Overview
Increasing climate risks and the growing pressure for sustainability are steering financial markets towards new strategies that prioritize green investments. Due to its central role in resource allocation, the banking sector holds critical importance in the transition to a sustainable economy. The European Union’s Green Deal regulations, the taxonomy system that classifies economic activities based on environmental sustainability criteria, and the concept of the “Green Asset Ratio” developed by the European Banking Authority (EBA)[i] have been established as key indicators to measure the financing provided by banks for environmentally sustainable economic activities. In parallel with these international developments, Turkey has also taken action through the Banking Regulation and Supervision Agency (BRSA), which has published the “Communiqué on the Calculation of the Green Asset Ratio of Banks.” Coming into force with the Official Gazette dated April 11, 2025, this Communiqué introduces a structural innovation in how banks allocate financing.[ii]
With the Communiqué, the economic support provided by banks to environmentally sustainable activities will be measured objectively; thus, the alignment of financing with the goals of the Paris Climate Agreement and the European Green Deal (EGD) can be monitored. Banks will be able to analyze climate-related risks more effectively and provide policymakers with comprehensive data.
What is the Green Asset Ratio?
The Green Asset Ratio indicates the proportion of a bank’s support for environmentally friendly and sustainable projects relative to its total financial assets. Under the scope of the Communiqué, this ratio is calculated by dividing the eligible assets on a bank’s non-consolidated balance sheet by the total assets defined according to specific criteria. The Green Asset Ratio serves as a key indicator for measuring the sustainability performance of banks. In order to calculate the Green Asset Ratio, the Communiqué defines three fundamental concepts.
The first concept is the total assets within the scope of the Green Asset Ratio. This is calculated by subtracting claims on public administrations, central banks, and international institutions, as well as assets held in trading portfolios, from the bank’s total financial assets on its balance sheet. In this way, government and central bank bonds, along with trading assets held for commercial purposes, are excluded from the assessment.
The second concept is eligible assets. These are financial assets within the total assets that are associated with sustainable economic activities as defined in the EU Taxonomy[iii]. Without considering technical screening criteria, the gross amounts of financing provided to these activities are taken into account.
The third concept is aligned assets. These are assets among the eligible assets that fully meet environmental and social criteria. For an asset to be considered aligned, it must satisfy all three specified conditions: making a substantial contribution to at least one environmental objective, not causing significant harm to other environmental objectives, and meeting minimum social safeguards.
In the Communiqué, the concept of environmental sustainability is defined in alignment with the European Union Taxonomy, and six fundamental environmental objectives have been established:
a) Mitigation of climate change,
b) Adaptation to climate change,
c) Transition to a circular economy,
d) Sustainable use and protection of water and marine resources,
e) Prevention and control of pollution,
f) Protection and restoration of biodiversity and ecosystems.
For an economic activity to be considered environmentally sustainable, it must make a substantial contribution to at least one of the above objectives and not cause significant harm to the others. In the calculation of the Green Asset Ratio, it is mandatory that aligned assets do not cause significant environmental harm. According to Article 7 of the Communiqué, this assessment includes the environmental impacts of the activity itself, as well as those arising throughout the life cycle of the resulting products and services and after their end of life. In the banking sector, the implementation and monitoring of these criteria are ensured by the Banking Regulation and Supervision Agency (BRSA), and banks are obliged to comply with the established environmental standards. In this process, banks are required not only to document their current compliance status but also to ensure ongoing monitoring of these criteria throughout their maturities.
Additionally, according to Article 8 of the Communiqué, the activities and relevant parties evaluated within the scope of aligned assets must also comply with minimum social safeguards. This regulation makes it mandatory to consider environmental sustainability together with social responsibility, thereby introducing a holistic approach to the green transformation process of the financial system. Banks are required to systematically document these compliance assessments and present them in a manner ready for inspection.
This principle, which prohibits causing harm to other areas, requires that while contributing to environmental objectives, no damage is done to other sectors. The details of this principle will be determined by the relevant public authorities and enacted by a decision of the Banking Regulation and Supervision Agency (BRSA). In this way, Turkey will have a flexible framework that can quickly adapt when it develops its own Green Taxonomy criteria in the future or adopts international standards.[iv]
Reporting Obligations and Implementation Schedule
The Green Asset Ratio Communiqué imposes an obligation on banks to report at regular intervals. Banks are required to regularly submit their calculations related to the Green Asset Ratio and secondary performance indicators to the Banking Regulation and Supervision Agency (BRSA). The first reporting date is set as June 30, 2025. After this date, reporting will be conducted at intervals determined by the BRSA (for example, every three or six months). The agency has the authority to differentiate the frequency and format of reporting based on the size and operational areas of the banks. Accordingly, large-scale banks will report more frequently and in greater detail, while different applications may be designated for smaller banks or participation banks.
