Kazakh sustainable investing expert advocates for business-led societal change

ASTANA – Businesses are key to greater societal change, a young Kazakh expert drawing on environmental, social and governance (ESG) factors in investment analysis and decision-making says.

Yelena Novikova. Photo credit: Andrey Lunin.

Yelena Novikova’s article on pension funds appeared in the September edition of “Global Solutions Journal,” along with contributors German Chancellor Angela Merkel and American economist and 2006 Nobel Laureate Edmund Phelps. Meeting Merkel as a 2017 and 2018 G20 Young Global Changer made Novikova even more determined to live a life of impact.

“Businesses are at the heart of our societies,” she said on the importance of firms’ ESG performance in an exclusive interview for this story. “The default setting for businesses and investing communities was to essentially be a part of the problem… With some companies being bigger in terms of revenue than some countries in terms of gross domestic product, we simply cannot navigate the maze of societal progress the way we used to. Plus, they have ethical, reputational and, importantly, financial incentives to join the challenge.”

“It is helpful to think of Sustainable Development Goals (SDGs) and ESG as two different frameworks that tell the same story,” she added. “ESG is essentially an SDG story told through the eyes of professionals in sustainable investing.”

Kazakhstan’s major sustainability initiatives are the energy-themed EXPO 2017, National Concept for Transition to a Green Economy until 2050 and green finance under the Astana International Financial Centre (AIFC) and Novikova makes a case for grassroots action in support of these initiatives.

“I strongly believe that if we are ever to fully achieve these [SDG] goals, leadership on these issues needs to come from everywhere, not just from the executive branch,” she said. “Remember that old tale of the National Aeronautics and Space Administration (NASA) janitor who described his job as helping to put a man on the moon? We need more of those people who pioneer SDGs while doing what they have always been doing.”

Kazakhstan’s first foray in ESG investment includes the AIFC and European Bank for Reconstruction and Development’s conceptualisation and development of Kazakhstan’s Green Financial System and the Kazakhstan Stock Exchange’s publication on ESG reporting methodology. Novikova sees a shift away from ad-hoc corporate social responsibility campaigns and encourages greater integration of sustainability practices in Kazakh companies’ corporate strategies.

“When we hear about companies joining to become a part of the solution in Kazakhstan, the focus tends to be on the responsibility of the business, rather than the opportunity that it might bring,” she said on why Kazakh firms should continue on this path. “For example, companies that have a better ESG performance tend to enjoy a lower cost of capital. This, in turn, can make them more competitive.”

“We need to continue improving the quality of corporate non-financial disclosures by Kazakhstan’s companies… Just like in any other country, the quality of ESG investment analysis can only be as good as the ESG data that is available out there… Thirdly, while any of the developments that take place within the AIFC setting are welcome, we cannot focus exclusively on the AIFC,” she added, pointing to the need for ESG integration in the Single Accumulative Pension Fund.

Novikova’s insights on SDGs and ESG investing may be followed on Twitter (@NovikovaYelena) and her research on the sharing economy within the post-Soviet context will be published in the upcoming issue of “Central Asia Business Journal.”