# Carbon Accounting in Turkey: What Premium Firms Need to Know # Carbon Accounting in Turkey: What Premium Firms Need to Know *By Evren Özmen, CPA* ## Introduction – Why Carbon Accounting Now Matters In an era where regulatory momentum and investor scrutiny converge on greenhouse-gas (GHG) emissions, companies operating in Türkiye cannot afford to view carbon simply as a public-relations issue. Carbon accounting—measuring, reporting and managing emissions—has moved firmly into the realm of financial risk, compliance burden and competitive advantage. For firms with remote or hybrid workforces, technology companies, English-speaking services and foreign-invested operations in Türkiye, understanding the national carbon-accounting framework is no longer optional. The stakes are high: non-compliance can trigger administrative sanctions; lack of data readiness may impede access to finance or export markets; on the flip side, robust carbon accounting can support green financing, strategic positioning and reduced regulatory cost. In this article we map the pathway from awareness to actionable decision-points: first establishing the regulatory context in Türkiye, then exploring the concrete steps of carbon accounting, and finally offering a decision-framework for firms choosing how far to go. --- ## 1\. Regulatory Landscape in Turkey — The New Carbon Framework ### 1.1 Monitoring, Reporting & Verification (MRV) Obligations Türkiye has had in place the **Regulation on Monitoring of Greenhouse Gases Emissions**, first entering into force on 17 May 2014, and its successor versions. Alongside this, the “Communiqué of Monitoring and Reporting Greenhouse Gas Emissions” and the “Communiqué on Verification of Greenhouse Gas Emissions and Accreditation of Verifiers” set out mandatory requirements for covered entities. In short: large facilities identified in Annex-1 of the regulation must prepare monitoring plans, submit emissions inventories, and obtain third-party verification. ### 1.2 Toward an Emissions Trading System (ETS) & Climate Law The regulatory landscape is evolving rapidly. The Turkish parliament passed the country’s first comprehensive climate law in 2024/25, laying the groundwork for a national emissions trading system (ETS) and a new institutional architecture. Indeed, in 2025 the cabinet approved a plan for a national ETS covering energy and heavy-industry sectors, aiming for a 41 % reduction (versus business-as-usual) by 2030. The law and draft regulation envision a “Carbon Market Board”, allocation of allowances, integration with border-adjustment mechanisms (e.g., for exports to the EU), and heavy legal sanctions for non-compliance. ### 1.3 Implications for Company Accounting & Reporting For companies, key take-aways include: * The focus is not just on voluntary disclosures but on **compliance-grade carbon accounting**. * Verification and audit of emissions will become as important as financial audits, especially for large emitters. * Failure to monitor, report or verify emissions potentially triggers administrative fines—which in draft phases run into millions of Turkish Lira. * The upcoming ETS means that carbon will be a **financial liability** or asset (via allowances or credits) on corporate balance sheets and risk registers. * Export-oriented or foreign-invested firms must factor in **carbon-border adjustment mechanisms (CBAM) risk**, since Türkiye’s alignment with the EU and global markets is accelerating. --- ## 2\. The Carbon Accounting Process — What Firms Must Do Here we drill into the practical accounting cycle: from establishing the baseline, building measurement, reporting and then management of carbon-costs and opportunities. ### 2.1 Identify Scope & Boundaries Just as with financial accounting, carbon accounting begins with defining **scopes** and **boundaries**: * **Scope 1**: Direct emissions from company-owned or controlled sources. * **Scope 2**: Indirect emissions from purchased electricity, heat or steam. * **Scope 3**: Other indirect emissions (value-chain upstream/downstream, employee commuting, logistics, etc.). While the current Turkish regulatory regime emphasises large industrial installations (Scope 1/2) under MRV, forward-looking companies—especially service/technology firms with remote workers—should consider Scope 3. This is because they face reputational risk, investor scrutiny, and may benefit from early-mover advantage. ### 2.2 Develop & Implement Monitoring Plan In Türkiye the legal framework requires covered entities to submit