Sustainability Bulletin (Issue 4)

MESSAGES FROM TRASTA ESG

KEMALEDD?N D?LBAZ, CEO

Dear followers, in this bulletin, there is an article that reveals the weight of human-made objects?has surpassed the total weight of all living organisms on Earth. The article illustrates humanity’s impact on nature. On the other hand, in the ESG news section, we witness the speed and ability of nature to heal itself, rekindling our hopes. Enjoy the bulletin.

?ZGüN ?INAR, CRO

Dear readers, in each of our newsletters, we conclude our messages with the phrase “stay sustainable.” However, even the European Union, who is a pioneer in sustainability area, is seeking ways to?flex the rules?in order to?remain sustainable. In the analysis we present in the Green Column about the EU Corporate Sustainability Due Diligence Directive, you will encounter an example related to the topic we mentioned. Despite some setbacks and delays, we must continue to look hopefully toward the future. Together, may we?persist in sustainability.

THE WEIGHT OF HUMAN-MADE OBJECTS EXCEEDED THE TOTAL WEIGHT OF NATURAL LIVING LIFE

Recent research conducted at the Weizmann Institute of Science in Rehovot, Israel, reveals that the weight of human-made objects exceeds the total weight of all living organisms on Earth as of 2020. This important milestone highlights the huge role humanity plays in transforming the world and its impact on ecological balance.

Studies since the 1900s have shown that the weight of man-made objects is doubling every 20 years. With the widespread use of materials such as plastic, concrete and aluminum, the total weight of objects produced by humanity is rapidly increasing. If this trend continues, the weight of man-made objects is expected to reach up to three teratons by 2040.

In contrast, the weight of natural creatures is gradually decreasing. The loss of forests and other natural habitats causes the living spaces of living organisms to shrink and their populations to decrease. As the weight of man-made objects increases, the natural balance is disrupted and ecosystems are damaged.

Dr. Ron Milo, who directed the above-mentioned research states that these findings clearly show the impact of humanity on the world. He emphasizes that each of us should review our consumption habits and our relationship with nature. He states that humanity should adopt a more sustainable lifestyle to maintain natural balance and protect our planet.

This research is seen as evidence that humanity has entered the Anthropocene Age (our readers who are interested in this subject can access our detailed analysis in the previous bulletin). The increasing impact of humanity on the world since the Industrial Revolution indicates a change so great that it will even leave its traces in the geological record. The Anthropocene Age represents the period when humanity's impact on the planet reached its highest levels, and this impact seems likely to continue for many years.

These findings highlight the great responsibility of humanity and the urgent need to protect nature. In order to leave a healthier planet to future generations, each of us must fulfil our duties.

To read the full article; https://www.nature.com/articles/s41586-020-3010-5

Almina Gencal, Sustainability Specialist

ESG NEWS

• Unilever sets new climate goals to reduce agriculture emissions. The consumer goods company said it plans to completely eliminate direct emissions and reduce indirect emissions by 42%, compared to a 2021 baseline, by the end of the decade.?DETAIL
• One of the most visible indicators of ocean surface temperature warming due to climate change is the bleaching of coral reefs. Environmental changes like warming waters can cause corals to expel the algae that live on them and provide them with nutrients, turning the corals white. A new study has found that, while most of the world’s coral reefs are currently damaged or under threat, efforts to restore them can revitalize important ecosystem functions remarkably quickly. “We found that restored coral reefs can grow at the same speed as healthy coral reefs just four years after coral transplantation,” lead author of the study Ines Lange, an associate professor of marine conservation and management at University of Exeter, said in a press release from Cell Press.?DETAIL

• The world added less than half of the new renewable energy capacity needed to meet its climate goals last year, with rising energy demand and weak grid infrastructure slowing the shift from fossil fuels, a leading think tank said.?DETAIL
• Weather forecasters at Colorado State University (CSU) predicted an "extremely active" 2024 Atlantic hurricane season because of warm sea surface temperatures and less wind shear to break up storms in the summer and fall.?DETAIL
• The vast majority of planet-warming carbon dioxide emissions since 2016 can be traced to a group of 57 fossil fuel and cement producers, researchers said. From 2016 to 2022, the 57 entities including nation-states, state-owned firms and investor-owned companies produced 80% of the world's CO2 emissions from fossil fuels and cement production, said the Carbon Majors report by non-profit think tank InfluenceMap.?DETAIL

GREEN COLUMN

EU CORPORATE SUSTAINABILITY DUE?DILIGENCE DIRECTIVE (CSDDD - CS3D)

The?European Council?has approved the?Corporate Sustainability Due Diligence Directive (CSDDD), also known as?CS3D, on?March 15, 2024. It’s important to note that the final version of the approved directive is a?narrowed-down version?following delays due to political processes, compared to the temporary version accepted on?December 14, 2023. At this stage, the directive awaits approval from the?European Parliament?in April.

