Abstract:

The corporate governance discourse in Turkey is inspired by the Anglo-Saxon law and economics way of thinking, which mostly focuses on principal-agency issues. Thus, much attention has been paid to the short-term maximization of returns to shareholders. However, the current focus of the Turkish commercial law gives rise to a loophole that prevents the development of sustainable business. The result of profit maximization focus is that corporations fail to consider environmental and social issues and integrate them into their strategic planning. Turkey has made a great progress in regulatory framework of corporate governance since the reformation of the Turkish Commercial Code in 2012. Yet, corporate sustainability still remains to be addressed. In this context, the Sustainability Principles Compliance Framework is prepared and put into effect by the Capital Markets Board of Turkey on 02.10. 2020. This study aims to investigate the legal basis for the integration of sustainability into corporate governance principles of Turkey and to reveal the barriers to corporate sustainability and as a result it offers complementary reform proposals. The Sustainability Principles Compliance Framework is useful, insofar as it feature as a starting point in legislative initiatives. The argument this article puts forward is that in order for a better compliance, the following points need to be adressed; reformulating the purpose of the company in the company law, integrating corporate sustainability into the duties of the board of directors and determining clear reporting and auditing standards.

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