Akademik Veri Yönetim Sistemi
VIII. Uluslararası Muhasebe ve Finans Sempozyumu, Bursa, Türkiye, 25 - 26 Temmuz 2025, ss.1-23, (Özet Bildiri)
EXTENDED ABSTRACT
1. GREENWASHING
Climate change, environmental pollution, population
growth, rapid industrialization, and urbanization have brought about numerous
political and social changes and, at the same time, have created some of the
most critical problems of our era. In this context, businesses have been
compelled to adopt environmentally friendly and sustainable practices,
initiating efforts to reduce their carbon footprints and contribute to
environmental protection. These initiatives are often driven not only by
ethical concerns but also by the desire to enhance corporate reputation and
gain a competitive advantage in the market.
However, it is frequently observed that companies tend
to exaggerate or misrepresent their environmental, social, and economic
commitments. This creates a gap between the disclosures made by businesses and
their actual practices, leading to the widespread issue known as greenwashing.
Although sustainability reporting is defined as a process through which
companies transparently disclose their environmental and social performance,
greenwashing reveals that these reports do not always reflect accurate and
transparent information. As a result, sustainability commitments are not
fulfilled, and stakeholders receive misleading or incomplete information,
obstructing access to reliable data.
In the literature, the term greenwashing is
consistently used to describe various forms of environmental deception. It can
be defined as the communication of misleading environmental or social
responsibility claims by companies to create a favorable impression and
influence current or potential stakeholders. While greenwashing may bring
short-term marketing and competitive benefits, in the long run, such strategies
may damage corporate reputation, hinder sustainability goals, and negatively
affect operational results.
From an accounting perspective, greenwashing
represents an attempt to build an environmentally conscious image by presenting
misleading, incomplete, or exaggerated information about a company’s
environmental performance or the environmental benefits of its products or
services. This indicates a disconnection between actual practices and the
information conveyed to the public or investors. Greenwashing often involves
companies publishing social responsibility reports to fabricate a sustainable
image, despite having weak environmental and social performance. In doing so,
companies frequently obscure their negative impacts by highlighting only the
positive. Therefore, greenwashing is not simply a mistake or oversight; it is
often a deliberate attempt to mislead stakeholders. From a business model
perspective, greenwashing refers to the intentional mismatch between the values
a company claims to deliver and the foundational elements of its operations. It
typically results from deficiencies in the business model and creates deceptive
impressions about environmental performance. Common motivations for
greenwashing include:
Today, greenwashing can be observed in advertising
campaigns, annual reports, corporate social responsibility (CSR) projects, or
through sustainability-related labeling. It typically manifests in reporting
through the following mechanisms:
Greenwashing creates serious information asymmetries
for investors, regulators, and other stakeholders, undermining the credibility
of financial reporting. While financial statements aim to be accurate,
reliable, comparable, and auditable, greenwashing contradicts these principles.
When sustainability disclosures are not integrated into financial statements,
companies often make environmental promises merely for public relations
purposes, without delivering measurable outcomes. This creates an
"information gap" that misguides investment decisions.
The effects of greenwashing on
financial reporting can be grouped into three main areas:
Greenwashing negatively affects not only companies and
consumers but also society and other key stakeholders.
On the other hand, internal control and audit
systems play a crucial role in preventing greenwashing. Companies with strong
oversight mechanisms can ensure the transparency and reliability of
environmental disclosures. However, in many cases, greenwashing undermines the
effectiveness of internal audits.
Weak internal control systems can prevent companies
from properly monitoring environmental compliance, potentially causing them to
overlook harmful impacts or fail to meet sustainability targets. The absence of
robust oversight facilitates deliberate misrepresentation of environmental
performance.
In short, insufficient internal controls and audits
enable companies to fall short of their environmental responsibilities and
contribute to the persistence of greenwashing.
2. GREEN TRUST
Although green trust is a term rooted in
marketing literature, it broadly refers to stakeholder confidence in a
company’s environmental claims and sustainability practices. It signifies
belief in a business’s ability and sincerity in fulfilling its environmental
responsibilities.
The transition from greenwashing to green trust
requires full transparency and the abandonment of misleading strategies. As
explained earlier, greenwashing and green trust are inversely
related—greenwashing erodes stakeholder trust, while transparency and
authenticity foster it.
To foster green trust, companies must embrace the
following principles:
Establishing green trust requires a long-term,
principled approach that prioritizes truthful communication and measurable
progress over superficial claims.
3. LEGAL REGULATIONS DEVELOPED TO
PREVENT GREEN WASHING AND BUILD GREEN TRUST IN TURKIYE
In Turkiye, where international regulations are
rapidly transposed into national legislation, the fight against greenwashing
has started to take its place within legal regulations. This process is of
great importance for companies to fulfill their reporting obligations and strengthen
their sustainability infrastructure. Accordingly, it is crucial for companies
to avoid greenwashing when describing their sustainability activities.
As definitions of sustainability become clearer,
consumer and investor awareness increases, and legal regulations expand, the
prevalence of greenwashing decreases. For example, the General Directorate of
Consumer Protection and Market Surveillance under the Ministry of Trade
regulates the environmental claims used in advertisements.
