KYRGYZSTAN’S BANKING SECTOR TAKES STEPS TO ALIGN WITH PARIS AGREEMENT
Bishkek, Kyrgyzstan - A Move Towards Sustainable Banking
In a significant effort to attract international financing and reduce greenhouse gas emissions, Kyrgyzstan’s banking sector is enhancing its compliance programs to align with the Paris Agreement. This move aims to limit global warming to well below 2 degrees Celsius above pre-industrial levels and pursue efforts to limit it to 1.5 degrees Celsius.
Aligning with International Standards
As of July 1, 2023, all World Bank operations have been aligned with the Paris Agreement. Other multilateral development banks (MDBs) have followed suit, prioritizing low-carbon and climate-resilient financing. This means that Kyrgyzstan’s financial sector must meet the country’s reduction targets submitted to the Paris Agreement in 2021 to access external financing, including concessional funding from MDBs.
National Bank of Kyrgyz Republic Issues ESG Guidelines
To achieve this goal, the National Bank of Kyrgyz Republic has issued Environmental, Social, and Governance (ESG) Guidelines for the banking sector. The guidelines specify minimum standards that banks must meet to manage ESG risks within the current prudential framework and provide recommendations on integrating ESG into:
- Business planning
- Organizational structures
- Internal governance
- Risk-management frameworks
Boosting Climate Adaptation and Resilience
The adoption of these guidelines is expected to boost climate adaptation and resilience in Kyrgyzstan’s financial sector. While the country’s greenhouse gas emissions are relatively low compared to other nations, domestic factors such as coal usage for heating contribute to poor air quality in Bishkek.
Benefits of ESG Guidelines
By adopting these guidelines, banks can better manage the risks associated with climate change and ensure a sustainable future for their business operations. The National Bank of Kyrgyz Republic is committed to promoting environmentally friendly practices in the banking sector.
Positive Impact on Kyrgyzstan’s Financial Sector
The guidelines are set to have a positive impact on Kyrgyzstan’s financial sector, enabling it to effectively manage climate-related risks and maintain its competitiveness in the international market.