Developments in the Sustainability Ecosystem

The year 2025 has been a year in which the regulatory framework in the field of sustainability has deepened in the areas of climate, nature, biodiversity, and sustainable finance; and reporting standards have matured with a focus on convergence and applicability. For companies and financial institutions, the sustainability agenda has progressed beyond voluntary commitments to mandatory reporting, assurance/audit expectations, supply chain data, and linking to financial impacts.

Global Reporting Architecture: The Spread of ISSB/IFRS S1-S2 and Implementation-Focused Updates

The International Sustainability Standards Board's (ISSB) IFRS S1 and IFRS S2 standards are being integrated into regulatory frameworks in numerous jurisdictions as of 2025. Profiles published by the IFRS Foundation show that many countries have adopted ISSB standards or are in the process of incorporating them into their legislation.

On the implementation side, in 2025, companies were supported in standardizing their data architectures and reporting processes with training materials on the use of sector-based metrics and explanations on how to evaluate the Sector-Based Guidance.

In line with market feedback, the ISSB has published targeted amendments to IFRS S2, particularly in areas such as greenhouse gas emissions disclosures, to facilitate implementation through transitional and clarifying provisions.

EU Regulations: CSRD/ESRS and Simplification (Omnibus) Agenda

Sustainability reporting in the European Union has been shaped in 2025 not only by scope expansion but also by discussions on simplifying the implementation burden, timetable, and data requirements, as well as timetable revisions. EU institutions have worked on “Simplification (Omnibus)” packages with a focus on competitiveness in sustainability reporting and disclosure obligations. The process has been prioritized throughout 2025, with political consensus expected by the end of the year. Regulations such as calendar postponements for reporting waves have also featured prominently on the agenda.

Carbon Border Adjustment Mechanism (CBAM) Applications

For the EU's CBAM, 2025 was a year in which reporting processes became institutionalized and the registration and application infrastructure was strengthened as the transition period (2023-2025) drew to a close. The EU Commission has implemented application steps such as the authorized declaration holder status on the CBM Registry while continuing the CBM transition period reporting framework.

Nature and Biodiversity: Financing Architecture and TNFD Momentum

The nature agenda gained significant momentum in 2025. Progress was made on resource mobilization and financing at the CBD COP 16 session held in Rome. Numerical frameworks such as the target of mobilizing USD 200 billion annually by 2030 and the target of USD 20 billion in annual international flows to developing countries by 2025 were reaffirmed.

Meanwhile, the 2025 Status Report published by the Taskforce on Nature-related Financial Disclosures (TNFD) shows that nature-related risks and opportunities are rapidly entering the corporate reporting agenda and that many organizations have made public commitments to start TNFD-compliant reporting.

Deforestation

Global deforestation is a critical global issue in terms of biodiversity loss, disruption of the carbon cycle, and climate change. According to the Food and Agriculture Organization's (FAO) Global Forest Resources Assessment 2025 report, although the annual net forest loss for the 2015-2025 period has decreased from approximately 17.6 million hectares in the 1990s to 10.9 million hectares, the total forest area continues to decline. This highlights the importance of strengthening sustainable land management and forest conservation policies. In this context, reducing deforestation through conservation, reforestation, and sustainable trade policies is a key objective in terms of both climate goals and the sustainability of ecosystem services.

Sustainability Assessment

Sustainability assessment is a set of methods that aims to identify the environmental and social impacts of a product/operation/company using measurable metrics and integrate them into decision-making processes. The assessment provides answers based on objectives, risks, impacts, and Key Performance Indicators (KPIs). On the corporate side, this assessment is designed to inform investor decisions based on governance, strategy, risk management, metrics, and targets.

The most common technical method used in sustainability assessment is Life Cycle Assessment (LCA). It provides a systematic framework covering everything from raw material extraction to production, logistics, use, and disposal. It includes the steps of target and scope definition, inventory analysis, impact assessment, and interpretation. ISO 14040 standardizes this framework and ensures that the “total impact” is visible, especially in areas such as products/packaging.

The 2025 Climate Change Approach of the United States and Its States

The state approach to climate policy in the US has become more visible as of 2025. States are implementing their own climate roadmaps through renewable energy targets, energy efficiency standards, vehicle emission regulations, public procurement, and market-based mechanisms such as “Cap-and-Invest” (formerly Cap-and-Trade). One of the key institutions institutionalizing this is the U.S. Climate Alliance Coalition, which frames state leadership with an emphasis on “state-led, high-impact climate action” and lists member states.

Two concrete examples of market-based mechanisms are California Cap-and-Invest and the Regional Greenhouse Gas Initiative (RGGI). The California Air Resources Board (CARB) defines the Cap-and-Invest program as a key element of the state's greenhouse gas reduction strategy and states that it complements other climate measures. RGGI is presented as a regional “Cap-and-Invest” model for CO₂ emissions in the electricity sector. The New York State environmental authority describes RGGI as the first mandatory market-based program in the US aimed at reducing CO₂.

