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Nov 05, 2024
Governance in Motion: Türkiye's Evolving Corporate Landscape
Insights from the Corporate Governance Association of Türkiye (TKYD)
Corporate governance efforts in Türkiye have been underway since the early 2000s to ensure the management of Turkish companies is in alignment with the four basic principles of corporate governance: "fairness", "transparency", "accountability" and "responsibility". To keep up with global trends, new laws were put in place in Türkiye, aiming to help companies stabilize and succeed in a competitive, global market.
The Corporate Governance Association of Türkiye (TKYD) established in 2003, coincided with the introduction of regulations on corporate governance principles in the country. TKYD has played a vital role in advancing corporate governance practices in Türkiye for 21 years. At TKYD, we believe that corporate governance should extend beyond businesses to encompass public institutions and non-governmental organizations, fostering a comprehensive ecosystem. Türkiye has significant room for improvement in this regard. From a business perspective, we see many positive developments, with rapidly growing companies making commendable strides in corporate governance. Over the past 20 years, Türkiye has emerged as a leader among developing countries in corporate governance quality; however, there remains room for improvement when compared to Western standards.
We continue our activities to establish a corporate governance infrastructure in line with international standards.
In November 2023, we prepared the 'Türkiye Corporate Governance Compass' report in collaboration with Boston Consulting Group with a focus on "Boards of Directors." Shedding light on corporate culture and board practices in Türkiye, this study provided us the opportunity to evaluate the corporate governance approach in detail, with a particular focus on boards, which play a critical role in the sustainability of organizations.
The groundwork for corporate governance has been laid in Türkiye over the last 20 years, and companies in Türkiye are increasingly internalizing the significance of corporate governance each year.
Our studies show that companies in Türkiye are increasingly internalizing the significance of corporate governance each year. 94% of the companies participating in our study with BCG state that corporate governance is critical for sustainable success.
Board diversity has long been a key agenda item in both global markets and Türkiye. We can evaluate the diversity concept on the basis of differences such as gender, age and experience, as well as independent board members. Whichever way we look at it, we know there is significant room for diversity improvement in Türkiye, and both of our reports confirm this. At TKYD, we work to increase the number of independent members and women on boards of directors to keep diversity and inclusion issues on the agenda and to raise awareness. As an NGO, we share our views with the regulatory body in Türkiye regarding this matter and contribute to legislative amendments.
Another key agenda item for boards in Turkish companies is ESG, as is the case globally. As a benchmark and anchor of the concept of sustainability, ESG has become one of the most important agenda items for companies moving towards corporate governance and institutionalization. Today, the most critical expectation of consumers, employees, investors, and financial institutions is for companies to act responsibly in environmental and social matters, alongside demonstrating good management. As global risks increase and the strategic importance of ESG becomes more evident, companies will find it increasingly difficult to create lasting value unless sustainability is a key focus at the board and executive level. Experience shows that the effective leadership skills of the board chair and board members make a difference in implementing a sustainability strategy, creating a competitive advantage. The European Green Deal will become a mandatory agenda item for Boards in the near future.
Organizational resilience and agility have become and must remain the key elements of corporate strategy. Trends reshaping the world, such as artificial intelligence, digitalization, brain drain, natural disasters, the climate crisis, and demographic change, are on the agenda of boards in Türkiye, just as they are globally.
The world is in a period of extraordinary change, driven by technology. Companies have to keep pace with such a change. This process naturally brings about the necessity for renewal. Globalization and technological developments have enhanced global traceability worldwide. Our ability to survive tomorrow and thrive in the future depends on our capacity to integrate new trends and technologies into our ways of business quickly. Artificial intelligence, digitalization, Industry 4.0, and blockchain are now becoming key agenda items for companies around the world, as well as finding a place on the agendas of company boards in our country.
At TKYD, we have strengthened our international collaborations and activities to further advance corporate governance practices in Türkiye. In this respect, we hold strategic meetings with leading organizations such as Hawkamah, CIPE, IFC, DiliTrust, IOD India, and ecoDa to organize different projects and events. In these contacts, we make plans to raise awareness on ESG, sustainability, and corporate governance issues, create new collaborations, and increase knowledge and experience exchange in corporate governance.
Through these efforts, we aim to raise corporate governance awareness and encourage good governance practices not only in Türkiye but also on a regional scale, and we continue our activities to establish a corporate governance infrastructure in line with international standards.
In conclusion, we observe that the groundwork for corporate governance has been laid in Türkiye over the last 20 years with increased corporate governance awareness in companies. As TKYD, we will carry on our efforts to further the development of corporate governance practices in our country by closely following global developments and establishing a communication network between the private industry and public institutions.
Chair of the Board at the Corporate Governance, Association of Türkiye (TKYD) & Member of the Board at BMS Group.
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
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Institute of Directors (IOD) is an apex national association of Corporate Directors under the India's 'Societies Registration Act XXI of 1860'. Currently it is associated with over 30,000 senior executives from Govt, PSU and Private organizations of India and abroad.
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