Kazakhstan regulator to carry out climate risk stress testing for banks in 2024

ASTANA. Nov 16 (Interfax) - Kazakhstan's Agency for Regulation and Development of the Financial Market plans to assess the potential risks posed by climate change to the economy and financial stability in 2024.

"The agency will incorporate procedures for stress testing climate risks within its supervisory practices in 2024. This will involve evaluating the potential economic and financial stability risks associated with climate change in Kazakhstan," the regulator said in a statement.

The financial market regulation in Kazakhstan will incorporate Environmental, Social, and Governance principles to encourage financial institutions to prioritize sustainable development and reallocate resources towards sustainable projects.

"The adoption of ESG principles is expected to enhance Kazakhstan's investment appeal and promote greater social and environmental responsibility among companies operating in the country," the regulator said.

The Agency has already developed and approved guidelines for ESG information disclosure for banks and other financial organizations. Additional guidelines will be developed, covering the management of environmental and social risks in financial organizations, calculation of greenhouse gas emissions for financial institutions, and assessment of the carbon footprint of banks' loan portfolios.