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A national standard on Environmental, Social, and Corporate Governance (ESG) has been adopted 04.11.24

A briefing on the content of national standard for ESG and its benefits for businesses was held.

A briefing on the newly adopted national standard for Environmental, Social, and Corporate Governance (ESG) was held at the "Baku SMB House," organized by the Small and Medium Business Development Agency (KOBİA).

Ilham Bayramov, the Director General of the Azerbaijan Standardization Institute (AZ STANDART, operating under the State Service for Antimonopoly and Consumer Market Control, and Natig Hasanov, the First Deputy Chairman of the Management Board of KOBİA, provided detailed information to media representatives on the content of the national standard for ESG and its benefits for business. It was noted that the national standard for ESG was developed at the initiative of KOBİA based on the recommendations of the International Organization for Standardization (ISO) and was recently adopted by the Azerbaijan Standardization Institute. The state standard "AZS IWA 48:2024 "Framework for the application of environmental, social and corporate management (ESG) principles" is considered one of the first practices adopted in this field.

By applying ESG principles in enterprises and organizations, the new state standard provides a framework to support sustainable development in the modern business environment and to promote social responsibility. The purpose of the standard which was developed on the basis of international practice, is to assist enterprises and organizations in forming and applying ESG strategies. The application of this standard will not only promote sustainable development in both the public and private sectors, but also lead to improve customer satisfaction, to reduce risks, and to enhance social responsibility. The adoption of the standard is voluntary.

Adherence to ESG principles enables businesses to optimize processes, to reduce production costs, to enhance competitiveness, to increase export potential, and, notably, to attract foreign investments. Investors prefer the application of ESG principles when making investment decisions. In this regard, the standard will serve as a roadmap for businesses, providing guidance on applying ESG principles within their processes and outlining the steps needed for effective application. The briefing also provided information on the work carried out regarding the application of ESG principles in Azerbaijan. It was stated that, to expand ESG promotion in the country, unite public and private sector efforts, and develop a cohesive approach, an ESG subgroup was established in 2022 within the “Corporate Governance, Investments, and Corporate Social Responsibility” working group for Commission on Business Environment and International Rankings.The subgroup is led by KOBİA. It includes representatives from nearly 30 enterprises and organizations from the public, private, and civil sectors. In the past period, a Strategic Vision document for the medium term has been developed in our country to ensure systematic activities in the field of ESG, and roadmaps for promoting and incentivizing the application of ESG principles have been approved.

Within the framework of these roadmaps, the current status in the ESG field in the country has been analyzed, surveys have been conducted, and international best practices have been studied. In addition, the normative legal frameworks related to the individual elements of ESG, as well as the existing and newly applied norms and regulations have been reviewed. It was emphasized that declaring 2024 as the "Year of Solidarity for a Green World" in Azerbaijan, along with the upcoming hosting the prestigious COP29 event in our country, will significantly boost impetus for the expansion of the application of ESG principles in Azerbaijan through the newly adopted state standard.

Subsequently, the questions from the mass media were addressed.