Opportunities in the Eastern Europe and Central Asia Region for green and sustainable investment

The UK is a global financial hub and a leading player in green finance. For centuries it has been the premier capital-raising location for many international businesses and start-ups. Organisations and businesses can unlock funding for green projects to achieve sustainable growth, a low carbon future and amplify global efforts.

As a result, the UK’s financial sector has issued more than ￡20bn worth of green bonds over the past decade. This, in no small part, has helped to kick-start a green industrial revolution in the UK, which has been strongly supported by the UK Government.

The UK Government supported the development of a strong green finance ecosystem by issuing the first sovereign green bond in 2021, also known as ‘green gilt’. The issuance amassed a total of ￡16bn and the proceeds are used to fund projects with low-carbon and energy transition potential.

One region that has identified its challenges in the sustainability agenda is Eastern Europe and Central Asia (EECAN). The region is abundant in natural resources and human capital, but it is a few steps behind more developed economies in terms of net-zero transition and climate change adaptation efforts.

However, national governments are now reconfiguring their policies to build climate resilient economies in response to the common global warming threat. Stakeholders both in private and public sectors in EECAN are generating a lot of traction in Environment, Social and Governance (ESG) domain. With support from international institutions, EECAN businesses and governments have developed a need for expertise in developing ESG-driven strategies and policies. UK companies stand in good stead and have the offer to match the regional needs in EECAN.

What are the market opportunities in EECAN?

Turkey

The Turkish Government has made green finance its strategic priority and national policymakers have engaged with the UK on this topic extensively. We successfully hosted a UK- Türkiye Green Finance Conference earlier this year in London and examples of green projects Turkey can be found here .

International financial institutions provide large financial backing to Turkey, especially around green economy projects. European Bank for Reconstruction and Development (EBRD) holds a considerable portfolio of investments in Turkey and in 2021, the bank’s total investments in green and inclusive economy amounted to nearly €2bn.

This is only a fraction of what Turkey needs to adapt to climate change. A study by the International Finance Corporation (IFC) identified a $270bn climate-smart investment potential in Turkey.

These figures accurately reflect the global investors’ assessment of Turkey’s potential as a market with right attributes to accumulate sustainable investments in that jurisdiction.

Kazakhstan

The UK Government collaborated with the Kazakh Government develop a green taxonomy, which puts the local economy in a good place in terms of attracting sustainable investments.

This effort is also strongly supported by the Astana International Financial Centre - a fantastic gateway to the region, which also operates under English common law.

Energy transition is very high on the agenda. Expertise is required to help the country to transition from traditional energy sources to renewables. For example, Svevind is going to develop a wind and solar mega-project with a total capacity of 45GW energy generated in 8-10 years. It will also have a green hydrogen production potential of 3m tonnes a year - making it the world’s largest green hydrogen project. This is an example of why the DIT team in Kazakhstan are ready to unlock similar opportunities.

Uzbekistan

Uzbekistan is undergoing a rapid market liberalisation and the country’s largest state-owned enterprises will be offered to institutional investors.

With the economy undergoing rapid reforms, a lot of interest has emerged around green finance and the Uzbek Government is keen to partner with the UK. We can see how the UK can help propel Uzbekistan’s booming market economy to further double-digit economic growth.

Uzbekistan recently signed up to the UK’s Generalised System of Preferences (GSP) Enhanced Framework which should boost bilateral trade and pave the way for further cooperation on greening our economies. We expect more Uzbek goods to be traded with the UK in line with international recognised environmental and social standards and best practices.

For more information, my team in EECAN can introduce you the right projects, contact Rassul.