In line with global taxonomy initiatives aimed at defining and promoting sustainable economic activities, the draft “Türkiye Green Taxonomy Regulation,” aligned with the European Union (“EU”) taxonomy and tailored to Türkiye’s specific needs, has been published by the Ministry of Environment, Urbanization, and Climate Change for public consultation.
As outlined in Türkiye’s Twelfth Development Plan (2024–2028) and Medium-Term Program (2025–2027), the establishment of a national green taxonomy is a key objective. Similarly, the Green Deal Action Plan, introduced in 2021, reflects Türkiye’s commitment to accelerating its transition to a low-carbon economy and aligning with EU climate standards.
Within this framework, the Climate Change Directorate has prepared a national green taxonomy regulation, including technical screening criteria to guide which investments qualify as environmentally sustainable. This draft legislation has now been made available for public input.
Purpose and Scope of the Draft Regulation
The draft Türkiye Green Taxonomy Regulation (the “Draft”) has been designed to support sustainable development goals, encourage the flow of financing into sustainable investments, and prevent greenwashing in the market. It establishes the principles and procedures for implementing the “Türkiye Green Taxonomy.”
The Draft provides a comprehensive framework, defining essential terms and outlining the procedural and substantive requirements for institutions mandated to prepare sustainability reports under the Türkiye Sustainability Reporting Standards (“TSRS”). This includes the application conditions of the Türkiye Green Taxonomy, its technical criteria, reporting, and verification requirements. Additionally, the Draft introduces provisions for the Online Taxonomy Management System, which will be used for reporting and verification.
Environmental Objectives and Eligible Economic Activities
The Türkiye Green Taxonomy is a classification system that establishes principles and criteria for economic activities contributing to environmental goals and climate change mitigation, while aligning with climate finance priorities. At its core are two main concepts: Environmental Objectives and Eligible Economic Activities.
The Draft’s Article 7 identifies six environmental objectives as fundamental criteria for assessing sustainable economic activities:
- Reduction of greenhouse gas emissions,
- Adaptation to climate change,
- Sustainable use of water resources,
- Circular economy,
- Pollution prevention, and
- Protection of biodiversity.
These objectives ensure that economic activities contribute to achieving net-zero emissions. The six objectives outlined in the Draft closely align with the six environmental objectives under the EU Taxonomy.
Under the EU Taxonomy, companies must demonstrate “substantial contribution” to at least one of the six objectives while ensuring no “significant harm” to any of the other objectives. Similarly, the Draft is built on four fundamental principles:
- Making a substantial contribution to at least one environmental objective,
- Doing no significant harm to other environmental objectives,
- Complying with minimum social safeguards, and
- Meeting defined technical screening criteria.
Economic activities must comply with these principles, ensuring that contributing to one environmental objective does not harm others. Adherence to technical screening criteria is also critical and requires regular monitoring by companies to avoid potential compliance issues and legal disputes.
Technical Screening Criteria and Social Safeguards
The technical screening criteria are periodically updated, and companies are required to align their operations accordingly. Non-compliance may lead to sustainability-related risks and disputes. Companies must also comply with international standards such as the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.
The Draft emphasizes that economic activities must meet governance and social standards, in addition to being environmentally sustainable. This includes adherence to minimum safeguards for social security and human rights.
Facilitating and Transitional Activities
Aligned with the EU Taxonomy, the Türkiye Green Taxonomy introduces two key classifications for economic activities:
- Facilitating Activities: These are activities that significantly contribute to at least one environmental objective, have a positive lifecycle environmental impact, and do not harm other environmental objectives.
- Transitional Activities: These include activities in carbon-intensive sectors (e.g., cement and steel manufacturing) where low-carbon alternatives are not yet available, promoting the development and adoption of technologies with the lowest greenhouse gas emissions.
Greenwashing
The term “greenwashing,” often criticized in the Draft for its direct translation as “yeşil boyama,” refers to the practice of misleading the public about the environmental benefits of certain activities. Companies must provide accurate and complete information, as false or misleading claims may result in significant administrative fines and reputational damage under the relevant provisions of Law No. 2872 on the Environment.
Calculation of Alignment, Reporting, and Verification
As stipulated in the Draft, entities required to report under the Türkiye Sustainability Reporting Standards must calculate key performance indicators related to eligible economic activities annually. Representatives must input this data into the e-Taxonomy system, which automatically calculates alignment rates.
Institutions subject to sustainability reporting requirements must include verified information on their eligible economic activities in their annual reports and submit this data to the e-Taxonomy system. Voluntary submissions are allowed for entities not subject to mandatory reporting requirements, following the procedures specified in the Draft.
Verification of taxonomy reports is mandatory and will be conducted by accredited verification bodies. These bodies will be accredited by TÜRKAK (Turkish Accreditation Agency), and their procedural requirements will be determined by the Climate Change Directorate.
Penalties
Article 27 of the Draft states that failure to fulfill notification, information, or documentation obligations for reporting will result in administrative fines under the relevant provisions of Law No. 2872 on the Environment. Misreporting or non-compliance can have severe financial and legal consequences, including reputational damage.
To mitigate such risks, companies must ensure the accuracy and completeness of their reporting processes. Any shared data must comply with data privacy policies to avoid breaches that could result in material and non-material damages.
Implementation Timeline
The regulation provides for a voluntary reporting phase until December 31, 2026. Starting January 1, 2027, reporting will become mandatory, and reports will be subject to verification.
During the voluntary phase, entities responsible for reporting can annually disclose information on their eligible economic activities along with their sustainability reports, without verification requirements. However, from January 1, 2027, all reports will be subject to mandatory verification processes.
In conclusion, compliance with the Draft Türkiye Green Taxonomy Regulation is essential for companies to avoid administrative and legal penalties and establish sustainable business models. Regular monitoring and alignment with technical screening criteria will be critical to ensuring adherence to the regulation.