ARMENIA Law and Practice Contributed by: Hayk Hovhannisyan and Suren Sloyan, HAP
2.2 ESG Considerations ESG reporting issues in Armenia are primarily regulated by the Corporate Governance Code, which was updated in July 2024. The Corporate Governance Code emphasises the importance of corporate governance principles for sustain - able private sector development, accountability and decision-making transparency. Companies adhering to the Corporate Governance Code have to prepare and publish an annual report. This has to include a corporate governance report and an annual corporate governance dec - laration and has to be published on their website by June 30 of the following year. This reporting follows the “comply or explain” principle, which allows organisations to either comply with the Corporate Governance Code’s provisions or explain their reasons for non-compliance. Despite the structured framework, companies face several challenges in ESG reporting. These are as follows. • Lack of awareness: many stakeholders, including BoD members and executives, may not fully understand their roles and respon - sibilities within the corporate governance framework, leading to ineffective decision- making and accountability issues. • Enforcement deficiencies: while legal frame - works exist, the enforcement and monitoring mechanisms are often inadequate. Regulatory bodies may lack the necessary resources and authority, resulting in organisations view - ing compliance as a formality rather than a necessity. • Standardisation and consistency: the absence of standardised ESG reporting frameworks leads to inconsistencies. Compa - nies might adopt different frameworks, mak -
• embedding sustainable finance: developing a robust supervisory framework within the CBA, guiding financial market participants in integrating environmental, social, and govern - ance (ESG) factors into their core processes; and • building awareness and capacity: raising awareness and enhancing knowledge on sustainability risks and opportunities among financial market participants and the wider public. These pillars collectively aim to ensure that ESG considerations are central to financial decision- making, reflecting Armenia’s dedication to sus - tainable practices. The Green Agenda Project The Green Agenda Project was launched in December 2023 and represents Armenia’s com - mitment to aligning with the European Green Deal and the EU-Armenia Comprehensive and Extended Partnership Agreement (the “CEPA” ). This initiative seeks to harmonise national poli - cies with leading European standards, propel - ling Armenia towards a more sustainable and prosperous future. Key objectives of the Project include: • developing a climate neutrality roadmap. • delivering investment-ready projects that promote sustainability. • raising public awareness about the green economy; and • enhancing stakeholder capacities for the green transition. The Project underscores Armenia’s dedication to adopting sustainable policies and practices and aims to enhance the quality of life for its citizens as well as strengthen trade and economic rela - tions with EU member states.
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