What is TSRS (Turkey Sustainability Reporting Standards)?

What is TSRS?

TSRS refers to the standards that businesses in Turkey must comply with when publishing a sustainability report. The TSRS and its scope were published in the Official Gazette on December 28, 2023, and as of January 1, 2024, reporting in accordance with TSRS standards has become mandatory for all firms within its scope.

The main purpose of TSRS, published by the Public Oversight Authority, Accounting and Auditing Standards Authority (KGK), is to ensure that companies report their environmental, social, and governance performance transparently and accountably. This way, investors and consumers can have a comprehensive view of companies' sustainability performance and make more informed actions.

TSRS consists of two main sections: TSRS S1 and TSRS S2.

• TSRS S1 enables firms to explain how they manage risks and opportunities in the ESG areas. It provides information about companies' long-term sustainability performance and long-term financial impacts.

• TSRS S2 focuses directly on issues such as climate change and greenhouse gas emissions.

These sections have been developed based on the IFRS S1 and IFRS S2 standards created by the International Sustainability Standards Board (ISSB). In this way, it ensures the integration of Turkey's sustainability reporting system with international standards.

Who is Included in the TSRS Scope?

Preparing and sharing a TSRS report is mandatory for companies exceeding certain financial and operational criteria.

Companies that exceed at least two of the following criteria for two consecutive years are included in the TSRS scope:

• Total assets (active size) over 500 million TL

• Annual net sales revenue over 1 billion TL

• Number of employees over 250

In addition:

• Companies listed on Borsa Istanbul,

• Banks subject to BDDK are also included in TSRS scope. (Excluding banks under the management of the Savings Deposit Insurance Fund)

If a firm remains below the designated threshold values by 20% or fails to meet these criteria for two years, the TSRS obligation will be lifted.

The Importance of TSRS for Companies

So why is TSRS important for companies?

Transparency and Trust

Companies that comply with TSRS become more attractive to investors and stakeholders as they establish a more transparent and sustainable financial structure.

Compliance with Regulations

Firms that comply with the standards become pre-adapted to practices such as the EU's CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive).

Attracting Investors

Reporting according to TSRS standards facilitates access to green financing and sustainability incentives.

Prestige and Competition

While TSRS strengthens companies' carbon footprint management, facilitating compliance with regulations, it also provides a competitive advantage in terms of prestige by improving environmental impact management.

One of the critical effects of TSRS is to create a more equitable competitive environment, especially for companies that partner with EU firms.

Firms not covered by TSRS can also prepare reports according to these standards. In this way, it is possible to both comply with international regulations and benefit from the competitive advantages mentioned above.

Obligations Your Company Faces with TSRS

Firms included in the TSRS scope are required to publish the previous year's TSRS report at the beginning of each year. (In 2025, firms will need to prepare their first TSRS reports for the year 2024.) The report can be prepared by company employees or consulting firms. Reports must be verified by authorized auditing firms published on the KGK website after they are created.

To facilitate firms' compliance with these obligations, several privileges have been granted to firms in the scope during the first two years of implementation:

• For the year 2024 specifically, companies are not required to conduct comparative analysis and reporting with previous years.

• Starting from the year 2024, there is no obligation for firms to include Scope-3 emissions in their reports during the first two years of the implementation.

• Beginning in 2024, the first two reports of firms can be prepared in conjunction with the company’s annual financial reports.

How is the TSRS Report Prepared?

It is expected that firms elaborate on four key topics in the reports they prepare:

Governance

Firms must explain the governance structures monitoring risks and opportunities in the sustainability field. In this way, information is provided to stakeholders about firms’ governance processes, action plans, and procedures regarding sustainability.

Strategy

Under this heading, firms are expected to explain how they will evaluate risks and opportunities in sustainability and the relationship of these plans to their business models.

Risk Management

It is explained how companies evaluate risks, opportunities, and strategies in sustainability and their connection with the company's overall risk management. It allows for information on the overall risk profile of the business.

Metrics and Targets

In this area, firms are expected to explain risks and opportunities in sustainability using the mandatory metrics specified by TSRS with numerical data. The targets in sustainability and tracking these targets are also included under this heading.

The method used for reporting is the company's choice. Generally, three internationally valid guides are used when selecting a reporting format. These three guides are GRI (Global Reporting Initiative), UNGC (United Nations Global Compact), and OECD (Organisation for Economic Co-operation and Development) standards.

TSRS Reporting Process

1) Scope Determination

Firms within the TSRS scope must prepare a report that complies with both TSRS S1 and TSRS S2. For firms not included in the scope, it is important to determine the scope of the report according to the institutions or organizations to which the report will be submitted.

2) Data Collection

TSRS reports are based on non-financial sustainability data. Collecting the data specified in TSRS S1 and TSRS S2 accurately and reliably is a critical requirement before reporting begins.

3) Creating Content in Accordance with the Determined Format

After collecting the data that should be included in the report, the content is organized in the previously determined report format.

4) Independent Audit

The created reports must be verified by organizations authorized by KGK. During the verification stage, the integrity of the reported data, the accuracy of emission calculations, and compliance with international standards are assessed.

5) Sharing

Reports that have passed the audit are presented to stakeholders along with the company's annual financial reports.

CarbonSmart and the TSRS Reporting Process

CarbonSmart allows you to manage all your metric data under TSRS S2 from a single address with its 'Carbon Footprint Management Platform'.

With CarbonSmart, you can perform all your emission calculations from a single address, save and analyze the data you obtain, and report in accordance with international standards.

CarbonSmart is by your side in the TSRS reporting process with over 30,000 emission factors and flawless compliance with standards such as ISO 14064 and ISO 14067.