The carbon risk exposure rate of the Borsa Istanbul 100 (BIST 100) Index was announced as 11.3% in a study, highlighting the risk that companies may face the inability to source funding from the capital markets in the future. Financial risks for companies trading under the BIST 100 index at Borsa Istanbul were emphasized to include energy efficiency and renewable energy investments.

The report titled “Stranded Asset Risk and Withdrawal Tendency from Fossil Fuel Investments: BIST 100 Example” by the Sustainable Economy and Finance Research Association (SEFiA) was published, examining the trend of withdrawing from fossil fuels and evaluating its impact on the capital markets in Turkey. The withdrawal from fossil fuels, which can be defined as large asset management companies pulling their investments from fossil fuels, is emerging as a significant trend in global financial markets. The size of capital deciding not to invest in fossil fuels is being considered a risk that structurally affects capital markets with high exposure to risks related to climate change. The report suggests that approximately 20% to 30% of the market values of the London, Sao Paulo, Moscow, Australia, and Toronto stock exchanges are associated with fossil fuel investments, with the exposure rate to carbon risk in the BIST 100 index calculated at 11.3%. Considering the density of global fossil fuel companies in these exchanges, the calculated rate for Turkey is considered “significant.” Within this rate, 7.3 points stem from firms directly investing in fossil fuels, while 4 points arise from firms investing in both fossil and renewable energy. When fossil fuel investments within these 4 points are weighed against installed capacity and investment costs, it is calculated that 1.4 points directly derive from fossil investments.

When the capital of companies’ renewable energy investments is separated, the direct exposure rate of BIST 100 companies to carbon risk rises to 8.7%. In a scenario where corporate investors are increasingly withdrawing from fossil investments, it is emphasized that these assets may face the risk of not being able to source funding from the capital markets. Therefore, it is crucial to closely monitor global trends and evaluate the exit from fossil fuel investments not only within the framework of climate goals but also in terms of financial risks.

Companies require concrete plans supporting the 2053 net zero target. Referring to a study examining the climate records of the first 30 companies trading on Borsa Istanbul (BIST 30), the report states that among the 26 non-banking companies, the percentage of “high and severely high-risk” companies decreased from 44% in 2022 to 38% last year, while the percentage of “low-risk” companies was calculated as 8% compared to 19%. These indicators suggest a certain level of improvement in the BIST 30. However, it is noted that companies do not have a concrete plan set or shared with the public to support the net zero emissions target by 2053.

“Energy efficiency and renewable energy investments should be prioritized.” Bengisu Özenç, the Director of SEFiA, mentioned that the financial transformation occurring in the Turkish financial markets and corporate investors due to climate goals and decarbonization trends is inevitable. She emphasized the need for investors to prioritize energy efficiency and renewable energy investments instead of investments in fossil fuel sectors to realign their portfolios towards low-carbon energy to respond to current global trends and mitigate financial risks effectively. It is predicted that without proper monitoring of these trends and the necessary measures, defaults and the possibility of stranded assets may weaken the Turkish banking sector. The financial risks arising from the new industrial policy shaped by a limited carbon budget must now be considered a significant risk by large enterprises.