I. Introduction
The viability of foreign-origin companies in Turkey transcends mere commercial operations. These entities must comprehensively comply with environmental, social, and governance (ESG) principles. The Turkish regulatory framework contains explicit provisions mandating large companies to fulfill specified environmental and social responsibilities. For foreign companies seeking to enter the Turkish market, implementing robust compliance measures is imperative—both to ensure adherence to local regulations and to mitigate potential legal, financial, and reputational risks.
II. Legal Assessment
A. Sustainability Obligations in International Law
Sustainability encompasses economic development that proceeds without environmental degradation or social harm. At the international level, sustainability frameworks have evolved through numerous instruments and multilateral agreements, creating binding and non-binding obligations for corporate entities. The following international frameworks significantly impact corporate sustainability requirements:
- United Nations Sustainable Development Goals (SDGs)
The Sustainable Development Goals, adopted by the United Nations General Assembly with implementation targets for 2030, comprise 17 integrated objectives. These goals address challenges ranging from poverty eradication and inequality reduction to climate action and responsible resource management, necessitating fundamental restructuring of corporate business models and supply chains. Foreign companies operating in Turkey are expected to demonstrably align their strategic objectives and operational practices with these global sustainability benchmarks.
- Paris Climate Agreement
The Paris Climate Agreement, adopted in 2015 and ratified by Turkey, establishes binding commitments to limit global warming to well below 2°C above pre-industrial levels. As a signatory, Turkey has implemented mandatory emissions monitoring and reporting requirements. Foreign-origin companies operating in carbon-intensive sectors must implement verifiable emissions reduction strategies and technological adaptations to ensure compliance with national carbon targets derived from this international commitment.
- OECD Guidelines for Multinational Enterprises
The OECD Guidelines establish comprehensive standards for responsible business conduct for multinational enterprises operating in or from adhering countries. These principles address corporate governance, disclosure, environmental stewardship, labor relations, human rights. Non-compliance may trigger examination resulting in potential reputational damage, and legal scrutiny.
- Human Rights and Environmental Due Diligence
International instruments, including the UN Guiding Principles on Business and Human Rights, establish corporate responsibility to identify, prevent, mitigate, and account for adverse human rights and environmental impacts. The ISO 14001 Environmental Management System provides a standardized framework for organizations to enhance environmental performance through efficient resource utilization and systematic management of environmental responsibilities.
B. Sustainability-Related Legal Regulations in Turkey
Turkey has enacted comprehensive legislation addressing environmental protection and corporate social responsibility. These laws establish clear compliance obligations for foreign-origin companies operating within Turkish jurisdiction. Strategic sectors face additional permit and licensing requirements with sustainability dimensions. Key regulatory frameworks include:
- Environmental Law (Law No. 2872)
Turkey’s Environmental Law establishes the fundamental legal framework for environmental protection and corporate environmental compliance. The law mandates environmental impact assessments (EIA), prescribes waste management protocols, establishes pollution prevention requirements, and protects natural resources. Foreign-origin companies must prepare detailed EIA reports for qualifying projects, implementing all specified environmental mitigation measures as conditions for operational authorization.
- Carbon Emissions and Emission Monitoring Framework
Following Turkey’s ratification of the Paris Climate Agreement, the government has implemented comprehensive carbon management regulations. The 2021 Carbon Market and Emission Trading System establishes sectoral carbon budgets and compliance mechanisms. Foreign entities operating in regulated sectors must implement continuous emissions monitoring systems, submit independently verified emissions reports, and maintain emissions within allocated thresholds.
- Capital Markets Board (CMB) Sustainability Disclosure Requirements
The Capital Markets Board’s 2014 Corporate Governance Directive mandates sustainability reporting for publicly traded companies. These requirements encompass disclosure of material environmental impacts, social performance indicators, and governance practices. Foreign-origin companies with Turkish listings must ensure comprehensive compliance with these disclosure requirements.
- Renewable Energy Regulatory Framework
Turkey’s renewable energy legislation, including the Renewable Energy Resources Support Mechanism (YEKDEM), provides incentives for clean energy development while establishing compliance obligations. This framework includes specific technical standards, grid connection requirements, and licensing conditions. Foreign entities in the renewable energy sector must adhere to these requirements while leveraging available incentive mechanisms.
III. Conclusion
International law and Turkey’s domestic regulatory framework establish clearly defined sustainability obligations for foreign-origin companies. These multifaceted requirements integrate environmental protection, social responsibility, and governance standards into mandatory compliance frameworks. Companies must approach Turkish operations with comprehensive compliance strategies that address not only explicit regulatory requirements but also evolving social expectations and global sustainability best practices.
Beyond regulatory compliance, sustainability represents a strategic imperative for long-term corporate success. For companies operating in Turkey, sustainability should constitute a core strategic principle, enabling environmentally responsible operations that create shared value for all.
