Türkiye Sustainability Reporting Standards: Changing the Rules of the Game for the Business World!

A significant step has been taken in Türkiye that directly affects  the business community. The Türkiye Sustainability Reporting Standards (TSRS) were published in the Official Gazette No. 32414 on 29 December 2023, and came into force on  1 January 2024.

The Türkiye Sustainability Reporting Standards (TSRS) enable companies to report their environmental, social, and governance (ESG) performance in alignment with both national and international standards.
These standards, prepared by the  Public Oversight, Accounting and Auditing Standards Authority, are inspired by globally recognized frameworks. TSRS has been developed based on the standards issued by the International Sustainability Standards Board (ISSB), which operates under the International Financial Reporting Standards (IFRS) Foundation.

Sustainability reporting makes a company’s environmental and social performance more transparent, while also highlighting how organizations manage risks and opportunities related to critical issues such as climate change. This regulation serves as a roadmap for companies in terms of transparency and accountability, while also empowering stakeholders to make more informed decisions.

A Milestone in Financial Reporting: The Role of TSRS 1 and TSRS 2

TSRS 1 aims to position sustainability-related risks and opportunities as a strategic guide for users of general-purpose financial reports. It mandates the disclosure of critical sustainability information to enable businesses to make more informed decisions about allocating capital.

TSRS 2, titled "Climate-Related Disclosures", is a key regulation that  ensurescompanies set clearer and more measurable targets in the fight against climate change. Aligned with EU regulatory frameworks and Türkiye’s harmonization processes, this standard requires the disclosure of quantitative climate-related targets.

Four Key Pillars of Sustainability Reporting: The Foundation of Transparency and Trust

Sustainability reporting requires companies to be transparent in terms of  governance, strategy, risk management, and metrics and targets. In this context:

• Governance: Companies are expected to disclose their sustainability and climate-related processes and internal controls.
• Strategy: Strategic approaches that demonstrate how companies manage sustainability and climate-related risks are of critical importance.
• Risk Management: Businesses should detail how the processes for identifying sustainability and climate-related risks and opportunities are integrated into their overall risk management frameworks.
• Metrics and Targets: In line with TSRS standards, companies must  disclose all sustainability-related risks and opportunities that could  materially impact on their financial statements, supported by relevant metrics.

These pillars enhance transparency and foster trust among stakeholders.

Companies Subject to TSRS: Who Is Required to Report?

The sustainability reporting obligation introduced by the Türkiye Sustainability Reporting Standards (TSRS) only applies to companies of a certain size and structure. This mandatory requirement is applies to companies that exceed the following thresholds:

• Publicly traded companies
• Companies with total assets exceeding TRY 500 million
• Companies with annual net sales revenue exceeding TRY 1 billion
• Companies with more than 250 employees
• Banks regulated by the Banking Regulation and Supervision Agency (excluding those under the Savings Deposit Insurance Fund)
  
  

If a company exceeds the defined thresholds for two consecutive reporting periods, it will be required to comply with TSRS. However, with voluntary reporting, puts you in the driving seat of this transition and enables you to build strong stakeholder trust.