ESG Global Vision

Non-financial reporting

Entry into force: 14 July 2021. 

Financial institutions who provide loans, grants, or other forms of funding for renewable energy projects. 

This legislation establishes a regulatory framework to promote the development and integration of renewable energy into the electricity market. It outlines the responsibilities of stakeholders, incentives for investors, and technical requirements for renewable energy projects. The law aims to support the transition to a low-carbon economy, reduce dependence on fossil fuels, and enhance energy security by diversifying the energy mix.

Under the law, the term ‘renewable energy’ includes solar, wind, hydroelectric, geothermal, and biomass generation sources. The law sets out mechanisms such as feed-in tariffs, tax incentives, and renewable energy certificates designed to attract private investment and facilitate sustainable energy development. The law also mandates grid operators to prioritise the integration of renewable electricity into the grid and ensure fair access for producers.

Non-financial reporting

Entry into force: 5 December 2023. 

The law applies to energy companies, state authorities and institutions, regulatory bodies, as well as energy consumers.

The law also applies to production-sharing agreements and agreements on the transportation of oil and gas via export pipelines, as well as other agreements concluded within the framework of these agreements and approved by the laws of the Republic of Azerbaijan, only in cases specified in those agreements and not contradicting them.

The law does not apply to the transportation of energy by road, rail, air, and water transport, nor to the import, export, production, storage, and processing of nuclear materials.

This legislation outlines national measures and activities to ensure the efficient use of energy resources, the development of energy infrastructure, and the security of energy supply. 

Non-financial reporting

Entry into force: 1 July 2022

Legal entities or individuals engaged in entrepreneurial activity without establishing a legal entity. 

This law regulates relations between entities stemming from the production, storage, transmission, transportation, distribution, sale, and consumption of energy and applies to state authorities and institutions, individuals, and legal entities operating in the field, including end consumers.

This piece of legislation defines the legal, organisational, and economic foundations of state policy in the field of efficient use of energy resources and energy efficiency, and regulates the activities of state authorities and institutions, individuals, and legal entities, as well as the relationships arising between them resulting from their activities in the space. 

Environmental policy; sustainability standards and certification

Entry into force: 8 June 1999

All businesses operating in Azerbaijan

This law regulates the sustainable use of natural resources, implementation of waste management systems, and the reduction of emissions. The law was recently amended to include stricter enforcement mechanisms and compliance standards.

The law also provides for a number of environmental protection measures, including the regulation of goods, services, and technology either produced in Azerbaijan or imported, which may pose a threat to ecosystems, the life and health of the population, and the use of natural resources.

Environmental policy

Entry into force: 8 July 2003

Any business operating in Azerbaijan, alongside relevant state authorities and institutions.  

The law provides for cooperation between the Republic of Azerbaijan and the Republic of Lithuania to tackle the  following environmental issues:

•    climate change;
•    the prevention and reduction of environmental pollution;
•    waste management and recycling;
•    land conservation;
•    environmental impact assessments; and
•    any other areas of cooperation deemed necessary by the parties.

Non-financial reporting; environmental policy

Entry into force: 2 October 2023

Private and state users of the Information System on Renewable Energy Sources (“BOEMIS”).

This regulation defines the legal, organisational, and technological foundations for the establishment, operation, and integration of BOEMIS with information systems and resources of other state authorities through the Electronic Government Information System (hereinafter – EHIS).

BOEMIS aims to ensure the provision of quarterly and annual data on various aspects related to renewable energy sources in the Republic of Azerbaijan. This includes information on the capacity and production of each power plant generating electricity from renewable energy sources, as well as their total output. Additionally, it provides data on the volume of natural gas saved nationwide as a result of renewable energy production and the revenue generated from the sale of carbon dioxide quotas saved due to reduced fuel consumption, as well as creating an “atlas of renewable energy sources”.

Environmental policy, non-financial reporting

Entry into force: 18 February 2003

State authorities, producers, and consumers.

The Presidential Decree brings into force the National Program, which is a voluntary program aimed at the preservation of existing ecological systems and economic potential, as well as the efficient use of natural resources in the Republic of Azerbaijan for the needs of present and future generations. 

The Program aims to do so through encouraging the development of sustainable methods for utilising natural resources, and ensuring that economic development should be carried out based with sustainability as a reference point.

The aim of the Program is to expand, improve, and enhance the scope of environmental preservation by establishing an economic foundation that serves these goals. 

The efficient and sustainable use of natural resources is envisaged to promote the development of various economic sectors and the creation of new jobs.  The National Program stipulates that:

• decision-making processes should be carried out while considering short and long term economic, environmental, and social outcomes, as well as potential consequences; 
• alternative options should be taken into account in decision-making processes related to sustainable development and environmental protection;
• the implementation of economic, social, and environmental projects that could lead to irreversible environmental degradation should be prevented;
• strong and diversified economic development should be ensured to allocate the necessary funds for environmental protection and sustainable development; and
• the involvement of representatives of non-governmental organisations in the decision-making process on sustainable development and environmental protection should be expanded.

