The Bank has approved the Environmental and Social Risk (ESR) Management Policy, which forms a system for identifying, assessing, managing, and monitoring risks in lending activities, ensuring process transparency and efficiency. The purpose of the policy is to build an effective ESR management system in lending, minimize negative impacts on the mortgage portfolio, take into account sustainable development principles, and ensure compliance with the legislation of the Republic of Kazakhstan and international standards.

ESR management is based on the principles of sustainable development, precaution, transparency, responsibility, and proportionality. The process includes identifying potential risks, assessing their impact on loan programs, developing and implementing corrective measures (including special conditions for energy-efficient properties and socially significant borrowers), as well as monitoring compliance with Policy requirements and controlling the portfolio.

ESR management functions are distributed among the key bodies and units of the Bank. The Board of Directors approves the Policy and the sustainable development strategy and monitors the disclosure of sustainability information. Committees under the Board of Directors pre-approve the strategy and the Policy, while the Management Board implements the Policy and generates reporting. The risk management unit develops the ESR assessment methodology and conducts monitoring, and the sustainable development unit formulates the risk mitigation strategy, trains personnel, and interacts with external organizations. Such a structure ensures risk mitigation, increases the sustainability of the loan portfolio, and strengthens the trust of clients, investors, and society.

The Bank has approved the Methodology for Assessing the Compliance of New Loan Programs with Sustainable Development Principles, the criteria of which are used to determine loan programs that can subsequently be approved for financing through the attraction of social and green loans and/or the issuance of social and green bonds.

In accordance with the Methodology, the selection criteria for such ESG projects are determined based on the social and environmental goals and characteristics of international and national standards and practices.

In the selection process for such ESG projects, the Bank strives to ensure that these loan programs:

1) are of a socially and environmentally sustainable nature (ESG-oriented);

2) ensure respect for the rights of employees and the local population affected by the loan programs;

3) are developed and executed in accordance with applicable regulatory requirements and international best practices.

The list of the Bank's loan programs that comply with sustainable development principles has been compiled and published on the official website of the Bank (hcsbk.kz) under the "Sustainable Development" / "Reporting" section.