- Introduction
Efforts to combat climate change and achieve sustainable economic growth require companies to assess their operations not only in terms of financial performance but also with regard to their environmental impact and sustainability policies. This transformation has made the accuracy and transparency of companies’ disclosures concerning their environmental performance as important as the promotion of sustainable investments. Green taxonomy systems developed in this context classify economic activities according to environmental sustainability criteria, thereby guiding the decision-making processes of investors, financial institutions and other stakeholders.
One of the key regulations in this field in Türkiye is the Türkiye Green Taxonomy Regulation (the “Regulation”), published in the Official Gazette dated 24 September 2026 and numbered 33380. Based on Climate Law No. 7552, the Regulation aims to support economic activities aligned with sustainable development objectives, encourage the flow of financing towards sustainable investments, and prevent greenwashing in the market.
The entry into force of the Regulation is significant in establishing common criteria for assessing companies’ environmental sustainability performance. However, its implications for corporate governance extend beyond reporting processes. The assessment of environmental risks, ensuring the accuracy of sustainability data, and safeguarding the company’s long-term interests are also directly related to the duties and responsibilities of board members.
In this context, the obligations arising under the Regulation should be assessed in light of the duty of care and duty of loyalty set out in Article 369 of the Turkish Commercial Code No. 6102 (the “TCC”) and the liability provisions stipulated in Article 553 thereof.
- Fundamental Principles of the Türkiye Green Taxonomy Regulation
The Türkiye Green Taxonomy is a classification system designed to assess economic activities against specified environmental objectives. Article 7 of the Regulation identifies these objectives as: climate change mitigation through the reduction of greenhouse gas emissions; climate change adaptation; the sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems.
Pursuant to Article 6 of the Regulation, three conditions must be satisfied cumulatively for an economic activity to be considered taxonomy-aligned. Accordingly, the activity must make a substantial contribution to at least one environmental objective, must not significantly harm any of the other environmental objectives, and must comply with minimum social safeguards. Therefore, the fact that an activity generates a particular environmental benefit is not, in itself, sufficient for the activity to be classified as taxonomy-aligned.
The Regulation also distinguishes between eligible economic activities and aligned economic activities. Activities listed in Annex I are considered eligible for assessment under the taxonomy, whereas their classification as aligned depends on compliance with the relevant technical screening criteria. This distinction requires companies, when describing their activities as environmentally sustainable, to consider not only the type of activity but also the conditions under which it is carried out and the applicable technical criteria.
Article 13 of the Regulation further defines the scope of reporting obligations. Institutions, organisations and enterprises carrying out at least one eligible economic activity listed in Annex I are envisaged as being able to report, while reporting is mandatory for certain financial institutions. Accordingly, it cannot be concluded that reporting under the Türkiye Green Taxonomy is uniformly and unconditionally mandatory for all companies. The applicable reporting obligations must be determined in light of the nature of the relevant entity and the provisions of the Regulation.
Entities subject to reporting requirements must take into account the proportions of their turnover, capital expenditure and operating expenditure attributable to taxonomy-eligible or taxonomy-aligned products and services. Reports are required to be uploaded to the Online Taxonomy Management System by the end of the sixth month following the end of the relevant financial statement period. In addition, the Regulation contains provisions concerning the verification of reporting processes and the imposition of administrative sanctions where certain obligations are not fulfilled.
These provisions require environmental sustainability data to be integrated into companies’ financial and managerial processes. In particular, the fact that assessments of taxonomy alignment may affect investment decisions, financing conditions and a company’s market reputation makes the responsibilities of boards of directors in this area more prominent.
- The Duty of Care and Duty of Loyalty of Board Members
Pursuant to Article 369 of the TCC, board members are required to perform their duties with the care of a prudent manager and to safeguard the company’s interests in accordance with the rules of good faith. This provision establishes the foundation for the standard of care that board members must exercise in their decision-making and oversight activities.
The duty of care requires board members to make decisions concerning the company’s activities on the basis of sufficient information, assess significant risks, and adopt a reasonable and diligent approach to management. The duty of loyalty, in turn, requires them to safeguard the company’s interests in accordance with the rules of good faith. Both duties may require corporate management to look beyond short-term financial results and take into account risks affecting the company’s operations and long-term interests.
In this regard, sustainability and environmental risks may become part of board-level assessments, depending on the company’s business activities and the risks to which it is exposed. For example, in the case of companies operating in energy-intensive or high-emission sectors, or in sectors that may be significantly affected by changes in environmental regulations, disregarding climate-related risks may adversely affect investment decisions, operating costs, access to financing and business continuity.
Nevertheless, it is not possible to conclude directly that Article 369 of the TCC imposes an independent and absolute obligation on board members to adopt a particular sustainability policy in all circumstances or to bring all of the company’s activities into alignment with the taxonomy. The scope of the duty of care must be determined by taking into account the applicable legislation, the company’s field of activity, the specific risks involved, the duties and powers of the board, and the circumstances in which the relevant decision is made. However, where the obligations arising under the Regulation are material to the company, ensuring that these obligations are understood by management and appropriately addressed becomes relevant to the fulfilment of the duty of care.
- The Application of the Duty of Care under the Türkiye Green Taxonomy
The relationship between the Türkiye Green Taxonomy Regulation and the duty of care of board members may be assessed particularly in terms of regulatory compliance, accurate reporting, risk management and internal oversight mechanisms.