a monitoring plan and subsequent annual reports. Key steps include: * Inventory of emissions sources: energy use, fuel combustion, process emissions, waste, refrigerants, etc. * Data-collection procedures: meters, fuel bills, utility invoices, emission factors. * Setting baseline year(s): for trend-analysis and target-setting. * Assigning responsibilities: data collection, internal controls, coordination with external verifier. From an accounting professional’s view, this resembles setting up an internal control environment for non-financial metrics. Errors, omissions or missing data may compromise credibility. ### 2.3 Verification & Audit – Assurance Requirements Under Türkiye’s regulation, the “Communiqué on Verification…” mandates third-party verification of monitoring plans and annual emission reports. As a CPA-advisor you should treat this similarly to audited financial statements: * Confirm external verifier is accredited. * Ensure traceability of data, documentation and emission-factor calculations. * Prepare for internal audit and board-level review of emissions reporting. * Ensure reconciliation of emissions data with financial disclosures (for example, energy cost, fuel tax, carbon cost). ### 2.4 Quantification, Reporting & Disclosure Once data is collected and verified, companies must report emissions. For compliance sectors in Türkiye, annual reports must be filed with the relevant ministry by the statutory deadline. But beyond compliance, best-practice firms will integrate their carbon disclosures into: * Management Discussion & Analysis (MD&A) or board reports: risks, targets, mitigation plans. * Integrated reports or sustainability disclosures: linking GHG performance with business strategy, risk management, strategy for transition to low-carbon economy. * External communication: investor presentations, CSR/ESG frameworks. ### 2.5 Internalising Carbon-Cost & Opportunity The measurement and reporting phase is necessary but not sufficient. Senior management must ask: what does this carbon data mean for our business? Examples of decision-points: * **Carbon liability exposure**: For companies likely to fall into the ETS or face carbon price indirectly (via supply chain), there needs to be scenario modelling: what happens if carbon price rises to €50/tCO₂e or €100/tCO₂e? * **Emission-reduction investment**: Which projects (e.g., energy efficiency, fuel switching, renewable purchase, waste-heat recovery) yield best IRR, pay-back period, and benefit from green financing? * **Green financing and carbon credits**: Some firms may generate or purchase carbon credits (domestic voluntary market) so understanding Türkiye’s voluntary markets (VCS, Gold Standard) is critical. * **Supply-chain and export risk**: For firms exporting to the EU or trading with EU-linked supply chains, the coming CBAM and Türkiye’s ETS create dual carbon-price risks (cost on Turkish side, cost from EU imports). * **Competitive positioning**: Carbon-efficient firms may gain preferential treatment in procurement, attract ESG-focused investors, access to green-certified financing, or better reputational standing. ### 2.6 Internal Controls & Continuous Improvement Just as financial accounting requires ongoing internal controls and improvements, so does carbon accounting: * Design and document internal procedures for carbon data collection and review. * Ensure segregation of duties: data-entry vs. review vs. verification. * Periodic internal audit of carbon-data systems, possibly by your own CPA practice. * Benchmarking: compare year-on-year emissions, intensity metrics (e.g., tCO₂e per million TL revenue or per employee) and industry peers. * Target-setting and monitoring: define short-, medium- and long-term targets aligned with national goals (e.g., Türkiye’s net-zero by 2053). --- ## 3\. Key Challenges & Considerations for Firms Several practical issues must be navigated by firms implementing carbon accounting in Türkiye—both from a compliance and strategic standpoint. ### 3.1 Data Quality and System Integration Especially for service/remote/tech firms, emissions sources may be diffuse (home-working, cloud-computing, employee travel, digital supply-chain). Collecting, aggregating and verifying this data is non-trivial. Solution: build or procure a robust data-management system, assign a carbon-accounting lead, and ensure traceability back to the ledger. ### 3.2 Scope 3 Emissions and Supply-Chain Risk While early regulatory focus is on Scope 1/2, investors and clients increasingly expect