Does Your Turkish Subsidiary Need a Sustainable Finance Framework? Turkey’s Green Finance Strategy 2026–2029 Explained
Turkey now has a national green finance roadmap, new capital-markets guides and a live carbon market. Here is what that means for foreign-owned companies in Turkey — in finance, accounting and tax terms, not slogans.
- The strategy is binding on regulators, not (yet) on your company. Presidential Circular 2026/8 (Official Gazette, 4 July 2026) puts 3 goals, 11 targets and 45 actions on the Treasury, BDDK, SPK, KGK and the Central Bank. The obligations reach companies through the rules those bodies write next.
- Three rules already reach companies today: TSRS sustainability reporting (KGK), the new SPK green/sustainable/social instrument guides (13 August 2026), and the Turkey ETS Regulation (27 August 2026).
- The real work is in the ledger. Lenders, parent groups and auditors will ask your Turkish entity to prove where green money went. That is an accounting-system question first and a sustainability question second.
Key facts at a glance
| Item | What applies in 2026 | Legal source |
|---|---|---|
| National strategy | National Green Finance Strategy and Action Plan 2026–2029 (Ulusal Yeşil Finans Stratejisi ve Eylem Planı): 3 goals, 11 targets, 45 actions | Presidential Circular 2026/8, dated 3 July 2026, Official Gazette 4 July 2026 |
| Coordinator | Ministry of Treasury and Finance, with BDDK, SPK, TCMB, KGK and SEDDK | Circular 2026/8; strategy document on hmb.gov.tr |
| Framework law | Turkey’s first Climate Law — 2053 net-zero target, ETS, taxonomy basis | Climate Law No. 7552 (2 July 2025) |
| Sustainability reporting | TSRS 1 and TSRS 2 (based on IFRS S1/S2) mandatory if 2 of 3 thresholds are exceeded two years running: total assets TRY 1bn, net sales TRY 2bn, 500 employees | KGK Decision No. 21634; thresholds updated in Official Gazette 16 January 2026 (No. 33139); TCC Art. 88 |
| Green bonds & sukuk | New “Green, Sustainable and Social Capital Market Instruments Guide” and “Sustainability-Linked Capital Market Instruments Guide”; minimum contents for framework documents; 50% reduction in CMB fees | SPK Principle Decision i-SPK 128.29 (13 August 2026), replacing i-SPK 128.18 (2022) |
| Green taxonomy | Turkey Green Taxonomy Regulation still in draft; completion is an action in the 2026–2029 plan | Draft regulation, Ministry of Environment, Urbanisation and Climate Change |
| Carbon market | Turkey ETS for installations above 50,000 tCO2e/year (Category B and C); first monitoring methodology plans due 27 October 2026 for pilot-scope installations unless extended | Turkey ETS Regulation, Official Gazette 27 August 2026 (No. 33353) |
What is Turkey’s National Green Finance Strategy 2026–2029? It is the government’s four-year roadmap, put into force by Presidential Circular 2026/8 on 4 July 2026, to build green-finance infrastructure, regulatory capacity and market tools. It has 3 goals, 11 targets and 45 actions, coordinated by the Ministry of Treasury and Finance, and it is aligned with the 2053 net-zero target.
What the strategy actually changes
The strategy is organised around three goals. In plain finance language:
- Build measurable infrastructure. A common definition of “green” (the national taxonomy), reliable sustainability data, wider reporting and tools against greenwashing. Without a shared definition, two banks can label the same loan differently — the plan is designed to stop that.
- Build capacity. Training and specialist staff across banks, insurers, capital markets and public bodies, plus outreach to the real sector on how to access green finance instruments.
- Build market mechanisms. More green products, monitoring of their market share and performance, sustainability-themed sovereign issuance by the Treasury, and positioning the Istanbul Financial Centre as a regional hub for sustainable finance.
Among the named actions reported by the Ministry and the press: completing the Turkey Green Taxonomy, widening the scope of the banks’ green asset ratio, and preparing a sectoral sustainability guide for payment institutions. Each of these lands on companies indirectly — through the questions your bank, your investors and your auditors will start asking.
Does it apply to a foreign-owned company in Turkey?