The Communiqué also requires banks to establish comprehensive internal control systems and processes to fulfill their reporting obligations. Banks must develop the necessary policies and procedures for the classification, documentation, monitoring, and auditing of green assets, thereby building the infrastructure to assess their credit and investment portfolios from an environmental perspective. Additionally, technological systems must be established to collect environmental performance data from customers and ensure that this information is regularly reported to the Banking Regulation and Supervision Agency (BRSA). Although these obligations are expected to create initial operational and financial burdens for banks, in the long term, they will strengthen sustainable financing strategies, enhance resilience to environmental risks, and enable more effective evaluation of new business and investment opportunities emerging in areas such as renewable energy, energy efficiency, and clean technology.
In addition, banks have independent verification and certification obligations to ensure the reliability of the data they report. Banks are required to support their information related to green asset criteria with documents obtained from independent and impartial sources. These documents include energy efficiency reports, project feasibility studies, Environmental Impact Assessment (EIA) reports, internationally recognized green certificates, and independent audit reports. The accuracy of these documents must be approved by independent organizations authorized by the Turkish Accreditation Agency (TÜRKAK)[v] or relevant public institutions. This independent verification mechanism will enable banks to demonstrate the environmental sustainability of the projects they support in an objective and transparent manner and will also make assessment stages, which can be referred to as “green status determination,” mandatory in addition to credit processes.
The Impacts of the Communiqué on Banks and Companies
The Green Asset Ratio Communiqué will lead to comprehensive structural changes in the banking sector. Banks will be required to regularly measure and report their environmental sustainability performance; they will analyze their credit portfolios in detail to assess the compliance of financial assets with the “eligible” and “aligned” asset criteria. In this context, banks will need to upgrade their information systems, collect specific and verifiable data from customers—such as carbon emissions, energy consumption, and environmental impacts—and collaborate with institutions and professionals specialized in environmental matters.[vi]
The Banking Law No. 5411 establishes the fundamental legal framework governing the activities of banks and grants the Banking Regulation and Supervision Agency (BRSA) the authority to supervise banks’ financial and operational processes.[vii] Within this scope, the implementation of the Green Asset Ratio Communiqué and the monitoring of banks’ sustainability performance are effectively overseen by the BRSA under the law. Thus, compliance with environmental sustainability criteria becomes both a legal obligation and a critical element for risk management in the financial system.
The Communiqué will also lead to changes in banks’ financial product and service portfolios. To achieve the Green Asset Ratio targets, banks will increase their financing allocations to sectors such as renewable energy, energy efficiency, low-carbon transportation, green building projects, and sustainable agriculture. The share of green products in the portfolio—such as energy-efficient housing loans, electric vehicle financing, and environmentally friendly consumer loans—is expected to rise. The Banking Regulation and Supervision Agency (BRSA) will monitor green performance criteria and may impose sanctions such as capital adequacy requirements in cases of non-compliance, which will compel banks to prioritize their sustainability preparations.
In the real sector, banks’ green financing policies will condition companies’ access to funding on environmental standards. Especially firms operating in carbon-intensive sectors will be required to submit detailed and verifiable documents regarding environmental performance indicators such as carbon footprint, energy efficiency, waste management, and water resource usage when applying for financing. This requirement will enhance companies’ environmental risk management and transparency, while also creating additional operational burdens for small and medium-sized enterprises (SMEs). Banks’ demands for environmental data will encourage companies to rapidly implement their green transformation strategies.[viii]
Within the scope of the Communiqué, general-purpose business loans provided to companies that derive at least 90% of their revenue in the last financial year from environmentally sustainable activities and do not generate income from non-renewable energy sources will be considered green assets. This regulation aims not only to support activities that contribute environmentally but also to reduce the presence of high environmental risk activities within the financial system. Accordingly, access to financing will be restricted for companies operating in fossil fuel-intensive sectors or failing to meet environmental compliance criteria. Firms with high Green Credit Scores will be able to obtain financing at lower costs, while those with low scores will face higher interest rates and limited credit opportunities. This regulation aims to promote the green transformation of the real sector by leveraging market mechanisms.
Impacts on Citizens and Society
The primary goal of the Green Asset Ratio Communiqué is to ensure that the financial system takes an active role in combating climate change. As banks shift toward green financing, the funding opportunities for environmental sustainability projects will increase. This will enable society to access clean energy, sustainable infrastructure, and low-carbon economic growth in the long term. Although citizens are not directly obligated, they will benefit positively from developments in banks’ green financing policies. For example, individuals will be able to take advantage of favorable loan options offered by banks when purchasing energy-efficient homes or electric vehicles. Additionally, with the widespread adoption of renewable energy projects and eco-friendly technologies, the quality of life and the possibility of achieving sustainable development goals for society will improve.
