TSRS Compliance and ESG Due Diligence for Foreign Investors in Türkiye

For foreign investors evaluating Türkiye, ESG is no longer a branding exercise; it is an investment variable that influences valuation, financing conditions, and exit optionality. In this environment, TSRS compliance (Türkiye Sustainability Reporting Standards) has become a practical benchmark for whether a target can produce reliable, decision-grade sustainability information. Investors increasingly treat TSRS readiness as a proxy for governance maturity, data integrity, and long-term risk management.

Why TSRS compliance matters in investment decisions

Investors typically care about TSRS compliance for three commercial reasons. First, it increases comparability by pushing companies to report sustainability-related risks and opportunities in a structured, enterprise-value oriented format. Second, it changes the diligence conversation: “nice narratives” are insufficient; buyers want evidence-backed metrics, defined methodologies, and internal controls. Third, TSRS readiness reduces post-closing integration friction—especially for groups that must consolidate ESG disclosures across jurisdictions or satisfy lender reporting packages.

Who is likely in scope and when

A foreign investor should begin with a scope assessment. In practice, TSRS mandatory reporting is triggered when an entity exceeds at least two of three criteria (assets, net sales, employees) for two consecutive reporting periods. Commonly cited thresholds are TRY 500 million total assets, TRY 1 billion annual net sales, and 250 employees. The standards apply to accounting periods beginning on or after 1 January 2024.

Even if the target is not formally in scope today, it may still face “shadow compliance” because customers, banks, insurers, and group parents demand TSRS-aligned information flows.

A TSRS compliance due diligence framework (what investors should test)

A strong TSRS compliance workstream usually has four layers:

1) Governance and accountability
Check whether sustainability reporting has clear ownership at board or senior management level, with defined escalation routes. Investors should confirm that ESG reporting is treated as controlled disclosure, not marketing content.

2) Data architecture and internal controls
The critical question is: can the company prove its numbers? Review data owners, calculation methods, system boundaries, audit trails, change logs, and record retention. Spreadsheet-only reporting without controls is a red flag because it is difficult to verify and easy to distort unintentionally.

3) Climate and risk integration
Where climate-related disclosures are relevant, investors should test whether climate risks are integrated into enterprise risk management, capital planning, maintenance strategy, and insurance discussions. Weak integration often signals future cost shocks.

4) Assurance readiness
Even before external assurance becomes mandatory in a practical sense, the investor should assess whether an evidence pack exists: policies, datasets, methodologies, controls, and approvals that can withstand third-party review.

How TSRS compliance issues are handled in SPA/JV documentation

When TSRS gaps appear in diligence, sophisticated investors convert them into transaction protections rather than leaving them as generic “ESG risk” notes:

• Representations and warranties focused on the accuracy of sustainability data, not vague “compliance” language.
• Covenants requiring a TSRS compliance roadmap (governance, data systems, controls) within defined timeframes.
• Indemnities for known, quantifiable issues (e.g., unreliable baseline data or missing records).
• Disclosure schedules that force specificity: which metrics are weak, which periods are affected, and what remediation is planned.

This approach keeps the negotiation objective: measurable obligations, clear remedies, and reduced litigation ambiguity.

A practical TSRS compliance roadmap for foreign investors

A workable post-closing plan (often within the first 100 days) typically includes:

1. Confirm scope and thresholds across the group structure.
2. Perform a TSRS gap analysis (content, governance, data, controls).
3. Build data governance (owners, methodologies, audit trails, retention).
4. Implement policies and internal controls proportional to sector risk.
5. Run an “assurance rehearsal” using a sample evidence pack.
6. Align supplier and customer data requests to reduce value-chain friction.

Conclusion

For foreign investors, TSRS compliance should be treated as a core diligence module, not a post-closing reporting project. It affects pricing, financing confidence, and exit readiness. The investor advantage comes from treating sustainability reporting like financial reporting: define scope, build controls, preserve evidence, and attach clear contractual protections to known weaknesses.