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Turkey Ratifies Paris Agreement

Turkey Ratifies Paris Agreement
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Turkey Ratifies Paris Agreement

On September 21, in his address to the UN General Assembly, President Recep Tayyip Erdoğan had announced that Turkey would ratify the Paris Agreement before the upcoming UN Climate Change Conference (COP26), which will take place between November 1-12 in Glasgow this year. Following his remarks, the Turkish parliament has ratified the agreement on Wednesday, October 6. Along with its much-anticipated outcomes for the environment, the ratification of the Paris Agreement is expected to create a significant impact on Turkey's private sector in terms of investment, production, and employment policies and accelerate ESG activities for businesses across the country. 

The Paris Agreement is an international accord drafted under the United Nations Framework Convention on Climate Change (UNFCCC). It addresses climate change mitigation, adaptation, and finance activities, and climate duties and obligations of nation-states in line with the UNFCCC. Even though Turkey has been a signatory to the Paris Agreement since April 2016, Ankara has long been hesitant to ratify the accord due to various political and financial obligations. Article 9 of the Paris Agreement urges its parties classified as economically 'developed states' to provide financial resources and assistance to developing nations against climate change. Since the accord went into effect in November 2016, Turkey has opposed being classified as a developed country under the Paris Agreement, stressing that it does not have the financial means to fulfill such obligations.

In 2019, Turkey was offered a special financial package by Germany and France to ratify the agreement. The offer, worth 3 million US dollars, was initially deemed insufficient by the Turkish authorities. However, the EU's upcoming carbon tax regulation has motivated the Turkish authorities to reevaluate Turkey's stance towards approving the agreement. The EU carbon tax regulation will increase taxes on imported goods exceeding the EU carbon emission standards and impose a border adjustment rule for the exporting country.

Today, the EU constitutes Turkey's most prominent export and import partner and its most significant investment source. In 2020 the EU provided 33.4 % of Turkish imports, and 41.3% of the Turkish exports were sent to the EU, raising the value of total traded goods between the EU and Turkey to €132.4 billion. The cost of remaining a signatory state and failing to ratify the accord could be tremendous for the Turkish-European trade.

Furthermore, the pressure from various Turkish business associations such as TOBB and TUSİAD to protect and boost Turkey's ongoing free trade engagements, as well as the expressed concerns of over 37 domestic and international NGOs regarding the environment (TEMA, WWF-Turkey, etc.), have also had an impact on the decision to ratify the Paris Agreement.

Turkey has become the last OECD country to ratify the accord on October 6, 2021. Following the approval of the Paris Agreement, green transformation, financing activities, and ESG ratings are likely to gain new momentum in the country, which can lead to financial opportunities and regulatory difficulties for private enterprises.

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