Not directly — but it reaches you through four routes. A foreign-owned Turkish company is affected if it (1) crosses the TSRS thresholds, (2) borrows from Turkish banks that must report green assets, (3) receives proceeds of a parent-level green bond or loan, or (4) operates an installation covered by the Turkey ETS or exports CBAM goods to the EU.
| Exposure route | Typical trigger | What you will be asked for |
|---|---|---|
| TSRS reporting | 2 of 3 thresholds (TRY 1bn assets / TRY 2bn net sales / 500 employees) exceeded in two consecutive periods, counted together with your own subsidiaries and associates | A TSRS 1 / TSRS 2 report with limited assurance by a KGK-authorised sustainability auditor |
| Turkish bank financing | Investment loans, project finance, “green” credit lines | Eligibility evidence, use-of-proceeds confirmation, periodic allocation and impact data |
| Parent group financing | Parent issued a green bond or signed a green/sustainability-linked loan and allocated part of it to Turkey | Project-level spend reconciled to the Turkish statutory books, FX and inflation effects explained |
| Carbon pricing | Installation above 50,000 tCO2e/year; EU exports of CBAM goods | Monitoring plans, verified emissions, allowance accounting and cost allocation — see our Turkey ETS Tax & Accounting Review |
A point foreign CFOs often miss: under Article 4(4) of KGK Decision No. 21634, the threshold test aggregates the Turkish company with its own subsidiaries and associates. A Turkish holding that owns two operating companies can cross the line even if neither operating company does on its own.
Green loan vs green bond vs sustainability-linked loan in Turkey
| Green (use-of-proceeds) loan | Green / sustainable bond or sukuk | Sustainability-linked loan or bond | |
|---|---|---|---|
| What is “green” | The projects funded | The projects funded | The company’s KPIs (e.g. emission intensity) |
| Market principles | LMA Green Loan Principles | ICMA Green / Social / Sustainability Bond Principles | LMA SLL Principles / ICMA SLB Principles |
| Turkish rulebook | Bank credit policy; BDDK supervision of the lender | SPK Green, Sustainable and Social Capital Market Instruments Guide (2026) | SPK Sustainability-Linked Capital Market Instruments Guide (2026) |
| Key finance task | Ring-fence and track proceeds | Track proceeds, publish allocation and impact reports | Measure KPIs with audit-grade data; margin step-ups if targets are missed |
| Typical external review | Optional; often lender-led | Second-party opinion on the framework is standard | KPI verification; often an SPO as well |
Which one fits a Turkish subsidiary? Most foreign-owned subsidiaries will not issue bonds in Turkey. The realistic instruments are a green investment loan from a Turkish bank, an allocation from a parent’s green bond, or a sustainability-linked facility at group level. All three require the same thing locally: proceeds and KPIs that can be traced in the Turkish books.
The six building blocks of a sustainable finance framework
A sustainable finance framework is the document — and the control system behind it — that explains how a company raises, spends, tracks and reports green or social money. The structure follows the ICMA and LMA principles and, for SPK-approved issues, the minimum contents set by the 2026 SPK guides.
| # | Building block | The question it answers | Where the Turkish entity’s finance team does the work |
|---|---|---|---|
| 1 | Use of proceeds | Which project categories may be financed? | Map capex and opex lines to eligible categories; flag VAT and inflation effects on the amounts |
| 2 | Project evaluation and selection | Who decides, against which criteria? | Approval workflow, investment committee minutes, exclusion list |
| 3 | Management of proceeds | How is the money tracked until it is spent? | Dedicated sub-accounts or project codes in the chart of accounts; treatment of unallocated cash |
| 4 | Reporting | What is reported, how often? | Annual allocation report reconciled to statutory and IFRS/TFRS books; impact metrics with sources |
| 5 | Second-party opinion | Is the framework aligned with market principles? | Provide the data room and answer the reviewer’s questions |
| 6 | Independent verification | Did the money go where you said? | Audit trail: invoices, payments, fixed-asset register, FX and inflation adjustments |
Our role is the finance, accounting and tax side of blocks 1, 3, 4 and 6, and preparing your entity for blocks 5 and 6. Second-party opinions and TSRS assurance are given by independent reviewers and KGK-authorised sustainability auditors, not by us — which keeps your evidence independent.
TSRS reporting vs a sustainable finance framework: what is the difference?
