Procedures and Principles Regarding the Implementation Scope of TSRS

31.08.2025 Ceren Eke

Introduction

Recently, financial, social, and environmental challenges experienced in our country and around the world have increased the sensitivity of societies and the business world toward sustainability. While developments in the field of sustainability continue at the international level, Türkiye has also been implementing policy and legislative reforms that contribute to its own green transformation process.

This Newsletter article examines the Procedures and Principles Regarding the Implementation Scope of the Türkiye Sustainability Reporting Standards (“TSRS”), which entered into force upon publication in the Official Gazette dated 16.07.2025 and numbered 32957.

Procedures and Principles Regarding the Implementation Scope of TSRS

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Türkiye Sustainability Reporting Standards

Sustainability reports are documents in which enterprises disclose the environmental, social, and governance impacts of their activities.

With the provision added to Article 88 of the Turkish Commercial Code No. 6102^[1], the Public Oversight, Accounting and Auditing Standards Authority (“Public Oversight Authority”) has been authorized to determine and publish sustainability reporting standards. Accordingly, the Türkiye Sustainability Reporting Standards^[2] have been published by the Public Oversight Authority with its decisions dated 27.12.2023 and numbered 75935942-050.01.04-[01/21632].

The implementation scope of the standards was first determined by the Public Oversight Authority’s Board Decision dated 27.12.2023 and numbered 75935942-050.01.04-[01/21634] (“Board Decision No. 21634”). Subsequently, amendments to the scope of implementation have been introduced with the Board Decision dated 16.12.2024 and numbered 75935942-050.01.04-[01/28294] (“Board Decision No. 28294”).

Most recently, with the Board Decision dated 25.06.2025 and numbered 75935942-050.01.04-[01/33130] (“Decision on Procedures and Principles”) the procedures and principles for the implementation of the previous two Board Decisions have been set out. While the previous board decisions established the fundamental rules, the Decision on Procedures and Principles clarifies how these rules are to be applied through practical examples and tables. In this respect, the Decision on Procedures and Principles serves as a more detailed and explanatory guide.

Institutions, Organizations, Enterprises Subject to Mandatory Sustainability Reporting

The institutions, organizations, and enterprises subject to mandatory sustainability reporting were initially determined by Article 3 of Board Decision No. 21634. In the subsequent period, the scope of entities subject to mandatory reporting was amended by Board Decision No. 28294. The entities currently subject to mandatory sustainability reporting are as follows:

Companies subject to the regulation and supervision of the Capital Markets Board under Law No. 6362^[3] that are; investment institutions, collective investment institutions, portfolio management companies, mortgage finance institutions, central clearing institutions, central securities depositories, data storage institutions, and partnerships whose shares are traded on the Stock Exchange, excluding partnerships whose shares are traded on the Watchlist Market of Borsa İstanbul A.Ş. and on the Venture Capital Market intended for qualified investors^[4] ,
Enterprises subject to the regulation and supervision of the Banking Regulation and Supervision Agency under the Banking Law No. 5411 dated 19.10.2005 that are banks^[5], rating agencies, financial holding companies, financial leasing companies, factoring companies, financing companies, asset management companies, companies holding a qualified shareholding in financial holding companies or banks as defined in Law No. 5411, savings finance companies.
Insurance, reinsurance, and pension companies operating under the Insurance Law No. 5684 dated 03.06.2007 and the Individual Pension Savings and Investment System Law No. 4632 dated 28.03.2001.
Authorized institutions, precious metals brokerage houses, and companies engaged in the production or trade of precious metals that are permitted to operate in the Borsa İstanbul markets.