First, oversight of regulatory compliance is important. The board should ensure that an assessment is made as to whether the company falls within the scope of the Regulation and is subject to reporting obligations. This may involve determining whether the company carries out eligible economic activities, monitoring the relevant technical screening criteria, and ensuring that any mandatory reporting processes are completed on time. Pursuant to Article 23 of the Regulation, administrative fines may be imposed on entities subject to reporting obligations if they fail to submit the required notifications, information and documents, further underscoring the importance of regulatory compliance processes.
Second, accuracy and transparency in reporting must be ensured. Since taxonomy-related reports are prepared using data such as turnover, capital expenditure and operating expenditure, financial and operational data must be collected consistently. It is important for board members, within the scope of their respective duties and powers, to oversee the methodologies used to prepare such data and the internal control mechanisms in place. In particular, presenting activities that are not taxonomy-aligned as if they were aligned, or misrepresenting environmental performance, gives rise to legal risks.
The Regulation’s objective of preventing greenwashing further supports this assessment. A distinction must be drawn between a company presenting its activities as environmentally sustainable and substantiating such claims through technical criteria and verifiable data. Depending on the circumstances of the particular case, the board’s scrutiny of the basis for the company’s sustainability disclosures and its efforts to ensure that material inconsistencies are addressed may be relevant to the duty of care.
Third, environmental risks may need to be incorporated into corporate risk management. Changes in environmental legislation, energy and raw material costs, emissions-related risks, vulnerabilities in the supply chain, and conditions affecting access to financing may influence a company’s economic activities. Accordingly, depending on the nature of the risks to which the company is exposed, the board is expected to request the necessary information and assessments, facilitate the engagement of relevant experts where appropriate, support the development of internal control processes, and consider the necessary corrective measures.
Finally, the allocation of responsibilities and the flow of information within the company are also important. Where environmental data is prepared by different departments, the processes for collecting, reviewing and incorporating such data into reporting must be clearly defined. Within the scope of its duties and powers, the board may ensure that an organisational structure is established to enable the operation of these processes to be monitored. However, the delegation of duties or the engagement of experts does not necessarily mean that board members are relieved of the responsibilities arising from their own duties in every circumstance.
- Legal Liability of Board Members
Article 553 of the TCC provides that board members may be held liable where they culpably breach their obligations arising from the law or the articles of association and damage results from such breach. In this context, the relationship between a failure to fulfil an obligation under the Türkiye Green Taxonomy Regulation and the personal liability of a board member must be clarified.
In a particular case, it is necessary to assess whether the relevant obligation applies to the company, the scope of the board member’s duties and powers, whether the obligation has been breached, whether fault exists, and whether there is a causal link between the breach and the damage suffered by the company or the persons concerned. For example, where a company subject to reporting obligations incurs an administrative fine because it fails to submit the required information within the prescribed period, the liability of the company and the personal liability of its board members must be assessed separately. The liability of board members must be considered in light of a culpable breach attributable to the relevant member and the conditions for liability set out in the TCC.
Similarly, where a company suffers damage as a result of making inaccurate disclosures concerning its environmental sustainability performance, the liability of board members must be determined in accordance with the circumstances of the particular case. If the board knowingly approves incorrect information, disregards material inconsistencies without making reasonable inquiries, or fails to exercise the necessary care in establishing and operating control mechanisms within its area of responsibility, these circumstances may be taken into account when assessing liability, provided that the relevant conditions are met.
Conversely, the fact that an economic activity of the company cannot be classified as taxonomy-aligned or that environmental objectives are not achieved does not, in itself, establish that the board members have acted unlawfully. The duty of care should not be construed as an obligation to achieve a particular result that guarantees the success of every company investment or the elimination of all environmental risks. The key consideration is whether board members have made decisions on the basis of sufficient information, taken relevant risks into account, and performed their duties in accordance with their legal obligations.
In this regard, keeping records of the grounds for board decisions, retaining relevant reports and expert opinions, presenting significant risks to the board, and documenting the measures taken may contribute both to establishing an effective corporate governance structure and to assessing potential liability disputes.
- Conclusion
The Türkiye Green Taxonomy Regulation represents a significant regulatory development aimed at assessing environmental sustainability performance against defined criteria and supporting sustainable investments. Its impact on companies extends beyond the scope of reporting obligations and also relates to how environmental risks and sustainability data are addressed within corporate governance processes.
The duty of care and duty of loyalty set out in Article 369 of the TCC require board members to assess significant risks affecting the company’s activities, ensure that the necessary information and controls are in place within their respective areas of responsibility, and safeguard the company’s interests in accordance with the rules of good faith. The obligations arising under the Regulation should also be taken into account in this assessment to the extent that they apply to the company.
Nevertheless, a breach of the Regulation must be distinguished from the personal liability of board members. The establishment of liability under Article 553 of the TCC depends on whether the relevant statutory conditions are satisfied in the particular case. Accordingly, an effective approach to corporate governance in the field of sustainability requires not only formal compliance with legislation but also the accurate identification of applicable obligations, reporting based on reliable data, appropriate assessment of environmental risks, and traceability of decision-making processes.
In conclusion, the relationship between the Türkiye Green Taxonomy Regulation and the duty of care of board members is important in strengthening the role of sustainability objectives in corporate management. Any assessment of legal liability arising from this relationship must take into account, together, the obligations applicable to the company, the specific duties and conduct of the board members, and the requirements concerning breach, fault, damage and causation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