The 2023-2025 Medium Term Program states that: “A
scientifically based National Green Taxonomy legislation, compatible with a
common international classification system and adapted to the unique needs of
Turkiye, which determines the qualities an environmentally sustainable economic
activity should possess and which will provide protection against greenwashing,
will be prepared.”
Furthermore, the Medium Term Program for 2025-2027
declares: “Legislative work will be completed for the establishment of a
National Green Taxonomy that is compatible with international taxonomy
examples, especially the European Union taxonomy, and that takes into account
Turkiye's specific needs.”
In general, the recent development of regulatory and
supervisory frameworks on sustainability prevents the formation of a minimum
standard in practices, increases uncertainties and information pollution, and
allows for approaches that can be described as greenwashing. However, it can be
said that Turkiye closely follows foreign regulations in this area, rapidly
transferring international regulations into national law, and the fight against
greenwashing has begun to be embedded in Turkish regulations.
The steps taken and regulations introduced within the
framework of the Public Oversight Accounting and Auditing Standards Authority
(POA - KGK), the Capital Markets Board (CMB), and the Banking Regulation and
Supervision Agency (BRSA) to combat greenwashing in sustainability practices
are as follows:
Since 2024, TurkİYE has adopted the Turkish
Sustainability Reporting Standards (TSRS) developed by the International
Sustainability Standards Board (ISSB). These regulations aim to ensure that
businesses transparently report their environmental, social, and governance
(ESG) performance. The POA has assumed a central role in managing this process
and will ensure the publication of sustainability reports and conduct assurance
audits starting from 2025.
Reporting of greenhouse gas emissions is mandatory
under TSRS 1 and TSRS 2, although some exemptions are granted during the
transition period. The POA is authorized to define and publish TSRSs to ensure
that sustainability reports comply with international standards and maintain
validity.
KGK's efforts in standard-setting are aligned with the
International Sustainability Standards Board (ISSB) under the IFRS Foundation.
In 2023, KGK integrated these international standards into Turkish legislation
and began issuing TSRSs.
Reporting according to the TSRS published by the POA
became mandatory for companies specified in the legislation. Organizations
meeting at least two of the following thresholds—total assets, annual net sales
revenue, and number of employees—for two consecutive years and classified as
public interest entities are required to prepare corporate sustainability
reports from January 1, 2024. Organizations outside this scope may apply the
standards voluntarily.
Standardized and mandatory reporting will help reduce
greenwashing by enabling companies to present their sustainability performance
transparently and comparably. Moreover, the assurance audit requirement
introduced in September 2024 will apply to these mandatory sustainability
reports.
An assurance audit on sustainability is a qualitative
process in which the auditor seeks sufficient appropriate evidence to express a
conclusion intended to increase the confidence of stakeholders—such as
investors, financial institutions, and rating agencies—who benefit from the
sustainability report. These assurance engagements will be conducted in
accordance with GDS 3000 ("Assurance Engagements Other Than Independent
Audits or Review Engagements of Historical Financial Information") and GDS
3410 ("Assurance Engagements on Greenhouse Gas Disclosures")
standards (until the issuance of GDS 5000). Reporting on sustainability
performance and receiving assurance assessments by independent auditors are
important steps toward transparency and a critical development in preventing
greenwashing.
The CMB published the Sustainability Principles
Compliance Framework for Turkish capital markets in 2020. Based on this
framework, the Public Disclosure Platform (PDP) Sustainability Reporting
Template covers environmental, social, and corporate governance principles
generally.
The framework recommends that sustainability
performance measurements be verified by an independent third party and
disclosed publicly. While the implementation of the principles is voluntary,
companies must disclose whether or not they have complied under the
"Comply or Disclose" principle. Verification of performance
constitutes a direct mechanism against greenwashing.
In 2022, the CMB published guidelines for Green Debt
Instruments, Sustainable Debt Instruments, Green Sukuk, and Sustainable Sukuk.
In 2024, these guidelines were updated to include social bonds and drafts for
Sustainability-Linked Capital Market Instruments were made available for public
comment.These guidelines aim to address potential greenwashing by ensuring that
financial products marketed as "green," "sustainable," or
"sustainability-linked" meet specific criteria.
In 2024, the CMB also issued Principles of Responsible
Management for funds managed by asset management companies, aiming to ensure
the responsible investment, management, and monitoring of securities investment
fund assets. This represents a step toward preventing greenwashing in financial
products.
Corporate governance principles were first legislated
by the CMB in 2003, and their scope has since expanded. Some principles have
become mandatory for publicly traded companies, including requirements to
establish board committees such as the Corporate Governance Committee.
Transparency and good governance are fundamental in preventing greenwashing.
The BRSA participates in sustainability action plans
carried out with various institutions. One such plan, Action 2.2.2.2, focuses
on ensuring consistency in second-party opinion services, which provide
verification for sustainable activities to prevent greenwashing.
The BRSA also works to require banks to obtain
sustainability principles compliance reports and carbon emission data from
their loan customers. Furthermore, it strengthens regulatory infrastructure to
standardize ESG practices across the banking sector in alignment with
internationally accepted approaches. These efforts aim to accelerate the
sustainability transformation of the corporate sector while mitigating
greenwashing risks that may emerge during this process.