The TSRS S2 (Turkey Sustainability Reporting Standards) Climate-Related Disclosures standard aims to drive green transformation in the business world by ensuring companies report on climate-related risks and opportunities transparently. This standard provides detailed guidance on how companies should develop strategies, establish management structures, and define risk management processes and financial performance targets to manage climate risks and opportunities effectively. Reporting under this standard is organized into four main sections.
Governance: Companies are required to disclose how they manage climate-related risks and opportunities within their governance structures. This includes detailing how governance bodies—such as the board, committees, and responsible departments—oversee climate risks, how management responds to these risks, and how these processes are integrated into company policies. This transparency allows decision-makers and stakeholders to better understand the company’s preparedness for climate risks.
Strategy: Companies must provide comprehensive information on how climate change may impact their business models, financial performance, and value chains in the short, medium, and long term. Through climate scenario analyses, companies should explain which strategies they adopt for a low-carbon economy transition, how transition risks are managed, and how financial planning aligns with this transition.
Risk Management: TSRS S2 clarifies how climate risks are incorporated into general risk management processes. Companies must share information about the data sources, analytical methods, and criteria they use to identify and assess climate risks. This section also outlines how companies monitor, prioritize, and evaluate climate risks through scenario analysis. By mandating an integrated approach, TSRS S2 encourages a holistic perspective in risk management, treating climate risks alongside other operational risks.
Metrics and Targets: The standard requires companies to identify and report on the metrics they use to evaluate their progress toward specific climate targets. These metrics include greenhouse gas emissions (Scope 1, Scope 2, and Scope 3), assets exposed to transition and physical climate risks, climate-aligned investments, and capital allocation. Companies must transparently report on their carbon reduction and climate adaptation goals, their progress toward these goals, and resource allocation processes.
Content disclosed under Governance, Strategy, Risk Management, and Metrics and Targets helps investors, lenders, and other stakeholders make more informed decisions. Climate-related financial reporting standards promote detailed measurement, monitoring, and reporting of carbon emissions by accounting for sector-specific risks and opportunities. Companies are required to report emissions sources comprehensively, including Scope 1 (direct emissions), Scope 2 (indirect emissions from purchased energy), and Scope 3 (indirect emissions from the supply chain and other areas). The use of sector-specific metrics enables a more thorough analysis of each sector’s unique environmental impacts, risks, and opportunities. This approach provides more precise and effective solutions for addressing climate risks and low-carbon strategies, taking into account emission profiles that vary based on each company's line of business. Examples of sector-specific requirements and reporting practices are outlined below.
Energy Sector: Companies in this sector are expected to detail their transition strategies to renewable energy sources due to their high carbon intensity. Additionally, the emission impacts of technologies used in energy production should be comprehensively explained.
Financial Services (Commercial Banking and Insurance): Banks and insurance companies should assess the climate resilience of the projects they finance. For example, commercial banks are required to report the emission profiles (Scope 1, 2, and 3) of assets they financially support by sector. In the insurance sector, strategies for managing emission risks and mitigating risks covered by policies should be clarified.
Mining and Heavy Industry: In sectors like mining and steel production, which have high carbon footprints, climate scenario analysis is a well-established practice. Companies in these sectors are expected to outline their transition plans to low-carbon technologies and emission reduction targets. Depending on the sector’s structure, innovative technologies and process modifications aimed at reducing emissions from production processes are essential.
These tailored reporting practices support companies in developing more effective sustainability strategies and aim to accelerate the global transition to a low-carbon economy. This transition into a new era is supported by well-defined regulations that facilitate compliance. Thus, the standard serves not only as a reporting requirement but also as a guiding framework for companies striving toward a sustainable future.
If you are interested in strengthening your climate responsibilities and advancing on the path to green transformation under the TSRS S2 framework, please reach out to us at info@carbongate.io for more information.