The state approach in 2025 involves a “federal state” tug-of-war. It appears that some federal measures may target state climate policies; however, states maintain their determination to pursue their own agendas. For companies, this means multi-layered compliance and different reporting/compliance timelines, such as federal-state-regional programs.

China's Sustainability Approach

China's sustainability approach advances its climate policy with targets of peak emissions before 2030 and carbon neutrality by 2060, alongside its industrial and financial policies with a “high-quality development/green transformation” agenda. Documents submitted to the United Nations Framework Convention on Climate Change (UNFCCC) clearly outline these targets and energy transition indicators for 2030, such as renewable capacity and the share of non-fossil fuels in the energy mix.

Two axes stand out in policy instruments: market mechanisms such as the national carbon market/ETS, and reporting and disclosure regulations that guide companies' sustainability performance. Official/semi-official institutional reports and public disclosures regarding China's national carbon market describe the operation and scope of the ETS as a “national system.” In addition, progress reports published by the Ministry of Ecology and Environment (MEE) describe the system's design and operational dimensions.

On the reporting side, stock exchange guidelines and public institution frameworks are rapidly evolving. The Shanghai Stock Exchange (SSE) breaks down environmental disclosure items into reporting elements, metrics, and methods in its user guide for sustainability reporting. This demonstrates that the sustainability approach in China is progressing with the triad of “targets, market mechanisms, and standardized disclosure.”

World Economic Forum (WEF) 2024 and 2025 Assessments

The WEF 2024 (Davos) annual meeting is themed “Rebuilding Trust.” Official meeting materials state that this theme was chosen with the aim of creating a platform for dialogue and cooperation in a fragmented and uncertain global environment. The WEF's 2024 press release and meeting document summarize the program's themes and topics, such as geopolitical tensions, economic transformation, technology, climate/energy transition, and social dimensions, within an official framework.

The WEF 2025 annual meeting has been announced with the theme “Collaboration for the Intelligent Age.” The WEF's press release dated January 24, 2025, emphasizes the participant profile and the meeting's intended role in collaboration/joint solution-building. This theme is presented as a framework for addressing technology, economic transitions, and sustainable transformation together.

The WEF provides guidance on how to effectively use its content within organizations. There are guidelines on translating this into concrete business impacts in areas such as business model, supply chain, access to capital, and talent/workforce; linking climate, energy, nature, and technology topics to a risk and opportunity inventory; and aligning KPIs and action plans with this framework. The WEF's official theme pages and press releases provide sufficiently clear guidance to make this translation.

EU Green Deal: Fit for 55

Fit for 55 is a set of regulations that translates the EU's goal of reducing net greenhouse gas emissions by at least 55% by 2030, indexed to the base year of 1990, into a legislative package. The EU Council defines Fit for 55 as a set of laws serving this goal and places it on the path to climate neutrality by 2050.

The package brings together numerous regulations covering sectors such as energy, industry, buildings, and transportation. Key elements within the Fit for 55 toolkits include expanding the scope and intensity of carbon pricing, the CBAM, and updating energy efficiency and renewable energy targets.

On the Fit for 55 pages, the European Commission explains that the package is a progress/implementation framework aimed at achieving the 2030 target in a “fair, cost-effective, and competitive” manner.

The practical impact of Fit for 55 is mostly felt through three channels: the increase in carbon costs and their spread to more activities, the fact that emissions from products and supply chains, especially in exports to the EU, have become a more visible cost/compliance item, and the acceleration of low-carbon investments such as energy efficiency, electrification, renewables, and process transformation.

COP 30 and Türkiye

2025 was a year in which the focus on implementation and financing for the Paris Agreement became significantly stronger in terms of global climate governance. The Conferences of the Parties organized under the UNFCCC continued to be the fundamental platforms determining the direction of global climate policies. Held in Belém, Brazil, in 2025, COP 30 coincided with the tenth anniversary of the Paris Agreement and stood out as a critical turning point in terms of accelerating climate action and strengthening implementation.

The negotiations at COP 30 focused on climate change adaptation, increasing climate finance, just transition, and nature-based solutions. The need for financing to increase the resilience of developing countries to the impacts of climate change came to the fore. Scaling up adaptation finance was one of the key topics of the conference.

Calls for more effective mobilization of public and private sector resources were reiterated. The fact that COP 30 was held in Belém, located in the Amazon basin, brought deforestation, biodiversity loss, and nature conservation to the forefront of the summit. Throughout the conference, it was emphasized that climate and nature agendas cannot be addressed separately.