In addition, with the Board Decision No. 28294, it has been decided that, among banks and non-bank financial institutions, excluding those whose shares are traded on the markets of Borsa İstanbul A.Ş., those whose number of branches does not exceed 1 or whose number of employees does not exceed 250 as of the previous year-end shall have their reporting of Scope 3 greenhouse gas emissions left optional in the periods when they are exempt from the obligation to disclose them^[6] . Moreover, in accordance with Article 3/3 of Board Decision No. 21634, banks under the Savings Deposit Insurance Fund (“TMSF”) are exempt from the mandatory sustainability reporting requirement. Banks not falling within the scope of the foregoing exemptions (namely, those not under TMSF and not benefitting from a temporary exemption) are subject to mandatory sustainability reporting without regard to any threshold criteria.

Threshold Value Implementation

Article 6 of the Decision on Procedures and Principles provides that institutions, organizations and enterprises meeting the prescribed qualifications for at least two reporting periods and exceeding at least two of the threshold values for two consecutive reporting periods are subject to mandatory sustainability reporting. In subparagraph (b) of the second paragraph of the same article, however, it has been stated that the two criteria met in successive reporting periods are not required to be the same criteria. The aforementioned three threshold values are as follows: (i) total assets of 500 million TRY, (ii) annual net sales revenue of 1 billion TRY, and (iii) number of employees^[7].

Under Article 10 of the Decision on Procedures and Principles, if a company subject to mandatory sustainability reporting by virtue of exceeding the threshold values subsequently falls (individually or together with its subsidiaries and affiliates) below at least two of the three thresholds—either for two consecutive reporting periods, or by 20% or more in at least two of the thresholds for a single reporting period—it will be removed from the scope of mandatory reporting from the following reporting period. The two criteria that fall below the threshold in consecutive periods need not be the same. In the event of losing the qualification of being one of the “institutions, organizations, or enterprises” within the scope, it is excluded from the scope as of the reporting period in which the situation occurs.

In the provision of Article 4/4 of Board Decision No. 21634 it is stipulated that, in determining whether the threshold values are exceeded, the enterprises shall be taken into account together with their subsidiaries and affiliates^[8] . Under the same provision, in enterprises that have subsidiaries and affiliates, in terms of total assets and annual net sales revenue, the sum of the items included in the financial statements of the parent company and the subsidiaries (eliminating intra-group transactions, if any) is taken into account. In terms of number of employees, the sum of the average number of employees of the parent company and the subsidiary for the last two years is taken into account. For affiliates, the relevant items will be taken into account in proportion to the undertaking’s shareholding. Similarly, Articles 7, 8, and 9 of the Decision on Procedures and Principles, respectively, regulate the financial statements to be taken as a basis in determining whether mandatory sustainability reporting is applicable, the principles to be applied in determining total assets and annual net sales revenue, and the details regarding the calculation of the number of employees.

Accordingly, in determining the total assets and annual net sales revenue of an enterprise together with its subsidiaries and affiliates, the statement of financial position and the statement of profit or loss and other comprehensive income for the last two reporting periods prepared in accordance with Turkish Accounting Standards will be used^[9]. If there are subsidiaries and affiliates located abroad, audited financial statements prepared in accordance with international accounting standards will be used, or, if these are not available, financial statements prepared in accordance with the legislation to which they are subject shall be taken into consideration. The regulation concerning the institutions, organizations and enterprises that do not prepare their financial statements in accordance with the Turkish Accounting Standards is set out in Article 8/3 of the Decision on Procedures and Principles.

Under Article 9 of the Decision on Procedures and Principles, the calculation of the number of employees is based on the monthly average of the total number of employees declared in the withholding tax return or in the withholding and premium service return for the year. The monthly average is obtained by dividing the total of the monthly employee counts for each month by twelve. Apprentices receiving vocational training in the company within the scope of apprenticeship and vocational training contracts and students doing internships are not taken into account in the calculation of the number of employees. The number of employees in affiliates is taken into account in proportion to the companies’ shareholding. In the calculation, the employee numbers of the company itself together with its subsidiaries and affiliates, both domestic and foreign, are taken into account.

