Amendments to Türkiye Sustainability Reporting Standards
Contents
The scope of Türkiye Sustainability Reporting Standards (“TSRS”) has been significantly narrowed by amendments which entered into force from accounting periods beginning on or after January 1, 2024. The decision was adopted by the Public Oversight, Accounting and Auditing Standards Authority (“KGK”) on December 16, 2024 and published in the Official Gazette on December 18, 2024.
Most notably, companies who trade shares to qualified investors on Borsa İstanbul A.Ş. (“Borsa İstanbul”), Watch List Market (Yakın İzleme Pazarı) and Venture Capital Markets (Girişim Sermayesi Pazarı) are now exempt from TSRS.
Previously, joint stock companies who traded their capital market instruments on a stock exchange or other organized markets, or for who an issuance certificate or prospectus had been approved for trading, were subject to TSRS. The amendment now includes only companies whose shares are traded on Borsa İstanbul.
Joint stock companies not trading their securities on a stock exchange or other organized market, but who have issued capital market instruments other than shares without a public offering,or hold an issuance certificate approved by the Capital Markets Board with a valid term for such issuance, are also now exempt from TSRS requirements.
The TSRS reporting obligation is now optional for private banks (and other financial institutions whose shares are not publicly traded) provided they meet certain criteria. Banks and financial institutions subject to the Banking Regulation and Supervision Agency (BDDK) whose shares are not traded on Borsa İstanbul and, as of the end of the previous year, have no more than one branch (or no more than 250 employees) are no longer required to disclose greenhouse
gas emissions. Moreover, this option may be exercised during the first two reporting periods.
The Scope of Affiliates
Importantly, the new regulations specifically require that the impact of affiliates be considered when assessing TSRS obligations. Potentially influential factors such as the financial scale, sectoral impact, and environmental risk management of affiliate companies are yet to be clearly defined.
It is fundamental that financial indicators such as total assets and annual net revenue be based on the consolidated figures of the parent company and its subsidiaries - and intra-group transactions excluded.
Employee count is based on the total average number employed by the parent and its subsidiaries over the previous two years. Relevant financial figures will be calculated in proportion to the company’s shareholding in the affiliate.
Threshold Exceedance and Entry-Exit Criteria
TSRS obligations are also determined by exceedance of at least two of the following financial thresholds for two consecutive accounting periods:
» Total assets: 500 million Turkish Liras
» Annual net revenue: 1 billion Turkish Liras
» Number of employees: 250
Exceeding these values places the company within the scope of TSRS from the start of the subsequent accounting period. The most recent two years’ financial statements, prepared in compliance with the relevant regulations, are used to calculate total assets and annual net revenue (with the average number of employees used for employee count). Relevant financial figures will be calculated in proportion to the company’s shareholding in any affiliate.
If thresholds fall below specified levels the exit criteria are the same. Namely, a business is exempt from TSRS obligations if it remains below thresholds for two consecutive accounting periods (or experiences a significant decline below the required levels).
Conclusion
TSRS ensures transparent reporting of information beyond companies’ financial structures with a focus on Environmental, Social, and Governance (“ESG”). This not only enhances a company’s reputation among investors, customers and the public but also demonstrates its commitment to responsible business practices.
The amendments have significantly changed corporate reporting obligations. While TSRS regulations improve the transparency of companies’ sustainability strategies, the treatment of affiliates within the new framework remains a critical issue. As businesses adapt it is crucial they carefully assess the financial implications of their affiliate structures.
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