Recent Developments
The Ministry of Environment, Urbanization and Climate Change of the Republic of Türkiye has circulated the Draft Regulation on Türkiye's Green Taxonomy (the "Draft Regulation"), prepared with the aim of supporting economic activities in line with sustainable development goals, encouraging the flow of financing to sustainable investments, and preventing greenwashing, for consultation. You can provide your opinions on the Draft Regulation here.
What Does the Draft Regulation Offer?
The Draft Regulation defines the basic criteria to be taken as reference in Türkiye's Green Taxonomy (the "Taxonomy"), the reporting requirements and the authorities in charge of Taxonomy.
Basic Criteria for the Taxonomy
The Draft Regulation identifies reduction of greenhouse gas emissions, climate change adaptation, the sustainable use and protection of water and marine resources, the transition to a circular economy, pollution prevention and control, and the protection and restoration of biodiversity and ecosystems as environmental objectives and determines the practices that are meant to make a significant contribution in achieving these objectives. The Draft Regulation introduces the definition of "sustainable economic activity" into Turkish laws, which allows the classification of environmentally sustainable economic activities of companies from different sectors and within the scope of uniform set of rules, thereby facilitating the creation of an atmosphere of trust for investors motivated by environmental concerns, reducing greenwashing, and encouraging sustainable investments. In this respect, in order for an activity to be considered a sustainable economic activity, it must contribute substantially to one or more of the environmental objectives, not significantly harm any other environmental objective set out in the Draft Regulation, must be carried out in compliance with the minimum safeguards laid down in the Draft Regulation; and comply with technical screening criteria determined in the Draft Regulation. Consequently, by clarifying which economic activities are compatible with sustainable development goals, the access of the companies engaged in these activities to financing sources will be facilitated.
Reporting
The Draft Regulation stipulates that the parties entities that are obliged to report on sustainability in accordance with the Turkish Sustainability Reporting Standards must also provide the information on their eligible economic activities carried out in the previous year to the e-taxonomy system of the Presidency of Climate Change (the "Presidency") along with their sustainability reports to be submitted each year, after verification of this information by verifying institutions.1 This reporting obligation will come into force on 1 January 2027, but voluntary reporting may be made until 31 December 2026. Who do not fulfill their obligation to provide notification, information and documents required for reporting will be subject to administrative fines in accordance with Environmental Law No. 2872.
Authorities Responsible for the Taxonomy
The Presidency, the Green Taxonomy Committee of Türkiye ("Committee") to be established by the Presidency and the Taxonomy technical expert group to be established by the Committee will be in charge of the Taxonomy. In this context, the relevant bodies will have duties and responsibilities such as determining sustainable economic activities and technical screening criteria, conducting sector-specific technical examinations and preparing reports within the scope of determining the relevant criteria.
Conclusion
Through the Draft Regulation, Türkiye joins the ranks of countries that have initiated taxonomy initiatives to define and promote sustainable economic activities. Accordingly, Türkiye will have a classification system that identifies environmentally sustainable investments. With the Regulation, sustainability, which has been addressed in various parts of Turkish laws and regulations, will be brought to the forefront in such an inclusive manner for the very first time.
Footnotes
1 You can find our client alert on which organizations should report on sustainability here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
