Which Entities Are Required to Have a Sustainability Audit?

In Türkiye, under the Turkish Sustainability Reporting Standards (TSRS) set by the Public Oversight, Accounting and Auditing Standards Authority (KGK), sustainability reporting and the audit of these reports have become mandatory for certain entities.

For a company to be required to prepare sustainability reports, it must first be one of the types of company included in the List of Entities Specified in the First Paragraph of Article 3 of the Board Decision and Subject to Thresholds. (For the list, click here.) This list is based on public interest entities.

Accordingly, entities meeting the following criteria are required to have a sustainability audit:

1. Banks: All banks, except those within the scope of the Savings Deposit Insurance Fund (TMSF), are subject to mandatory reporting and audit regardless of any threshold.

2. Entities meeting certain criteria: Entities exceeding at least two of the following three criteria in two consecutive financial periods:

   • Total assets: TRY 500 million or more

   • Annual net sales: TRY 1 billion or more

   • Number of employees: 250 or more

Entities subject to these criteria include:

• Companies subject to the regulation and supervision of the Capital Markets Board (CMB): investment firms, collective investment undertakings, portfolio management companies, mortgage finance institutions, central clearing institutions, central securities depositories, trade repositories, joint stock companies whose capital market instruments are traded on an exchange or other organised market or which have a valid prospectus or issue document approved by the CMB for that purpose, and joint stock companies that, although not traded on an exchange or other organised market, issue capital market instruments other than shares without a public offering or have a valid issue document approved by the CMB for that purpose.

• Entities subject to the regulation and supervision of the Banking Regulation and Supervision Agency (BRSA): credit rating agencies, financial holding companies, financial leasing companies, factoring companies, financing companies, asset management companies, companies holding qualifying shares, as defined in Law No. 5411, in financial holding companies and banks, and savings finance companies.

• Companies permitted to operate in Borsa İstanbul markets: authorised institutions, precious metals intermediaries and companies engaged in the production or trade of precious metals.

• Insurance, reinsurance and pension companies.

First reporting period and audit requirement:

These entities will publish their sustainability reports for the financial period 1 January 2024 – 31 December 2024 in 2025. As reporting on sustainability-related results for 2024 begins in 2025, these reports will be subject to mandatory sustainability assurance.

Entities outside the scope:

Entities below the specified criteria or not falling within the above categories may report in accordance with TSRS on a voluntary basis, although they are not required to do so.

These rules aim to increase transparency in sustainability reporting and assurance in Türkiye and to ensure alignment with international standards.