ESG

Scope

ESG refers to the legal obligations to which companies are subject, and the commitments they undertake voluntarily, in environmental, social and governance matters. The legal content of the concept is not consolidated in a single law; environmental legislation, rules on occupational health and safety and working life, corporate governance rules in company and capital markets law, and sustainability reporting obligations are addressed together under this heading.

On the environmental side, Environmental Law No. 2872 and the regulations issued under it (such as those on environmental impact assessment, waste management and emission permits) are decisive. The social dimension covers rules on working conditions such as Occupational Health and Safety Law No. 6331, Labour Law No. 4857 and the prohibition of discrimination. On the governance side, the provisions of Turkish Commercial Code No. 6102 on company bodies and, for publicly held companies, the Corporate Governance Communiqué of the Capital Markets Board (SPK) and the sustainability principles compliance framework apply. For sustainability reporting, the Turkish Sustainability Reporting Standards (TSRS) apply; since the businesses falling within scope are determined by decisions of the relevant authority, the current regulation should be monitored.

Binding rules and voluntary frameworks are assessed separately. The accuracy of targets, policies and statements disclosed voluntarily to the public is, however, a matter for legal review, as it may give rise to liability.

Frequently encountered matters

• Scope analysis of the sustainability reporting obligation.
• Allocation of sustainability responsibilities within board of directors and committee structures.
• Environmental permit, inspection and administrative sanction processes.
• Liability of managers in respect of environmental criminal provisions and administrative fines.
• Reflecting occupational health and safety obligations in contracts and subcontractor relationships.
• Adding compliance, audit and termination provisions to supplier and business partner agreements.
• Assessment of environmental or social responsibility claims under the rules on advertising and unfair commercial practices.
• The effect of climate and carbon regulations on export and supply chain data.
• Sustainability terms and reporting undertakings in financing agreements.
• Preparation of internal policies, codes of ethics and whistleblowing mechanisms.

Process and points to note

ESG work generally begins with identifying the binding legislation to which the company is subject. The reporting obligation may vary depending on the company’s type, size and whether it is listed on a stock exchange. Existing policies, contracts and internal control documents are then reviewed, and written arrangements are prepared for areas found to be lacking.

Environmental and social statements made to the public may be assessed as to whether they are misleading under Law No. 6502 and the Regulation on Commercial Advertising and Unfair Commercial Practices. Retaining the data and documents supporting a statement is therefore important. Disclosures to shareholders and investors may also be subject to the public disclosure rules in capital markets legislation.

In inspections in the fields of environment and occupational health, sanctions such as administrative fines or the suspension of activities may be imposed. The time limit for bringing an action against such acts before the administrative courts is, as a rule, sixty days from service (Art. 7 of Administrative Procedure Law No. 2577); for administrative fines, the remedy and time limit under the Law on Misdemeanours should also be checked. As climate and carbon regulations are developing rapidly, the current state of the relevant legislation is reviewed afresh in each engagement.

Our office’s approach

Work under the ESG heading consists of identifying binding obligations, preparing policy and contract texts, and conducting proceedings against administrative acts. Voluntary commitments and mandatory obligations are presented separately.