Under Article 6/4 of the Decision on Procedures and Principles, the enterprise preparing the sustainability report is the same undertaking that prepares the relevant financial statements. For an enterprise preparing consolidated financial reports, this matter includes its consolidated subsidiaries, joint ventures accounted for by the equity method, and its affiliates.

Under Board Decision No. 21634, an enterprise meeting the conditions for mandatory sustainability reporting is required to prepare a consolidated sustainability report that includes the information and data of its subsidiaries, affiliates, and branches, even if they operate in different countries or report under a different framework. These principles are reiterated in the Decision on Procedures and Principles.

Furthermore, if any subsidiary or affiliate of such an undertaking individually meets the conditions for mandatory sustainability reporting, that subsidiary or affiliate is also required to prepare its own sustainability report, independently of the parent company, including its own information and data.

Evaluations in Subsequent Reporting Periods and Other Provisions

Under Article 11 of the Decision on Procedures and Principles, it has been provided that companies subject to mandatory sustainability reporting shall assess annually, in subsequent reporting periods, whether they remain within the scope of such reporting.

For a company that was previously subject to reporting requirements and that fell outside the scope, the determination of whether it will again be subject to sustainability reporting in subsequent periods shall be made in accordance with Articles 7, 8, and 9 of the Decision on Procedures and Principles.

The Decision on Procedures and Principles entered into force on the date of its publication to be applied in reporting periods starting on 01.01.2024 and thereafter.

Conclusion

Alongside global developments in the field of sustainability, significant steps continue to be taken in Türkiye. Most recently, by the Public Oversight Authority’s decision dated 25.06.2025, the procedures and principles governing the scope of application of the TSRS are applied. This new regulation, which serves as a detailed, example-based, and explanatory guide, offers clear responses to potential questions that may arise in practice.

References

Similarly, see Article 9/1(ö) of the Decree Law No. 660.
For the Newsletter article previously published on the Türkiye Sustainability Reporting Standards see. https://www.erdem-erdem.av.tr/en/insights/turkiye-sustainability-reporting-standards.
With the Board Decision No. 28294, “joint stock companies issuing capital market instruments other than shares without being publicly offered, although not traded on a stock exchange or other organized markets or joint stock companies that have an export document with a validity period approved by the Capital Markets Board for this purpose” have been removed from the scope of mandatory application.
With the Board Decision No. 28294 “joint stock companies whose capital market instruments are traded on a stock exchange or other organized markets, or which have a prospectus or export document with a validity period approved by the Capital Markets Board for trading,” have been replaced by “partnerships whose shares are traded on the stock exchanges, excluding partnerships whose shares are traded on the Watchlist Market of Borsa İstanbul A.Ş. and on the Venture Capital Market intended for qualified investors”. As a result, joint stock companies that previously fell within the scope under the former provision have been excluded from the mandatory sustainability reporting obligation. The revised wording further indicates that partnerships whose shares are traded on the Watchlist Market of Borsa İstanbul A.Ş. and on the Venture Capital Market intended for qualified investors are also excluded from the scope of mandatory sustainability reporting.
As explained in the article, for banks, attention should be paid to the provisions on temporary exemptions and whether the bank is under TMSF.
Under Article 14 of the Decision on Procedures and Principles, when assessing whether an institution, organization, or enterprises within this scope qualifies for a temporary exemption, only the branch count of the parent company shall be considered; the branch counts of its subsidiaries and affiliates shall not be included in the calculation.
See Article 3/1 of the Board Decision No. 21634.
In Article 4/2 of the Decision; it is stated that the concepts of parent company, subsidiary, and affiliate shall be taken into consideration with the meanings in the financial statements which are prepared in accordance with the Turkish Accounting Standards and which are taken as the basis in determining whether or not they are subject to the scope of the Board Decision No. 21634.
The items to be used in calculating net sales revenue for different institutions, organizations, and enterprises are specified in the Decision on Procedures and Principles.

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