Baku: The Central Bank of Azerbaijan has announced its plans to introduce new macroprudential tools aimed at enhancing the management of ESG (environmental, social, and governance) risks within the financial system by the end of the year. This strategic initiative was revealed by Shahin Mahmudzade, Director of the Central Bank of Azerbaijan, during the '8th SDG Dialogue: Innovative Financing for Sustainable Development - Beyond Aid and Traditional Official Development Assistance (ODA)' session held as part of the Islamic Development Bank Annual Meetings in Baku.

According to Azeri-Press news agency, Mahmudzade emphasized that the forthcoming tools are designed to integrate ESG risks into capital planning processes, thereby aligning with international regulatory benchmarks such as the updated Basel principles. The initiative underscores the bank's commitment to adopting global standards in financial risk management and sustainability.

Furthermore, Mahmudzade highlighted that transition risks will also be incorporated into the stress testing framework by the end of the year. This move is expected to fortify the resilience of Azerbaijan's financial system against evolving environmental and governance challenges.