Given that Baku is the host city for COP29 at the end of 2024, the focus for the third consecutive Conference of the Parties (COP) under the aegis of The UN Framework Convention on Climate Change (UNFCCC) converges on Azerbaijan, the newest ICIEC accession Member Country, following in the footsteps of Sharm El Sheikh for COP27 and Dubai for COP28. In the UAE, ICIEC also launched its much-anticipated Climate Change Policy and ESG Framework. Salih Suwarelzahab, Senior Legal Counsel and Climate Action Team Lead at ICIEC, looks ahead to a post-COP28 Climate Action, Finance and Risk Management Pathway underpinned by the Corporation’s transformative results-oriented Climate Change Policy and ESG Framework, the IsDB Group synergies, the role and importance of partnerships with global best practice institutions and the private sector, and the promise and opportunities of Azerbaijan’s brave new Green Energy and Decarbonisation Strategy.
COP28 in the United Arab Emirates (UAE) represents a watershed moment in ICIEC’s history with the launch of ICIEC’s Climate Change Policy and ESG Framework. The publishing of the two key documents reflects an ongoing commitment towards mainstreaming Climate Action that began in 2021 at COP26 in Glasgow, in which Mr. Oussama Kaissi, CEO of ICIEC, participated.
Through a stepwise approach ICIEC setup a Taskforce dedicated to Climate Action and implemented the screening of Political Risk Insurance projects for Climate Risks. ICIEC staff were trained in Climate Change Fundamentals, whilst existing partnerships were steered towards addressing common objectives around sustainability and climate change, and new partnerships were forged, such as ICIEC’s membership of the InsuResilience Global Partnership for Climate and Disaster Risk Finance and Insurance Solutions in 2022.
In 2023 a total business insured target of 10% was dedicated to Climate Action and this target was reached and surpassed. In 2024 the target for total business insured for Climate Change projects and transactions was increased to 13%.
Climate Change Policy
ICIEC Climate Change Policy serves as a testament to our dedication to addressing climate change head-on. It is our blueprint for a greener, cleaner, and more sustainable world. Through this policy, we outline our commitment to reducing carbon emissions, protecting our planet’s invaluable natural resources, and promoting sustainable economic growth.
The ICIEC Climate Change Policy establishes to:
- Support Member States to meet their commitments under the Paris Agreement, particularly their Nationally Determined Contributions (NDCs).
- Promote investment and trade opportunities that support resilience, playing a pivotal role in reducing greenhouse gas emissions and enhancing adaptability to climate change.
- Be aligned with The Islamic Development Bank Group by guaranteeing projects and investments that are in line with the Group’s climate action objectives.
- Engage with Financial Institutions to promote business models and investments that are focused on renewable, energy-efficient, natural capital, among other environmental themes, aligning with the broader transition towards the low-carbon economy.
| ICIEC Climate Change Policy | |
|---|---|
| Internal Operations | Operationalization of climate change management across ICIEC internal operations focusing on decarbonization initiatives, policies, and plans to manage the organization’s own carbon footprint. |
| Insurance and Resinsurance | Opportunities for ICIEC to incentivize and contribute to scaling up climate agenda across member countries. |
| Risk Management | Approach to climate-related risks in Risk Management |
| Contribution to Capacity Building | Integration of climate change in ICIEC capacity building support and engagement with member countries. |
| Communication | Development of climate change-specific reporting at the level of the organization and its development impact intervention in member countries. |
ICIEC’s Climate Change Policy and ESG Framework mark the commencement of a transformative results-oriented process where ICIEC’s operations, insurance, de-risking, physical assets and human capital and focus are addressing the Climate Crisis at their core, based on the needs of ICIEC’s member countries, IsDB Group synergies, the role of the private sector in climate finance and industry best practice. 2024 sees the second phase of the Climate Change project which is dedicated to screening, monitoring and evaluation based on practical, achievable and industry benchmarked parameters that take all ICIEC’s business lines into account.
At the institutional level, the year 2024 will witness the responsibility for Climate Change and ESG being housed in a dedicated Function whilst capacity building continues to be offered to all operations staff who will have specific climate change specific KPI’s. Staff who are trained in climate change are naturally better equipped to proactively seek out transactions and projects that contribute towards climate change mitigation, adaptation and/or resilience. A stock take of ecological consumption versus potential savings will take place on ICIEC’s physical premises with clear environmentally friendly recommendations made and implemented, and travel mission carbon footprints will be mitigated through investment in certifiable carbon sink schemes in ICIEC member countries.
Collaboration & Smart Partnerships the Key
Collaboration and smart partnerships remain at the heart of ICIEC’s Climate Action strategy as the global climate funding gap continues to grow whilst climate disasters proliferate. Through smart partnerships, ICIEC has signed a number of MoUs with technology and industry leaders such as GE Vernova, multilateral institutions focused on designing climate-based solutions such as the Global Green Growth Institute and export credit agencies (ECA’s) whose portfolio of transactions and supported companies are predominantly renewable energy based, such as EKF of Denmark.
