Türkiye’s Green Taxonomy Regulation: A New Framework for Sustainable Finance and Foreign and Domestic Investment represents a critical title for Türkiye. Türkiye policy and law makers have taken a remarkable step in articulating Türkiye Green Taxonomy Regulation.
Introduction
Türkiye’s Green Taxonomy Regulation (hereinafter as the“Regulation”) was published in the Official Gazette dated 24 September 2026 and numbered 33380. It is helpful to indicate that the Regulation represents a significant step towards establishing a national sustainable finance framework for a green economy. The present article will highlight core parameters of the Regulation. At the end the present paper, after addressing the concluding remarks for the compliance screening process, will end Conclusion Part.
The full text of the Türkiye Green Taxonomy Regulation is available through the Official Gazette.
Key Takeaways
The Türkiye Green Taxonomy Regulation entered into force on 24 September 2026 and establishes a national classification framework covering 16 sectors and 137 economic activities.
An economic activity must make a substantial contribution to at least one environmental objective, cause no significant harm to the other objectives and comply with minimum social safeguards to qualify as taxonomy-aligned.
Although entities carrying out activities listed in Annex 1 may report voluntarily, specified financial institutions are subject to mandatory reporting. A transitional exemption applies to those financial institutions until 1 January 2029.
The detailed reporting and verification procedures will be further determined by the Climate Change Directorate and the relevant financial regulators.
General Overview
The adoption of the Türkiye’ Green Taxonomy Regulation was based on Article 8/1(c) of Climate Law No. 7552 and Article 792/D of Presidential Decree No. 4. The Regulation entered into force on the same date after the publication.
What is really significant is that Türkiye’s Green Taxonomy Regulation establishes a classification system for identifying economic activities that contribute to Türkiye’s environmental objectives. Indeed Article 1 describes the main objective as the establishment of the procedures and principles governing the Türkiye Green Taxonomy in order to support economic activities aligned with sustainable development goals, encourage the flow of finance towards sustainable investments and prevent greenwashing in the market.
In that connection, Article 7 addresses 6 main environmental objectives:
a) Mitigation of greenhouse gas emissions;
b) Adaptation to climate change;
c) Sustainable use and protection of water and marine resources;
ç) Transition to a circular economy;
d) Prevention and control of pollution;
e) Protection and restoration of biodiversity and ecosystems.
It is remarkable to bear in mind at the outset that the Regulation may have a direct impact upon most companies operating in the real economy in terms of bank financing, foreign investment models, insurance coverage and access to cross border capital.
Taxonomy Eligibility and Taxonomy Alignment
The distinction between taxonomy eligibility and taxonomy alignment is important.
An economic activity is taxonomy-eligible when it falls within one of the activities listed in Annex 1. However, inclusion in Annex 1 does not automatically mean that the activity is environmentally sustainable.
A taxonomy-eligible activity becomes taxonomy-aligned only if it satisfies the applicable technical screening criteria, makes a substantial contribution to at least one environmental objective, causes no significant harm to the remaining objectives and complies with minimum social safeguards.
Main Descriptions
The first thing capturing our attention is that the Regulation addresses core wording for the Green Taxonomy. It is sufficient here to note two main definitions among others, as set forth in Article 4.
In this context, “environmental objective” means, for the purpose of assessing the environmental sustainability of an economic activity, the objectives of mitigating greenhouse gas emissions, adapting to climate change, sustainably using and protecting water and marine resources, transitioning to a circular economy, preventing and controlling pollution, and protecting and restoring biodiversity and ecosystems;
Regarding “Online Taxonomy Management System”, it means the online system through which the operations and procedures relating to the Taxonomy process will be conducted electronically.
Taxonomy-eligible activity refers to an economic activity falling within the scope of Annex 1.
Taxonomy-aligned activity refers to an eligible activity that satisfies the applicable technical screening criteria and the other alignment requirements prescribed by the Regulation.
Greenwashing refers to presenting a financial product, investment, activity or organisation as environmentally sustainable without sufficient and verifiable evidence.
Transition plan refers to the plan accompanying the taxonomy report and setting out the measures through which the reporting entity intends to improve its taxonomy alignment over time.
Scope of Türkiye’s Green Taxonomy Regulation
Based on the additional documentation attached to the Regulation, the Regulation covers 16 sectors and 137 economic activities listed in Annex 1 including
- energy;
- manufacturing;
- construction and real estate;
- transportation;
- water and waste management;
- information and communication;
- agriculture;
- forestry;
- tourism; and
- certain environmental and professional services.
The assessment must be conducted at the level of the particular economic activity by examining Annex 1 and the applicable technical screening criteria.
The inclusion of a sector in the Regulation does not mean that every company or activity operating within that sector will automatically qualify as taxonomy-aligned.
Alignment of Taxonomy Activities
Under Article 6, for an eligible activity to qualify as taxonomy-aligned, it must satisfy three cumulative conditions:
A – Joint Conditions
- Making a substantial contribution to at least one environmental objective,
- Not causing significant harm to any other environmental objective
- Complying with the minimum social safeguards.
Minimum social safeguards form an independent component of taxonomy alignment. Article 10 refers to fundamental labour and human rights standards, including the core conventions of the International Labour Organization, the OECD Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.
