A step towards integrated thinking in Turkey

Today, we are well aware that focusing on merely economic and financial results are not sufficient for institutions to sustain. In the last few decades, organisational market value has slowly shifted from price-based tangible capitals to intangible capitals such as intellectual assets, research and development strength, brand value and also social and human capital. Numerous developments have shown that risks that are not included in the financial statements may lead to financial results. Investors, having seen that environmental, social and governance risks and uncertainties faced by companies directly affect company sustainability, have started to demand information on companies’ non-financial performance. And the need of enhanced reporting of intangible capitals that affect business performance emerged.

From this point forth, “integrated reporting” was created to express the result of the integrated management of the financial and non-financial process. The journey towards integrated reporting in Turkey began in 2011 and the breakthrough point came in 2013 when the project proposal for the “Improvement of Investment Environment in Turkey” (YOIKK) that I submitted to the Turkish Industry and Business Association (TUSİAD) Coordination Council was accepted. It embodied a strategy for companies’ sustainable development and the need for integrated reporting for investors’ to access high quality information. Additionally, the project highlighted the importance of having a strategy to widely emanate this way of reporting. With these aims, the actions proposed were preparation of a guideline for integrated reporting, and establishment of an initiative that would work on the topics of raising awareness, training, education and information sharing. With the acceptance of the proposal, we prepared and launched the manual “New Era for Corporate Reporting: Integrated Reporting.” The same year, Garanti Bank and Çimsa Cement became the first companies from Turkey to join the IIRC Pilot Programme to help develop the International Framework.

In the meantime, upon Prof. Mervyn King’s proposal for me to lead the awareness activities of integrated thinking and reporting in Turkey, the idea to form a Turkish network which I would become the founding chair flourished. In 2015, after the then-CEO of IIRC, Mr. Paul Druckman, came to Turkey for a conference, Borsa Istanbul, TUSİAD, UN Global Compact Turkey, IIRC Ambassador, Argüden Governance Academy, Corporate Governance Association of Turkey (TKYD), Business Council for Sustainable Development Turkey (SKD Türkiye), and the two pilot companies, Çimsa Cement and Garanti Bank came together to form the Integrated Reporting Turkey Network (ERTA). After two years of immense work, ERTA’s establishment was officially announced in an opening bell ceremony held at Turkey’s Stock Market, Borsa Istanbul on February 15th, 2017.

At ERTA, we aim to raise awareness on integrated reporting and thinking throughout Turkey, to enhance the capacity of businesses, and to ensure that good practices are shared. We have set our sights on integrated thinking being adopted by all institutions and companies through cooperating with the public and private sectors, civil society and academic circles on a national and international level. We believe that, in today’s global business environment, integrated reporting should be regulatory in order to ensure a transparent, responsible, and sustainable process for all stakeholders. And it makes me happy to see that many of our member companies have already experienced the integrated reporting process, and some of them have reached to fruition.

As a finance professor, the relationship between the corporations’ financial performance, corporate governance and corporate sustainability have been the focus of my research for years. Whether in the academic circles, or in business world, I have made effort to protect this relationship and wanted it to be considered highly important by the top management of corporations. Today, I am proud to share my experience in academia and in the business world under ERTA. I hope that many more companies and institutions in Turkey will embrace integrated thinking and the reporting practices in a sharp and effective way.