Türkiye’s Sustainability Reporting Obligations Take Shape: Key Principles and Procedures Now in Force

On 16 July 2025, the Public Oversight, Accounting and Auditing Standards Board (the “Board”) published in Official Gazette No. 32957 the Board decision dated 25 June 2025 (Decision No. 75935942-050.01.04- [01/33130]) adopting the principles and procedures for implementing the Turkish Sustainability Reporting Standards (the “TSRS”). The publication provides a practical framework for determining which entities are subject to mandatory sustainability reporting and how the regime operates in practice.

The new Principles and Procedures turn the Board’s 27 December 2023 (No. 21634) and 16 December 2024 (No. 28294) decisions into an actionable compliance roadmap. They translate the TSRS framework into operational tests for scope, timing, exemptions, exit, consolidation, sector-specific revenue and employee-count calculations—so companies can move from a high-level obligation to a repeatable, evidence-based annual determination.

Who Falls Within the Scope of TSRS?

The decision identifies three key thresholds to determine whether an entity is subject to TSRS obligations:

• Total assets of TRY 500 million or more;
• Annual net revenue of TRY 1 billion or more;
• An average number of 250 or more employees.

For entities assessed under Article 6(2), meeting at least two thresholds is necessary but not sufficient. Subject to the exemptions described below, the entity must (i) have qualified as one of the institutions, organisations or undertakings covered by the Board decision for at least two reporting periods—for example, have been publicly listed for that period—and (ii) meet at least two thresholds in each of two consecutive reporting periods. Article 6(2) expressly provides that the two thresholds met in consecutive periods need not be the same. This status-and-threshold sequence matters in practice: a company that first becomes listed in 2023 will not enter mandatory reporting for 2024 merely because it meets two thresholds in 2022 and 2023; it must remain a qualifying entity and satisfy the threshold test again for the next determination.

A separate rule applies to banks supervised by the Banking Regulation and Supervision Agency (“BRSA”): under Article 6(1), and subject to the temporary exemptions in Article 5(2), they are subject to mandatory sustainability reporting without regard to the thresholds. For other qualifying entities, including publicly held joint stock companies whose shares are traded on a stock exchange, the Article 6(2) two-period test applies; listing alone does not automatically make them subject to reporting. Companies whose shares trade on Borsa İstanbul A.Ş.’s Watchlist Market or Venture Capital Market are expressly excluded from mandatory reporting under Article 5, and banks within the Savings Deposit Insurance Fund (“SDIF”) are likewise exempt. The scope analysis must therefore distinguish between BRSA-supervised banks, which are threshold-independent, and other qualifying entities, which must satisfy the status and threshold rules.

Subsidiaries and equity-method joint ventures and affiliates are included in the parent’s consolidated reporting perimeter where they are included in the consolidated financial statements. This does not mean that a qualifying subsidiary or affiliate is relieved of a separate reporting obligation: if it independently satisfies the criteria, it reports on its own as well. Conversely, a parent that is not itself subject does not become subject merely because a subsidiary or affiliate reports. The consolidation analysis therefore follows the applicable financial reporting perimeter, while standalone scope must be tested for each entity separately.

Exemptions and Exit Criteria 

The exemption analysis should not be conflated with the banking rule. BRSA-supervised banks other than those within SDIF are subject under Article 6(1) without regard to the thresholds, subject to any temporary exemption under Article 5(2). Article 5(1) expressly excludes from mandatory reporting: (a) banks within the SDIF; (b) joint stock companies that are not traded on a stock exchange or other organised market and issue, or hold a valid Capital Markets Board-approved issuance document for, capital market instruments other than shares without a public offering; and (c) companies whose shares are traded on Borsa İstanbul A.Ş.’s Watchlist Market or on the Venture Capital Market for sale to qualified investors. These are exemptions from mandatory reporting, not alternative ways of satisfying the thresholds.

For an entity that entered mandatory reporting because it exceeded the thresholds, Article 10(1) provides the ordinary exit route: acting alone or together with its subsidiaries and affiliates, it must fall below at least two threshold values in two consecutive reporting periods before exiting from the following reporting period. The two thresholds below which it falls need not be the same in both periods. A single year below the two-of-three test does not ordinarily end the obligation. Article 10(2) creates an accelerated rule: if, in a single reporting period, at least two thresholds are at least 20% below their applicable values, the company exits from the following reporting period without waiting for two consecutive under-threshold periods.

Article 10(3) addresses status-based exit separately: an entity already within scope exits as of the reporting period in which it loses its qualifying status, for example, if it is delisted. Companies should therefore maintain a rolling scope file covering the entity-status test, the two-of-three threshold results, any 20% accelerated exit trigger and the reporting period to which each conclusion relates. The regulation’s reference-year, reporting-year and exemption-year concepts are useful for documenting that analysis, but they do not replace the annual review required by Article 11.

