TSRS 1 and 2, scope, climate disclosures and preparation steps for independent assurance.
Sustainability reporting is becoming a complement to financial reporting for many businesses. The Turkish Sustainability Reporting Standards (TSRS) issued by the KGK bring an obligation to disclose climate and other sustainability information in line with international standards.
What is TSRS?
TSRS consists of two main standards: TSRS 1 regulates general requirements for the disclosure of sustainability-related financial information, and TSRS 2 climate-related disclosures. Entities are expected to provide information under the headings of governance, strategy, risk management, and metrics and targets.
Who is in scope?
The scope is set by KGK decisions and widens in stages by company size and sector criteria. Large entities subject to independent audit and companies in certain sectors are in the first group; voluntary application is possible for others. The current scope should be checked in KGK announcements.
Key climate-related disclosures
- Greenhouse gas emissions: Scope 1 (direct), Scope 2 (purchased energy) and, where appropriate, Scope 3
- Climate-related physical and transition risks and opportunities
- Climate scenario analysis and resilience assessment
- Targets, investment plans and board oversight
Why does assurance matter?
As sustainability information becomes decision data for investors and lenders, an independent assurance report increases the reliability of the information. Initially 'limited assurance' is generally given; a move to 'reasonable assurance' is expected in later years.
Recommended preparation steps
- Determine scope and effective dates
- Gap analysis: compare existing data and processes with TSRS requirements
- Build the greenhouse gas inventory and data collection systems
- Perform climate risk and scenario analysis
- Prepare the draft report in line with the financial statements
- Plan the independent assurance engagement
Supply chain effect
Exporters to the EU also face sustainability data requests from their customers. The carbon border mechanism and EU sustainability reporting rules may require you to supply data as a supplier even if you are outside scope.
Cost and timing
A readiness assessment is completed in a few weeks; the first reporting cycle generally takes six to nine months with data collection systems being built. Regular collection of supplier and energy consumption data for the greenhouse gas inventory is the largest cost item. Integrating the process into the financial close calendar therefore lowers cost over the years.
At Sahih Audit we offer a TSRS readiness assessment, reporting support and assurance together, with independence safeguards against conflicts of interest.