Regulation and Supervision
Integration of social considerations into the financial system
Sustainable financing is the integration of environmental, social and governance (ESG) standards into the processes of financial decision-making. The Report on Social Considerations is a description of the integration of the social standards into the financial system of Armenia. The report highlights various social issues present in financial sector, emphasizing aspects such as diversity, financial inclusion, and social investments. It consists of various recommendations that demonstrate how to address existing challenges within the financial system.
Climate Risk Reporting Framework
Climate risk Reporting & Disclosure Framework is a critical element under the EMBED Sustainable Finance Pillar of the sustainable finance roadmap in the context of supervisory guidance to financial market participants on ESG risk integration and management. CBA is launching this Sustainable Finance Reporting & Disclosure Framework to guide commercial banks report and disclose climate-related information in a relevant, useful, consistent and comparable manner.
Climate Stress Testing Framework
The Central Bank of Armenia (CBA), together with the World Bank Group, has developed Climate Transition Risk Stress Testing (CRST) tool to assess the resilience of financial institutions against climate-related transition risks. This is the first exercise of its kind in Armenia, focusing on the assessment of financial stability risks stemming from the transition toward a low-carbon economy.
The CTRST assesses three NDC-aligned transition scenarios over 2025–2029, using a climate-enhanced macroeconomic model MFMod to estimate sectoral output changes, further assessing credit risk changes through a Bayesian Additive Regression Trees (BART) model to derive expected losses and capital impacts in the case of carbon tax application. The results show that transition risk is broadly manageable, although more abrupt and poorly coordinated transitions increase stress, without posing a threat to the financial stability. The findings highlight the need for timely and well-coordinated transition policies, consistent climate risk supervision, improved data, enhanced interagency coordination, and future integration of physical climate risks into stress testing frameworks.
The full version of the report is available here:
The report is also available on the World Bank's webpage here:
Green, Social and Sustainable Bond Guidelines
The Central Bank of Armenia has developed the Green, Social and Sustainable Bond Guidelines of Armenia with the support of the European Investment Bank (EIB) under the Greening Financial Systems Technical Assistance Programme. The Guidelines were developed within the framework of the National Sustainable Finance Roadmap of Armenia.
The Guidelines aim to support the development of a credible and transparent market for green, social and sustainable bonds in Armenia. They provide issuers, investors, external reviewers and other market participants with practical guidance on the issuance of such bonds, the management of proceeds and reporting, in line with the Principles of the International Capital Market Association (ICMA).
The Guidelines also present the process for the registration of the prospectus and the listing of such bonds.
The role of the Central Bank in relation to green, social and sustainable bonds is the registration of the prospectus in accordance with Armenian legislation.
The Guidelines are applied on a voluntary basis.