New Guidelines on Green, Sustainable, Sustainability-Linked and Social Capital Markets Instruments by CMB

Recent Developments

The Capital Markets Board of Türkiye (the “CMB“) submitted to public opinion the Draft Guidelines on Green, Sustainable and Social Capital Markets Instruments (“Draft Green Guidelines“) and the Draft Guidelines on Sustainability-Linked Capital Markets Instruments (“Draft Sustainability-Linked Guidelines“, together with the Draft Green Guidelines, the “Draft Guidelines“). You may access the Draft Guidelines here.

What Do the Draft Guidelines Offer?

The Draft Green Guidelines, which are drafted based on the International Capital Markets Association’s (ICMA) Green Bond Principles, Sustainable Bond Guidelines and Social Bond Principle, focus on domestic and international issuances of green, sustainable and social capital markets instruments; green and social projects; green, sustainable and social capital markets instrument framework document; reporting and external review.

The Draft Green Guidelines cover green, sustainable and social capital markets instruments, such as green, sustainable and social debt instruments, lease certificates, asset- and mortgage-covered securities, asset- and mortgage-backed securities, project-backed securities, and real estate certificates. The Draft Green Guidelines evaluate blue capital markets instruments as green capital markets instruments.

The Draft Sustainability-Linked Guidelines, which are drafted based on the International Capital Markets Association’s Sustainability-Linked Bond Principles focus on domestic and international issuances of sustainability-linked capital markets instruments, the sustainability-linked capital markets instrument framework document, the performance assessment report, key performance indicators, reporting and the external review.

The Draft Sustainability-Linked Guidelines cover sustainability-linked capital markets instruments, such as sustainability-linked debt instruments, lease certificates, asset- and mortgage-covered securities, asset- and mortgage-backed securities, project-backed securities, and real estate certificates.

The Draft Green Guidelines set out the conditions that must be met for capital markets instruments to be named “green,” “sustainable” or “social”. Accordingly:

• In the framework document, the issuer must undertake that the issuance will be carried out in accordance with the principles set out in the Draft Green Guidelines.

• The funds raised from the issuance must be used exclusively for financing or refinancing a new and/or existing green and/or social project that meets the relevant green and/or social project descriptions, as specified in the framework document.

• The compliance of the issuance with the Draft Green Guidelines needs to be reviewed and assessed by a second party opinion, which is a type of external assessment.

Issuers must obtain external reviews from independent institutions specialized in environmental, sustainability and social issues to certify that their capital markets instrument issuances comply with the Draft Guidelines. The external review may be provided by the institutions listed by organizations such as the International Capital Markets Association and the Climate Bonds Initiative, as well as public institutions specialized in sustainability-related issues and providing external review services or institutions authorized for independent audit or rating in capital markets.

For issuances under the Draft Green Guidelines, a separate issuance ceiling must be obtained from the CMB, and only green, sustainable and social capital markets instruments or sustainability-linked capital markets instruments must be issued within the scope of this ceiling.