I. INTRODUCTION
Today, climate change mitigation and sustainable development goals play a decisive role in the restructuring of financial systems both globally and locally. It is important for financial institutions to steer their activities by taking environmental risks into account, in order to enhance the effectiveness of sustainable financing policies. In Türkiye, it is observed that regulatory authorities have accelerated the adoption of regulations incorporating environmental and social responsibilities in recent years to contribute to this transformation process.
Within this framework, the Communiqué on the Calculation of Banks' Green Asset Ratio ("Communiqué"), published in the Official Gazette dated 11/04/2025 and numbered 32867, aims to promote the alignment of banks with environmental sustainability criteria. The Communiqué sets out the procedures and principles regarding the calculation and reporting of banks' green asset ratios and other key performance indicators. This regulation seeks to ensure greater transparency in the environmental impact of financial institutions and to support the development of their sustainable finance strategies.
II. FUNDAMENTAL PRINCIPLES
1. How Is the Green Asset Ratio Calculated?
The green asset ratio is the primary key performance indicator in terms of banks' activities, reflecting how and to what extent these activities take into account sustainability and environmental objectives, as well as the degree to which they contribute to such objectives. The green asset ratio is calculated by dividing the eligible assets included in banks' unconsolidated balance sheets by the total assets encompassed within the scope of the green asset ratio.
𝐸𝑙𝑖𝑔𝑖𝑏𝑙𝑒 𝐴𝑠𝑠𝑒𝑡𝑠 𝐼𝑛𝑐𝑙𝑢𝑑𝑒𝑑 𝑖𝑛 𝐵𝑎𝑛𝑘𝑠′ 𝑈𝑛𝑐𝑜𝑛𝑠𝑜𝑙𝑖𝑑𝑎𝑡𝑒𝑑 𝐵𝑎𝑙𝑎𝑛𝑐𝑒 𝑆ℎ𝑒𝑒𝑡𝑠
𝑇𝑜𝑡𝑎𝑙 𝐴𝑠𝑠𝑒𝑡𝑠 𝑤𝑖𝑡ℎ𝑖𝑛 𝑡ℎ𝑒 𝑆𝑐𝑜𝑝𝑒 𝑜𝑓 𝑡ℎ𝑒 𝐺𝑟𝑒𝑒𝑛 𝐴𝑠𝑠𝑒𝑡 𝑅𝑎𝑡𝑖𝑜
In calculating eligible assets, within the total assets encompassed by the green asset ratio, the gross amounts of on-balance sheet financial assets—measured at amortized cost—pertaining to all economic activities included in the technical screening criteria defined by the Banking Regulation and Supervision Board (the "Board") are summed.
In calculating compliant assets, among eligible assets, the gross amounts—measured at amortized cost—of on-balance sheet financial assets related to economic activities that simultaneously (i) significantly contribute to one or more environmental objectives, (ii) do not cause significant harm to other environmental objectives, and (iii) fulfill the conditions for ensuring minimum social security standards are summed. It is important to note that working capital loans and other similar types of credit, allocated to enterprises that derive at least 90% (ninety percent) of their most recent fiscal year's turnover from compliant assets and that have not generated any revenue from non-renewable energy sources during the past year—but for which the designated place of use cannot be determined in a concrete manner—may nonetheless be accepted as compliant assets in the calculation of the green asset ratio.
In calculating total assets under the green asset ratio, (i) receivables from public administrations within the scope of the central government, from central banks, and from supranational organizations—as well as assets recorded in trading accounts—are first deducted from the total on-balance sheet financial assets; thereafter, (ii) the gross amounts of the remaining on-balance sheet assets, measured at amortized cost, are added to the result.
2. What Are the Criteria to Be Determined by the Board for Identifying Compliant Assets?
In calculating the green asset ratio, the accurate identification of the compliant assets serving as its basis is of critical importance for the proper evaluation of banks' environmental sustainability performance. In this context, under the Communiqué, the principles for identifying compliant assets shall be determined either directly by the Board or by authorized public institutions in accordance with the Board's decision, and three fundamental headings have been established as a framework within the Communiqué:
Technical Screening Criteria: The inclusion of a compliant asset in the green asset ratio is contingent upon the asset making a significant contribution to at least one environmental objective and meeting the technical screening criteria established by the Board. Banks are required to verify—and ensure availability for audit—that the technical screening criteria have been or will be met, using emission reports, feasibility studies, energy efficiency assessment reports, and similar documents prepared by independent verifiers, in addition to national or internationally recognized certifications, green technology selection tools, or investment-related expenditure documentation. For compliant assets with maturities, it is imperative to continuously monitor whether the technical screening criteria are maintained throughout the term.