TSRS is a legal reporting duty; a framework is a financing tool. TSRS applies to companies above the KGK thresholds, whether or not they raise green money, and covers climate risks and governance. A framework applies only when you raise labelled finance, and it governs how those specific funds are used, tracked and reported.
| TSRS (TSRS 1 and 2) | Sustainable finance framework | |
|---|---|---|
| Trigger | Size thresholds or sector (e.g. banks) | Raising green, social, sustainable or sustainability-linked finance |
| Source | KGK decisions; TCC Art. 88; Decree-Law 660 | ICMA/LMA principles; SPK 2026 guides for SPK-registered issues; lender terms |
| Assurance | Mandatory limited assurance by an authorised sustainability auditor | Second-party opinion; post-issuance verification |
| Penalty for getting it wrong | Regulatory exposure; audit qualification | Greenwashing claims, covenant breach, margin step-ups, reputational loss |
The two overlap in one place that matters to the CFO: the same emissions, energy and capex data feed both. Build the data once, at ledger level, and use it twice.
The accounting and tax side nobody budgets for
1. Proceeds tracking in a Turkish chart of accounts
Turkish statutory books follow the Uniform Chart of Accounts. Green projects are usually spread across fixed assets in progress, prepaid expenses and opex. Without project codes from day one, the allocation report becomes a manual reconstruction at year-end. Fix the coding before the first drawdown.
2. Three sets of numbers that rarely agree
Group reporting (IFRS), Turkish financial reporting (TFRS, with hyperinflation accounting under TMS 29 for TFRS reporters — see our inflation accounting guide) and tax books can show different amounts for the same solar roof. Allocation reports must state which basis they use and reconcile to the others. Investors and verifiers ask for exactly this reconciliation.
3. Intra-group green loans
When a parent on-lends green bond proceeds to the Turkish subsidiary, the label does not change the tax analysis. Check the arm’s-length interest rate (transfer pricing, Corporate Tax Law No. 5520 Art. 13), the related-party debt limit (thin capitalisation, Art. 12), the financing-expense restriction for highly leveraged companies (Art. 11/1-i), withholding tax on interest paid abroad (Art. 30 and the relevant tax treaty) and the VAT position on cross-border interest. A “green” loan with a non-deductible interest leg is an expensive way to be sustainable.
4. Carbon costs
For ETS-covered installations, allowances, surrender obligations and CBAM costs need an accounting policy and a tax position. We cover this in detail in Does Turkey’s ETS apply to your Turkish subsidiary?
The framework document is the easy part — a good template and a week of drafting. The weeks go into the ledger: reclassifying spend that was booked before anyone thought of a green label, explaining TRY-to-EUR differences to a parent-level verifier, and proving that an invoice paid from a mixed account was funded by the green tranche. If you design the coding first, the report almost writes itself.
What drives the cost of getting ready
We do not publish fees; every engagement is scoped privately. What moves the effort, in our experience:
- Number of financed projects and sites — one rooftop solar project is a different exercise from a multi-plant efficiency programme.
- State of the books — whether project codes exist, whether capex was booked consistently, and how far back the look-back period goes.
- Number of reporting bases — statutory only, or statutory plus TFRS plus group IFRS plus a lender template.
- TSRS status — whether the entity is already in scope, newly crossing thresholds, or reporting voluntarily.
- ETS / CBAM exposure — whether allowance accounting and carbon cost allocation are part of the scope.
- Language and audience — English-language packs for a foreign parent and a Turkish-language set for local auditors and banks.
Turkey vs EU vs UK: how the green finance rulebooks compare
| Turkey | European Union | United Kingdom | |
|---|---|---|---|
| National strategy | Green Finance Strategy and Action Plan 2026–2029 | Sustainable finance strategy and action plans | Green Finance Strategy |
| Taxonomy | Draft regulation; completion planned within 2026–2029 | EU Taxonomy Regulation (EU) 2020/852 in force | No binding green taxonomy in force |
| Corporate reporting | TSRS (ISSB-based), threshold-driven | CSRD / ESRS, scope narrowed by the Omnibus simplification | UK SRS (ISSB-based) being introduced |
| Green bond rulebook | SPK guides (2026), ICMA-aligned | European Green Bond Standard (EU) 2023/2631, voluntary | Market practice (ICMA); FCA listing rules |
| Carbon market | Turkey ETS, pilot phase from 2026 | EU ETS; CBAM definitive period from 2026 | UK ETS |
For a European group, the practical consequence is two-way: the Turkish subsidiary must feed EU-standard data upwards and meet Turkish TSRS and lender requirements locally. One data model, two outputs.
