Example Notes on Climate-related Risk Disclosures

Below is an alternative example note adapted for the manufacturing sector.

📌 Note title: Effect of climate change on the financial statements

The Company continues its work to assess the effects of climate-related risks and opportunities on its financial statements. In this context, climate factors are taken into account in long-term strategic planning as well as in assessing direct financial effects.

Extreme weather events during 2024 caused operational disruptions at some of our production facilities, resulting in a decrease of approximately TRY 3.2 million in net sales. An impairment of TRY 1.1 million was recognised for damage to inventories and property, plant and equipment caused by these events.

In addition, as a result of valuation work on the Company's high-emission production line, an impairment loss on property, plant and equipment of TRY 6.5 million was recognised. This valuation is based on updated assumptions reflecting the effects of carbon taxes and emission limits expected to be introduced in the future.

The Company is planning a total investment of TRY 20 million from 2025 to move to low-carbon production technologies, and green loan options are being considered to finance it. In this context, environmental impact analyses and financial feasibility studies were completed at the end of 2024.

The assumptions used in preparing the financial statements are tested against 1.5°C and 3°C global warming scenarios, and these analyses have been integrated into the annual risk assessment process.

Explanation:

This note covers:

• Physical risks (weather events, loss of assets),

• Transition risks (carbon tax, regulatory effects),

• Investment plans (low-carbon production),

• Financial estimates based on scenario analysis.

Below is an example financial statement note on climate change prepared specifically for the energy sector (in particular, a company engaged in electricity generation and distribution).

⚡ Example note – energy sector

Note title: Climate-related risks and financial effects

Owing to its field of activity, the Company may be directly affected by regulatory developments related to climate change, carbon pricing and physical climate events. Climate risks are therefore taken into account in both financial and strategic planning, and the related effects are reflected in the financial statements.

During 2024, under the national emissions trading system to which our carbon-intensive production facilities are subject, a carbon emission obligation of TRY 8.4 million was calculated and recognised within operating expenses.

In the same period, an impairment loss on property, plant and equipment of TRY 15 million relating to our coal-fired power plants was recognised in the financial statements. This impairment is based on cash flow projections reassessed in line with management's estimates that carbon prices will rise.

In its transition to renewable energy, the Company launched a solar energy investment with a total capacity of 120 MW in 2024 and incurred capital expenditure of TRY 32 million in this context. The green loans obtained to finance these investments are presented in the balance sheet under "Long-term financial liabilities".

The forward-looking assumptions in the notes to the financial statements are based on scenario analyses consistent with the ISSB's IFRS S2 standard. Management expects the carbon tax to reach USD 100 per tonne and the share of renewable sources to rise to 65% by 2030.

From 2025, detailed disclosures under the TCFD and IFRS S2 will also be included in the sustainability report.

What does this note cover?

• Effect of carbon pricing (as a direct expense)
• Asset impairment (due to transition risk)
• Investment and financing (renewable energy, green loans)
• Updates to estimates based on scenario analysis (IFRS S2 alignment)

Below is an example note on climate change prepared for a company operating in the services sector (for example, a logistics or consultancy firm), consistent with the regulations of the KGK (Public Oversight Authority).

This note has been prepared taking into account Turkish Financial Reporting Standards (TFRS), and in particular the KGK's direction on climate-related financial reporting and its expectations for sustainability disclosures by large entities.

🏢 Services sector – example note consistent with KGK requirements

Note title: Climate-related risks and financial effects

Within the framework of sustainability principles, the Company assesses the effects of climate change on its operations, financial performance and structure of assets and liabilities. In this context, climate-related physical and transition risks are analysed regularly, and environmental effects are integrated into reporting processes.

During 2024, higher fuel costs due to carbon emissions from our transport and field operations, together with restructuring of logistics processes, increased operating expenses by approximately TRY 2.8 million.

The Company also invested in digitalisation and green logistics projects aimed at reducing its carbon footprint, making total R&D and technology investments of TRY 6.4 million in this context. Part of this expenditure was accounted for under a "TÜBİTAK-supported environmental impact reduction project".

An impairment loss on property, plant and equipment of TRY 1.1 million was recognised for vehicles with high fuel consumption in the service fleet, and these assets have begun to be gradually replaced with hybrid models.

The Company's climate risk management and sustainability practices are addressed consistently with TSRS 1 and TSRS 2 published by the KGK, and these matters are covered in the notes to the financial statements. Based on the climate assumptions and scenario analyses used, carbon costs are expected to rise by 2030, and these cost increases are planned to be passed on gradually to service prices.

Climate-related disclosures are presented in detail in the sustainability performance report, and the related information will be published in accordance with the Turkish Sustainability Reporting Standards (TSRS).

🧩 What does this note cover?