It was reaffirmed that protecting ecosystems is critical to achieving long-term climate goals. It was stated that nature-based solutions need to be more strongly integrated into climate policies and financing mechanisms.

The concept of “Just Transition” came to the fore at the conference. Assessments were made regarding the management of employment, income distribution, and social impacts during the transition to a low-carbon economy.

While it was emphasized that the effects of energy transformation on workers and vulnerable groups must be taken into account, it was stated that the social dimension of climate policies must be strengthened. No agreement was reached on a binding and clear global timetable for phasing out fossil fuels. This issue remains one of the controversial topics in climate negotiations.

Sustainability Agenda in Türkiye

In Türkiye, 2025 was a year in which institutional capacity was strengthened around reporting standards such as TSRS, sustainable finance indicators, and taxonomy preparations in the field of sustainability. From the perspective of the banking sector, the sustainability ecosystem has had a more direct impact on credit allocation processes, risk management, data infrastructure, and product development.

TSRS Implementation and Strengthening of Reporting Discipline

TSRS has emerged as a regulatory area that strengthens the scope of corporate reporting and the coordination of reports with financial reporting through its framework, which is consistent with ISSB standards. Transitional arrangements, including exemptions in certain areas, aimed to make the reporting transition manageable. The clarification of the TSRS definition and scope of application within the framework of the legislation and board decisions of the Public Oversight Accounting and Auditing Standards Authority (POA) supported standardization in the reporting ecosystem.

Climate Law and Climate Policy Tools

The Climate Law, the first comprehensive legislation of its kind in Türkiye, was published in the Official Gazette on July 9, 2025, and entered into force. The law establishes the institutional and legal framework for reducing greenhouse gas emissions, adapting to climate change, and implementing adaptation processes to enable our country to achieve its 2053 Net Zero Emissions Target and fulfill its commitments under the Paris Agreement. The law includes numerous components such as carbon markets, greenhouse gas reduction, adaptation actions, planning tools, and administrative sanctions.

Türkiye's first legally enacted Climate Law has ensured that climate policies in our country are now governed by a comprehensive and binding legal framework for the first time.

Green Asset Ratio (GAR) and Climate Risk Management

The GAR, a KPI showing the extent to which assets on banks' balance sheets are directed towards environmentally sustainable economic activities, serves as a regulatory tool aimed at measuring the contribution to financing the green transition in the banking sector, promoting sustainable finance practices, and managing climate-related risks more effectively. The numerator of the ratio includes loans and investments allocated to areas that provide environmental benefits. The denominator consists of the total eligible assets defined within the scope of the regulation. This ratio allows for the transparent assessment of banks' resource allocation preferences from an environmental sustainability perspective.

The calculation of the GAR is based on criteria such as the contribution of activities to environmental goals, the principle of doing no significant harm, and minimum social safeguards. It is designed to be consistent with the Turkish Green Taxonomy and international sustainable finance frameworks. For the banking sector, the GAR is not only a reporting indicator but also a strategic guidance tool.

The “Guidance on the Management of Climate-Related Financial Risks” published by the BRSA is a complementary regulatory tool that aims to integrate the physical and transition risks arising from climate change into banks' corporate risk management frameworks. The Guide envisages the identification of the effects of climate risks on credit, market, operational, and reputational risks; the strengthening of the data infrastructure for measuring and monitoring these risks; forward-looking risk assessments through scenario analysis and stress tests; and effective oversight at the board level. It contributes to the sound management of the effects of tools such as ETS, carbon pricing, and CBAM, as envisaged under the Climate Law, on the financial system. It supports the creation of a comprehensive framework between climate policies and financial stability objectives.

Taxonomy Preparations and Climate Law Compliance

Technical work on developing the Türkiye Green Taxonomy continued in 2025. The aim is to strengthen the classification infrastructure that will guide sustainable investments.

CBAM and Supply Chain Data

Given the EU's weight in Türkiye's foreign trade, CBAM transition period reporting and the increasing compliance requirements as 2026 approaches have become a strategic agenda item, particularly for exporters operating in carbon-intensive sectors and the financial institutions working with them. The framework of the CBAM transition period and the reporting/recording infrastructure developed in 2025 have made the verification of emissions data and product-based carbon cost management critical.

Türkiye Awarded COP31 Presidency and Hosting Rights

Following COP 30, attention has turned to COP31, scheduled to be held in 2026. COP31 is expected to be a summit where the implementation results of the topics highlighted at COP 30 will be evaluated and the progress made in implementing countries updated nationally determined contributions (NDCs) will be reviewed. It is anticipated that the COP31 agenda will focus on topics such as concretizing climate finance, measuring adaptation targets, accelerating the energy transition, and ensuring more effective participation of the private sector in climate action. In the preparation process for COP31, it is expected that countries will not only announce new targets but also make it more visible how existing commitments are supported by financing, policy, and regulatory tools.