Avoidance of Significant Environmental Harm: When evaluating whether economic activities cause significant harm to the environment, the assessment should not be based solely on their positive impacts, but also on whether they inflict damage on other environmental areas. Accordingly, both the activity itself and the environmental impacts of the products and services it produces over their entire life cycles are evaluated. Environmental consequences that may arise after the usage phase has ended are also analyzed within this framework. Banks are obligated to prepare and maintain, for audit purposes, the technical and administrative documentation that confirms compliance with this requirement. For compliant assets with maturities, it is essential to monitor whether the criteria for avoiding significant environmental harm continue to be met throughout their maturity period.
Minimum Social Security Standards: The activities to be included in the green asset ratio are expected to meet certain minimum standards not only environmentally but also socially. Accordingly, it is mandatory for the activities and the involved parties to act in accordance with the fundamental principles of social security. Banks are required to prepare the documentation confirming that these standards are met and, if necessary, present such documentation for an audit. For compliant assets with maturities, it is essential to monitor whether the criteria for compliance with minimum social security standards continue to be satisfied throughout their term.
The aforementioned set of three criteria enables banks to calculate their green asset ratios not only through a quantitative lens but also with a qualitative perspective. This approach provides a significant regulatory framework that supports the integration of environmental and social responsibility into the financial system.
It is important to note that, in determining compliant assets, the objective of mitigating climate change shall be taken into account. For the calculation of the green asset ratio, the objectives of climate change adaptation, transition to a circular economy, sustainable use and conservation of water and marine resources, pollution prevention and control, as well as the protection and restoration of biodiversity and ecosystems may be incorporated within the scope by the Board.
3. What Are the Other Obligations Imposed on Banks Under the Communiqué?
Global regulations on environmental sustainability and climate change mitigation focus not only on the investment preferences of financial institutions, but also on the transparent monitoring and public disclosure of such preferences. In this respect, as in European Union regulations, reporting activities constitute the core of the obligations imposed on banks in Türkiye. Pursuant to the Communiqué, banks are required to manage the data and processes related to the green asset ratio calculated within the framework of environmental sustainability. Accordingly;
(i) Banks must establish documentation, classification, monitoring, and control processes, along with the relevant internal policies, for the assets comprising the numerator and denominator of the green asset ratio. They must also make the necessary arrangements in their databases and develop an appropriate reporting system.
(ii) Banks are required to submit their green asset ratio reports to the Banking Regulation and Supervision Agency within the timeframes to be determined by the Board. This reporting requirement will take effect as of 30 June 2025
The Board shall determine and differentiate the green asset ratio reporting obligation based on the type and size of the bank and is empowered to differentiate it.
4. What Are the Secondary Key Performance Indicators Established Under the Communiqué?
Pursuant to the Communiqué, in addition to the green asset ratio, banks are required to calculate two secondary key performance indicators to assess their contribution to environmental sustainability: the ratio of compliant assets to eligible assets, and the ratio of eligible assets to total assets within the scope of the green asset ratio. The Board is authorized to define new performance indicators and impose related reporting obligations in line with the national taxonomy framework.
III. CONCLUSION
In conclusion, the regulations introduced by the Communiqué enable the assessment of environmental sustainability principles in the banking sector through concrete indicators and contribute to the establishment of an institutional framework in the field of sustainable finance. In the upcoming period, it is expected that the development of financial legislation and its alignment with international practices will continue in line with climate change mitigation, green transition, and sustainable development goals. Accordingly, the Board's further development of the criteria for calculating the green asset ratio and the clarification of the implementation details, within the framework of the powers conferred upon it by the Communiqué, will strengthen the scope of the regulation.
The full text of the Communiqué can be accessed here.
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