Environmental policy

Entry into force: 18 August 2015

State authorities

These standards establish requirements for the design of external water supply systems for residential settlements, agricultural, and industrial facilities that are being constructed or renovated.

Environmental policy; licensing

Entry into force: 1 June 2016

All legal entities operating in the territory of the Republic of Azerbaijan; branches and representative offices of foreign legal entities, individual entrepreneurs, as well as licensing and permit-issuing authorities, and their officials responsible for licensing and permits related to the conduct of entrepreneurial activities in the Republic of Azerbaijan.

The law determines the legal, economic, and organisational foundations for regulating the licensing and permit system related to the conduct of entrepreneurial activity (excluding the financial markets sector) in the Republic of Azerbaijan.

The law defines the criteria for determining the types of activities requiring a license and permits for conducting entrepreneurial activities, the list of such activities, the principles of state regulation of the license and permit system, the procedures for granting, reissuing, suspending, restoring, and revoking licenses (permits), duplicates, and appendices, as well as the responsibilities of licensing and permit-issuing bodies, their officials, and license (permit) holders.

Non-financial reporting

Entry into force: 30 November 2006

Private and public employers

This legislation aims to promote workplace equality, ensure equal pay for equal work, and prohibits gender discrimination in the workplace. It also mandates periodic reporting on these issues by in scope companies.

The purpose of the law is to ensure gender equality by eliminating gender-based discrimination and creating equal opportunities for men and women in political, economic, social, cultural, and other spheres of public life.

Non-financial reporting

Entry into force: 2 July 1999

The code applies to private and state employers, regardless of ownership and legal form. It also applies to workplaces where employment contracts are concluded with employees without establishing a company enterprise, as well as to the embassies and consulates of the Republic of Azerbaijan operating beyond its borders, ships sailing under the State Flag of the Republic of Azerbaijan in international waters, offshore installations, and other workplaces.

The employer's duty under the code is to ensure equal working conditions for employees engaged in the same work, regardless of gender; not impose different disciplinary measures for the same violation; and take necessary measures to prevent gender-based discrimination and sexual harassment.

Child labour

Entry into force: 28 November 2020 

State authorities

The Presidential Decree establishes the Action Plan, the stated purpose of which is to establish an agile institutional mechanism in the field of child rights protection and to ensure the coordination of relevant state authorities.

The Action Plan (which is voluntary) is aimed at: 

• the improvement of the legal and regulatory framework in the field of child protection and the formation of an agile institutional mechanism by utilising international best practices;
• ensuring the physical and mental development of children in their early years, taking measures for healthy nutrition, and improving the quality of medical services provided for the healthy growth of children;
• increasing the accessibility of social services for children deprived of parental care, neglected children, and children in socially dangerous situations, as well as ensuring better quality education for children with disabilities;
• conducting regular monitoring of the fulfillment of child rights.

Child labour

Entry into force: 13 January 2004

State authorities

This international legislation (ratified by almost 200 nations), to which the Republic of Azerbaijan is a party, is aimed at ensuring member states take effective and immediate measures to prohibit and eliminate the worst forms of child labour in their respective countries.  

As part of the action taken by Azerbaijan, the Azerbaijani Labor Code sets the minimum working age at 15, with strict guidelines for any exceptions.

Additionally, Azerbaijan has created a number of national action plans, such as the National Strategy on Children’s Rights Protection, which focus on preventing child labour through education and social programs. The government also has enforcement mechanisms in place, like the State Labor Inspection Service, to monitor compliance and ensure that child labor laws are followed effectively. Through these steps, Azerbaijan is working to ensure that children are protected from harmful labour practices, in line with its international obligations.

For more detail, see here.

Child labour

Entry into force: 3 June 2020

State authorities

The main goal of the Strategy is to align the child protection system in the Republic of Azerbaijan with the requirements of the Constitution of the Republic of Azerbaijan and the principles of the UN Convention on the Rights of the Child, to create equal opportunities for all children within the territory of Azerbaijan, to protect their interests, to more effectively safeguard the rights of children in need of state care, and to provide them with modern and relevant social support services.

The following priorities are identified for the improvement of the normative legal framework and institutional structure in the field of child protection:

• improvement of the mechanism for state oversight of the fulfillment of child rights;
• enhancement of the normative legal framework and institutional structure regulating the activities of commissions for the protection of minors' rights and guardianship and custody authorities of local executive bodies;
• study of international best practices in the field of child rights protection and resolution of their problems, as well as training specialists in this field;
• improvement of legislation to ensure equality in access to education for children;
• creation of an effective mechanism for identifying children living in difficult circumstances and implementing urgent social protection measures for them; 
• improvement of legislation on the rehabilitation and reintegration of neglected and socially vulnerable children into society;
• enhancement of legislation related to the application and development of alternative care services (foster care, family-type small group homes) and the establishment of requirements based on international best practices in this field;
• analysis and improvement of legislation to prevent violence against children; and
• analysis and improvement of legislation on the protection of child rights during the administration of justice.