Closer to ICIEC Headquarters, outreach is underway with the Saudi and Middle East Green Initiatives in order to tap into the value chains of carbon sequestration and the circular economy. A methodological approach to partnerships has ICIEC member states’ National Determined Contributions and National Adaptation Plans at its core.
Due to its proximity to its member countries, ICIEC, through the Member Country Partnership Strategy of the IsDB Group, remains cognizant of the priority areas of respective member countries for climate action. This know-how is invaluable to financial institutions that have financing targets and that need ICIEC’s de-risking and insurance support to access new markets and to expand their footprint in existing ones. Furthermore, specialized companies in member countries that produce goods or services that contribute towards climate action are continuously identified with a view to assisting their activities in other ICIEC member states and beyond.
ICIEC joined ETAF, the Energy Transitional Accelerator Financing Platform, managed by IRENA, at COP28 in Dubai in recognition of the need to bring diverse, effective partners (including the private sector, multilateral lenders and renewable energy industry leaders) around the same table in order to support the rollout of renewable energy projects to the amount of US$4 billion by 2025. ICIEC, as a member of the International Union of Credit and Investment Insurers (the Berne Union), which celebrates its 90th anniversary this year, has been invited to join the Berne Union Climate Working Group and shall bring the perspective of the Economic South and 49 member countries in the search for export credit and insurance-based contributions and solutions to the climate crisis.
As a founding member of the AMAN Union of Commercial and Non-commercial Risk Insurers and Reinsurers in member countries of the Organisation of Islamic Cooperation (OIC) and the Arab League, ICIEC strives to provide climate leadership and assistance to sister ECA’s in member countries as the common challenges posed by the climate crisis invariably provide opportunities for growth in new economic sectors.
Azerbaijan’s Competitive Green Advantages
Since COP26, two COPs have fortuitously been hosted by ICIEC member countries, COP27 in Sharm El Sheikh, Egypt, whose focus was on adaptation, and COP28 in Dubai, in the UAE with COP29 being hosted by ICIEC’s newest member country Azerbaijan. Azerbaijan is one of the oldest and most pioneering oil producing countries in the world, with drilling and extraction activities dating back to at least the 1800’s.
Few countries reflect energy transition in a similar manner to Azerbaijan with a commitment to produce 30% of energy from renewables by 2030 and with the potential to be a green hydrogen hub and key supplier to the European Union, capitalizing on 23,000 MW of solar power potential, 800 MW of wind energy power, 520 MW of hydropower energy and 800 MW of geothermal energy. In a geopolitical energy ecosystem rife with uncertainty and volatility due to the conflict in Ukraine, if implemented correctly, Azerbaijan’s hydrogen potential is capable of providing the ultimate win-win scenario and playbook, clean fuel for the European Union (EU) market in line with EU pledges, legislation and taxonomies, and a new and profitable global export for Azerbaijan.
One of Azerbaijan’s competitive advantages for green hydrogen export is the existing pipeline infrastructure that was designed and built to export hydrocarbons. Across ICIEC’s 49 member countries whilst the severity of the climate crisis continues to become more manifest, innumerable opportunities for green growth emerge that are spurred on by innovation, technology and enterprise.
ESG Framework
The ICIEC ESG framework is a comprehensive strategy that reflects the organization’s strong commitment to environmental, Social, and Governance (ESG) principles. It is designed to integrate ESG values into every aspect of ICIEC’s operations and decision-making. Key elements of the ICIEC ESG framework include:
- The framework underscores the importance of embedding ESG principles at the core of ICIEC’s operations.
- ICIEC’s governance structure ensures oversight of ESG initiatives and their integration into the overall business strategy.
- ICIEC focuses on developing ESG-centric products and services while incorporating ESG criteria into risk assessment and underwriting.
- ICIEC implements various measures to promote sustainability throughout its internal processes, from HR to supply chain management and policies.
- ICIEC actively aligns with global sustainability objectives and collaborates on initiatives that contribute to these goals.
- ICIEC’s framework includes a robust ESG reporting mechanism that promotes transparency and accountability, ensuring stakeholders are informed about ICIEC’s ESG performance
Collaboration & Smart Partnerships the Key
Collaboration and smart partnerships remain at the heart of ICIEC’s Climate Action strategy as the global climate funding gap continues to grow whilst climate disasters proliferate. Through smart partnerships, ICIEC has signed a number of MoUs with technology and industry leaders such as GE Vernova, multilateral institutions focused on designing climate-based solutions such as the Global Green Growth Institute and export credit agencies (ECA’s) whose portfolio of transactions and supported companies are predominantly renewable energy based, such as EKF of Denmark.
Closer to ICIEC Headquarters, outreach is underway with the Saudi and Middle East Green Initiatives in order to tap into the value chains of carbon sequestration and the circular economy. A methodological approach to partnerships has ICIEC member states’ National Determined Contributions and National Adaptation Plans at its core.
