BAKU, Azerbaijan, June 16. Sustainable finance is one of the key elements of the strategic framework of the Central Bank of Azerbaijan, said Rustam Tahirov, Director of the Sustainable Development of the Financial Sector Department at the Central Bank, Trend's correspondent reports from the event.
Tahirov made the remark during the 14th Private Sector Forum of the Islamic Development Bank Group.
According to him, Azerbaijan's high exposure to climate and environmental risks, including both transition and physical risks, makes sustainable finance a crucial focus area for the regulator.
"These risks impact the mandate of the Central Bank, particularly financial stability and the resilience of financial institutions. Therefore, sustainable finance has been integrated into the strategic framework of the Central Bank," Tahirov said.
He noted that the Central Bank of Azerbaijan has approved a roadmap for sustainable finance, implemented a green taxonomy, and introduced regulatory requirements for managing climate and environmental risks in the banking sector.
"In addition, disclosure and reporting requirements have been introduced. The green taxonomy serves as a strategic tool for both the state and the private sector. The taxonomy allows funds to be directed into priority areas and supports the decarbonization of the economy," he stated, adding that, according to World Bank estimates, the country will require approximately 2.3% of its GDP annually to achieve carbon neutrality.
According to him, for the private sector, the taxonomy creates opportunities to attract and diversify financing, as well as to develop green financial instruments.
He specifically noted that the taxonomy enhances market transparency and defines the criteria for which projects are classified as green, transitional, or ineligible.
"Projects must align with environmental objectives, technical criteria, the 'do no significant harm' principle, as well as minimum social standards," Tahirov noted.
He added that the Central Bank is implementing regulations for green and sustainable loans and is considering expanding the range of instruments to include green, social, and sustainable bonds, as well as blue bonds (a type of sustainable bond where proceeds are directed toward projects related to water resources and the ocean economy).
Tahirov also recalled that following COP29 in Azerbaijan, the country's banking sector committed 2 billion manats ($1.7 billion) toward sustainable financing.
"Banks have already begun financing projects in renewable energy, energy efficiency, sustainable agriculture, and water resource management," he stated.
