

The Central Bank of Armenia has published "National Sustainable Finance Roadmap of Armenia", which estimates how the financial system of Armenia should face climate risks.
"Climate change is already affecting Armenia: higher than average annual increase in global temperature and a significant decrease in precipitation have already recorded. Climate-related risks can affect the real and financial sectors of the economy through microeconomic or macroeconomic transmission channels," the document states. Climate risks are divided into physical and transition risks.
Physical risks include forest fires, heat stress, hurricanes, floods, droughts, sea level rise, and precipitation variability.
Transitional risks are as follows: politics, technology change, investor preference, consumer preference.
According to the analysis carried out in 2023, loans to climate-vulnerable sectors make up about 29 percent of the banking system's loan portfolio. Another 19 percent are mortgage loans, the underlying assets of which are buildings or apartments, which may be subject to physical risks.
The Sustainable Finance Roadmap consists of 4 key pillars, which are:
Facilitate the flow of capital to industries and activities aligned with low-carbon ambitions of Armenia in a risk-based, market-oriented and sustainable manner.
Enhance knowledge transfer, reduce information asymmetries, instill market confidence, and strengthen the enabling environment for sustainable finance.
Guide financial market participants in embedding ESG principles in their business decisions.
Raise awareness of sustainability risks and opportunities in Armenia and build capacity within the CBA and among financial market participants.
In collaboration with the relevant stakeholders the CBA will implement the completed action plan based on these pillars.
The road map of sustainable financing was developed by the Central Bank of Armenia as a member of the Sustainable Banking and Financial Platform of the International Financial Corporation.
October 16, 2023 at 16:23