Climate Change Management: Enhancing Corporate Governance and Strategy

Otbasy Bank JSC views climate-related risk management as a key component of its sustainable development strategy, which is implemented with the active involvement of its corporate governance bodies. In 2023, in order to institutionalize the ESG agenda, the Bank adopted a Sustainable Development Policy that establishes strategic principles for managing environmental impact, social responsibility, and climate adaptation. According to this policy, sustainable development is recognized as a core principle of corporate governance, encompassing not only strategic decision-making but also the daily operations of all employees and officials at every level.

The ESG agenda is managed within an integrated corporate governance framework. The Board of Directors oversees the implementation of the sustainable development strategy, including its climate-related components. The Management Board, in cooperation with relevant departments and specialized committees, is responsible for executing ESG initiatives, integrating them into operational processes, and ensuring compliance with internal regulatory standards and external reporting frameworks.

In 2024, the functions of the Risk Committee were expanded. In addition to its regular analysis of factors influencing the resilience of the Bank’s business model, the Committee now also supervises and preliminarily approves internal regulatory documents related to climate and ESG risks. The Committee reviews the results of climate-related risk assessments with respect to their impact on the Bank’s operations in the short-, medium-, and long-term. Climate-related risk management functions are coordinated by specialized departments under the oversight of the executive management level.

The Bank’s risk management system also incorporates reputational and ESG-related risks, which are acknowledged as critical in the context of sustainable development. These risks are managed through media monitoring, stakeholder feedback, ongoing consultations, and the evaluation of external and internal impact factors. The primary objectives are to minimize the Bank’s negative environmental impact, strengthen trust among customers and partners, and strengthen social sustainability.

The Bank’s internal documentation outlines procedures for the assessment and monitoring of ESG risks. These include the development and implementation of key risk indicators (KRIs) and key performance indicators (KPIs), procedures for managing reputational risk, and the evaluation of climate-related impacts. Looking ahead, the Bank plans to gradually integrate ESG principles into contractual relationships with suppliers and counterparties, with a focus on the sustainability and transparency of supply chains.

Special attention is given to fostering a corporate culture of sustainability, including regular employee training and the professional development of management in the areas of climate-related risk management and sustainable development. These measures ensure a holistic approach, support the formation of responsible business practices, and enable the Bank to effectively adapt to evolving regulatory and market expectations. The corporate governance system of the Bank provides for the systematic and comprehensive integration of climate and ESG risks into both strategic and operational management, enhancing the sustainability of the business model and laying the foundation for long-term development in line with international and national standards.