AIFC Green Finance Centre initiated a discussion on application of Green Taxonomy in the Republic of Kazakhstan

The AIFC Green Finance Centre (hereinafter – the Centre), held an online conference on approaches to the application of the Green taxonomy for the development of green finance in Kazakhstan.

Devising a working mechanism for Green Taxonomy use is one of the legislative initiatives proposed by the AIFC Authority to develop the green finance system in Kazakhstan. All the norms previously proposed by AIFC on green financing in support of the new market have been adopted in the new Environmental Code of the Republic of Kazakhstan. The work on draft bylaws for the implementation of these norms of the Ecocode, the Green taxonomy being among them, has commenced, including the outreach to experts and business.

The main objective of the meeting was to discuss how Taxonomy could be applied both under government support programmes for the green economy and outside of them, including questions about the verification of “green” projects’ compliance with Taxonomy thresholds and the role of external review providers.

The agenda was focused on the use of the Green taxonomy by financial market entities, authorised financial support agencies, regulators, and potential external review providers within the program for subsidising interest rates on green loans and coupon rates on green bonds to be launched  the mid-year, taking into account international practices and its adaptation for Kazakhstan.

Also, the participants were briefed on the status of consultations on the draft “Green” taxonomy itself, originally developed by the Centre with the participation of international experts and currently being finalised by the International  Green Technologies and Investment Projects Center (IGTIC) in terms of clarifying threshold criteria for individual subsectors of activities and assets, the achievement of which is necessary for projects to be qualified as “green”, taking into account the local specifics.

The discussion was attended by representatives of the Ministries of Ecology, Geology and Natural Resources, National Economy, Industry and Infrastructural Development, the Agency for the Regulation and Development of the Financial Market, the National Bank of the Republic of Kazakhstan, Damu, STB, potential providers of external reviews of green projects (environmental auditors, energy audit organisations, conformity assessment bodies, audit, rating, consulting, expert companies, etc.), “Atameken” Chamber, as well as non-governmental and academic community.

During the meeting, the participants voiced their suggestions and commented on the requirements for an independent assessment of green projects for compliance with the Taxonomy outside the framework of government incentives, on the need for a single accreditation centre for independent review providers, as well as on options for involving energy saving and energy audit companies as independent evaluation providers for Taxonomy’s energy efficiency projects.

The draft Decree of the Government of the Republic of Kazakhstan on the “Green” taxonomy is expected to be adopted by July 2021.  The document, as revised given the recommendations of the participants, will be submitted by the Centre to the Ministry of Ecology, Geology and Natural Resources of the Republic of Kazakhstan, along with the recorded recommendations of this conference, for finalisation through the established consultation procedure.

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The Astana International Financial Centra was created by the initiative of the First President of the Republic of Kazakhstan, Leader of the Nation, Nur-Sultan Nazarbayev as part of the “100 steps to implement five institutional reforms” national program. The Centre’s development strategy until 2025 was approved by the Management council of the AIFC during the council’s meeting on July 2, 2020. In accordance with the strategy, the vision of AIFC is in becoming the leading financial centre in the region that includes Central Asia, the Caucasus, EAEU countries, western China, Mongolia, and Eastern Europe.

The mission of the AIFC is in assisting the sustainable and long term development of the region. As the head of state Tokayev noted, “AIFC, with its unique opportunities, can act as a universal platform that connects the countries in the region.”

The strategic directions for the sustainable development of the AIFC include the development of a circular economy, financial technologies, and “digital financial centre.” https://aifc.kz/