Türkiye’s Green Asset Ratio Regulation: From Adoption to Implementation

On 11 April 2025, the Banking Regulation and Supervision Agency  (“BRSA”) took a landmark step towards embedding sustainability into Türkiye’s financial system by publishing the Communiqué on the Calculation of the Green Asset Ratio of Banks (“Communiqué”) in the Official Gazette. This new framework marked the beginning of a new era in which banks must measure, monitor, and transparently report on the contribution of their balance sheets to environmentally sustainable economic activities.

Purpose and Scope of the Communiqué

The Communiqué establishes the methodology and reporting standards for calculating the Green Asset Ratio (“GAR”) and related performance indicators. The Communiqué has two main objectives: (i) to quantify banks’ contribution to financing a sustainable economy, and (ii) to align domestic banking practices with emerging international sustainability taxonomies.

What is the Green Asset Ratio?

The Green Asset Ratio measures the proportion of a bank’s assets that finance environmentally sustainable economic activities. It is calculated by dividing a bank’s eligible green assets, recorded on a non‑consolidated basis, by the total assets that fall within scope.

“Eligible assets” include financial exposures linked to activities that make a substantial contribution to one or more of the following environmental objectives:

• climate change mitigation
• climate change adaptation
• transition to a circular economy
• sustainable use and protection of water and marine resources
• prevention and control of pollution
• protection and restoration of biodiversity and ecosystems

To qualify, an activity must significantly support at least one of these objectives without causing significant harm to others and must comply with minimum social safeguards.

Obligations and Innovations Introduced

Banks faced a series of operational and reporting requirements designed to ensure consistent measurement of sustainability‑linked exposures:

• Documentation and Reporting: Banks were required to create robust systems for documenting, classifying, monitoring, and verifying assets included in the GAR calculation. The first reporting period began on 30 June 2025. Pursuant to the BRSA’s decision dated 13 March 2025, it was resolved that banks were to submit their reports to the BRSA on a quarterly basis, calculated for three‑month reporting periods.
• Technical Screening Criteria: Eligible assets had to meet the technical screening criteria defined by the BRSA, which mirror global taxonomy approaches.
• No Significant Harm & Safeguards: Banks had to confirm that financed activities do not undermine other environmental goals and comply with the required social principles.
• Untraceable Use of Proceeds: Certain working‑capital loans and similar facilities could  qualify even when the precise use of the proceeds cannot be traced, provided that certain predefined conditions are met.

Why This Regulation Matters and Why It Could Be a Turning Point for Banks

The introduction of the GAR represented a strategic shift that will influence how banks lend, how capital is allocated in Türkiye, and how businesses access financing, and is not just an ESG reporting exercise.

First, the GAR creates transparency around banks’ sustainability performance, enabling regulators, investors, and the market to compare banks based on their contribution to environmental goals. Consequently, banks are likely to experience mounting pressure from a variety of sources, including supervisory expectations, stakeholders, and reputational drivers, to increase their allocation of green assets in the following years.

Second, GAR‑driven transparency is likely to influence lending behaviour in the forthcoming years. Banks may gradually reprice, prioritize, or expand financing for activities that improve their GAR scores, while becoming more cautious of carbon‑intensive sectors that negatively affect their sustainability profile. Over time, this may lead to a shift in capital towards renewable energy, energy-efficient buildings, green manufacturing and circular economy solutions.

Third, when banks adjust their lending policies and risk models, businesses across the economy will feel the impact. Those that align their operations and investments with environmental objectives may gain preferred access to credit, better pricing, and improved long‑term financing opportunities. Conversely, businesses that are unable or unwilling to adopt sustainability measures may face stricter terms or reduced credit availability. In this sense, the GAR acts as a financial catalyst, encouraging the real economy to undergo sustainable transformation.

Finally, the Communiqué significantly strengthens Türkiye’s alignment with international frameworks such as the EU Taxonomy and sustainability‑oriented prudential expectations that are emerging globally. This alignment could help banks attract foreign funding, ESG‑linked credit lines, and international investor interest.

Against this broader regulatory and strategic backdrop, the practical implementation of the GAR framework has taken the form of structured and periodic reporting obligations. Banks currently submit their reports to the BRSA on a quarterly basis, based on three‑month reporting periods. At this stage, the reports submitted to the BRSA are not publicly disclosed.

ESG Assessment and Conclusion

By embedding a standardized GAR in supervisory reporting, the BRSA has integrated sustainability into banks’ risk management and disclosure regimes. This move is set to strengthen market discipline, improve comparability across institutions, and bring Türkiye’s banking sector into line with evolving, taxonomy‑based international practices, thereby anchoring the transition to sustainable finance within the core of prudential oversight.

For more information on the Guidelines and impact on your company or business, contact your CMS partner or local CMS expert: Dr. Döne Yalçın or Dr. Zeynep Berin Manavgat.