BAKU, Azerbaijan, April 22. The progress of the sustainable finance initiative strategy in Azerbaijan has been revealed for the past year.
Data obtained by Trend from the 2024 execution status of the "Financial Sector Development Strategy" released by the Central Bank of Azerbaijan (CBA) indicates that sustainable finance initiatives were executed at a rate of 76.9 percent in planned activities, while delayed actions accounted for 23.1 percent.
Key achievements in the sector include the approval of "Sustainable Finance Principles," "Guidelines for Managing Environmental Risks in Banks," and the "Green Taxonomy." Furthermore, the completion of the first joint technical assistance mission with the International Monetary Fund (IMF) to assess transition risks and align the financial sector was highlighted.
Looking forward, the necessary steps for advancing sustainable finance include supporting the government's initiatives for issuing green sovereign bonds, integrating climate and Environmental, Social, and Governance (ESG) factors into the risk management system, and establishing key criteria and ratios for disclosing climate and ESG risks to ensure market transparency and discipline. Additionally, financial institutions will be required to disclose information on these risks periodically.
Delayed actions include creating a favorable legal and regulatory environment for the development of green and sustainable financial instruments, determining criteria for disclosing climate and ESG risks, and integrating these criteria into the regulatory framework.
The Board of the Central Bank of Azerbaijan (CBA) approved the "Financial Sector Development Strategy for 2024-2026" on January 26, 2024.
The CBA's strategy encompasses the integration of ESG and sustainable finance criteria into financial services, the development of digital financial solutions, large-scale promotion of innovations in this area, and the enhancement of cybersecurity.
It reflects strategy objectives such as promoting financial inclusion, diversifying financial instruments, boosting sector efficiency, implementing corporate governance, and strengthening transparency and stability.