Climate change is no longer solely an environmental concern. It is reshaping production, energy security, international trade, urban development and the functioning of financial systems. The central challenge is therefore not simply to set climate targets, but to translate them into investable projects, bankable activities and measurable outcomes.

Türkiye’s hosting of COP31 offers a strategic opportunity to demonstrate its climate diplomacy, sustainable finance capacity and evolving regulatory architecture. A key milestone will be the Istanbul Climate Finance Summit, to be held at the Istanbul Financial Centre on 4 September 2026 under the theme “Financing Climate Action: From the COP31 Vision to Delivery.” Its agenda from clean energy to green industrialisation and adaptation positions sustainable finance as an engine of economic transformation.

A MORE CREDIBLE AND MEASURABLE FINANCE FRAMEWORK

The scale of green investment cannot be met through public resources alone. Türkiye must mobilise private capital, attract international investment to climate-aligned activities and develop instruments for different investor profiles. The Capital Markets Board’s sustainability principles and guidance on sustainable instruments strengthen the link between environmental and social performance and capital allocation.

The 2026 guidelines for green, sustainable, social and sustainability-linked capital market instruments extend this framework beyond designated projects to corporate performance targets. In banking, the Banking Regulation and Supervision Agency’s Green Asset Ratio regulation supports assessment of portfolio alignment with environmentally sustainable activities. The key question is shifting from “How much finance was provided?” to “Where did it flow, and what transformation did it create?”

FROM COMMITMENT TO IMPLEMENTATION

Regulation will deliver its full value only when climate ambitions become real-economy investments. Priorities include clean energy, electrification and grid infrastructure, climate-resilient cities, low-carbon industrialisation and adaptation. For Türkiye, industrial decarbonisation is not only an environmental objective; it is essential to productive capacity, exports and international competitiveness.

Adaptation finance must receive equal attention. Investment in resilient cities, infrastructure and businesses is critical as physical risks intensify. SMEs must also gain access to finance for energy efficiency, cleaner production and technology upgrades. Their participation will determine whether green transformation reaches the wider economy.

THE STRATEGIC ROLE OF PARTICIPATION FINANCE

Participation finance is well positioned within this emerging architecture. Its connection to real economic activity, asset- and trade-based structures, risk-sharing principles and emphasis on social benefit closely align with sustainable finance objectives. The opportunity, however, goes beyond adding a “green” label to existing products. The sector can design financing models that are directly linked to productive activity and generate verifiable environmental and social impact.

Green sukuk and sustainability-focused lease certificates, project-based financing, tailored solutions for SME transition and performance-linked capital market instruments offer significant potential. These tools can connect domestic savers and global Islamic investors with Türkiye’s climate investment pipeline, while improving risk allocation and broadening the funding base.

The Istanbul Climate Finance Summit will provide a platform for coordinated action. A high-level panel jointly convened by the Presidency’s Investment and Finance Office and the Participation Banks Association of Türkiye (TKBB) will examine how climate and Islamic finance can be connected through effective market infrastructure. It will address investable project pipelines, risk allocation and links between international capital and implementation ecosystems.

The strategic dialogue, “Mobilising Islamic Finance for COP31 Implementation,” will bring together standard setters, climate finance institutions, participation banks, takaful providers and Islamic private capital. Representing Türkiye’s participation banking ecosystem, TKBB will help articulate how member institutions can align collectively around climate-finance priorities and accelerate practical implementation.

These initiatives reinforce the Istanbul Financial Centre’s potential as an international hub connecting sustainable and participation finance with investors and bankable climate projects.

CONCLUSION

The road to COP31 can mark a new phase in Türkiye’s sustainable finance transformation. The priority is stronger cooperation among government, financial institutions, the real sector and international partners, converting commitments into investable projects and measurable results. With its real-economy orientation and diverse toolkit, participation finance can make this transition more inclusive and resilient. COP31 is therefore more than a diplomatic milestone: it is an opportunity for Türkiye to demonstrate how commitments become finance, finance becomes investment and investment delivers credible climate action.