Turkish companies must match Zorlu Enerji’s transparent and responsible business model in order to boost investor confidence in the region
Exploring energy derived from domestic and renewable sources sits high on the Turkish government’s agenda, being an area that, if properly exploited, could have a profound impact on the country’s economic fortunes. Turkey’s reliance on imports continues to drain the country’s resources and with this there exists a responsibility on the part of local players to step up and improve upon the investment landscape.
Despite Turkey’s modest economic growth, many investors are still cautious of a climate that has too often fallen foul of poor governance. In order to meet government ambitions and boost investment, more must be done to cement Turkey’s reputation as a reliable and sustainable place for doing business.
One of the biggest names leading developments of this kind is Zorlu Energy Group, which boasts over 20 years of industry experience and the backing of the Zorlu Group. What differentiates Zorlu Energy Group above all else however is not its expertise, but a collective commitment to good governance and matters of a social and environmental significance.
Zorlu Energy Group’s operations span a range of integrated services, including electricity and steam generation, electricity and natural gas trading and distribution, and the turnkey delivery of power plants – encompassing project development and long-term maintenance and operation services.
Of the Zorlu Energy Group, a – a company that is solely engaged in the generation and sales of electricity and steam, Zorlu Enerji Elektrik Üretim A.Ş. (Zorlu Enerji) is the flagship, and remains the only listed company of the Zorlu Energy Group’s constituents.
Zorlu Enerji currently has 877 MW of installed capacity, of which 821 MW resides in Turkey and 56.4 MW in Pakistan, with 45 percent of the company’s current capacity stemming from renewable energy sources, i.e. hydro, geothermal and wind power plants. The company also recently expanded its renewable capacity by commissioning Turkey’s largest geothermal power plant – with 80 MW of installed capacity – and Pakistan’s first private sector wind farm – worth 56.4 MW of capacity.
The company’s target is to reach 2,300 MW of installed capacity in the medium term by focusing on renewable projects in Turkey and on gas fired power plants in Israel, former of which looks to offset Turkey’s reliance gas imports by considerable margins.
Zorlu Enerji is among the first of the private sector companies to enter Israel’s electricity market, and is currently in the process of constructing three natural gas fired power plants with a combined capacity of 1,015 MW. The first and largest of these projects, Dorad Natural Gas Power Plant, boasting 840 MW of installed capacity, is scheduled to begin operations in Q1 2014 and upon completion, will account for six percent of Israel’s total installed capacity.
With these numerous power plant investments, the company not only contributes to Turkey’s mission to increase the use of its indigenous and renewable resources in electricity generation, but also adds value to the surrounding hinterland by supporting agriculture and employment, in effect increasing sustainability on various fronts.
Zorlu Enerji is the first energy company in Turkey to calculate its carbon footprint and stands at the forefront of sustainable advances in the energy sector, being the first to obtain ISO 14064-1 Greenhouse Emission Standard certification. The monitoring activities show that in 2011, the direct CO2 emissions created by the Company’s operations were reduced by 11 percent and indirect CO2 emissions by two percent compared to 2010.
In 2011, the company received the “Carbon Disclosure Leadership Award” for Turkey; and with its performance in 2012, ranked fourth of the top Carbon Disclosure Leaders in Turkey.
Zorlu Enerji was also the first Turkish energy company to prepare a sustainability report, with the Company’s 2012 Sustainability Report earning one of the 24 ‘Level A’ ratings awarded to energy companies worldwide by GRI – marking a first for Turkey’s energy sector.
As is evidenced by the company’s commitment to green energy, Zorlu Enerji is extremely aware of the environmental impact of its operations. While reduction of emissions and climate protection are top strategic environmental issues, the firm also focuses on energy efficiency as a means of combating the climate change problem.
Far from excluded to matters of an environmental significance, Zorlu Enerji also heads a number of projects that create value, contribute to employment, and support sustainability by focusing on indigenous and renewable resources.
The company’s principal social concerns relate to employee happiness and health and safety, which are mostly affected by the overall impact and engagement with the many local communities the company comes into contact with.
Through its various social responsibility projects, Zorlu Enerji aims to reach local people living in regions where power plants are located. As of October, 104,000 children were reached via the “Our Energy is for Children” project, which has been initiated with the objective of raising environmental awareness amongst younger generations. The flagship educational corporate social responsibility project will continue to take steps towards a sustainable world, the target for next year being to reach an additional 50,000 thousand students in the region and train them on energy-related issues.
Zorlu Enerji’s CSR efforts are far from confined to external matters, best characterised by numerous structural changes intended to improve upon transparency and establish an industry standard for others to aspire to. The Company is committed to adopting the best corporate governance practices and achieving full compliance with the Turkish Capital Market Board’s (CMB) evolving Corporate Governance Principles going forward. The management sees this as an on-going process and attaches the utmost importance to progress in this arena.
Zorlu Enerji commenced its corporate governance activities in 2005 and has, since then, put in place a series of mechanisms to achieve better governance in strict compliance with the Corporate Governance Principles published by the CMB, as well as with broader international standards.
Initially the company’s Articles of Association were amended to accord with these principles, with additional rights granted to minority shareholders and radical changes made to the management structure. Within this context, the board of directors was made more transparent with the addition of independent members, and audit and corporate governance committees were set up to further increase the board’s effectiveness. The chairmen of both committees are selected from independent directors to ensure the committees’ objectivity at all times.
In addition, an Investor Relations Department was set up to help maintain continuous communication with the shareholders and to facilitate shareholders’ ability to exercise their rights and obtain relevant information. A dedicated investor relations website was also created in recognition of the stakeholders’ rights to have equal, complete, timely, and fast access to company information.
In line with the new Corporate Governance Principles Communiqué published by the CMB in late 2011, Zorlu Enerji adopted a Remuneration Policy (applicable to its Board members and senior executives), a Donation and Charity Policy, made further revisions to its Articles of Association and established an Early Detection of Risk Committee in 2012.
Understanding that a solution to Turkey’s economic inefficiencies lies not with quick fixes but with a long-term commitment to the wider community, Zorlu Enerji’s corporate governance looks to up investor confidence in the region, provided that others follow suit.