Implementation of ESG principles in the financial market

The Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (hereinafter – the Agency) initiated work on the implementation of ESG principles in the regulation of the financial market.

Regulation will be focused on stimulating financial organizations to sustainable development in order to redistribute financial resources in favor of sustainable projects. This will have a positive impact on increasing the investment attractiveness of the Republic of Kazakhstan and contributes to the growth of social and environmental responsibility of companies.

The key priorities of the Agency's phased policy on the implementation of ESG principles in the regulation of the financial market of Kazakhstan are included in the corresponding Roadmap adopted in March this year.

It is planned to implement the principles of sustainable development through the development and establishment of requirements for internal risk management systems and the corporate governance system of financial organizations, as well as monitoring compliance with recommendations and requirements in ESG risk management.

For these purposes, this year the Agency, together with IFC, developed and approved Guidelines for the Disclosure of ESG Information for Banks and Other Financial Organizations, and by the end of the year, Guidelines for Environmental and Social Risk Management in Financial Organizations (ESRM) and Guidelines for Calculating Greenhouse Gas Emissions for Financial Organizations and Assessing the Carbon Footprint of Credit institutions will be developed. bank portfolios.

In addition, in 2024, procedures for conducting stress testing of climate risks for banks will be introduced into the Agency's supervisory practice. When analyzing climate risks, an assessment of potential risks to the economy and financial stability of Kazakhstan caused by climate change will be carried out.

Of great importance in the implementation of the principles of sustainable development in the financial market is to increase the awareness of its participants about ESG standards. In order to increase the expert potential of the financial market, the Agency, together with international financial organizations and the Big Four companies, is currently conducting a number of training seminars and trainings in the field of sustainable financing.

These measures will enhance the role of the financial sector in combating climate change and ensuring sustainable financing of the economy of Kazakhstan.