to as environmental social governance principles. Article 369 of the Turkish Commercial Code addresses what the board of directors should focus on regarding their responsibilities, including ESG. Both the Corporate Governance Associate and the Board Members Association carefully examine ESG issues to educate board members about their increasing responsibilities in these areas. The three partners examine what responsibilities board members have regarding ESG, and their potential liability for failing to comply with ESG requirements. Board members are expected to appoint competent people to oversee these issues and then to supervise them.
The UN Global Compact and Guideline on Human Rights have had a profound impact on shaping the principles of ESG. Following on the UN's efforts, the EU's transformative Green Deal in 2019 outlines a comprehensive strategy aimed at mitigating the carbon footprint generated by corporate activities. Its core ambition is to ensure that companies, in the course of their production and service activities, achieve carbon neutrality. Initially targeting a fifty-five percent reduction in carbon emissions by 2030, the ultimate goal is to achieve complete carbon neutrality by 2050. The video addresses measures taken by the Turkish Government to manage this process, in order to maintain access to its largest export market. It discusses The Turkish Energy Market Regulatory Authority's draft regulation on the Operation of Carbon Markets inspired by the cap-and-trade model in Europe and published it for consultation at the end of 2023.
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