Sustainability has rapidly gained prominence in the global financial sector, and the markets of the South Caucasus and Central Asia are no exception. While the integration of Environmental, Social, and Governance (ESG) principles remains relatively new for some jurisdictions, momentum is building, albeit at different paces.
This analysis examines the regulatory approaches of Armenia, Georgia, Kyrgyz Republic, Mongolia, Tajikistan, and Uzbekistan, comparing progress against five key pillars: regulatory reporting, risk management, sustainable finance instruments, transparency, and supervisory practices. The goal is to highlight achievements, assess readiness, and identify opportunities for alignment with global ESG standards.
The Central Bank of Armenia (CBA) has in recent years taken a strategic and consistent approach to embedding ESG principles into the national financial system. In 2023, the CBA introduced the National Sustainable Finance Roadmap — a milestone document that sets out clear steps for integrating climate, environmental, and social risk considerations into financial market governance, risk management, and reporting practices. The roadmap not only outlines the long-term vision but also emphasizes a phased, proportionate approach to regulation in line with international best practices.
One of the most significant advances is the creation of Armenia’s Green Taxonomy — a classification system defining which economic activities can be considered environmentally sustainable. This taxonomy was developed alongside the Sustainable Finance Reporting Framework and is intended to serve as a cornerstone for consistent, comparable ESG disclosures. Both instruments reflect methodologies and principles of the European Banking Authority, ensuring future compatibility with global frameworks such as IFRS S2 and Basel Committee guidance.
Armenia’s progress has been shaped by active international cooperation to develop supervisory tools, capacity-building programs, and training resources. This collaboration has accelerated the adoption of ESG concepts among local banks and enhanced their ability to align with emerging regulatory requirements.
Market engagement is also increasing. Several Armenian banks have already begun voluntary ESG disclosures, setting a precedent for the sector. High-profile events such as the one co-organized by the CBA and Grant Thornton Armenia — have brought together regulators, financial institutions, and experts to discuss sustainability priorities and share best practices.
The importance of this agenda is reinforced by the World Bank’s Country Climate and Development Report, which highlights Armenia’s vulnerability to climate risks, particularly in agriculture, water resources, and infrastructure. These findings underline the urgency for climate-aligned financial regulation and the pivotal role of the banking sector in financing adaptation and resilience.
Georgia has positioned itself as a regional leader. The National Bank of Georgia (NBG) launched its first Sustainable Finance Roadmap in 2019, followed by a second phase running to 2028. In 2020, Georgia became the first in the region to mandate ESG reporting for commercial banks, requiring annual standardized disclosures published under Pillar 3.
Complementary tools include a Sustainable Finance Taxonomy, ESG Guidelines, and a Financed Emissions calculator. The Corporate Governance Code was updated in 2018 and 2021 to embed ESG responsibilities at the board level.
Georgia has also made strides in sustainable finance products: sovereign green bonds, sustainability-linked loans, and growing green loan portfolios, now valued at GEL 1.4 billion. Partnerships with the EBRD, IFC, and others have strengthened implementation, while annual Sustainable Finance Forums foster multi-stakeholder dialogue.
The Kyrgyz Republic has recently formalized its ESG agenda. In December 2024, the National Bank of the Kyrgyz Republic (NBKR) approved a Roadmap for Sustainable Finance and ESG Implementation (2024–2026). It sets out phased actions, including the adoption of IFRS S1/S2 standards, ESG project verification, and regulatory updates.
In April 2025, the Ministry of Economy and Commerce approved a Green Taxonomy Sustainable Finance Framework, aligned with UN SDGs and aiming for carbon neutrality by 2050. The framework is in pilot phase until 2028.
External partners remain central: IFC, AIFC, and UNDP have supported ESG adoption, while German Sparkassenstiftung and GIZ organized seminars on ESG risk management. The private sector has also been active—Dos Credo Bank published the country’s first sustainability report in 2023, issued green bonds, and launched a green loan program.
Mongolia has been a pioneer in sustainable finance among its peers. The Sustainable Finance Initiative (SFI), launched in 2013 with the Mongolian Bankers Association, the Ministry of Environment, and IFC, introduced voluntary ESG principles for banks. Since then, most major banks have integrated social and environmental risk screening into lending practices.
A Green Taxonomy, adopted in 2020, defines sustainable sectors and activities and serves as a reference for loans and investments, though adoption remains voluntary. In 2023, Mongolia issued its first sovereign green bond to finance resilience and climate projects.
The Bank of Mongolia has promoted ESG through capacity-building and supervisory pilots, though binding disclosure requirements have yet to be enforced. The Mongolian Stock Exchange encourages listed companies to improve ESG transparency. Strong multi-stakeholder consultations—supported by UNDP and the Global Green Growth Institute—have enhanced inclusivity and policy coherence.
Tajikistan has recently entered the ESG arena. The National Bank of Tajikistan (NBT) joined the Sustainable Banking and Finance Network in 2023 and the NGFS in 2024, signaling growing global engagement. The Green Economy Strategy 2023–2037 provides the national framework for sustainability.
Early steps include drafting ESG disclosure standards with ADB and IFC support and encouraging banks to pilot green financial products. In 2024, Eskhata Bank issued Tajikistan’s first green bond, while other institutions have launched renewable energy loans and climate-smart MSME financing. ESG reporting, however, remains voluntary and unstandardized, with capacity-building programs carrying much of the weight.
Uzbekistan’s regulatory landscape remains at an early stage, with no binding ESG reporting requirements. The Green Economy Transition Strategy 2030 (adopted in 2021) sets a national vision for climate-aligned development, but practical guidelines for financial institutions are still being designed.
Capacity-building and pilot projects, supported by the ADB and other partners, have introduced ESG principles to banks, though uptake is largely voluntary. The issuance of Uzbekistan’s first sovereign green bond in 2023 marks a symbolic step toward market development. The Uzbekistan Stock Exchange and State Committee on Ecology are considering green financial instruments, but the central bank’s role in ESG supervision remains limited.
Across the CIS region, sustainable finance regulation shows clear divergence in maturity.
Despite uneven progress, a regional pattern is emerging: gradual adoption of taxonomies, pilot ESG reporting, and the testing of green bonds. These steps highlight a shared commitment to aligning with global standards such as IFRS S1/S2, EU taxonomy principles, and NGFS guidelines.
The next challenge lies in scaling from pilots to enforcement—making ESG requirements binding, building data infrastructure, and equipping supervisory bodies with the skills and tools for effective oversight. Regional cooperation, peer learning, and sustained technical assistance will be crucial in accelerating this transition.