Child labour

Entry into force: 19 May 1998

The rights and obligations of children provided for in this Law apply to every person under the age of 18 (the age of majority) who has not acquired full legal capacity.

This Law defines the rights and freedoms of children in the Republic of Azerbaijan, the fundamental principles of state policy regarding children, and the duties of state authorities, as well as other legal and natural persons, in the field of child protection, in accordance with the Constitution of the Republic of Azerbaijan, the Declaration of the Rights of the Child, the Convention on the Rights of the Child, and other international legal norms.

Business and human rights

Entry into force: 28 December 2006

State authorities

This decree mandates the consideration of human and citizen rights and freedoms as a nationwide duty, and taking into account the priorities set by the UN’s “Millennium Development Goals” and the Council of Europe’s third summit on human rights protection, democracy, and the rule of law.

People trafficking

Entry into force: 11 May 2010

States ratifying the convention

The objectives of the Convention are as follows:

a) combating and preventing human trafficking while ensuring gender equality;

b) developing a comprehensive framework for protecting the rights of human trafficking victims, ensuring the protection of victims and witnesses, providing assistance to them while ensuring gender equality, and ensuring effective investigation and prosecution of any offences; and

c) promoting international cooperation in the fight against human trafficking.

People trafficking

Entry into force: 6 August 2005

Relevant executive authorities 

This Law establishes the legal and organisational foundations for the prevention of human trafficking and the fight against human trafficking in the Republic of Azerbaijan, and defines the legal status of victims of human trafficking, regulating the protection and assistance provided to human trafficking victims.

The Law is aimed at ensuring the protection of individuals and society from all forms of human trafficking and the detection and prevention of human trafficking, as well as the elimination of its consequences.  Policymakers intend the National Action Plan on Human Trafficking (addressed separately) to be the central piece of legislation to assist these goals.

Financial policy

Entry into force: 1 February 2023

Financial institutions, non-financial institutions and professionals.

In scope individuals and entities are required to clarify the purpose and nature of all complex, unusually large-scale,  transactions for which there is no obvious purpose, and to identify and report on the source of the assets/consideration exchanged.

Financial institutions must assess the relevant risks before introducing new products and business practices and using new technologies, as well as determine preventive measures to manage and mitigate the relevant risks.

Violation of the law will result in fines in accordance with the Code of Administrative Offenses of the Republic of Azerbaijan

Financial policy

Entry into force: 1 January 2005

This law applies to:

• individuals elected or appointed to state authorities;
• individuals representing state authorities based on special authority;
• civil servants holding administrative positions;
• individuals performing organisational-administrative or administrative-economic functions within the relevant structural units of state authorities, state administrations, enterprises, and organisations, as well as economic entities in which the state holds a controlling share;
• individuals elected to local self-government bodies; 
• individuals performing organisational-administrative or administrative-economic functions in local self-government bodies;
• heads and employees of institutions, including individuals performing organisational-administrative or administrative-economic functions based on special authority within these institutions;
• individuals performing organisational-administrative or administrative-economic functions in non-state bodies exercising the powers of state authorities; 
• individuals who, by using their influence or connections, obtain material or other benefits, privileges, or concessions in exchange for unlawfully influencing the decision of an official; and
• individuals or legal entities who unlawfully offer, promise, or provide material or other benefits, privileges, or concessions to an official, or who mediate in such actions.

This law is aimed at detecting, preventing, and eliminating the consequences of corruption-related offences, protecting social justice, human and citizen rights and freedoms, at creating a favorable environment for economic development, and ensuring the legality, transparency, and efficiency of the activities of state authorities, local self-government bodies, and public legal entities and their officials.

Additionally, this law aims to strengthen public trust in state authorities, local self-government bodies, and institutions, to encourage professional personnel to enter public service within these entities, and create conditions that prevent individuals from committing corruption-related offenses.

Senior management accountability

Entry into force: 8 September 2023

Banks and bank employees

This Decision mandates that banks must have management and organisational structures in place, including: (i) the proper division of authority; (ii) effective risk management; (iii) adequate internal control systems, including accounting procedures, effective information systems; and (iv) performance-based compensation policy. 

While the Decision of the Management Board of the Central Bank of the Republic of Azerbaijan on the Approval of the "Corporate Governance Standards in Banks" does not explicitly mention sustainable investing, certain aspects of corporate governance—such as effective risk management and internal control systems—can support sustainable investment practices. Strong governance frameworks are intended to help ensure that banks operate transparently, manage risks responsibly, and make long-term strategic decisions, which are essential for sustainable investing.