firms to manage Scope 3. For example, a tech firm whose cloud-provider uses coal-fired power may face reputational or procurement risk. Action: map supply-chain emissions, prioritise high-impact categories, engage key suppliers, and consider offset or avoided-emissions strategies. ### 3.3 Carbon Price Uncertainty and Scenario Planning Because Türkiye’s ETS is still maturing (pilot in 2025/2026) and carbon-price trajectories remain uncertain, firms must engage in scenario modelling: high/medium/low carbon-price paths, supply-chain pass-through, investment trade-offs. ([ER&GUN&ER Law Firm](https://istanbullawyerfirm.com/blog/turkey-emissions-trading-system-2025?utm_source=chatgpt.com)) Your role as advisor: facilitate these scenarios, quantify balance-sheet and P&L impacts, help board understand cost-of-delay vs. early action. ### 3.4 Voluntary Carbon Markets vs. Compliance Markets Türkiye has been an active host country for voluntary carbon-market projects (under standards such as VCS and Gold Standard) and expects to develop national carbon-crediting architecture. Companies may have the opportunity to generate or buy credible carbon credits. But careful due-diligence is required: standard-eligibility, registry integrity, offset quality. As a CPA, you can offer review of carbon-credit projects and their accounting implications (asset recognition, cost capitalisation, etc). ### 3.5 Export-Market and CBAM Linkages For firms exporting to the EU (or in supply chains tied to EU CBAM jurisdictions), Türkiye’s carbon-pricing alignment is material. Without a domestic carbon price, exporters may face import-level adjustments. Therefore: your blog should highlight that carbon accounting is not just “nice to have”, but vital for trade-risk management. ### 3.6 Need for Professional Advisory – Why A CPA Matters Many companies treat carbon accounting as an “environmental” or “sustainability” issue managed by operations teams. That is now insufficient. The convergence of carbon-costs, verification, emissions data, reporting disclosures and investor/financing scrutiny means that the issue sits firmly in the enterprise-risk, financial-control and audit space. ## 4\. FAQ: Common Questions & Answers **Q1. Who in Türkiye must undertake carbon accounting?** A: Companies that fall within the regulated sectors under Türkiye’s MRV regulation must prepare monitoring plans, submit verified emissions reports and comply with verification obligations. Even if your firm is not yet covered, if you operate in energy-intensive sectors (steel, cement, aluminium, chemicals) or have significant export exposure you should treat carbon accounting as strategic risk. **Q2. What is the timeline for Türkiye’s ETS?** A: A pilot phase is planned for 2025, with full implementation expected in 2026 and beyond. Companies should therefore act now in order to be ready well ahead of the compliance deadline. **Q3. What are the penalties for non-compliance?** A: Under the draft climate law, firms failing to submit verified emissions reports may face administrative fines ranging from TRY 500,000 to TRY 5 million or more. **Q4. Can SMEs ignore carbon accounting?** A: While smaller firms may not immediately fall under compliance regimes, many will face indirect impacts (via supply-chain demands, investor expectations, export-market pressure). It is advisable for SMEs—not only large firms—to build a basic level of readiness rather than be caught off-guard. **Q5. How does carbon accounting interact with financial statements?** A: Carbon-related costs or liabilities (e.g., purchasing allowances or carbon credits) may require recognition or disclosure in the financial statements. Internal controls over these cost flows, allocation of carbon-costs to product lines, and audit-ready documentation become vital. As a CPA you can guide firms through linkage with IFRS or Turkish Financial Reporting Standards. **Q6. What opportunities exist from a carbon-accounting perspective?** A: Aside from compliance avoidance, opportunities include: access to green financing, reputational differentiation, ability to generate carbon credits (especially if you have renewable-energy or waste-to-energy projects in Türkiye) and improved bargaining position in export markets. For example, Türkiye is among the leading host-countries in the voluntary carbon-market space. ### Reach us for advisory services info@ozmconsultancy.com ![](https://cdn.hashnode.com/res/hashnode/image/upload/v1761399221052/7fbb43fa-3f34-43e1-8aea-dacafd06ff63.png align="center")