The future of ESG for banks is already here
Starting from 2024, it is planned to include ESG risks in the annual process of stress testing of the banking sector in Kazakhstan.
ESG practices in the banking sector, plans of regulators, new reporting standards and climate risks were discussed during the session “Transformative potential of ESG in banking and climate risks” at the Green Growth Forum, held as a part of Astana Finance Days on June 28.
The financial system that is reliable and resilient to climate risks, plays a key role in ensuring a smooth transition to a low-carbon economy and mitigating the potential impact of environmental risks. Dr. Ma Jun, Co-Chair of G20 Group on Sustainable Finance, Chairman of China Green Finance Committee, Founder and President of Beijing Institute of Finance and Sustainability spoke about these issues as well as the importance of creating the basis for common ground taxonomies for harmonizing sustainable finance systems.
Yaseen Anwar, Head of Regional office of Green Investment Principles for BRI in Central Asia noted the role of the principles for financial institutions.
Sima Kamil, Deputy Governor of the State Bank of Pakistan shared experience of Pakistan in implementing green loan guidelines and climate stress testing among banks.
Madina Abylkassymova, Chairman of the Agency for Regulation and Development of the Financial Market of the Republic of Kazakhstan shared the plans for implementation of environmental and social risk management guidelines for second-tier banks. Specifically, the Chairman noted that the Agency has developed a roadmap for the implementation of ESG standards in the financial sector, which at the first stage includes recommendations for voluntary disclosure by financial institutions of information on ESG risks and their impact. Starting from 2024, it is planned to include ESG risks in the annual stress testing process of the banking sector. Ms. Abylkassymova added that 5 banks already provide high quality ESG disclosures in their annual sustainability reports in Kazakhstan.
“The International Sustainability Standards Board (ISSB) has developed 2 drafts of the sustainability disclosure standards, which are open for consultation now”, -said Ravi Abeywardana, Technical Director of the IFRS Foundation. Once the board has reviewed the feedback it receives, it will look to finalise sustainability disclosure standards as a mandatory part of the financial reporting of companies. Moreover, Mr. Abeywardana noted that the ISSB will consolidate SASB, as part of the consolidation of the Value Reporting Foundation, at the end of June. “SASB standards formed the basis of the industry specific disclosure requirements within the draft standards, and as such are good starting place for companies looking to disclose sustainability relate information to investors. For companies looking to disclose information for broader stakeholders than investors, the GRI standards remain relevant.”
Within the framework of the Green Investment Principles for the Belt and Road office in Central Asia AIFC Green Finance Centre will continue the work on the development of sustainable finance market and plans to conduct a series of seminars on the implementation of mentioned reporting standards, as well as on environmental and social risks management for second-tier banks.
The general sponsor of the Astana Finance Days 2022 conference is Eurasian Resources Group (ERG).
Reference:
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.
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
