Azerbaijan’s presidential representative urges banks to make climate finance core business

Banks should make climate finance part of their core business as climate risks increasingly affect investment decisions and the value of assets, Azerbaijan’s Presidential Representative for Climate Issues Mukhtar Babayev said.

As reported by a Caliber.Az correspondent, Babayev made the remarks on September 9 at a roundtable titled “Baku Sustainable Business Development Assembly 2026,” held as part of Baku Climate Action Week 2026 (BCAW 2026).

“Ultimately, climate talk is about implementing good decisions and real work,” Babayev said, stressing the fundamental role of the private sector in the transition to a green economy.

Citing World Bank figures, he noted that in developing economies the private sector accounts for around 90% of jobs, 75% of investment and more than 70% of economic output.

“Its role is therefore fundamental,” Babayev said.

At the same time, he pointed to significant differences among countries and sectors in terms of the cost of capital, access to technology, infrastructure and institutional capacity.

According to Babayev, many renewable energy and electrification technologies have already become commercially viable and competitive. However, sectors such as steel, chemicals, aviation and shipping still face high costs because many low-carbon solutions remain expensive or are not yet commercially mature.

“We need to deploy what already works, while accelerating innovation and technology transfer where solutions are still being developed,” he said.

Babayev also highlighted the scale of the climate-finance challenge, citing the latest OECD data showing that around $30 billion in private finance was mobilised for developing countries in 2024. He noted that just over one-fifth of the total came from grants.

“Simply calling for more private finance will not change this,” Babayev said, emphasising that private capital ultimately follows risk and return.

He called for greater use of guarantees, blended finance and risk-sharing mechanisms to make climate-related projects more attractive and accessible to financial institutions.

“Banks also need to make climate finance part of their core business,” Babayev said. “Climate considerations need to become part of everyday banking and investment decisions.”

He noted that physical climate risks, water scarcity, carbon exposure and technological change can directly affect the value of assets.

The same approach, he added, should be applied to environmental, social and governance (ESG) frameworks, while stronger disclosure, measurement, reporting and verification (MRV), and carbon accounting can improve transparency and decision-making.

Babayev also called for climate considerations to become an integral part of corporate decision-making.

“Climate change should be part of the decisions made by CEOs, boards, CFOs, investors, procurement teams and risk managers,” he said.

According to him, climate policy is increasingly becoming linked to trade and industrial policy, making it important to ensure that international standards support economic transformation while expanding opportunities for developing economies.

He also stressed that technologies needed for the green transition must be affordable, accessible and reliable if they are to be deployed at scale.

Babayev highlighted the potential of carbon markets as another source of financing for climate action.

He said the completion of the rules for Article 6 of the Paris Agreement at COP29 in Baku had created greater certainty for international cooperation in carbon markets.

“For developing economies, it can help attract investment and generate additional revenues for credible mitigation projects,” he said.

Babayev stressed that climate action should be viewed as part of the broader sustainable-development agenda.

“Climate action, industrialisation, jobs, energy access, food and water security, and resilient infrastructure are interconnected across the SDGs,” he said.

According to him, climate action must support development, while sustainable development cannot ignore growing climate risks.

“We need the two to reinforce each other. The transition needs mature technology, affordable finance and predictable policy,” Babayev said.

He added that effective climate action could ultimately contribute to competitiveness and sustainable economic growth, with the business community playing a key role as countries move toward COP30.

By Vugar Khalilov