The integration of Environmental, Social, and Governance (ESG) and climate risks into Azerbaijan's prudential framework will be completed by the end of 2026, according to Shahin Mahmudzada, Executive Director of the Central Bank of Azerbaijan (CBA).
Report quotes him as saying at the 8th SDG Dialogue: Innovative Financing for Sustainable Development Beyond Aid and Traditional Official Development Assistance (ODA) event in Baku within the framework of the Islamic Development Bank (IsDB) Group's 51st Annual Meeting, that the CBA has introduced guidelines based on ESG principles to manage climate risks.
"This approach requires financial institutions to integrate ESG criteria into their strategies and governance frameworks. Amendments made to the prudential regulation framework in April further strengthened ESG and green finance components. Corporate governance requirements have also been improved to integrate ESG principles and disclosure obligations. It is expected that by year-end, macroprudential tools will be developed to incorporate climate-related risks into capital planning. This step is crucial for alignment with updated Basel standards. In addition, the integration of transition risks into the stress-testing framework will also be completed by year-end," he emphasized.