TSRS Reporting Thresholds Revised: 2026 Turkey ESG Regulations

Summary

The most significant development in Turkey's sustainability reporting ecosystem over the last 90 days is the upward revision of the mandatory reporting thresholds under the Turkey Sustainability Reporting Standards (TSRS). The Public Oversight, Accounting and Auditing Standards Authority (KGK) officially updated these criteria in a decision published in the Official Gazette on January 16, 2026. This regulatory shift redefines the pool of companies required to comply with ESG transparency mandates by increasing the financial and operational scale necessary to trigger the obligation.

The primary objective of this move is to balance the administrative and financial burden on mid-sized enterprises while ensuring that systemically important large-scale firms maintain high standards of transparency. By doubling the previous limits, the KGK is strategically calibrating Turkey's alignment with global financial reporting trends. This recalibration is not merely a technical adjustment but a strategic response to the evolving economic landscape, ensuring that the regulatory net captures the entities with the most significant environmental and social footprints without stifling the growth of the "SME+" segment. This decision reflects a sophisticated understanding of the Turkish market's unique structure, where mid-cap companies often serve as the engine of economic expansion but may lack the immediate infrastructure for complex non-financial reporting.

Background

Turkey's journey toward integrated sustainability reporting gained significant momentum following the ratification of the Paris Agreement in 2021 and the subsequent announcement of the Green Deal Action Plan. During this period, the TSRS were established to enhance financial market transparency and facilitate investor access to ESG (Environmental, Social, and Governance) data. The initial thresholds set for 2024 and 2025 were designed to initiate the transition, acting as a foundational phase where the market began to familiarize itself with the rigors of climate-related disclosures.

However, the period between 2020 and 2024 revealed several practical challenges. The foundational years were characterized by a steep learning curve for both regulators and the private sector. Given the inflationary environment and the evolving economic landscape, the original thresholds captured a larger number of companies than initially anticipated. Many firms that were technically "mid-sized" in terms of their operational impact found themselves crossing the 500 million TL asset mark simply due to nominal price increases, rather than a fundamental shift in their systemic importance.

Evaluating feedback from the private sector and international best practices, the KGK decided to optimize the scope without compromising reporting quality. This decision is a cornerstone of Turkey's vision to remain fully aligned with the ISSB (International Sustainability Standards Board). Following the foundational years of 2020-2024, this 2026 update marks the transition into a more mature phase of the regulatory framework. It signals a shift from broad-based inclusion to a more targeted, high-impact oversight model that mirrors the maturity seen in more established financial markets.

Data and Figures

According to the new decision issued by the KGK, companies must exceed at least two of the following three thresholds in two consecutive reporting periods to be subject to mandatory TSRS reporting. The revised figures represent a 100% increase over the previous period's requirements, a move designed to correct the "bracket creep" caused by economic fluctuations.

The following table outlines the specific changes to the mandatory reporting criteria:

| Criterion | Old Threshold (2024-2025) | New Threshold (2026 onwards) | | :--- | :--- | :--- | | Total Assets | 500 Million TL | 1 Billion TL | | Annual Net Sales Revenue | 1 Billion TL | 2 Billion TL | | Number of Employees | 250 Employees | 500 Employees |

These figures directly impact publicly traded companies on Borsa Istanbul (BIST) as well as large-scale private enterprises. Compliance is monitored through annual financial statements and social security records. The "two consecutive reporting periods" rule is a critical stabilizer; it ensures that a company is not forced into a complex reporting regime due to a single exceptional year of high sales or a temporary hiring surge.

With the implementation of this decision, a significant increase in the number of companies exempted from mandatory reporting is expected. This allows these entities to focus on growth and operational efficiency rather than the immediate implementation of complex compliance procedures. For a company that previously sat just above the 500 million TL asset mark, this update provides a significant "breathing room," effectively doubling the ceiling before they must invest in the specialized accounting and auditing infrastructure required by the TSRS.

Market Impact

The most immediate impact of this regulation on the market will be the reduction of compliance costs for mid-cap companies (SME+). Sustainability reporting involves substantial costs that go beyond simple data entry. These include:

• Data Collection and Management: Implementing systems to track Scope 1, 2, and 3 emissions, as well as social metrics.
• Specialized Software: Investing in analytical tools and ESG-specific ERP modules to ensure data accuracy.
• Independent Assurance Audits: Hiring authorized firms to verify the sustainability reports, which is a mandatory requirement under the current framework.
• Human Capital: Training existing staff or hiring specialized sustainability officers to oversee the reporting lifecycle.

Raising the thresholds allows these companies to redirect resources toward operational efficiency and innovation. On the other hand, for the major players in the BIST indices, the standards remain unchanged. This ensures that transparency is maintained at the top tier of the market where the majority of foreign institutional capital is concentrated.