All parties have reached consensus on Türkiye hosting COP31 and assuming the COP31 Presidency. This agreement has been accepted by the Western European and Others Group (WEOG) under the UN, of which Türkiye is a member. Türkiye will host COP, the UN's highest-level platform for combating climate change, for the first time. Leaders, policymakers, and stakeholders from 196 countries will discuss their commitments, policies, and proposed solutions to the climate crisis in Türkiye.

Türkiye's hosting of COP31 has been shaped by the approach of “a more equitable and inclusive climate diplomacy that leaves no country behind.” In this context, it is expected that preparations regarding which provinces will host the COP31 Leaders' Summit and the main conference organization will be finalized in the coming period.

Antalya, as the host city of COP31, has been noted as a strong candidate for COP31 due to its transportation infrastructure, accommodation capacity, and experience in hosting international events. Its previous successful hosting of the G20 Leaders' Summit is also among the factors supporting this choice. It has been stated that the Leaders' Summit to be held within the scope of COP31 is planned to take place in Istanbul.

Türkiye's COP31 candidacy process began in 2022 with the simultaneous announcement of its updated NDC and COP31 candidacy at COP27, held in Sharm El-Sheikh, Egypt. Türkiye and Australia also became candidates within the WEOG Group. Friendly and constructive negotiations were conducted between the two countries for approximately two years. During this process, Türkiye established diplomatic contacts with numerous countries to secure the necessary support for hosting the conference.

Minister Kurum emphasized that Türkiye, located in the Mediterranean basin, is among the countries deeply affected by climate change. However, he stated that despite its limited historical emissions responsibility, Türkiye has implemented decisive climate actions. It was noted that Türkiye's Climate Law, Zero Waste Movement, circular economy practices, diversity of renewable energy sources, and steps taken towards the 2053 Net Zero Emissions Target have positioned the country as an effective actor in the global climate struggle.

Ziraat Bank's Agenda for Combating Climate Change

Agriculture Mission

Ziraat Bank is the leading bank in the agricultural sector in our country with its sustainability-focused agricultural mission to ensure food security and increase agricultural resilience. The bank supports agricultural projects and practices that protect biodiversity, are sensitive to environmental risks, and are climate-resilient, in line with global frameworks such as TNFD and the EU Taxonomy, primarily through subsidized credit products regulated by national legislation.

Agriculture, one of the sectors most sensitive to climate change, is of strategic importance in terms of the sustainable management of natural resources, the preservation of agricultural productivity, and raising awareness among farmers. In this context, it is clear that climate-smart investments in agriculture need to be encouraged and financing sources increased within the framework of the Climate Change Adaptation Strategy and Action Plan.

Ziraat Bank provides support to its agricultural customers in the areas of consulting, financing, training, and awareness in their climate change adaptation processes.

With the goal of ensuring food security and protecting biodiversity, Ziraat Bank, which provides services to its customers in line with environmental sustainability principles, aims to increase climate resilience in the agricultural sector and strengthen national food systems.

Waste Management and Zero Waste Approach

Ziraat Bank has widely integrated the Zero Waste approach, based on the principles of waste prevention, source separation, and recycling, into all its operations as part of its efforts to combat climate change. As of 2025, waste separation and recycling practices have been continuously implemented throughout the Bank. Standard services continue to be provided in all branches and units in line with the Zero Waste Regulation. Without making any fundamental changes to the strategic approach in 2025, the comprehensiveness and effectiveness of existing practices have been increased.

Digitalized Waste Management

The Bank effectively utilizes digital solutions in its waste management processes within the scope of combating climate change. In this regard, using the Zero Waste Management software, the data quality of the Zero Waste Management System on the Bank Portal was improved and the reporting infrastructure was strengthened in 2025.

Micro Waste Management

Within the scope of its sustainability activities, Ziraat Bank aims to reduce carbon emissions through the advanced recycling of microwaves such as coffee beans. Under the established partnership, coffee waste is collected weekly and reported in accordance with ISO standards and the GHG Protocol. The carbon report includes carbon emissions in the process, carbon emissions saved, the amount of alternative raw materials produced, and an equivalent comparison of emission data.

The evaluation of 3,524.85 kg of coffee waste produced by Ziraat Bank in 2025 through micro-waste management prevented the release of 4,088.24 kg CO2e greenhouse gases into the atmosphere. This benefit is approximately equivalent to the carbon footprint generated by the following activities:

Sectoral Workshops, Training Sessions, and Sub-Working Groups (SWGs)

Within the scope of regulatory and sectoral developments in the field of climate change and sustainability, the Bank participates in workshops, training sessions, and conferences organized by relevant institutions such as the Capital Markets Board (CMB) and The Banks Association of Türkiye (BAT), where deemed necessary and appropriate.