TSRS and SPK Requirements: A Complete Guide for Turkish Enterprises

A Turning Point for Sustainability Reporting in Turkey

Turkey is undergoing a fundamental transformation in sustainability reporting. The Turkish Sustainability Reporting Standards (TSRS) published by the Public Oversight, Accounting and Auditing Standards Authority (KGK), together with the Capital Markets Board's (SPK) Sustainability Principles Compliance Framework, are jointly shaping Turkey's corporate sustainability reporting infrastructure.

This guide provides a detailed examination of both regulatory frameworks, their scope and obligations, timelines, and their relationship with international standards.

KGK and TSRS: Understanding the Foundation

What Is TSRS?

The Turkish Sustainability Reporting Standards were developed by KGK based on IFRS S1 and IFRS S2, published by the International Sustainability Standards Board (ISSB) of the IFRS Foundation. Two core standards exist:

• TSRS 1 — General Requirements for Disclosure of Sustainability-Related Financial Information: The general framework defining how companies should disclose sustainability-related risks and opportunities (aligned with IFRS S1)
• TSRS 2 — Climate-Related Disclosures: Detailed requirements for reporting climate change-specific risks, opportunities, and metrics (aligned with IFRS S2)

The TSRS standards adopt the ISSB's four-pillar structure in full: Governance, Strategy, Risk Management, and Metrics & Targets (KGK TSRS S1, 2024).

The Relationship Between TSRS and IFRS S1/S2

TSRS is a Turkish adaptation of IFRS S1 and S2. While the core principles and disclosure requirements are directly aligned, TSRS includes certain Turkey-specific adaptations and transition provisions:

• Definitions and references consistent with the Turkish legal framework
• Transitional period reliefs and phased implementation
• Alignment with the Turkish Commercial Code and financial reporting legislation

This alignment ensures that companies reporting under TSRS are recognized as ISSB-compliant by international investors and stakeholders (IFRS S1, 2023; IFRS S2, 2023).

SPK Sustainability Principles Compliance Framework

What Is Communique II-15.1?

SPK has published a comprehensive framework mandating sustainability disclosures for companies whose securities are traded on Borsa Istanbul. The Sustainability Principles Compliance Framework (Communique II-15.1) covers:

• Environmental principles: Emissions management, energy efficiency, waste management, water use, biodiversity
• Social principles: Occupational health and safety, employee rights, human rights, supply chain management
• Governance principles: Board structure, code of ethics, risk management, stakeholder relations

The "Comply or Explain" Approach

The SPK framework adopts a "comply or explain" model. Companies either implement each principle or publicly explain the rationale for non-compliance. This approach provides flexibility, particularly for smaller listed companies, while ensuring transparency (SPK Communique II-15.1).

Mandatory Disclosures

Despite the "comply or explain" approach, certain disclosures are directly mandatory:

• Sustainability policy and strategy
• Greenhouse gas emissions (Scope 1 and Scope 2)
• Board-level sustainability oversight structure
• Risk assessment and management
• Sustainability targets and progress

Who Must Report?

TSRS Scope

KGK is expanding the TSRS scope on a phased basis:

First group (from FY2024):

• Companies listed in the BIST-100 index
• Banks and insurance companies
• Public interest entities exceeding certain size thresholds

Second group (subsequent years):

• Other listed companies
• Large-scale enterprises (based on thresholds to be determined by KGK)

SPK Scope

The SPK Communique covers all companies whose shares are traded on Borsa Istanbul. However, the level of compliance expected varies by company size:

• BIST-100: Full compliance expected
• BIST-All: Core disclosures mandatory; detailed principles subject to "comply or explain"

Reporting Timeline

Reporting is presented as a separate section within the company's annual report. A standalone sustainability report may also be published, but the annual report disclosure is mandatory.

The Four Pillars of TSRS: A Detailed Look

1. Governance

Companies must disclose the governance processes, controls, and procedures they use to oversee and manage sustainability-related risks and opportunities:

• The board's oversight role and competencies
• Management's assessment and management process
• Decision-making mechanisms and authority distribution

2. Strategy

Current and anticipated effects of sustainability-related risks and opportunities on the company's business model, strategy, and cash flows:

• Short, medium, and long-term risks and opportunities
• Impacts on the business model and value chain
• Strategic resilience assessment (including climate scenario analysis)
• Transition plans

3. Risk Management

Processes for identifying, assessing, prioritizing, and monitoring sustainability-related risks:

• Risk identification methodology
• Assessment and prioritization criteria
• Integration with overall risk management

4. Metrics and Targets

Metrics used to measure and monitor performance, and targets set:

• Greenhouse gas emissions (Scope 1, 2, and 3)
• Sector-specific performance metrics
• Targets and progress toward targets
• Internal carbon pricing (if applicable)

(KGK TSRS S1, Paragraphs 25-42; IFRS S1, 2023)

Relationship with International Frameworks

TSRS and CSRD/ESRS

Although TSRS (ISSB-based) and ESRS (EU-based) are different standard families, significant intersection points exist:

Companies reporting under both frameworks should reference the ISSB-EFRAG interoperability guidance.

TSRS and GRI

While GRI Standards and TSRS differ in their impact versus financial materiality perspectives, they offer synergies in data collection processes. Companies already reporting under GRI can leverage a significant portion of their existing data for TSRS reporting.

Implementation Roadmap

Recommended steps for Turkish companies preparing for TSRS and SPK requirements:

Short-Term (0-6 Months)

1. Current state assessment: Inventory the sustainability data already being collected
2. Gap analysis: Compare TSRS and SPK requirements against current capacity
3. Governance structure: Establish a sustainability committee or designation
4. GHG inventory: Begin Scope 1 and 2 emission calculations

Medium-Term (6-12 Months)

1. Data collection infrastructure: Establish systematic data collection processes
2. Scenario analysis: Develop climate-related scenario analysis capability
3. Training: Provide TSRS technical training to relevant departments
4. First draft: Conduct a pilot reporting exercise

Long-Term (12+ Months)

1. Scope 3 data: Develop value chain emission data collection capability
2. Assurance readiness: Prepare for independent assurance processes
3. Integration: Integrate sustainability reporting with the financial reporting cycle
4. Continuous improvement: Enhance data quality and scope breadth in annual cycles

Frequently Asked Questions

Are TSRS and SPK reporting done separately? TSRS disclosures are made within the annual report. The SPK compliance report is separately disclosed to the public annually. The two reporting exercises complement each other but are distinct processes.

When will Scope 3 emissions become mandatory? TSRS S2 requires Scope 3 emissions reporting, but transition provisions may grant relief in the first year. Under the SPK framework, Scope 3 is evaluated within the "comply or explain" scope.

Is independent assurance mandatory? It is becoming mandatory on a phased basis. Limited assurance is expected in the initial implementation. KGK and SPK will separately announce the scope and timing of assurance requirements.

Bottom Line: Turkey's sustainability reporting infrastructure is rapidly maturing through the TSRS and SPK frameworks. ISSB-aligned TSRS standards enhance the credibility of Turkish companies with international investors, while the SPK framework strengthens capital market transparency. Early preparation both reduces compliance costs and delivers strategic advantage (Turkish Commercial Code, Article 516).