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Climate regulation is increasingly moving from policy intent to legal reality, and, with it, into the core of transactional decision-making.
In Turkish M&A practice, climate-related considerations have generally been addressed within the broader scope of environmental compliance or ESG positioning. With Climate Law No. 7552 now in force, this approach may begin to shift. In that sense, the shift is less a break with the past than a formalisation of practices already familiar in more mature markets.
The new law marks an important step in Türkiye’s transition from policy-level climate commitments to a more structured regulatory framework. While framed as an environmental measure, its implications are likely to extend beyond compliance. For purchasers and sellers, the new framework is expected to shape how Turkish targets are assessed, valued, structured and managed post-closing.
By introducing a legal basis for emissions trading, greenhouse gas emission permits and carbon market mechanisms, the Climate Law brings climate regulation closer to the core of transactional analysis, particularly for carbon-intensive sectors, export-oriented businesses and companies whose competitiveness may depend on transition readiness. It also signals a shift towards a more data-driven and verifiable compliance landscape, where emissions-related metrics are likely to carry increasing legal and commercial significance. From a legal due diligence perspective, this necessitates a more focused assessment of whether the target falls within the scope of the Emissions Trading System, is required to obtain a greenhouse gas emission permit, may be subject to allowance allocation and surrender obligations, and can meet the applicable monitoring, reporting and verification requirements under the evolving climate law framework.
Climate Compliance as a Distinct Transactional Workstream
One of the immediate implications of the new framework is that climate compliance is unlikely to remain a background ESG consideration. Instead, it is taking shape as a more defined regulatory area, with its own institutions and compliance mechanics. From an M&A perspective, this is likely to translate into a more structured review process. Purchasers may focus not only on the target’s current environmental compliance, but also on whether it falls - or may soon fall - within the scope of the Emissions Trading System, whether it will be required to obtain a greenhouse gas emission permit, and whether it will be subject to monitoring, reporting and verification obligations. They may also assess whether the target’s activities could trigger allowance-related requirements, including the allocation, holding, transfer or surrender of allowances under the Climate Law and its forthcoming secondary legislation.
Given that the Climate Law sets out the overarching framework while leaving many practical aspects to secondary legislation, deals may increasingly require an assessment of both current compliance and forward-looking regulatory exposure. This assessment should cover whether the target has made the required submissions, prepared, or is capable of preparing, verified annual greenhouse gas emissions reports (where applicable), and secured (or requires) access to any registry, account or other market-facing infrastructure established under the ETS framework, as well as whether it has been subject to inspections, information requests or administrative actions in connection with its climate-related obligations. In practice, this often calls for closer coordination between legal, technical and financial advisors, particularly in deals involving emission-intensive operations.
A More Forward-Looking Approach to Due Diligence
The law is also likely to influence how due diligence is approached. While environmental reviews in Turkish transactions have traditionally focused on permits and site-specific compliance, they are expected to become more data-driven and more closely linked to commercial considerations. Under the new framework, legal due diligence may increasingly need to assess whether the target falls within the scope of climate-law instruments’ implementation, whether it is required to hold a greenhouse gas emission permit, whether it may participate, directly or indirectly, in ETS-related market infrastructure, and whether its operations and reporting systems are capable of supporting monitoring, reporting and verification, as well as any allowance-management requirements.
In this respect, the scope of environmental due diligence may begin to expand, increasingly incorporating technical, EHS and climate-related assessments.
In practice, this often involves assessing a target’s emissions profile, the reliability of its monitoring and reporting systems, and its potential exposure to carbon costs; areas that, until recently, were not always treated as core diligence items in Turkish transactions. From a legal due diligence perspective, this may include reviewing the target’s greenhouse gas emission permit status, its monitoring and reporting records, verified emissions data and, where applicable, annual greenhouse gas emissions reports, as well as correspondence with the competent authority and any inspection history or administrative sanctions relevant to its climate-law compliance. It may also extend to assessing the target’s preparedness for any registry, allocation, transfer or surrender processes that may arise under the ETS framework. Purchasers may also need to consider whether additional capital expenditure may be required to align operations with a more demanding regulatory environment or to maintain competitiveness in export markets increasingly shaped by climate-related measures.
This shift is likely to be more visible in sectors such as energy, cement, steel, chemicals, manufacturing and logistics, where climate exposure may begin to affect profitability, pricing dynamics and investment planning.
Valuation and Deal Structuring
As the framework develops, climate-related risks and opportunities are also expected to factor more directly into valuation discussions. Sellers may highlight transition readiness or access to green financing as value drivers, while purchasers may focus on potential future costs, regulatory uncertainty and the pace of implementation. In practice, the extent to which such factors translate into value will often depend on how clearly they can be evidenced and quantified.
This can lead to wider valuation gaps, particularly where the financial impact of future regulation is not yet clear. In practice, this gap is often bridged through familiar structuring tools, such as earn-outs, deferred consideration, escrow arrangements and targeted indemnities, as is often the case in M&A transactions where forward-looking risks are difficult to price at signing.
The Climate Law is also expected to influence how deals are structured and negotiated. General compliance warranties may no longer be sufficient in deals involving climate-sensitive sectors. Purchasers may seek more tailored protections relating to emissions data, reporting systems, greenhouse gas emission permit status, monitoring-reporting-verification compliance, annual reporting, allowance exposure, registry or account access, dealings with any market operator where relevant, and regulatory filings. Where a target relies on climate-related representations, there may also be greater focus on whether such statements are adequately supported and internally consistent.
Looking Ahead: Carbon Rights and Investment Strategy
Where a target owns or relies on carbon projects, offsets or similar instruments, what is being acquired, and how robust that value is, may require closer scrutiny. Such rights may depend on registration, verification, issuance, registry recognition and regulatory treatment within the relevant carbon market framework, and their transferability may not always be straightforward, particularly as the regulatory framework continues to evolve.
More broadly, the Climate Law may begin to influence investment strategy beyond the transaction itself. As the framework becomes more defined, purchasers may place greater emphasis on a target’s ability to align with transition requirements, access green financing and meet investor expectations. This may, in turn, shape both deal appetite and post-closing priorities.
Over time, this may contribute to a broader shift: targets with stronger emissions visibility, more developed compliance systems and a clearer transition pathway may become easier to assess, finance and ultimately exit.
Conclusion
The Climate Law is unlikely to reshape the Turkish M&A market overnight, and much will depend on how the framework develops in practice. Even so, climate considerations are moving more firmly into the centre of transactional analysis.
For purchasers and sellers, this is likely to translate into a more structured approach to identifying and addressing climate-related risks earlier in the deal process. From a legal due diligence perspective, this may increasingly require a more thorough assessment of ETS scope, greenhouse gas emission permit exposure, monitoring, reporting and verification compliance, annual emissions reporting, potential allocation and surrender obligations, registry or account requirements, regulatory filings, inspection history, and any administrative sanctions or enforcement risks arising under the Climate Law framework. In that sense, the shift may be less about new risks emerging, and more about familiar ones being addressed through clearly prescribed indicators of compliance.
Keeping pace with these developments may soon become an integral part of the deal process.
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