In brief, the purpose of this directive is to ensure that?EU companies and companies operating within the EU?manage their activities’ negative impacts on the environment and human rights according to specific standards and principles. It aims to eliminate existing adverse effects and enhance transparency and accountability in corporate sustainability practices. Furthermore, the directive intends to enforce consequences for non-compliance with these obligations. The specific violations are determined by the international agreements listed in the directive’s annex.

CS3D?encompasses certain?due diligence obligations?for?European Union companies?and?non-EU companies operating in Europe.?Beyond imposing responsibilities solely on the corporate level, the directive also includes?audit obligations for company executives.

The prescribed duty of care for companies essentially includes identifying, terminating, preventing, mitigating, and always considering the negative impacts related to human rights and the environment occurring within the company's own operations, affiliated entities, and value chains. These negative impacts, on the basis of human rights, may include child labor, slavery, occupational safety, labor exploitation, etc., while under environmental law, they may encompass pollution, depletion of life resources and biodiversity, climate issues, environmental degradation, etc.

The prescribed duty of care for company executives entails taking necessary measures within the framework of the aforementioned duty of care, establishing and overseeing the relevant processes, and integrating the duty of care task into corporate strategy. Henceforth, executives will be obliged to uphold the duty of care by not only ensuring the best interests of the company at the corporate level but also by taking into account human rights, climate, and environmental consequences in their decisions.

The companies covered within the scope of the directive are as follows:

(i) For EU companies, companies with 1,000 employees and a net worldwide turnover of 450 million Euros (the scope in the interim agreement was specified as 500 employees and 150 million Euros.)

(ii) For non-EU companies, those generating a net turnover of 450 million Euros within the EU (the scope in the interim agreement was set at 150 million Euros.)

(iii) Companies that do not meet the thresholds in (i) and (ii) but are subsidiaries of a group that does meet these thresholds. (These thresholds must be met in two consecutive financial years.)

The compliance deadlines for relevant companies are as follows: (i) From 2027 onwards: Companies with more than 5,000 employees and a turnover of 1,500 million Euros – 3 years (ii) Companies with more than 3,000 employees and a turnover of 900 million Euros – 4 years (iii) Companies with more than 1,000 employees and a turnover of 450 million Euros – 5 years.

The sanctions for non-compliance with the directive and failure to timely fulfil the necessary compliance obligations may include legal liability, administrative penalties and fines, damage to reputation, decrease or elimination of financial credibility, and so forth. Legal liability primarily refers to the obligation for compensation. If the actions or omissions of a company result in harm, it will be required to compensate for such harm. Additionally, EU Member States are envisaged to empower certain authorities to ensure the implementation of the directive. These authorities can impose penalties on companies up to 5% of their worldwide net turnover for violations. Subjecting a company to such administrative penalties undoubtedly leads to a decline in brand and commercial reputation, reduction in commercial credibility, and potential exclusion from public tenders.

It should be noted that the lower thresholds for employees and turnover envisaged for companies operating in one of the three high-risk sectors (textiles; agriculture, forestry, and fishing; chemicals and mining sectors) in the previous text are not included in the new updated text.

While small and medium-sized enterprises (SMEs) are not directly within the scope of the directive, they will be affected by regulatory provisions due to their role as suppliers or subcontractors to larger companies within the scope.

It is also mentioned that the Commission is required to prepare a report within 2 years from the adoption of the directive regarding the necessity of additional sustainability obligations specific to the financial sector.

Oya ?zhan Ayhan, Trasta Consultancy, Partner

IMPORTANT CONCEPTS

There was a period of debate and confusion regarding who is obliged to publish a sustainability report in accordance with the Turkey Sustainability Reporting Standards. The decision tree prepared by the Public Oversight, Accounting and Auditing Standards Authority sheds light on who will be reporting. We are sharing the visual below to facilitate the process for companies that have not yet found an answer to this issue.

WHO ARE WE?

Trasta ESG, is a consulting firm in Turkey that offers services such as gap analysis and sustainability consulting, providing businesses with the opportunity to determine their ESG score using a "Sustainability Assessment and Management Platform" designed in accordance with international standards and tailored to different sectors.

Our motto is, "We are with you at every stage of your sustainability journey!"

You can explore our services in detail here and reach us through the links below.

Click for our corporate web site…

Telephone: +90 (216) 455 39 66

Email: [email protected]