Consolidated Reporting, Affiliates and Subsidiaries

The reporting perimeter follows the consolidated financial reporting perimeter. A parent that is subject to mandatory reporting must aggregate in its consolidated sustainability report the information of all subsidiaries included in its consolidation and the joint ventures and affiliates accounted for using the equity method. Example 4 illustrates the point: A Holding’s consolidated financial statements include A Holding, its subsidiaries Y Ziraat Aletleri and Z Perakende, and its equity-method affiliate U Balıkçılık; its sustainability report must likewise consolidate information from each of those entities.

The obligation is not limited by geography or by the reporting framework used by a group company. A parent within scope must include the information of subsidiaries, affiliates and branches operating abroad—even where they report under a different framework. For threshold calculations and supporting financial information, audited financial statements prepared under international accounting standards, including IFRS where applicable, should be used where available; otherwise, the financial statements prepared under the relevant local legislation or local GAAP are used.

Example 5 shows that consolidation and standalone obligations can coexist. B Holding must include D Tekstil, which operates in Germany and reports under European rules, G Enerji and J İnşaat in its consolidated sustainability report. Because G Enerji independently meets the reporting criteria, it must also publish a separate sustainability report covering its own subsidiaries and affiliates; that separate report does not relieve B Holding of its obligation to consolidate G Enerji. Conversely, Example 6 confirms that reporting does not flow upstream: M Holding is not required to report merely because its subsidiary P Madencilik is listed and must report independently.

Sector-Specific Revenue Rules

The decision interprets “net sales revenue” in a manner sensitive to sector-specific differences. Given that a standard revenue definition may not sufficiently reflect the operational nature of financial entities such as banks, insurance and pension, Article 8(2) replaces a one-size-fits-all revenue test with sector-specific line items. The regulation prescribes distinct revenue components for each category of financial entity—such as technical income for insurers, core operating revenue for factoring and leasing companies, portfolio management firms, factoring companies and financial leasing institutions, specific revenue items are considered for these institutions. For instance, technical income and contribution revenues are considered for insurance companies, while interest, dividend and commission income apply for investment firms and combined financial-sector revenue streams for holdings and for portfolio management companies, management fee income is the relevant metric. This tailored approach recognizes operational dynamics across sectors and supports a more equitable and practicable framework managers. Entities that do not prepare financials under Turkish Accounting Standards use their applicable framework, with the Presidential Decree audit-threshold rules applied by analogy. Companies should verify these classifications against their chart of accounts before finalising the threshold calculation.

Implementation Timeline and Transitional Provisions

The principles and procedures apply to reporting periods beginning on or after 1 January 2024. The two-year look-back means that the 2024 determination uses 2022 and 2023 financial and employment information. The Provisional Article 1 adds an important transitional rule: for the 2024 determination under Article 8, the 2022 financial statements must be taken without adjustment for the effects of inflation (“enflasyon etkisine göre düzeltilmemiş”). This prevents an inflation restatement from changing the historical baseline used for the first determination.

Assessment and Conclusion

TSRS obligations require more than disclosure of environmental and social performance: they require reliable data governance, ownership of the reporting process and an auditable trail from the applicable financial statements and payroll records to the sustainability report. Holdings and other groups must map the consolidation perimeter; sector-specific entities must identify the correct revenue lines; and all entities should align finance, HR, legal, compliance and sustainability teams before the annual scope assessment.

In-house legal and compliance teams should lead the annual scope review, document the applicable exemptions and exit tests, allocate data responsibilities across the group, and ensure that ESG policies, supplier arrangements, internal controls and audit protocols support the required disclosures. The key question is not only whether a parent reports, but also which subsidiaries and equity-method affiliates must be included and whether any entity has a separate reporting obligation.

Article 13 authorises the Institution to resolve uncertainties arising in the application of the Procedures. Companies should therefore monitor subsequent guidance and interpretive positions issued by the Institution and the Board, particularly where the status, consolidation or sector-revenue tests intersect with their business model.

Because Article 11 requires entities already within mandatory reporting scope to reassess their status in every subsequent reporting period, scope determination is an ongoing compliance exercise, not a one-time determination. Companies should maintain an annual calendar for the two-year threshold and status tests, review the Article 5 exemptions and Article 10 exit triggers, refresh group and employee data, and align their reporting systems and governance arrangements well before the relevant reporting deadline. Sustainability reporting is therefore no longer merely a voluntary ESG practice for in-scope entities; it is a recurring legal and operational obligation.

For more information on how TSRS obligations may impact your company’s reporting framework, internal structuring or group-wide responsibilities, please contact your CMS partner or local CMS expert: Dr. Döne Yalçın and Deniz Tirit.