Türkiye aligns with ISSB Standards, unveiling much awaited Turkish Sustainability Reporting Standards for 2024

On 27th December 2023, KGK announced that it had chosen to use International Sustainability Standards Board (ISSB) standards, part of the International Financial Reporting Standards Foundation (IFRS), as the international basis for the TSRS. In practice this means that the Turkish sustainability standards will mirror those of the IFRS, rather than the European CSRD or US disclosure standards.

So far, the ISSB has released two sustainability standards: S1 sets out the general requirements for disclosing sustainability-related financial information and S2 is for climate-related disclosures. These now map to TSRS1 and TSRS2 under the new Turkish Sustainability Reporting Standards.

What does this mean for Turkish companies?

The short answer is that large Turkish companies that have not yet published a Sustainability Report will be required to do so for 2024 by 2025, and those that have previously published reports using GRI or WEF standards must now switch to TSRS. They will need to begin by analyzing the differences between what they are currently reporting on and what TSRS requires (‘gap analysis’).

On a positive note, there is a two-year grace period for Scope 3 reporting to allow companies to adjust. Scope 3 is where most of the carbon lies and is the most difficult to report on because it requires other, usually smaller, counterparties like suppliers to provide detailed information.

Also, companies need report on TSRS1 and TSRS2 only if they meet at least two of three criteria in two consecutive reporting periods which are a) total assets over TL 500 million (USD 17 million), b) annual net sales revenue of TL 1 billion or more, or c) 250 or more employees. Financial institutions listed companies and other companies that fall within the remit of the Capital Markets Board will be required to publish against TSRS irrespective of size criteria.

Further clarification is needed on deadlines for reporting and whether these TSRS compliant reports will need an external audit. It’s likely that publicly listed companies will require an external audit based on the ISSA 5000 International Standard. This is in the process of being finalised but external audits on selected indicators (carbon, energy use, etc.) have been performed for some time using language that offers ‘limited’ assurance. For more on ISSA 5000, here’s an excellent article from Noah Wasswa at Deloitte.

For Turkish readers, see the KGK’s press release here.
The full text of the TSRS in Turkish here.
Turkish TSRS 1 here.
Turkish TSRS 2 here.