İstanbul Menkul Kıymetler Borsası  (İMKB) and Turkish Business Council for Sustainable Development (TBCSD) initiated the “İMKB Sustainability Index” Project in a joint press meeting on the 10th of August, 2010.

The “İstanbul Menkul Kıymetler Borsası Sustainability Index (ISESI) Project” is a multi-stakeholder project, which will develop best practices with the goal of launching a Turkish sustainability benchmark for ISE-listed companies. İMKB Sustainability Index is also expected to be a platform for the institutional investors to demonstrate their commitment to companies managing environmental, social and governance (ESG) issues with high performance.

The İMKB Sustainability Index Project is developed using a unique multi-stakeholder process design that will engage companies, investors and relevant stakeholders from the Turkish market in the development and agreement of the selection criteria for the index. The stakeholder process is run by international experts Cheryl D. Hicks [Lead advisor on corporate sustainability] and Graham Sinclair [Lead advisor on sustainable investment]. Company assessments will be completed by a third party institution with conceptual input from Sustainable Asset Management (SAM), research provider of the Dow Jones Sustainability Indexes [DJSI].

Sustainability Survey
At the beginning of the project, a “sustainability survey” was sent to İMKB companies in August  with the aim of understanding material sustainability issues for companies in Turkey.

The first workshop on the 1st of October
Over 100 listed company members of the Istanbul Stock Exchange, their investors and stakeholders attended the Project Kick-off Workshop for the Sustainability Index Project which explored the state of corporate sustainability in Turkey – and related risks for Turkish companies.
The inputs from sustainability survey and workshop were integrated into the project to develop selection criteria for Turkish companies.

The second workshop on the 8th of December
Another workshop, titled "Corporate Sustainability Indicators for Turkish Business World & Expectations of the Investors" took place with the participation of around 60 representatives from companies and investors "Determining Indicators for Corporate Sustainability" was discussed at the first session in the morning. At this session, a panel titled "Global Sustainability Index and its Criteria", which categorized international examples of global compliance into the fields of developing markets and global markets, took place. At the morning sessions' parallel meeting a workshop titled, "The point that sustainable investment reached in Turkey, blocks and encouragements" was organized as well. Investors' expectations particularly in developing markets were analyzed and the criteria for index were discussed in detail. Companies – Investors Dialog took place in the afternoon session. Company representatives and the investors exchanged opinions on criteria for sustainability index during the session.
 
The third workshop on the 23rd of March
The seminar was focused on Turkey’s ecological footprint and its effect in the investment environment, while the representatives of the ISE-traded companies discussed the first draft of the ISESI criteria at a workshop.

During the seminar, the speakers talked about Turkey’s ecological footprint, Turkey’s position with regard to climate and similar environmental issues, relevant work and arrangements in the public sector, the importance of such work with regard to corporate performance and decision-making process for investments and the role of the public sector and the business world on the drain of resources and climate change.

The seminar, realized with the participation of the representatives of İMKB-traded companies, focused on the draft criteria for ISESI, the sustainability indices of developed and emerging markets, and corporate sustainability reporting.

“The Draft Sustainability Criteria” is developed following the workshop organized on the 23rd of March. After getting feedback from ISE-traded companies, “The Sustainability Criteria” will be finalized. To see “The Draft Sustainability Criteria” click here.

The ISESI will adapt learnings from a cohort of sustainability indexes in developed and developing markets to determine the index methodology and sustainability criteria. With the project, a sustainability index at world standards will be created. The İMKB Sustainability Index is planning its launch at 2012.

Expected outcomes of the Index
With the completion of the project, those Turkish companies, which manage their corporate risks and opportunities effectively, will get competitive advantage. There will be an index, which can develop new investment instruments for finance and attract capital for companies.

The Index will display companies’ approach to important sustainability issues including global warming, draining of natural resources, health, security and employment, while allowing the independent assessment and in a sense, registration of their operations and decisions regarding these issues.

The Index offers companies the opportunity to compare their sustainability performance on a local and global level. With the Index, the İMKB provides companies an instrument for evaluating their performance and consequently adopting new targets or furthering their performance while allowing them to develop their risk management abilities for corporate transparency, accountability and sustainability. This, in turn, lets companies gain competitive edge. Inclusion in the Index will add to the visibility and prestige of companies.

The Index will allow companies to access global clients, capital, and lower-cost finance more easily.

The project aims to create an instrument which will allow investors to select and invest in companies that adopt principles of sustainability and corporate governance.

On the side of asset managers, the Index will provide an indicator that will be the underlying asset for various financial products including sustainability funds, exchange traded funds and structured products.

Today, responsible investment is preferred mainly by institutional investors. The İMKB Sustainability Index will encourage the establishment of such funds, while facilitating it for Index-constituent companies to get a larger share from such funds.

At the same time, the Index offers a new financial asset category for all investors.