Ayan Bektybaeva of KazakhExport: ESG is a quality standard
ESG principles are gaining traction among Kazakhstani companies, yet there remains room for improvement as some companies still lag behind. This observation was drawn by analysts from Kursiv Research in their second study of corporate ESG practices conducted in August 2023.
In essence, ESG practices include respect for the environment, the creation of favorable working conditions, and maintaining proper corporate governance.
ESG compliance isn't merely a global phenomenon; it often serves as a prerequisite for foreign companies seeking potential partnerships. For instance, in July 2023, the Council of the Agro-Industrial Complex of the Atameken Chamber of Entrepreneurs in the Aktobe region, KazakhExport EIC (a subsidiary of Baiterek Holding), and Qaztrade JSC convened with representatives from the Slovenian EcoSynergy System program. The Slovenian counterparts expressed interest in importing food products from Kazakhstan but stressed the importance of using packaging crafted from recycled materials.
Ayan Bektybaeva, Deputy Chairman of the Board of KazakhExport Export Insurance Company, delved into the significance of ESG implementation for Kazakhstani companies.
– Could you please elaborate on whether ESG principles are integrated into KazakhExport's current and future operations? How does the company plan to evolve?
– ESG standards have been foundational to our development strategy from the outset. We aim at increasing non-resource exports and reducing dependency on hydrocarbon exports. The growth of manufacturing enterprises contributes to job creation and enhanced budgetary contributions. We intend to pursue these objectives through environmentally sustainable means.
Our development plan for 2024-2033 emphasizes our commitment to sustainability, with a focus on supporting various ESG projects and companies dedicated to decarbonization and combating climate change.
In addition, KazakhExport plans to embed ESG principles into its business processes.
We encourage exporters to adopt the best available techniques to minimize the environmental impact of their economic activities. Furthermore, we offer incentives for enterprises already implementing sustainable growth principles. Those actively promoting environmental stewardship and carbon neutrality are eligible for reduced insurance tariffs. These initiatives not only provide economic benefits but also help in reducing energy and raw material costs, enhancing productivity, and improving product quality.
– Implementing ESG practices is crucial for Western companies. Do you believe that Kazakhstani exporters may encounter difficulties in finding partners in the West if their operations do not adhere to ESG principles?
– Certainly. However, it's essential to recognize that ESG requirements extend beyond the individual supplier to encompass the entire supply chain. For instance, a European company seeking a certain ESG rating will scrutinize whether ESG principles are upheld throughout the entire chain when considering purchases from Kazakhstani exporters.
Any business engaged in international trade will increasingly confront this reality. Failure to meet these requirements may render exporters unable to collaborate with foreign partners.
– How are ESG practices monitored and enforced?
– Primarily through a rating system. While obtaining a rating is not obligatory, interested partners may request specific documentation if a rating is not available. For instance, companies may need to demonstrate the environmental impact of their operations, such as detailing their fuel usage. Even if a company relies on coal but tries to mitigate emissions, it may still be acceptable.
Though it may seem distant and abstract, environmental stewardship and fostering favorable working conditions have always been, and will continue to be, core principles of any business. This isn't anything new. Rather, these principles are now official and come with certain conditions, which may yield financial benefits in the future.
– How long have businesses worldwide embraced this philosophy, considering each company has its own vision? Are there specific requirements? Is there an international organization overseeing this?
– There are specific challenges in this sphere. As mentioned, there are various ESG ratings with different assessment methodologies, and a unified international standard has yet to emerge. It happened due to the varied valuation of industries. For instance, the financial sector and manufacturing may have different requirements.
I don't anticipate a universal standard emerging in the near future. Instead, it's more likely that each industry will undergo assessment tailored to its unique characteristics.
Regarding our involvement, KazakhExport recently joined the Net Zero Export Credit Agencies Alliance (NZECA) as an affiliated member in early December 2023. This alliance aims to unite leading export credit institutions committed to climate change mitigation goals, thereby facilitating the transition to a low-carbon economy. The NZECA will be overseen by a secretariat comprising prominent figures from export-import banks and export credit agencies, working closely with the Berne Union to shape climate policy.
– Does joining the Alliance compel Kazakhstani exporters to only collaborate with companies adhering to ESG principles?
– No, joining the Alliance doesn't impose any obligations. However, domestic suppliers will need to meet consumer demands to navigate foreign markets successfully.
It's worth noting that Kazakhstan is progressing towards sustainable development. The country has committed to the Paris Climate Agreement and the UN Sustainable Development Goals.
In line with its Paris Agreement commitments, Kazakhstan approved a strategy for achieving carbon neutrality by 2060 through a presidential decree issued on February 2, 2023. This strategy emphasizes aligning the Kazakh economy with global climate trends, including the promotion of ESG principles, fostering 'green' investments, encouraging energy-efficient production, electrification, and other initiatives.
Source: kz.kursiv.media
