Draft Green Taxonomy Regulation of Türkiye is Submitted to Public’s View.

The Climate Change Presidency (“Presidency”) has submitted the draft Regulation on Türkiye Green Taxonomy Regulation (“Draft Regulation”) to public’s view.  The Draft Regulation aims to regulate the principles and procedures of the Green Taxonomy of Türkiye to (i) support economic activities aligned with sustainable development goals, (ii) promote the flow of financing toward sustainable investments, and (iii) prevent greenwashing in the market. The authority to enforce the Draft Regulation lies with the Minister of Environment, Urbanization, and Climate Change.

In the Draft Regulation, the Green Taxonomy is defined as a classification system that establishes the principles and criteria for economic activities that contribute to the mobilization of climate finance and to combating climate change in line with the determined environmental goals. Accordingly, in the Green Taxonomy, it is essential to (i) take into account transparency, sustainability and environmental integrity principles and (ii) support net zero emission targets and activities regarding the green development.

Entities and institutions required to perform sustainability reporting under the Sustainability Reporting Standards of Türkiye (“Obliged Companies”) will be subject to the Draft Regulation once it enters into force.  Accordingly, the Obliged Companies will be required to submit verified information regarding their compliant economic activities conducted in the previous year (“Reporting”) to the Presidency’s e-taxonomy system, in addition to the Sustainability Report to be prepared annually under the Sustainability Reporting Standards of Türkiye.

In this regard, the general principles of compliant economic activities are determined as (i) contributing to at least one of the environmental objectives, (ii) ensure that no harm is caused to any other environmental objective, (iii) comply with minimum social safeguards (measures aimed at ensuring that the economic activities do not infringe upon social and economic rights), and (iv) ensure that their activities meet the technical screening criteria.

The environmental objectives are determined as follows:

• Reduction of greenhouse gas emissions,
• Climate change adaptation,
• Sustainable use and protection of water and marine resources,
• Transition to a circular economy,
• Pollution prevention and control,
• Protection and restoration of biodiversity and ecosystems.

The Reporting should be validated by entities accredited by the Turkish Accreditation Institution.

The compliance ratios of the Obliged Companies are calculated based on the financial statements by taking into account the key performance indicators determined under the Draft Regulation.

The Draft Regulation foresees a transition period for the Reporting until 31 December 2026 and up to such time the compliant activities will be voluntarily declared.

Transactions and operations related to the taxonomy process will be conducted through the Online Taxonomy Management System (“e-taxonomy”), with regulations regarding the e-taxonomy being announced on the official website by the Presidency. Obliged Companies are required to use E-taxonomy.

The Obliged Companies are also expected not to intentionally or falsely mislead the public with deceptive or inaccurate information, with an aim to create a climate-sensitive and environmentalist image (“Greenwashing”).

Administrative fines will be imposed as per the Environmental Law No. 2872 upon the Obliged Companies that fail to fulfil their reporting obligations or that act in violation of the Greenwashing prohibition.