I. INTRODUCTION
In recent years, the concept of sustainability has assumed central importance not only from the perspective of environmental and social responsibility, but also in the fields of financial reporting and corporate governance. The systematic reporting of the environmental and social impacts of companies' economic activities is becoming increasingly determinative in the decision-making processes of investors, regulatory authorities and other stakeholders. In this context, compliance with international sustainability standards has become not only a legal obligation for companies, but also a critical requirement for remaining within global supply chains.
In Türkiye, the legal framework for sustainability reporting has been shaped by the Turkish Sustainability Reporting Standards (the "TSRS") issued by the Public Oversight, Accounting and Auditing Standards Authority (the "POA"). Entering into force on 01/01/2024, the TSRS provides a reporting framework aligned with international standards and has become binding for undertakings that meet specified criteria; however, the boundaries of the scope of application and the obligations of different types of companies were clarified by the "Board Decision on the Scope of Application of the TSRS" published in the Official Gazette dated 29/12/2023 and numbered 32414 (Repeated) (the "Board Decision"), as well as by subsequent regulatory decisions. Whether portfolio management companies are included within the scope was the subject of a specific regulation in the Announcement of the POA dated 26/08/2025 and numbered 2025-53, titled "Removal of Portfolio Management Companies from the Mandatory Scope of Application of the TSRS" (the "Announcement").
II. FUNDAMENTAL PRINCIPLES
1. What Is the TSRS and What Function Does It Serve Within the Corporate Reporting Ecosystem?
TSRS are national sustainability reporting standards developed in Türkiye based on IFRS S1 and IFRS S2 issued by the International Sustainability Standards Board (ISSB), and they entered into force on 01/01/2024. TSRS 1 sets out the general principles for companies to disclose all material sustainability-related risks and opportunities and their effects on cash flows and financial position; TSRS 2 focuses specifically on the identification of climate-related risks and opportunities, how these are reflected in a company's strategy and performance, and the disclosure of the related metrics. Considered together, these two standards demonstrate that sustainability information is no longer confined to an environmental reporting area but has been incorporated into the category of financial information that directly guides investor decision-making.
From the perspective of the corporate reporting ecosystem, the TSRS performs multiple core functions. First, it replaces purely voluntary sustainability reporting practices with a binding legal framework for companies that meet specified criteria. Second, owing to its alignment with international standards, it enables companies operating in Türkiye to provide comparable and reliable information to global capital markets. In addition, by mandating the core components of reporting, governance, strategy, risk management, and performance indicators, it aims to enable users of financial reports to assess companies' long-term sustainability performance more effectively.
2. Which Institutions Fall Within the Mandatory Scope of Application of the TSRS?
The scope of application of the TSRS is set out in the Board Decision. Pursuant to the Board Decision, the application of the TSRS is limited to undertaking meeting specified characteristics, and the undertaking and institutions within the scope are expressly enumerated in Article 3 of the Board Decision. Accordingly:
" those whose total assets exceed 500.000.000 Turkish
Liras,
" whose annual net sales revenue exceeds 1.000.000.000 Turkish
Liras, and
" whose number of employees exceeds 250,
it has been decided that the TSRS shall apply to the preparation of sustainability reports for the institutions, organizations and undertakings listed below that exceed the threshold values of at least two of the foregoing criteria in two consecutive reporting periods.
a) Pursuant to Capital Markets Law No. 6362, entities subject to the regulation and supervision of the Capital Markets Board include: (i) investment institutions; (ii) collective investment institutions; (iii) mortgage finance institutions; (iv) central clearing institutions; (v) central securities depositories; (vi) trade repositories; (vii) joint stock companies whose capital market instruments are traded on an exchange or other organized markets, or that have a prospectus or an issuance certificate approved by the Capital Markets Board with a current validity period for the purpose of such trading; (viii) joint stock companies that, although not traded on an exchange or other organized markets, issue a capital market instrument other than shares without a public offering (until the end of the accounting period in which the instruments they issued are redeemed), or that have, for this purpose, an issuance certificate approved by the Capital Markets Board with a current validity period.
b) Pursuant to Banking Law No. 5411 (the "Banking Law"), institutions subject to the regulation and supervision of the Banking Regulation and Supervision Agency include: (i) rating agencies; (ii) financial holding companies; (iii) financial leasing companies; (iv) factoring companies; (v) finance companies; (vi) asset management companies; (vii) companies holding a "qualifying share" (as defined in the Banking Law) in financial holding companies and banks; and (viii) savings finance companies.
c) Entities operating under Insurance Law No. 5684 and the Individual Pension Savings and Investment System Law No. 4632, namely (i) insurance companies, (ii) reinsurance companies, and (iii) pension companies.
d) Entities permitted to operate in the Borsa İstanbul markets, including (i) authorized institutions, (ii) precious metals intermediary institutions, and (iii) companies engaged in the production or trade of precious metals.
On the other hand, as specifically provided in the Board Decision, banks other than those within the Savings Deposit Insurance Fund are obliged to apply the TSRS without being subject to any threshold values.
Institutions and undertakings not included in the scope described above may apply the TSRS at their discretion when preparing their sustainability reports.
3. Are Portfolio Management Companies Included Within the Mandatory Scope of Application of the TSRS?
Under the Board Decision, portfolio management companies that, in two consecutive reporting periods, exceeded the threshold values of at least two of the criteria relating to total assets, annual net sales revenue, and number of employees, as set out above under the heading "2. Which Institutions Fall Within the Mandatory Scope of Application of the TSRS?", had been brought within the scope of mandatory sustainability reporting. Subsequently, the POA, acting pursuant to its authority to set the procedures and principles for implementation of the Board Decision and to resolve potential uncertainties in practice, decided to remove portfolio management companies from the mandatory scope of application of the TSRS and announced this to the public by the Announcement.
The Announcement excluding portfolio management companies from the mandatory scope considered the structural characteristics of these companies. Portfolio management companies are capital markets institutions incorporated as joint stock companies, authorized by the Capital Markets Board to establish and manage investment funds, with their principal activity being the establishment and management of funds. As non-public joint stock companies, portfolio management companies are financed exclusively through equity and employ a very limited number of personnel. Additionally, it is assessed that these companies do not have the aim of obtaining funds from individual or qualified investors for their own legal entity. In the POA's assessment, due to these structural features, portfolio management companies may face different levels of compliance processes and costs compared with other company groups.
Accordingly, it was concluded that subjecting portfolio management companies to mandatory reporting obligations under the TSRS would not be consistent with the principle of proportionality. On the basis of these grounds, portfolio management companies were removed from the scope of the Board Decision and granted an exemption from sustainability reporting obligations.
III. CONCLUSION
TSRS have strengthened companies' transparency and accountability obligations by integrating the sustainability dimension into the corporate reporting system. At the same time, and as evidenced by portfolio management companies, the structural characteristics of certain sectors have been considered, and mandatory reporting obligations no longer apply to such companies, thereby introducing flexibility in practice. In this way, the principle of proportionality has been observed, and sustainability reporting has been rendered voluntary for portfolio management companies.
Accordingly, the TSRS both provide a framework aligned with international reporting norms and are being integrated into the corporate reporting ecosystem in a balanced manner that considers sector-specific needs at the national level.
You can access the full text of the Announcement via this link.
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