SOCAR Green: Local banks' low risk appetite hinders green projects

The main obstacle for Azerbaijani companies to join renewable energy projects is the low risk appetite of local banks, said Rza Naghiyev, Director of the Finance Department at SOCAR Green, a subsidiary of the State Oil Company of Azerbaijan (SOCAR), Report informs.

Speaking at the 13th International Caspian Energy Forum 2025, Naghiyev noted that SOCAR Green aims to engage local market participants in renewable energy initiatives. "However, we face certain challenges, the most significant being the limited risk appetite of local banks. Most banks in Azerbaijan have short-term deposit portfolios, which makes it difficult for them to finance long-term projects," he said.

Naghiyev added that project financing remains a relatively new concept in Azerbaijan. "The Central Bank introduced a legal framework for it in 2022, and initial steps such as adopting a Green Taxonomy ahead of COP29 are commendable. Yet, more needs to be done," he stressed.

He also pointed out the lack of independent third-party evaluators in the local market, which increases the risk of greenwashing. "Attracting green capital requires compliance with ICMA - the International Capital Market Association - principles, and meeting those standards is essential for Azerbaijan's green finance development," Naghiyev concluded.