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Dear readers,
In this issue, we delve into key developments on the ESG agenda. Our first topic is the Arcadis Sustainable Cities Index. We also take a close look at a groundbreaking regulation that ushers in a new era for measuring banks’ sustainability performance: the Communiqué on the Calculation of the Green Asset Ratio. What is the green asset ratio, which environmental objectives does it encompass, and what kind of reporting obligations will banks face? Additionally, we’ve prepared a brief concept explanation to highlight the role of open-loop recycling in a sustainable economy. If you are interested in regulatory frameworks and the future of green finance from an ESG perspective, our newsletter offers a wealth of insightful content.
Stay sustainable…
ÖZGÜN ÇINAR, CEO
ESG NEWS
- IKEA Australia cuts climate footprint by 89% since 2016 while growing revenue. DETAIL
- The IFRS Foundation today launched the Jurisdictional Roadmap Development Tool, a key pillar of its Regulatory Implementation Programme, designed to guide jurisdictions in effectively adopting International Sustainability Standards Board (ISSB) Standards. DETAIL
- EU member states in the European Council announced that they have approved the European Commission’s ‘stop-the-clock’ directive, delaying the implementation of key sustainability reporting and due diligence regulations, including the CSRD and CSDDD. The directive forms the first major step in the Commission’s Omnibus package, aimed at significantly reducing the sustainability reporting and regulatory burden on companies, and particularly on SMEs. Among the proposals included in the package were delays for the application of the CSRD for companies that have not yet started reporting by two years, and of the transposition and application of the CSDDD by a year. DETAIL
- Britain’s greenhouse gas emissions fell by 4% in 2024, provisional government data showed on Thursday, as the country’s last coal-fired power plant closed and emissions fell from the industrial sector. DETAIL
- Japan’s Government Pension Investment Fund (GPIF-1,7 trillion $) has outlined a comprehensive policy to ensure long-term, stable investment returns by prioritizing sustainability-focused investments, incorporating ESG and impact considerations across its portfolio. DETAIL
- New Scientist reports that a “recent surge in the rate of global warming has been largely driven by China’s efforts to reduce air pollution, raising questions about how air quality regulations are influencing the climate and whether we fully understand the impact of removing aerosols from the atmosphere”. The outlet adds: “This extra warming, which was being masked by the aerosols, accounts for 5% of global temperature increase since 1850.” DETAIL
- Retreating glaciers created 2,500km of “new” coastline and 35 “new” islands in the Arctic between 2000 and 2020, according to a new study. The research uses satellite images of more than 1,700 glaciers in Greenland, Alaska, the Canadian Arctic, Russian Arctic, Iceland and Svalbard. The findings show that 85% of these glaciers retreated over 2000-20, revealing 123km of new coastline per year on average. DETAIL
- Maisy Weicherding from Amnesty International said the EU should lead by example and make mechanisms such as ‘human rights impact assessments’ mandatory for infrastructure projects. DETAIL
🍃 GREEN COLUMN🍃
A Measure of Green Finance: How Will Banks Calculate the Green Asset Ratio?
The Communiqué on the Calculation of the Green Asset Ratio for Banks, published in the Official Gazette on April 11, 2025, marks a significant milestone in the financial sector’s sustainability agenda in Turkey. With this regulation, banks’ contributions to environmental sustainability goals can now be measured and compared in a standardized and transparent way. At the heart of the communiqué lies the Green Asset Ratio, which aims to calculate the share of financing provided to green activities in banks’ overall portfolios.
The Green Asset Ratio represents the proportion of environmentally sustainable economic activities, as recorded on a bank’s non-consolidated balance sheet, in relation to its total assets as defined by specific criteria. As a tangible indicator of sustainable finance, this ratio will serve not only investors, but also regulators, policymakers, and the public as an important tool for transparency.
For a financial asset to be considered “eligible” in the Green Asset Ratio calculation, it must meet three core criteria: it must make a substantial contribution to at least one designated environmental objective, must do no significant harm to the other environmental goals, and must comply with minimum social safeguards. This approach offers a holistic financial assessment that includes both environmental and social responsibility dimensions.
The environmental objectives used to evaluate eligible assets under the communiqué are comprehensive. These include: climate change mitigation, climate change adaptation, transition to a circular economy, sustainable use of water and marine resources, pollution prevention, and protection of biodiversity and ecosystems. These goals are also closely aligned with Turkey’s broader sustainable development policies.
Banks will be required to document that the assets deemed eligible meet the specified criteria. Compliance will be demonstrated through emission reports, energy efficiency audits, environmental feasibility studies, green technology certifications, and other relevant documents. These must be verified by independent third-party entities and kept ready for audit. In addition, banks must monitor these assets throughout their lifetime to ensure continued compliance with technical screening criteria.
In addition to the Green Asset Ratio, two secondary indicators will also be tracked: the ratio of “eligible assets to aligned assets,” and “eligible assets to total assets within the scope of the green asset ratio.” This will allow stakeholders to assess not only the final ratio, but also how “green” the process is overall. Banks will be obligated to establish policies, document procedures, and submit regular reports concerning these ratios. The first reporting deadline is June 30, 2025. As part of this process, the Banking Regulation and Supervision Agency (BRSA) may set minimum thresholds and targets for green asset ratios and other sustainability metrics, which can vary by bank. Failure to meet these targets may lead to sanctions, including additional capital requirements.
This regulation introduces a more responsible and transparent framework for the banking sector in Turkey with regard to environmental alignment. It mandates not only financing sustainable projects but also evidencing the impact of that financing. Aligned with international green finance standards, this step is expected to enhance investor confidence.
The Green Asset Ratio represents both a new area of responsibility and an opportunity for banks to showcase their sustainability performance. At a time when climate risks must be assessed in tandem with financial risks, this regulation stands to make a meaningful contribution to Turkey’s green transition journey.
DAMLA GÜNALP, SUSTAINABILITY ASSISTANT SPECIALIST
