Mandatory Sustainability (ISSB) Reporting: Early Evidence from Türkiye

Abstract

This paper provides evidence on mandatory sustainability reporting aimed at investors. We exploit the introduction of IFRS S1 and IFRS S2 in Türkiye. Türkiye incorporated the standards into domestic law without material modification and mandated their application for public issuers beginning in 2024. We document three findings. First, about 95% of the mandatory adopters filed a report in the first year. Second, we document a very high degree of formal compliance with the new standards with firms addressing most of the items covered in the standards. Third, our data also reveals substantial heterogeneity in key reporting choices, including materiality approaches, climate scenario, emissions measurement boundaries, and base year and target year in carbon emission reduction plans. These differences arise due to the flexibility offered by the standards. Our findings raise questions about the extent to which flexibility in the standards may at least initially limit cross-firm comparability.

Keywords: Climate Change, Sustainability Reporting, IFRS Standards

JEL Classification: M41, M48, Q56