Environmental, Social, and Governance (ESG) principles

INTEGRATING ESG PRINCIPLES INTO THE INVESTMENT PORTFOLIO

Environmental, social, and governance (ESG) factors have become increasingly significant in the business and investment landscape due to recent trends such as global warming, resource scarcity, growing social inequality, and the shift towards improved corporate governance. Experience shows that ESG integration not only helps companies comply with regulations addressing these issues but can also enhance long-term financial performance.

These trends are reflected in the investment strategies of financial institutions, particularly sovereign wealth funds. As guardians of national wealth, sovereign wealth funds are committed to supporting sustainable development, ensuring healthy financial growth, and managing state assets with social responsibility.

As the State Oil Fund of the Republic of Azerbaijan, we recognize the importance of ESG principles and strive to integrate ESG into our investment portfolio as part of our mission and vision.

SOFAZ vision:

“SOFAZ is committed to its mission of safeguarding the financial assets of future generations by diligently pursuing a long-term investment strategy. By adopting a systematic approach to Environmental, Social, and Governance (ESG) factors, we aim to both mitigate risks and identify investment opportunities that align with our overarching goal. This approach, aligning with our focus on maximizing risk-adjusted returns, seeks to protect and enhance the real value of our assets, providing long-term security for the future.”

In 2025, SOFAZ participated in voting on 20,213 proposals submitted at 1,384 shareholder meetings held across 32 countries. The proposals voted on primarily related to the election of directors, executive compensation policies, and other director related matters. This approach reflects SOFAZ’s commitment to promoting effective corporate governance, protecting shareholder interests and supporting the creation of sustainable long term value across its investee companies.