Draft Regulation on Türkiye’s Green taxonomy has been published

The Ministry of the Environment, Urbanisation and Climate Change of the Republic of Türkiye recently shared with the public a draft regulation on Türkiye’s Green Taxonomy (the “Draft Regulation”).  

Prepared in line with Türkiye’s Green Deal Action Plan, developed to accelerate Türkiye’s transition to a low-carbon economy and aligned with the European Union’s climate change policies, the Draft Regulation aims to provide a common language and clear criteria to identify environmentally sustainable investments. 

The Draft Regulation targets supporting economic activities aligned with sustainable development goals, promoting green finance, ensuring market transparency and advancing harmonisation with the EU Taxonomy.  

The proposed regulations, which will apply to institutions required to conduct sustainability reporting under the Türkiye Sustainability Reporting Standards, are explained below. 

CRITERIA FOR TAXONOMY COMPLIANCE 

The Draft Regulation outlines the criteria to be considered for determining compliance with the taxonomy. Accordingly, for an economic activity to be deemed taxonomy-compliant, it must make a substantial contribution to at least one environmental objective, cause no significant harm to any other environmental objectives, adhere to minimum social security measures and meet the technical screening criteria specified for environmental objectives. 

The environmental objectives are defined as follows: (i) reduction of greenhouse gas emissions, (ii) adaptation to climate change, (iii) sustainable use and protection of water and marine resources, (iv) transition to a circular economy, (v) prevention and control of pollution and (vi) protection and restoration of biodiversity and ecosystems. 

Some of the actions listed by the Draft Regulation to achieve environmental objectives include: transitioning to the use of sustainable materials; establishing the necessary energy infrastructure for decarbonising energy systems; implementing adaptation solutions that significantly reduce the adverse climate-related impact risk on the economic activity in question, or that reduce this impact without increasing the risks to humans, nature or assets; and protecting the environment from the adverse effects of urban and industrial wastewater discharges. 

Furthermore, an economic activity is deemed to cause significant harm to environmental objectives if it substantially increases greenhouse gas emissions, intensifies the adverse impacts of current and future climate conditions, compromises the environmental quality standards of water bodies and the circular economy, or leads to a marked rise in pollutant emissions. 

Compliance with minimum social security measures, introduced as one of the taxonomy compliance criteria in the Draft Regulation, is defined as following the procedures implemented by institutions and organisations required to conduct sustainability reporting under Türkiye Sustainability Reporting Standards to ensure alignment with the principles and rights outlined in the eight core conventions defined in the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and the Universal Declaration of Human Rights, as well as the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights. 

The technical screening criteria are further detailed in the Draft Technical Screening Criteria, annexed to the Draft Regulation. 

TECHNICAL SCREENING CRITERIA 

The Draft Technical Screening Criteria, annexed to the Draft Regulation, cover a wide range of activities, from forestry operations and energy production to construction and real estate activities, as well as data processing and hosting services. 

The Technical Screening Criteria establish specific requirements for each type of activity and foresee their verification by independent certifying bodies. For example, forest management plans, afforestation activities and strategies for the protection of forest ecosystems must include detailed measures and strategies. For energy production facilities, greenhouse gas emissions must be kept below a certain threshold and the use of renewable energy sources is encouraged. In construction and real estate activities, energy efficiency and the use of sustainable materials are prioritised, while data processing and hosting services consider factors such as energy efficiency and waste management. 

CALCULATING AND REPORTING TAXONOMY COMPLIANCE 

The Draft Regulation sets out the key performance indicators for taxonomy compliance as the ratio of revenues from compliant economic activities to total turnover, the ratio of capital expenditures for compliant economic activities to total capital expenditures and the ratio of operating expenses for compliant economic activities to total operating expenses. 

Institutions and organisations subject to the Draft Regulation are required to register verified information about the compliant economic activities they carried out in the previous year in the Climate Change Directorate’s “e-taxonomy” system. The Draft Regulation also allows institutions and organisations not covered by it to report on a voluntary basis. 

The system will automatically determine the compliance rate once the data has been entered into the e-taxonomy system by the authorised representative of the activity owner, and the information regarding the calculated compliance rate will be declared alongside the Sustainability Report. These reports will be validated by certifying bodies accredited by the Turkish Accreditation Agency to ensure their validity. 

SANCTIONS 

The Draft Regulation provides for administrative fines under Environmental Law No 2872 for those who fail to meet the reporting obligation outlined above. 

It also states that responsible institutions and organisations may voluntarily report the eligible economic activities they carried out in the previous year until 31 December 2026, after which reporting will become mandatory starting 1 January 2027. 

These regulations are expected to play a crucial role in Turkey’s progress toward sustainable development goals and accelerate the transition to a green economy. The Draft Regulation and Consultation Form (in Turkish) can be accessed here.