Turkey: Capital Markets Council turns debt instruments green

In short

On November 3, 2021, the Capital Markets Board (CMB) submitted the draft guidelines on green debt instruments and green lease certificates (Sukuk) (“Draft guidelines“) to a public consultation. The draft guidelines aim to regulate the principles regarding green debt instruments and leasing certificates to be issued to finance investments that will contribute to sustainability.

What does the draft guidelines say?

The draft guidelines regulate the principles regarding green debt securities, green leasing certificates and their issuance in accordance with the Green Bond Principles of the International Capital Markets Association, which set globally accepted standards in the field.

Green Debt Securities and Green Lease Certificates will be subject to the same principles in the draft guidelines, and the asset leasing company or fund user will meet the obligations for issuing green lease certificates. .

Framework document on the green debt instrument

  • With the framework document on green debt instruments, the board of directors of the issuer will ensure that the debt instruments to be issued comply with the requirements of the draft guidelines, and determine the use of the proceeds and the necessary procedures related to these instruments.
  • The framework document will be used to disclose to the public the sustainability strategies of the issuer, the taxonomies used in the selection of green projects and the certificates of the issuer.
  • The annexes to the draft guidelines include a template for preparing the framework document.

Principles of green debt instruments

The draft guidelines set out the conditions for qualifying debt securities or leasing certificates as “green” as follows:

  • The issuer must confirm in the framework document that the issue will be carried out in accordance with the principles set out in the Draft Directives.
  • The proceeds are to be used to finance green projects, as indicated in the framework document.
  • The issuer should receive an independent audit opinion confirming that the issuance complies with the draft guidelines.

Domestic capital market instruments that do not comply with the draft guidelines cannot be labeled as green debt instruments or green leasing certificates, or any equivalent expression.

Main components of green debt instruments

The draft guidelines foresee four main components of green debt instruments:

1. Use of the product

The funds raised through the issuance of green debt instruments will have to be used for green projects. If possible, the environmental benefits of these projects should be disclosed to the public in the framework document in a quantifiable manner. In this context, the draft guidelines provide examples of green projects and stipulate that issuers may also use other internationally accepted taxonomies.

2. Project evaluation and selection process

Issuers will disclose the sustainability objectives of their projects in the framework document; the methods used to determine the sustainability objectives; and the processes for identifying and managing the potential environmental and social risks these projects pose.

3. Fund management

The net fund or the equivalent amount obtained through the issuance of green debt instruments should be managed by opening separate and private accounts, and ensuring the accuracy of their records. Funds can be managed separately for each issue, or funds raised from multiple green issues can be managed under a single portfolio.

As long as these instruments are in circulation, these funds will be used for green projects to be carried out during the period concerned. Issuers will publicly disclose the intended use of the product.

4. Disclosure

Issuers will publish annually updated information on the use of funds in accordance with CMB’s regulations on the disclosure of material events. If the issue has a maturity date of less than one year, statements will be made on the maturity date. It will be important to disclose the estimated or realized benefits of the projects and to use qualitative and quantitative performance indicators for these disclosures. Issuers will be able to benefit from the models provided by international standards for their impact statements.

External review

Issuers will need to obtain confirmation from external auditors recognized by internationally recognized organizations, such as the International Capital Markets Association and the Climate Bonds Initiative, for their issuance of green debt instruments. These institutions will confirm that the relevant debt instrument complies with the main components of green debt instruments as set out in the draft guidelines. In addition, issuers will need the services of these institutions after issuance to verify that funds raised are being used for appropriate purposes.

Issuance procedure

Issuers will submit their framework document and the report of the external auditor to the CMB for approval of their issuance certificates or their offer circulars. Issuers will also disclose to the public their framework document and their external auditor’s report, as well as their emission certificates or offering circulars.

An external auditor’s opinion verifying the use of the products will be disclosed to the public in accordance with the CMB’s rules on public disclosures.


The CMB was the first Turkish regulator to take concrete action to ensure sustainability. As we mentioned in our alert, at the end of 2020, the CMB introduced the “Sustainability Principles Compliance Framework” which contains the principles that public companies must follow.

Now it is taking stronger action to regulate the principles of issuance of green debt instruments and green leasing certificates, with the aim of encouraging the use of internationally accepted standards for issuance of instruments. green debt in Turkey.

Opinions on the draft guidelines can be sent to [email protected] or to the CMB in writing until November 30, 2021.

You can also read this article on our website: CMB Greening Debt Instruments

Click here for the Turkish version.

The content is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This may be termed a “lawyer advertisement” requiring notice in some jurisdictions. Past results do not guarantee similar results. For more information, please visit: www.bakermckenzie.com/en/disclaimers.

Sharon P. Juarez