Consideration of ESG factors and creation of conditions for the development of sustainable finance instruments are recognized as key to ensuring sustainable growth. This thesis can be traced in the speech of the Head of State at the meeting of the AIFC Management Council, it runs like a red thread in the rhetoric of the key sessions of Astana Finance Days and was also noted by several speakers of the Green Growth Forum.
At the meeting of the AIFC Management Council, the Head of State focused on the issues of achieving sustainable development goals and implementing green projects. He said that last year alone, the sustainable financing market expanded 500 times, exceeding 250 million dollars. Of these, 58% of green bonds and loans were verified by the AIFC Green Finance Centre. “I advise the Government, the AIFC and the Council members to continue working in this direction at the same pace,” added the President of the Republic of Kazakhstan Tokayev K.K.
Madina Abylkassymova, Chairperson of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market, noted that starting from 2024, ESG risks will be included in the annual stress-testing process of the banking sector. This step is aligned with growing international trends in risk management and best practices of financial regulators. It is widely recognized that the financial risks associated with the physical consequences of climate change and the transition to a net-zero economy can affect the vulnerability of banks, as well as the stability of the financial system.
Further development of policies and instruments for financing sustainable projects is equally important for achieving sustainable development goals. AIFC Green Finance Centre presented the draft of Social Taxonomy for Kazakhstan . International experts agreed that the document would create a clear reference point for participants of the social finance market, and representatives of the Ministry of National Economy of the Republic of Kazakhstan - First Vice Minister Timur Zhaksylykov and Director of the Department of Entrepreneurship Development Policy Erik Dzhambulov confirmed the willingness of the Ministry to work together with the AIFC to further develop the document.
Mandatory ESG disclosure is also marked as one of the cornerstones of an effective financial system. “The International Sustainability Standards Board (ISSB) has developed 2 prototypes of the sustainability disclosure standard”, -said Ravi Abeywardana, Technical Director of the IFRS Foundation. These standards will be approved by the IFRS Foundation over the next 1-2 years as a mandatory part of the financial reporting of companies.
Consolidation of business and regional leaders in sustainable finance also creates an additional platform to advance these initiatives. Thus, within the Forum, a Memorandum of Understanding was signed with the intention to cooperate on the creation of the National ESG Club, as well as the initiative of the AIFC Green Finance Centre to create a Regional Green Finance Council was announced.
The ESG Club united 19 companies that actively promote the principles of sustainable development and ESG in Kazakhstan, including the Qazaq Green Association, Kazakhstan Stock Exchange, Development Bank of Kazakhstan, as well as leading Kazakh second-tier banks and the largest mining companies in addition to the AIFC Authority and the AIFC Green Finance Centre. While presenting the activities of the ESG Club, the СEO of the AIFC Green Finance Centre Aidar Kazybayev emphasized that the ESG Club will become a support for the President and the Government of Kazakhstan in achieving the Sustainable Development Goals and moving toward the New Kazakhstan, through the promotion of the principles of ESG and sustainable development.
Support for the initiative to create a Regional Green Finance Council was expressed by the speakers of the session - Secretary General of the Organization of Turkic States - H.E. Baghdad Amreyev, Deputy Chairman of the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market - Mariya Khadzhiyeva, Executive Director of the Central Bank of Hungary - Marcell Horvath and the President of the Union of Banks of Kyrgyzstan - Anvar Abdraev.
Implementation of these initiatives will bring the sustainable finance market in Kazakhstan to a new level, thereby attracting much-needed investment in the decarbonization of the economy and the implementation of social projects.
The general sponsor of the Astana Finance Days 2022 conference is Eurasian Resources Group (ERG).
The Astana International Financial Centre (AIFC) is an independent jurisdiction that started operations in 2018. In accordance with the Development Strategy until 2025, the key focus of the AIFC is to consolidate as a universal platform connecting the countries of the EAEU, Central Asia and the Caucasus. www.aifc.kz
The AIFC Green Finance Centre is a subsidiary organisation of the AIFC Authority and the Eurasian Development Bank, aimed at introduction and development of sustainable finance instruments and attracting of investments in environmental and social projects in Kazakhstan and Central Asia. The AIFC Green Finance Centre supported the very first issuance of green bonds and first verified green loan in Kazakhstan. Also, the Centre introduced definitions of green finance and green taxonomy (a classifier of economic activities and projects that meet technical selection criteria) in the national environmental legislation. The new legislation provides incentives for entrepreneurs who use green finance instruments. www.gfc.aifc.kz