The year 2025 marked a turning point in which sustainability, both globally and in Türkiye, moved beyond being a conceptual preference and was put into action through concrete regulations and practices integrated into corporate structures. This process is manifesting itself in many areas, bringing concepts such as transparency and accountability to the forefront, influencing companies’ strategic decision-making processes, and transforming data, technology, and sustainability goals into a holistic value creation model. As a result of Türkiye being one of the countries with the highest awareness of sustainability issues, significant steps are being taken for the sustainable transformation of the business world through regulatory frameworks and reporting obligations.

We are the first country in the world to make sustainability reporting a legal requirement. This year, the first reports prepared under the Turkish Sustainability Reporting Standards (TSRS) were published. In these reports, which are compliant with the standards published by the International Sustainability Standards Board (ISSB) (IFRS S1, IFRS S2), sustainability data were presented with a level of transparency and reliability equivalent to financial data, providing investors with the opportunity for accurate and complete assessment. This development shows that sustainability in Türkiye is not just a compliance requirement but has also become part of a strategic transformation.

Another important step in the transformation in our country was the implementation of the Green Asset Ratio in the banking system as of June 2025. This reporting enables the measurement of sustainable assets on the balance sheets of financial institutions, encouraging the channeling of capital toward low-carbon investments and standing out as a powerful transformation tool that transparently shows the level of banks’ compliance with climate targets. Another critical development completing this structural transformation is the publication of the draft Turkish Green Taxonomy. The taxonomy provides a common language and classification system for directing financial flows to green investments by defining which economic activities are considered environmentally sustainable. With the implementation of the taxonomy, the structuring of sustainable finance instruments for banks and investors will become more transparent and standardized.

The publication of the Climate Law on July 9, 2025, prepared to combat climate change in line with the green growth vision and net-zero emissions target, and the acceleration of efforts to establish the Emissions Trading System (ETS), indicate the beginning of a new era in Türkiye’s transition to a low-carbon economy. The Climate Law provides a clear roadmap for all sectors by establishing the legal basis for sustainable transformation and aims to strengthen Türkiye’s alignment with the Paris Climate Agreement and the EU Green Deal.

While the law is expected to initiate a transformation process in many sectors in line with Türkiye’s 2053 Net-Zero Emissions target, critical regulations such as greenhouse gas emission reduction, climate change adaptation, ETS, carbon pricing mechanisms, green taxonomy, and the Carbon Border Adjustment Mechanism (CBAM) have been legally established for the first time. National and local strategies and action plans have been created, and it has been stipulated that Local Climate Change Action Plans must be prepared in all provinces by December 31, 2027, at the latest. The Climate Law has also established the legal infrastructure for the Turkish Green Taxonomy, which is aligned with the EU Taxonomy. Additionally, with the regulation aimed at supporting sustainable finance flows and expected to come into force by the end of 2026, six environmental objectives have been set: emission reduction, climate change adaptation, protection of water and marine resources, transition to a circular economy, pollution prevention, and biodiversity conservation.

The ETS, on the other hand, aims to make carbon risks priceable and manageable for the financial sector by activating market mechanisms through carbon pricing to encourage companies to reduce their emissions. With the implementation of the Emissions Trading System, banks will also be affected, and the increasing emission obligations of companies operating in carbon-intensive sectors will become a factor to be considered in credit evaluation processes. In this context, companies that take steps to reduce their emissions or invest in green transformation will be able to gain an advantage in accessing finance.

Both regulations require the financial sector to integrate climate variables more systematically into its risk management, credit policies, and investment strategies.

In September 2025, the Medium-Term Program (MTP) published by the Presidency of Strategy and Budget of the Republic of Türkiye announced Türkiye’s economic roadmap for the 2026-2028 period. The program includes comprehensive regulations in the areas of environmental and social sustainability, as well as targets for increasing growth and production capacity. Under the green transformation heading, increasing renewable energy investments, expanding practices that prioritize energy efficiency, and supporting low-carbon production methods stand out.

The MTP offers a holistic framework that accelerates climate-friendly transformation while supporting economic growth, promoting digitalization, and increasing social inclusion. Thus, it is anticipated that Türkiye will take strong steps in both environmental and social sustainability over the next three years.

Türkiye submitted its Second Nationally Determined Contribution (NDC) to the United Nations on September 24. Under the updated submission, Türkiye commits to reducing its greenhouse gas emissions by 466 million tons of CO2e compared to the reference scenario by 2035, thereby limiting total emissions to 643 million tons of CO2e. As Türkiye continues its efforts in line with the Paris Agreement’s goal of limiting the global temperature increase to 1.5°C, it maintains its determination to strengthen global solidarity in the fight against climate change and to build a cleaner, more resilient, and sustainable future for future generations.

This statement strengthens the country’s emission reduction targets, making the role of the financial system in achieving these targets even more critical. Banks and financial institutions play a leveraging role in achieving these national goals by financing low-carbon projects. The diversification of sustainable finance instruments and the strengthening of data infrastructure increase the transformation capacity of the financial system.

A welcome development for our country occurred at the end of this year. As a result of the negotiations held at COP30 in Belém, Brazil, from November 10–21, 2025, it was decided that COP31 will be hosted and presided over by Türkiye. At the meetings, it was also agreed that Australia would contribute to the process as a co-negotiator and that the Pre-COP would be held in a country in the Pacific region.

Türkiye’s hosting of COP31 stands out as a strategic development that will make the country’s position in the field of sustainability more visible on a global scale. This organization reinforces Türkiye’s claim to be not just a country that implements regulations, but also an active player in shaping global climate policies. The COP31 process will increase the financial sector’s interaction with international investors and encourage the adoption of higher standards in transparency, data quality, and sustainability performance.

In the coming period, the integration of sustainability goals will deepen further, and the financial sector will continue to be the main driving force of environmental and social transformation, moving beyond being a structure that only supports economic growth. The regulatory and strategic steps taken by Türkiye provide a strong foundation for this transformation to proceed in a permanent and inclusive manner, making the financial sector the focal point of a more resilient, transparent, and sustainable future.

VakıfBank, which continues to support sustainability efforts at the highest level, will continue to contribute to economic growth by treating financial performance and sustainability as two complementary elements.

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