Worked cases
Illustrative scenarios (composite and anonymised). Facts are simplified to show the decision.
Case 1 — The parent’s green bond and the Bursa solar roof
Facts: A German-owned automotive parts manufacturer in Bursa received an intra-group loan funded from the parent’s green bond to install rooftop solar and replace compressors. Twelve months later the parent’s verifier asked for the allocation evidence.
The obvious answer: send the supplier invoices.
Why it failed: invoices were VAT-inclusive, partly paid from a general account, booked across three ledger accounts, and the TRY amounts did not match the EUR allocation in the parent’s report. The interest on the loan had also been priced without a transfer pricing file.
What was adopted: project codes added retroactively with a documented reclassification, a quarterly allocation schedule in EUR and TRY reconciled to the statutory books, net-of-VAT reporting with a note on recoverable VAT, and a benchmarked interest rate supported in the annual transfer pricing report.
Case 2 — “Our parent reports under CSRD, so we are exempt”
Facts: A Dutch-owned logistics group’s Turkish holding company had two operating subsidiaries, each below the TSRS thresholds.
The obvious answer: neither company is in scope, and the parent’s CSRD report covers Turkey anyway.
Why it failed: the KGK test aggregates the Turkish holding with its own subsidiaries; on that basis two of the three thresholds were exceeded for two consecutive years. A foreign parent’s report is not, by itself, a Turkish exemption.
What was adopted: a documented scope test each year, a TSRS-ready data model that also feeds the parent’s ESRS template, and early appointment of an authorised sustainability auditor.
Case 3 — A green investment loan from a Turkish bank
Facts: A US-owned food processor in Izmir negotiated a green investment loan for a heat-recovery system and was offered a better margin if eligibility and annual allocation reports were provided.
The obvious answer: let the engineering team send the bank a project description.
Why it failed: the bank’s credit team needed finance-grade data — drawdowns matched to payments, fixed-asset capitalisation, and a sign-off from someone accountable for the numbers.
What was adopted: a short use-of-proceeds policy, a ring-fenced project code, and a CPA-prepared annual allocation statement in Turkish and English. The margin benefit was secured at the first review.
Common mistakes we see
- Treating green finance as a sustainability-team project and bringing finance in at the reporting stage.
- Reporting VAT-inclusive or pre-inflation-adjustment amounts without saying so.
- Assuming a parent’s CSRD or ISSB report removes the Turkish TSRS duty.
- Labelling a loan “green” without a transfer pricing and withholding tax review of the interest.
- Ignoring the 27 October 2026 monitoring-plan deadline for ETS pilot installations.
What happens if…
What happens if we cannot prove where green loan proceeds went?
Under most green loan and bond documentation, unallocated or misallocated proceeds trigger reporting obligations, possible reallocation, loss of the margin benefit and, in serious cases, a covenant discussion. The reputational cost of a greenwashing allegation is usually larger than the financial one.
What happens if we cross the TSRS thresholds mid-year?
Under KGK Decision No. 21634 Art. 4, scope starts from the period following two consecutive periods above two of the three thresholds. Crossing them once does not trigger the duty — but it should start your preparation, because the data for the first in-scope year has to be collected during that year.
What happens if our installation is in the ETS pilot and we miss the monitoring plan deadline?
The ETS Regulation requires pilot-scope installations to submit their first monitoring methodology plan within two months of 27 August 2026. Missing it puts you on the back foot with the Climate Change Presidency at the exact moment free allocations are being set. Talk to your verifier and adviser now.
What happens if the Turkish taxonomy differs from the EU taxonomy?
Until the Turkish taxonomy is final, most frameworks reference ICMA categories and, for European groups, EU Taxonomy criteria. Design your project data so that it can be re-tagged against Turkish criteria once they are published.
A 90-day plan for the CFO of a Turkish subsidiary
| When | Action | Output |
|---|---|---|
| Days 1–15 | TSRS scope test (with subsidiaries), ETS/CBAM exposure check, list of green-labelled financing at entity and group level | One-page exposure map |
| Days 15–45 | Project coding in the chart of accounts, use-of-proceeds policy, reconciliation method statutory ↔ TFRS ↔ IFRS | Proceeds tracking set-up |
| Days 45–75 | Tax review of intra-group green loans (TP, thin cap, Art. 11/1-i, WHT, VAT); carbon cost accounting policy if relevant | Tax position memo |
| Days 75–90 | Dry-run allocation report; data room for the reviewer or sustainability auditor | Audit-ready pack in English and Turkish |
Sustainable Finance Readiness Review — Tax Certainty for your green financing in Turkey
A fixed-scope review by a licensed Turkish CPA for foreign-owned companies: TSRS scope test, proceeds-tracking design in your Turkish books, tax review of intra-group green loans, ETS/CBAM cost accounting, and an English-language findings pack your group CFO and lender can use. Peace of Mind before your bank, parent or auditor asks.
