Kazakhstan: Building the Foundations for Sustainable Finance
Kazakhstan has developed a comprehensive regulatory framework to support sustainable finance, ESG disclosure, and sustainable capital market development. To mobilize private investment for its climate and sustainable development objectives, the country introduced coordinated reforms covering taxonomy development, ESG disclosure, environmental and social risk management, and sustainable bond market regulation.
The Challenge
Kazakhstan’s transition toward a lower-carbon economy requires substantial investment in environmentally sustainable projects and infrastructure. Following its ratification of the Paris Agreement and adoption of the Strategy for Achieving Carbon Neutrality by 2060, the country faced the challenge of mobilizing private capital while creating a credible and transparent sustainable finance market.
Financial institutions lacked common definitions of green activities, consistent ESG disclosure practices, and guidance on managing environmental and social risks, while investors faced limited transparency and comparability of sustainability-related information. Without a coordinated framework, sustainable finance products remained limited, and market participants faced uncertainty regarding project eligibility, reporting expectations, and investor requirements.
Strategic Approach
Kazakhstan adopted a coordinated approach to sustainable finance market development built around three pillars: taxonomy development, ESG disclosure, and environmental and social risk management.
The first pillar focused on establishing a common classification framework. In 2021, Kazakhstan's Environmental Code introduced the Green Taxonomy and established the regulatory foundations for green finance by defining eligible green activities and strengthening disclosure and issuance requirements for ESG and green bonds.
The second pillar focused on improving transparency and market confidence. In 2023, the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market (ARDFM) introduced ESG Disclosure Guidelines and subsequently established mandatory sustainable development disclosure requirements for banks beginning in 2025.
The third pillar focused on strengthening risk management practices. In 2024, ARDFM introduced Environmental and Social Risk Management (ESRM) Guidelines to support the integration of environmental and social risks into financing decisions and internal governance processes.
Complementing these regulatory reforms, the Kazakhstan Stock Exchange (KASE) supported sustainable bond issuance through a dedicated ESG bond sector, preferential listing conditions, and advisory support for issuers. Together, these reforms created a coherent framework for sustainable finance by establishing common definitions, improving transparency, strengthening risk management practices, and supporting the growth of sustainable finance instruments.
Outcomes and Impact
Kazakhstan's coordinated reforms across taxonomy development, disclosure, risk management, and capital market infrastructure contributed to the growth of the country's sustainable finance market. By May 2025, Kazakhstan's ESG bond market had grown to 44 issuances with a cumulative issuance volume of approximately USD 2.3 billion across KASE and the Astana International Exchange (AIX).
As of 2024, 20 financial institutions, including 14 banks, had integrated ESG principles into their operations. In addition, 79 listed companies were disclosing ESG information, indicating broader adoption of sustainability-related reporting practices across the market.
Lessons Learned
Kazakhstan’s experience demonstrates that sustainable finance market development requires more than the introduction of individual financial products. Sustainable finance markets are more likely to grow when taxonomies, disclosure frameworks, risk management requirements, and capital market infrastructure are developed as part of a coherent and mutually reinforcing framework.
By combining regulatory reforms with market-based initiatives, Kazakhstan established common definitions, improved transparency, and strengthened risk management practices across the financial sector. This integrated approach helped support the growth of sustainable finance instruments and create conditions for mobilizing private capital toward climate and sustainable development objectives.
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