Türkiye Sürdürülebilirlik Raporlama Standartları (TSRS)

Turkish Sustainability Reporting Standards (TSRS), are S1 and S2 standards that explain the principles and provisions that businesses must comply with in their financial information and climate-related disclosures. Turkish Sustainability Reporting Standards (TSRS) and the Scope of Application of Turkish Sustainability Reporting Standards (TSRS) were published in the Official Gazette with the Decision No. 32414 dated 29.12.2023. The standard entered into force as of January 1, 2024. With the amendment made to Article 88 of the Turkish Commercial Code No. 6102 in the Official Gazette dated 04/06/2022 and numbered 31856; The Public Oversight, Accounting and Auditing Standards Authority was given the authority to determine and publish Turkish Sustainability Reporting Standards (TSRS) in compliance with international standards.

Content published by the Public Oversight, Accounting and Auditing Standards Authority TSRS S1 – General Provisions for Disclosure of Sustainability-Related Financial Information and TSRS 2 General Provisions Regarding Disclosure of Sustainability-Related Financial Information It consists of two parts as follows. In accordance with Article 88 of the Turkish Commercial Code No. 6102 dated 13/1/20211 and Articles 9, 26, 27 and temporary 1 of the Decree Law No. 660 dated 26/09/2011, the scopes of application of the Turkish Sustainability Reporting Standards to be taken as basis in the preparation of sustainability reports of institutions, boards and enterprises within this scope have been determined by the decision of the board.

What is TSRS?

TSRS (Turkish Sustainability Reporting Standards) is a series of standards published by the Public Oversight, Accounting and Auditing Standards Authority, which determine the general provisions and principles to be followed by the enterprises subject to the decision in their sustainability reporting. The aim of this series of standards is to facilitate the access of large enterprises to green financing through sustainability reporting and to improve their ability to receive investment.

Standards series S1: General Provisions Regarding Disclosure of Sustainability-Related Financial Information and TSRS 2 General Provisions Regarding Disclosure of Sustainability-Related Financial Information It consists of two parts. At the United Nations Climate Change Participation Meeting of the Parties (COP) 26, the International Financial Reporting Foundation (IFRS Foundation) announced the establishment and commencement of the International Sustainability Standards Board (ISSB). The International Sustainability Standards Board (ISSB) is basically a climate change must be addressed in the fight against ESG They publish sustainability reports that are compliant with IFRS sustainability standards, which set out the rules for reporting risks and opportunities in the areas of (Environmental, Social and Governance) by businesses.

TSRS (Turkish Sustainability Reporting Standards (TSRS)) has been prepared based on IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures published by the International Sustainability Standards Board (ISSB).

For Which Businesses Are Turkish Sustainability Reporting Standards (TSRS) Mandatory?

According to the Board Decision on the Scope of Application of the Turkish Sustainability Reporting Standards (TSRS) published in the Official Gazette dated 29.12.2023 and numbered 32414;

otal assets 500 Million Turkish Liras
Annual Net Sales Revenue 1 Billion Turkish Lira
Institutions, organizations and businesses that exceed the threshold values of at least two of the criteria of Number of Employees More than 250 people in two consecutive reporting periods Sustainability Report within the scope of TSRS they need to prepare.

Among the companies that are subject to regulation and supervision by the Capital Markets Board in accordance with Law No. 6362:

Investment Institutions,
Collective Investment Institutions,
Portfolio Management Companies,
Mortgage Finance Institutions,
Central Clearing Institutions,
Central Depository Institutions,
Data Storage Institutions,
Joint Stock Companies with a CMB Approved Prospectus or Issuance Certificate,
Joint stock companies that are not traded on a stock exchange or other organized markets, that issue capital market instruments other than shares without being offered to the public, or that have an issuance document approved by the CMB for this purpose,
Insurance, Reinsurance and Pension Companies operating within the scope of the Individual Retirement Savings and Investment System,
Companies that are allowed to operate in Borsa Istanbul (BIST) Markets,
Precious Metals Brokerage Firms,
Companies engaged in the production and trade of precious metals
Institutions, organizations and businesses that are banks (excluding those under the SDIF) are required to apply the Turkish Sustainability Reporting Standards (TSRS) in their Sustainability Reporting.

Institutions, organizations and businesses that do not meet the above conditions can optionally prepare a Sustainability Report within the scope of the Turkish Sustainability Reporting Standards (TSRS).

How to Prepare a TSRS Report?

In the TSRS report preparation process, full compliance with the determined standards is essential. Institutions, organizations and businesses that exceed three main threshold values in two reporting periods must submit a TSRS Sustainability Report. Exceeding the threshold values is evaluated based on the active totals and annual net sales figures in the financial statements of the companies for the last two years and the number of employees. A transition period is foreseen until the full implementation of the standards. In the first implementation period, it is not necessary to present comparative information and report Scope 3 Greenhouse Gas Emissions. The content of the TSRS Sustainability Report must include detailed explanations of the businesses' governance, strategy, risk management, performance criteria and targets.

Companies can use a variety of methods when creating their sustainability reports, as there are different standards and each company can choose the one that suits their needs. The reporting frequency and method are also entirely up to the company.