WhatsApp usEmail info@ozmconsultancy.comCall +90 216 352 29 61
Prefer a written scope? Request a proposal. Running an installation above 50,000 tCO2e? See the Turkey ETS Tax & Accounting Review.
Frequently asked questions
Is the National Green Finance Strategy legally binding on private companies?
No. Circular 2026/8 instructs public bodies to implement the plan. Companies are affected through the regulations those bodies issue — TSRS, SPK guides, bank supervision rules, the ETS and, once final, the green taxonomy.
Who has to report under TSRS in Turkey?
Companies exceeding two of three thresholds — total assets TRY 1 billion, net sales TRY 2 billion, 500 employees — in two consecutive periods, plus certain sectors such as banks regardless of size. Thresholds are tested together with the company’s subsidiaries and associates, for periods starting on or after 1 January 2025.
Does a foreign parent’s sustainability report exempt the Turkish subsidiary from TSRS?
Do not assume so. Run the test under KGK Decision No. 21634 and its procedures and document the conclusion each year. In practice, the same data can feed both the parent’s report and a Turkish TSRS report.
What changed in SPK’s green bond rules in 2026?
On 13 August 2026 (Principle Decision i-SPK 128.29) SPK replaced its 2022 guide with two new guides covering green, sustainable and social instruments and sustainability-linked instruments, set minimum contents for framework documents, aligned them with ICMA principles and cut CMB fees on these issues by 50%.
Is the Turkey Green Taxonomy in force?
Not yet. A draft regulation has been published for consultation, and completing the taxonomy is one of the actions in the 2026–2029 plan. Until then, frameworks typically reference ICMA categories and, for European groups, the EU Taxonomy.
Do we need a second-party opinion for a green loan from a Turkish bank?
Not always. Many bank green loans rely on the lender’s own eligibility review. Bonds and larger syndicated facilities usually require an external review. Either way, the lender will want finance-grade allocation data.
Is a green intra-group loan taxed differently in Turkey?
No. The green label does not change transfer pricing, thin capitalisation, the financing-expense restriction, withholding tax on interest paid abroad or VAT. Those positions should be reviewed before the first drawdown.
Can a CPA firm prepare our allocation report?
Yes — preparing finance-grade allocation statements, reconciliations and the accounting and tax positions behind them is CPA work. Independent second-party opinions and TSRS assurance are provided by separate reviewers and KGK-authorised sustainability auditors.
Primary sources
- Presidential Circular 2026/8 on the National Green Finance Strategy and Action Plan (2026–2029), Official Gazette, 4 July 2026
- Ministry of Treasury and Finance, Ulusal Yeşil Finans Stratejisi ve Eylem Planı 2026–2029 (PDF)
- Climate Law No. 7552, mevzuat.gov.tr
- KGK decision on TSRS thresholds, Official Gazette, 16 January 2026 (No. 33139); TSRS texts on kgk.gov.tr
- Turkish Commercial Code No. 6102 (Art. 88), mevzuat.gov.tr
- SPK press release on the 2026 green, sustainable, social and sustainability-linked instrument guides, spk.gov.tr
- Turkey Emissions Trading System Regulation, Official Gazette, 27 August 2026 (No. 33353)
- Corporate Tax Law No. 5520 (Arts. 11, 12, 13, 30), mevzuat.gov.tr; guidance on gib.gov.tr
This article is general information as of 21 October 2026 and is not legal or tax advice for a specific situation. Regulations under the 2026–2029 plan are still being issued; confirm the current text before acting.
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Most CFOs I speak with read “national strategy” and file it under policy noise. The mistake is timing. When a bank’s green asset ratio becomes a supervised number, the bank’s credit team needs data from you — and it will ask for it at renewal, not after you are ready. The companies that get better pricing are the ones whose Turkish books can answer the question on the first request.