From a banking perspective, the impact is nuanced. Institutions that utilize ESG criteria in their lending processes are expected to continue using their own assessment forms for companies outside the mandatory scope. This suggests that voluntary reporting will remain highly relevant for maintaining access to green finance. Even if a company is no longer legally required to report under TSRS, its lenders or international supply chain partners may still demand similar data. Therefore, the market impact is a shift from "regulatory compulsion" to "market-driven incentive" for the mid-cap sector.

What It Means for Investors

For investors, this update reinforces the principle of "quality over quantity." Narrowing the mandatory scope allows the KGK and auditing firms to focus their oversight on larger companies that carry systemic risks. This is expected to lead to an improvement in the data quality and comparability of the published reports. When the regulatory body oversees a more concentrated pool of high-impact firms, the level of scrutiny and the resulting reliability of the data typically increase.

Institutional investors, particularly those aligned with the European Union's CSRD (Corporate Sustainability Reporting Directive), demand high-quality, reliable ESG data to fulfill their own reporting obligations. By rationalizing the thresholds, Turkey encourages the remaining companies in the scope to provide deeper and more meaningful disclosures. This alignment is crucial for Turkish firms that are part of European supply chains, as the CSRD often requires data from non-EU subsidiaries or partners.

However, there is a strategic consideration for ESG-focused funds. Portfolios that include mid-cap companies should be aware of a potential narrowing in the available data set. As these companies move from mandatory to voluntary status, the frequency and standardization of their reporting might fluctuate. Investors may need to request voluntary sustainability disclosures from high-growth companies that no longer fall under the mandatory mandate. This creates a scenario where active engagement between investors and company management becomes even more critical to ensure that the "data gap" does not hinder capital allocation to promising, sustainable mid-sized firms.

Frequently Asked Questions

Who is required to perform TSRS reporting?

Mandatory TSRS reporting applies to all entities that exceed at least two of the three criteria: total assets (1 billion TL), net sales (2 billion TL), and employee count (500) for two consecutive reporting periods. Special provisions apply to Public Interest Entities (PIEs) such as banks, insurance companies, and other financial institutions, which often have lower or more specific triggers due to their systemic importance to the financial ecosystem.

When did the new thresholds take effect?

The update by the KGK was published in the Official Gazette on January 16, 2026, and is effective immediately. Companies' reporting obligations for the 2026 fiscal year will be calculated based on these new values. This means that the financial statements and operational data from the preceding years will be evaluated against these 1 billion TL and 2 billion TL benchmarks to determine the 2026 reporting status.

Can companies below the thresholds still report?

Yes, companies below the thresholds are encouraged to report voluntarily according to TSRS standards. For companies that export to the EU or seek international financing, voluntary reporting remains a significant competitive advantage. In many cases, being "TSRS-compliant" voluntarily can serve as a powerful signal to international creditors and partners that the company is managed with a long-term, sustainable perspective.

Are these reports subject to independent audit?

Yes, sustainability reports prepared under TSRS must undergo an "assurance audit" by authorized independent audit firms. This is a critical requirement to ensure the accuracy of the data and its compliance with international standards. The audit provides the necessary "seal of approval" that institutional investors require before they can integrate the ESG data into their valuation models.

Outlook

The threshold update at the beginning of 2026 reflects Turkey's commitment to building a robust sustainable finance infrastructure. It represents a move toward a more "proportional" regulatory environment, where the intensity of the reporting obligation is matched to the scale and impact of the enterprise. Through the end of 2026, we expect a noticeable increase in the reporting quality of companies within the scope and a greater standardization of data as firms adapt to the mature phase of the TSRS.

Moving toward 2027, it is likely that these standards will become more sector-specific. As Turkey continues its alignment with the EU Green Deal, we may see the KGK introduce tailored disclosure requirements for high-carbon industries such as cement, steel, and energy. This would mirror the global trend of moving from general ESG disclosures to industry-specific metrics that provide more granular insights into climate-related risks.

Companies should view sustainability not just as a legal hurdle but as a core business model essential for long-term capital access. The KGK's flexible approach enhances market adaptability while strengthening Turkey's position in the global ESG landscape. By ensuring that the reporting mandate is both rigorous for large players and realistic for growing ones, Turkey is positioning itself as a sophisticated participant in the global transition to a low-carbon economy. As reported by Bloomberg HT, this development marks a new era in the world of financial and non-financial reporting, bridging the gap between local economic realities and international transparency expectations.

This content is for informational purposes only and does not constitute investment advice.

Source: Bloomberg HT

Primary source: Bloomberg HT