Due to its proximity to its member countries, ICIEC, through the Member Country Partnership Strategy of the IsDB Group, remains cognizant of the priority areas of respective member countries for climate action. This know-how is invaluable to financial institutions that have financing targets and that need ICIEC’s de-risking and insurance support to access new markets and to expand their footprint in existing ones. Furthermore, specialized companies in member countries that produce goods or services that contribute towards climate action are continuously identified with a view to assisting their activities in other ICIEC member states and beyond.
ICIEC joined ETAF, the Energy Transitional Accelerator Financing Platform, managed by IRENA, at COP28 in Dubai in recognition of the need to bring diverse, effective partners (including the private sector, multilateral lenders and renewable energy industry leaders) around the same table in order to support the rollout of renewable energy projects to the amount
of US$4 billion by 2025. ICIEC, as a member of the International Union of Credit and Investment Insurers (the Berne Union), which celebrates its 90th anniversary this year, has been invited to join the Berne Union Climate Working Group and shall bring the perspective of the Economic South and 49 member countries in the search for export credit and insurance-based contributions and solutions to the climate crisis.
As a founding member of the AMAN Union of Commercial and Non-commercial Risk Insurers and Reinsurers in member countries of the Organisation of Islamic Cooperation (OIC) and the Arab League, ICIEC strives to provide climate leadership and assistance to sister ECA’s in member countries as the common challenges posed by the climate crisis invariably provide opportunities for growth in new economic sectors.
ICIEC and Climate Action
Partnership: ICIEC is proud to announce the signing of several key partnerships to provide a framework for joint action in promoting climate action, green projects, extending training and capacity-building opportunities, and organizing joint seminars and workshops. These collaborations will enable us to better understand our shared challenges related to climate change mitigation efforts as well as help create a more sustainable future for all. We are confident that these initiatives will bring positive changes both locally and globally by providing access to resources that can help reduce emissions while also creating jobs through green investments.
- ICIEC has been proactively aiding the OIC member states in reaching their climate objectives. An innovative step by ICIEC in this direction is the Green Sukuk Insurance Policy, facilitating Sukuk issuers to secure capital for viable green initiatives. Furthermore, ICIEC is providing de-risking solutions for regional funds in Africa, focusing on mitigation and adaptation measures.
- Towards a sustainable financial horizon, ICIEC has put forth the idea of a climate-centric fund in collaboration with institutional partners. This proposed fund is poised to offer discounted insurance premiums for financing Climate Action initiatives, especially in the Least Developed Member States. Additionally, ICIEC is committed to capacity building, leading to the provision of climate change training for its employees.
- To underscore its commitment to the Climate Action cause, ICIEC has become a part of the InsuResilience Global Partnership, aiming for climate disaster risk finance and solutions. This move solidifies ICIEC’s position as a pioneer among its industry contemporaries. Presently, ICIEC signed a Collaborative Partnership Agreement with The International Renewable Energy Agency (IRENA), through the Energy Transition Accelerator Financing Platform (ETAF), a multi-stakeholder climate finance solution.
- ICIEC has signed an agreement with ”Aware for Projects”, a landmark online climate risk screening software solution. This new tool will help the Corporation identify potential climate change risks and develop a consistent approach to assessing them.
- ICIEC developed a Climate Change Policy and ESG Guidelines to institutionalize its Climate Action and Green Finance commitments.
Azerbaijan’s Competitive Green Advantages
Since COP26, two COPs have fortuitously been hosted by ICIEC member countries, COP27 in Sharm El Sheikh, Egypt, whose focus was on adaptation, and COP28 in Dubai, in the UAE with COP29 being hosted by ICIEC’s newest member country Azerbaijan. Azerbaijan is one of the oldest and most pioneering oil producing countries in the world, with drilling and extraction activities dating back to at least the 1800’s.
Few countries reflect energy transition in a similar manner to Azerbaijan with a commitment to produce 30% of energy from renewables by 2030 and with the potential to be a green hydrogen hub and key supplier to the European Union, capitalizing on 23,000 MW of solar power potential, 800 MW of wind energy power, 520 MW of hydropower energy and 800 MW of geothermal energy. In a geopolitical energy ecosystem rife with uncertainty and volatility due to the conflict in Ukraine, if implemented correctly, Azerbaijan’s hydrogen potential is capable of providing the ultimate win-win scenario and playbook, clean fuel for the European Union (EU) market in line with EU pledges, legislation and taxonomies, and a new and profitable global export for Azerbaijan.
One of Azerbaijan’s competitive advantages for green hydrogen export is the existing pipeline infrastructure that was designed and built to export hydrocarbons. Across ICIEC’s 49 member countries whilst the severity of the climate crisis continues to become more manifest, innumerable opportunities for green growth emerge that are spurred on by innovation, technology and enterprise.