Accordingly, taxonomy alignment cannot be demonstrated solely through environmental performance. Companies must also examine their employment practices, human rights policies, supply-chain controls and compliance with applicable labour and social security legislation.
B- Compliance with Performance Indicators
From that connection, Article 12 introduces relevant performance indicators that will be reviewed for the environmental objectives. The key performance indicators are as follows:
a) The proportions of turnover, capital expenditure and operating expenditure derived from products or services that are taxonomy-eligible or taxonomy-aligned.
b) Ratios indicating how and to what extent banking activities take environmental sustainability and environmental objectives into account, and the degree to which they contribute to those objectives.
c) Ratios indicating how and to what extent brokerage firms, investment companies and portfolio management companies take environmental sustainability and environmental objectives into account, and the degree to which they contribute to those objectives.
ç) Ratios indicating how and to what extent insurance, reinsurance and pension companies take environmental sustainability and environmental objectives into account, and the degree to which they contribute to those objectives.
(3) Financial institutions required to report pursuant to the second paragraph of Article 13 shall, when calculating their own key performance indicators, use the current data and key performance indicators of the institutions, organisations and enterprises reporting under the first paragraph of the same Article.
The 10% Reporting Threshold
Under Article 13, an Annex 1 activity may be excluded from the relevant reporting calculation where its turnover, capital expenditure and operating expenditure ratios each remain below the applicable 10% threshold.
Companies should document the financial data and calculation methodology used when relying on this exclusion.
C – Mandatory Reporting by Financial Institutions
The Regulation introduces mandatory taxonomy reporting for specified financial institutions, including:
- investment firms;
- collective investment undertakings;
- portfolio management companies;
- banks;
- insurance and reinsurance companies; and
- pension companies.
Reporting Timetable and Transitional Period
Article 13 distinguishes between voluntary and mandatory reporting.
Institutions, organisations and enterprises conducting at least one Annex 1 activity may submit taxonomy reports voluntarily. Mandatory reporting applies to brokerage firms, investment companies, portfolio management companies, banks, and insurance, reinsurance and pension companies.
The detailed rules applicable to these institutions will be determined by the Capital Markets Board, the Banking Regulation and Supervision Agency and the Insurance and Private Pension Regulation and Supervision Agency, according to their respective areas of authority.
Reports must generally cover the preceding reporting period and be uploaded to the Online Taxonomy Management System by the end of the sixth month following the end of the relevant financial year.
Financial institutions benefit from a transitional exemption from mandatory reporting until 1 January 2029. The relevant regulators may provide further guidance concerning the first mandatory reporting period.
Financial institutions may nevertheless request companies carrying out Annex 1 activities to provide taxonomy information in relation to financing or investment transactions. Consequently, real-economy companies may face taxonomy-related data requests before mandatory reporting formally begins.
Verification, Public Disclosure and Administrative Sanctions
The procedures and principles governing the verification of taxonomy reports will be determined by the Climate Change Directorate.
Reports uploaded to the Online Taxonomy Management System will, in principle, be publicly accessible. Reporting entities should therefore establish internal review and approval procedures before submitting financial, environmental or social data.
Failure to comply with notification, information and document-submission obligations may result in administrative sanctions under Climate Law No. 7552.
Companies should retain the calculations, technical evidence, policies and supporting records used to demonstrate substantial contribution, compliance with the “do no significant harm” principle and observance of minimum social safeguards.
Concluding Observations
That section, while addressing the main implications of the Regulation, will outline the impact of the Regulation on particularly foreign and domestic entrepreneurs. Taxonomy compliance review process can become part of:
- legal, financial and environmental due diligence;
- valuation of companies and projects;
- investment committee decisions;
- loan and security documentation;
- sustainability-linked financing arrangements;
- representations and warranties;
- environmental indemnities;
- exit and refinancing strategies.
Relationship with the EU Taxonomy
The Türkiye Green Taxonomy Regulation adopts concepts also used under the EU Taxonomy, including substantial contribution, the “do no significant harm” principle, technical screening criteria and minimum social safeguards.
However, compliance with the Türkiye Green Taxonomy should not automatically be treated as evidence of alignment with the EU Taxonomy. Turkish technical criteria, reporting rules and regulatory procedures must be assessed separately.
Cross-border groups, exporters, financial institutions and companies receiving financing from European lenders may therefore need to map their activities against both frameworks.
Technical Screening Criteria and Annual Updates
The technical screening criteria applicable to taxonomy activities will be published by the Climate Change Directorate.
Updates announced by 15 December will generally apply during the following calendar year. Companies and financial institutions should therefore review the applicable criteria annually rather than relying permanently on an earlier assessment.
Activities involving the production of solid fossil fuels cannot qualify as environmentally sustainable activities under the Regulation.
Conclusion
It should be reiterated that the Regulation in question was adopted by the Türkish Government both to encourage the flow of finance towards sustainable investments and to prevent greenwashing in the market. Corporates and investors should consider taking the following initial steps for the identification of whether their business activity falls within Annex 1 and if so mapping each eligible activity against the relevant environmental objectives and reviewing all requirements for the full compliance.
