by Mehmet Cakmak
The CSRD will impact Turkish companies that operate or want to operate within the EU market. In this article, we explore the specific challenges and opportunities that Turkish companies will face in complying with the EU’s Corporate Sustainability Reporting Directive (CSRD).
Compliance with the CSRD can present challenges and opportunities for Turkish companies:
- Compliance costs: Turkish companies will need to invest time and resources to comply with the CSRD’s reporting requirements. They may need to hire consultants, auditors, and other experts to support them with compliance, which will require additional cost items in their budgets.
- Reputational risks: Non-compliance with the CSRD can result in fines and reputational damage, which can harm a company’s reputation and its relationship with stakeholders.
- Operational changes: Turkish companies may need to change their operations and strategies to comply with the CSRD and improve their ESG performance.
- Lack of knowledge and expertise: Turkish companies may lack knowledge and expertise in sustainability reporting and compliance with EU regulations, which can make it challenging to comply with the CSRD.
- Competitive advantage: Turkish companies that comply with the CSRD can demonstrate their commitment to sustainable business practices and gain a competitive advantage over companies that do not comply.
- Access to the EU market: Compliance with the CSRD can also facilitate Turkish companies’ access to the EU market by showing their alignment with EU regulations and policies related to sustainability and corporate governance.
- Long-term value creation: By addressing ESG issues in their operations and strategies, Turkish companies can create long-term value for their business and society.
- Investors’ expectations: CSRD compliance can help Turkish companies to attract new investors and meet the increasing demand for sustainable products and services.
- Managing ESG risks: Sustainability reporting can help Turkish companies identify and address potential risks related to ESG issues, such as climate change and human rights, which can be crucial for the long-term survival of the company. Managing ESG risks can help companies identify and manage potential financial risks, such as regulatory changes or reputational damage. Besides, it helps to attract and retain investors and accelerates accessing financial funds. In addition to all these, it contributes to the elimination of risks arising from non-compliance.
Turkish companies can take the following steps:
- Assess whether you fall under the scope of the directive. The CSRD applies to companies with more than 250 employees and an annual turnover of more than €40 million or a balance sheet total of more than €20 million.
- Review your current ESG performance and identify any areas that need improvement.
- Develop a sustainability reporting framework that complies with the CSRD’s requirements and international reporting standards such as GRI, Sustainability Accounting Standards Board (SASB) and Task Force on Climate-related Financial Disclosures (TCFD)
- Implement systems and processes for collecting and reporting ESG data.
- Communicate and engage with stakeholders on your sustainability performance and initiatives.
- Monitor and update your sustainability reporting in line with CSRD and requirements and regulations.
- Seek professional guidance and support from consultants, auditors, and other experts who have experience in CSRD compliance and sustainability reporting.
- Keep updated on any changes to the EU’s regulations and policies related to sustainability reporting and ensure compliance with any new requirements.
In conclusion, Turkish companies that do business with or operate within the EU will be impacted by the EU Corporate Social Responsibility Directive (CSRD). While compliance with the directive will come with additional costs, it can also be seen as an opportunity for companies to improve their reputation, attract new customers and investors, and gain a competitive advantage in the EU market. Companies should consider the potential impacts of the CSRD and take steps to prepare for compliance in order to mitigate risks and capitalize on opportunities.
Corpera Consulting and ACE Consultancy have a strategic ESG consultancy partnership. With Corpera’s industry-leading social and governance management consultancy and ACE’s world-class environmental consulting services, we offer unique, all-encompassing solutions for investors and issuers navigating the intricacies of ESG consultancy.