Although there are differences between the standards, in general there are criteria regarding the company's resource use, environmental policies, human rights and living conditions. Studies are carried out in line with these standards, risks are determined, corrective and preventive measures are taken and the results are reported.

There are three main internationally valid guides in these processes:

Global Reporting Initiative (GRI),
United Nations Global Compact (UNGC)
These are the Organisation for Economic Co-operation and Development (OECD) Standards.

The most widely preferred reporting standard today is the Global Reporting Initiative (GRI).

What is Governance in TSRS Reporting?

It refers to the governance processes, controls and procedures that an enterprise uses to monitor and manage sustainability-related risks and opportunities. The main purpose of enterprises' sustainability-related financial disclosures is to help general financial report users understand the processes by which an enterprise manages, monitors and controls sustainability-related risks and opportunities. These financial disclosures aim to raise awareness among stakeholders by enabling enterprises to understand sustainability-related governance processes, controls and procedures.

What is Strategy in TSRS Reporting?

The methods used by an entity to manage sustainability-related risks and opportunities. The primary goal of strategy-oriented sustainability-related financial disclosures is to enable users of general financial reports to understand an entity's strategy for managing sustainability-related risks and opportunities. These financial disclosures aim to help stakeholders understand the entity's strategies for effectively managing sustainability-related risks and opportunities, thereby enabling them to follow these strategies more closely.

Türkiye Sustainability Reporting Standards Strategy headings are as follows;

Sustainability risks and opportunities
Business model and value chain
Strategy and decision making
Financial position, financial performance and cash flows
Flexibility

What is Risk Management in TSRS Reporting?

The processes that an entity uses to identify, assess, prioritize and monitor sustainability-related risks and opportunities. The primary purpose of sustainability-focused financial disclosures related to risk management is to help users of general financial reports understand whether the processes for identifying, assessing, prioritizing and monitoring sustainability-related risks and opportunities are integrated into the entity's overall risk management process; if so, to help them understand those processes, including how they are integrated and how they inform the overall risk management process. It also enables them to evaluate the entity's overall risk profile and overall risk management processes.

What are the Criteria and Targets in TSRS Reporting?

It refers to the performance of the enterprise in relation to risks and opportunities related to sustainability, including progress towards the targets set by the enterprise or required by law. The main purpose of sustainability-focused financial disclosures on metrics and targets is to help users of general financial reports understand the performance of the enterprise in relation to risks and opportunities related to sustainability, including progress towards the targets set by the enterprise and required by law.

Who Prepares the Turkish Sustainability Reporting Standards (TSRS) Report?

TSRS Sustainability Report There is no requirement for authorization or being an authorized institution published by the Public Oversight, Accounting and Auditing Standards Authority for preparation. Sustainability reports can be prepared by consultancy firms without any authorization. It would be quite appropriate for the TSRS sustainability report preparation team to consist of financial advisors, lawyers, engineers and environmental engineers.

Türkiye Sustainability Reporting Standards and Their Impact on Businesses

Turkish Sustainability Reporting Standards (TSRS), It stands as an important turning point for the Turkish business world. TSRS is a set of guidelines that require businesses to disclose their financial information related to sustainability. These standards enable businesses to report sustainability-related risks and opportunities more transparently, helping both investors and consumers make more informed decisions.

What are the innovations brought by TSRS?

TSRS, It provides a standard framework for businesses to assess and report their sustainability performance. This framework requires businesses to integrate environmental, social and governance (ESG) factors into their financial reporting processes. This aims to enable businesses to more clearly identify sustainability-related risks and opportunities and demonstrate how they perform in these areas.

What are the effects of TSRS on businesses?

Transparency and Accountability: TSRS enables businesses to report their sustainability activities more transparently, increasing their accountability and helping them gain the trust of stakeholders.
Risk Management: Identifying sustainability risks and opportunities allows businesses to manage these risks more effectively, which can positively impact the financial performance and market value of the business in the long term.
Investor Interest: Sustainability reporting is especially important for investors who are sensitive to environmental and social responsibility issues. The implementation of TSRS may attract the attention of such investors and open up new sources of financing for businesses.
Competitive Advantage: Reporting transparently and effectively on sustainability can give businesses a competitive advantage. Consumers and business partners are increasingly placing greater importance on sustainability issues. This can help businesses that are proactive about sustainability to gain a better position in the marketplace.
Compliance and Regulatory Compliance: TSRS facilitates compliance with international sustainability standards for businesses in Turkey. This is especially important for businesses operating in global markets or aiming to expand into these markets.
Sustainability reporting can increase the corporate reputation and brand value of businesses. Studies in the field of social and environmental responsibility contribute to the creation of a positive image of businesses. Sürdürülebilirlik raporlaması, işletmelerin kurumsal itibarını ve marka değerini artırabilir. Sosyal ve çevresel sorumluluk alanında yapılan çalışmalar, işletmelerin pozitif bir imaj oluşturmasına katkıda bulunur.

The Turkish Sustainability Reporting Standards are not just a matter of compliance for businesses, but also a strategic opportunity. These standards can help businesses improve their sustainability performance, better manage risks and gain a stronger position in the market. TSRS is an important step in the sustainability journey of the Turkish business world, and businesses need to be proactive in this journey.

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