Yelena Novikova, who works on various aspects of extra-financial risk integration, has taken part in the “G20 Global Solutions” Summit in Berlin. The think-tank Summit, that was organised by the newly launched G20 Global Solutions Initiative, is meant to further inform the G20 Think 20 process. Some of the world’s most renowned policy-makers, economists and politicians participated in the event. German Chancellor Angela Merkel and members of her Cabinet, Nobel Laureates Edmund Phelps and George Akerlof, sustainable development visionary Jeffrey Sachs and many others contributed to this high-profile policy forum.
Some promising young experts from all over the world were invited to join this quest for global solutions to the world’s most pressing problems. A select number of them also got a chance to participate in a new, prestigious side-event, “G20 Global Solutions Summer School”.
Yelena Novikova is a graduate of Grenoble Ecole de Management, London Metropolitan University and KIMEP, who holds 4 university degrees. She is the only “Young Global Changer – 2017” in the world, who also got to participate in the “G20 Summer School” side-event this year.
“I work to show our society, policy- and decision-makers why we need to adopt and adapt certain state-of-the-art practices in Kazakhstan”, - she says.
Integration of financially material Environmental, Social and Governance (ESG) factors into is becoming increasingly mainstream around the world. This is supported by numerous studies. Thus, Morgan Stanley’s Institute for Sustainable Investing surveyed 1,000 active individual investors. As its results have shown, 75% of those surveyed believe that “their investments can influence climate change”. Yelena Novikova strives to adapt ESG practices to Kazakhstani context. She advocates for policy tweaks that would incentivise integration of extra-financial risk by local stakeholders. For instance, financially material ESG risks are of particular importance, when it comes to Pension Funds.
“Some environmental risks can impact financial performance in very noticeable ways. If you remember BP oil spill a few years ago, the event in the Gulf of Mexico had significant stock price consequences. Certain Pension Funds got dragged down because of holding BP shares back then”, - she explains.
Investors can influence society with their portfolios, while making profits at the same time. If Norway and its world’s largest pension fund can stay away from risky “brown” investments and successfully adopt ESG integration strategies, there’s no real reason why Kazakhstan can’t follow the suit, - the expert claims.
“It makes sense for pension funds to both “work” for financial prosperity of its beneficiaries as well as to support the objective of their wellbeing. For example, Kazakhstan’s own National Concept Policy for Transition to Green Economy reports that 6,000 of our citizens die prematurely every year due to poor environmental conditions. That means those people don’t live long enough to ever become pensioners. All things considered, wouldn’t it make perfect sense for the SAPF (Single Accumulative Pension Fund) to ensure it doesn’t contribute to the environmental situation that claims 6,000 lives annually?”, Yelena asks rhetorically.
Yelena admits that Sustainable Investing strategies are yet to become mainstream in Kazakhstan. Even large companies are far from being adept when it comes to integration of Environmental, Social and Governance (ESG) into their corporate strategies. Their non-financial reporting tends to be superficial and patchy.
“I spend my days trying to explain to various stakeholders, why what I do and what I advocate for is important for Kazakhstan. It can feel like hitting the ground at times. Then, G20 gives me this opportunity of a lifetime… I’ve met Chancellor Merkel. I’ve learnt “how to change the world” from the likes of Nobel Laureate George Akerlof. I’ve interviewed Arundhati Bhattacharya (one of the world’s most powerful women according to Forbes) for a special G20 podcast project. There’s nothing that can make me feel more empowered to be making impact now”, - she tells Forbes.kz.
We are seeing the first, early steps towards proliferation of ESG practices in Kazakhstan, as the expert says. For instance, the term “ESG” is being mentioned within the documentation on the “Green Financial System for Kazakhstan”, that was produced by foreign experts and commissioned through the EBRD. Another prominent development is the release of voluntary methodology for ESG Reporting by Kazakhstan Stock Exchange (KASE).