ESG And Sustainable Development Of The Oil And Gas
Transition to the Green Growth Model Will Provide Additional 3 Percent GDPv
The ESG agenda has become one of the key tasks at the global level. Countries strive to reduce the negative impact of their industrial economies on the environment and adapt production to green growth as much as possible. Goals are defined, and commitments are made to reduce greenhouse gas emissions. Kazakhstan has also joined this initiative. The Astana Finance Days international conference, dedicated to sustainable development, social responsibility, and growth, was held in Astana last year.
The application by organizations, enterprises, and companies in their activities of ESG principles – respect for the environment and people – is becoming a global trend. According to experts, enterprises that do not follow them will lose their market position in the long term.
Kazakhstan also started the transition to a low-carbon model of development, launching the transformation of the domestic economy. The pool of tasks is quite broad: it is necessary to attract investments and new technologies, modernize existing enterprises, create new production facilities, train specialists and update legislation.
Analysts at FinReview.info determined if Kazakhstan would attain carbon neutrality by 2060, how ESG principles are implemented in the country, and what impact they have on the economy.
Over 120 trillion USD in assets are held by corporations that support ESG principles
As known, the ESG acronym stands for environmental, social, and governance. In a broad sense, the qualitative improvement of these three components ensures the achievement of the sustainable development goals defined in the UN agenda and aimed at improving the population's well-being and protecting the planet. In other words, these are standards that minimize environmental, social, and corporate risks.
Now more and more investors are choosing to favor companies that comply with these principles. And this tendency is fairly objective because ESG compliance decreases the impact of risks and, as a result, has a beneficial influence on strengthening the company's overall activities.
Investments in ecology, sustainable development, alternative energy, and social projects are becoming one of the key and sustainable trends. The global assets of companies that support and implement ESG principles now exceed 120 trillion USD. They have grown five times in the last ten years. Therefore, it is evident that companies that ignore this trend will remain without funding.
Kazakhstan is at the initial stage of the ESG agenda
The ESG agenda is gradually becoming a strategic basis in Kazakhstan's economic policy. The country was the first in the Central Asian region to create an organizational and legal basis for the transition to green growth by adopting several legislative documents, strategies, and programs. For example, the criteria of green financing and its components – bonds, loans, and other financial instruments – were established at the legislative level in the new Environmental Code, which came into effect on July 1, 2021.
This initiative has strengthened the market's liquidity and has become one of the impulses of the inflow of investments into the country. Thus, the successful placement of green bonds of Samruk-Energy JSC took place on Astana International Exchange, the stock exchange of the Astana International Financial Centre. A public offering raised 18.4 billion KZT for the company
In addition to various documents, agreements, declarations, and financial instruments, ESG principles are already being implemented in production. For example, work on modernizing Almaty's A. Zhakutov CHP-2 Power Plant began at the end of 2021, with the goal of transitioning to ecologically friendly gas. After the launch of gas installations, dangerous substance emissions from the station will fall from 50.4 thous. to 6.7 thous. tons per year by 2026, enhancing the environment in the country's largest metropolis. This is one of the systemic state decisions on the green agenda's execution.
Nevertheless, Kazakhstan is still at the initial stage of ESG development. The country will face significant changes and reforms to achieve a zero-emissions balance.