Effective management of climate risks by banks will also positively impact the financial stability of society. Natural disasters and economic damages caused by the climate crisis can threaten banks’ financial structures and, consequently, the savings of citizens. By monitoring their green asset ratios and reducing climate-related financial risks, banks will help prevent these risks from turning into economic crises. In this regard, the Banking Regulation and Supervision Agency (BRSA) has published the “Guide on the Management of Climate-Related Financial Risks” concurrently with the Green Asset Ratio Communiqué. This guide, which will come into effect in July 2025, will enable banks to assess their credit and market risks from the perspective of climate change. As a result, banks will both increase their environmentally sustainable assets and strengthen the resilience of the financial system. This holistic approach will serve to protect society’s economic welfare in the long term.
Conclusion and Evaluation
The Communiqué on the Calculation of the Green Asset Ratio for Banks represents a significant step in the transformation of the Turkish banking sector towards environmental sustainability. Aligned with international standards, the regulation aims to enable banks to measurably disclose their performance related to climate change. By regularly reporting the financing they provide to sustainable projects, banks will enhance transparency; this will not only promote competition within the sector but also serve as an important evaluation criterion for investors and other stakeholders. Additionally, new business areas such as green bond issuance, sustainable investment funds, and eco-friendly loan products will emerge.
In this transformation process, legal professionals will play a direct role beyond merely drafting contract texts. They will be involved in structuring financial products in compliance with national and international sustainability regulations, legally mitigating risks, and accurately interpreting obligations. Especially in areas such as the classification of green projects, integrating environmental commitments into loan agreements, verifying the accuracy of taxonomy compliance statements, and legally auditing transparent reporting, lawyers will provide strategic consultancy and oversight functions for both financial institutions and the real sector.
The implementation process may initially pose some challenges for banks. Particularly, establishing new reporting systems, collecting environmental data, and training personnel may require additional resources and time. However, in the long run, these investments will increase the resilience and competitiveness of banks and the real sector in sustainability. Since European Union countries have begun requesting similar data, Turkish banks’ early action in this regard will facilitate easier access to international funding sources.
In conclusion, the Communiqué should be regarded by banks not merely as a legal obligation but as a strategic opportunity for the future of sustainable finance. Banks that adopt the green transformation early will gain easier access to sustainability-focused global funds, achieve higher corporate reputation among investors by effectively managing environmental risks, and secure operational advantages by complying with regulations in advance through taxonomy-compliant products and services. This capability will, in the long term, reduce financing costs and enable them to become preferred actors in international markets. With the effective implementation of the Communiqué, the Turkish banking sector will play a critical role in the sustainable transformation of the economy and become a leading pillar of the financial system in the transition to a low-carbon and environmentally sustainable future.
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Eren ÇALIŞKAN
Uçar Law & Consultancy Office
Editor: Baver UÇAR (Attorney at Law)
References
[i] EBA, 2025. https://www.eba.europa.eu/eba-publishes-first-monitoring-exercise-green-asset-ratio.
[ii] Bankaların Yeşil Varlık Oranı Hesaplaması Hakkında Tebliğ. Resmî Gazete, 11 Apr. 2025, no. 32867. https://www.resmigazete.gov.tr/eskiler/2025/04/20250411-9.htm.
[iii] EU Taxonomy for Sustainable Activities – Technical Screening Criteria. European Commission, 2023. https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance/eu-taxonomy-sustainable-activities_en.
[iv] Sürdürülebilir Finans ve Yeşil Ekonomi Raporu 2024. SBB, 2024. https://www.sbb.gov.tr/surdurulebilir-finans-ve-yesil-ekonomi-2024-raporu/.
[v] Yönetim Sistemleri Akreditasyonu – Doğrulama ve Belgelendirme Hizmetleri. TÜRKAK, 2025. https://www.turkak.org.tr/hizmetlerimiz/yonetim-sistemleri-akreditasyonu/.
[vi] Principles for Responsible Banking. UNEP FI, 2025. https://www.unepfi.org/banking/bankingprinciples
[vii] 5411 Sayılı Bankacılık Kanunu. TBB Mevzuat Portalı, 2025. https://www.tbb.org.tr/mevzuat/5411-sayili-bankacilik-kanunu/94.
[viii] İklimle Bağlantılı Finansal Risklerin Yönetimine İlişkin Rehber. BDDK, July 2025. https://www.bddk.org.tr/Mevzuat/DokumanGetir/561.
