Казахтелеком

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4.2. Sustainability Report: E Aspect

4.2.3. Combating climate change

GRI 3-3

Kazakhtelecom JSC regards climate change as one of the key challenges, and also as an important opportunity for the transformation of the business model and the enhancement of sustainability. In conditions of the global transition to a low-carbon economy, the Company strives to make a contribution to the achievement of the climate goals of the Republic of Kazakhstan, and also to the fulfilment of international obligations within the framework of the Paris Agreement.

The approaches to the management of climate risks and opportunities formed earlier retained their relevance also in the reporting period. The Company continued the implementation of the Low-Carbon Development Programme for 2022–2032 and the application of elements of climate analysis in the processes of strategic and investment planning.

At the basis of the current approach lie the results of an in-depth climate analysis covering the activities and infrastructure of the Company, as well as the identification of transition and physical climate risks with the assessment of their potential influence on key business processes with account for the international TCFD recommendations. The responsibility for the management of climate risks is fixed at the level of a member of the Management Board.

The development of an adaptation plan to the identified climate risks is planned as one of the priority measures for the medium term.

Key priorities of our climate strategy:

  • Decarbonisation and reduction of greenhouse gas emissions from the activities of the Company and at all stages of the value creation chain;
  • Alternative energy;
  • Resource saving and enhancement of energy efficiency.

The results of the full analysis are presented in the “Analytical report on the assessment of climate risks and opportunities”, available on the Company’s website telecom.kz

4.2.3.1. Management in the area of climate change

Kazakhtelecom JSC has built a multi-level system of management of climate issues, based on the principles of accountability, transparency and the integration of climate risks and opportunities into strategic management.

Oversight by the Board of Directors

The Board of Directors carries out the highest level of control over the climate agenda through the relevant body — the Audit and Sustainability Committee. Within the limits of its competence, the board considers issues related to climate change upon the approval of strategic plans, investment programmes, annual budgets, and also upon the assessment of large infrastructure projects and transactions. Issues related to climate change are brought to the attention of the Board of Directors not less than once a year. The agenda includes monitoring of the implementation of the Low-Carbon Development Programme, progress on the achievement of emission reduction goals, resilience to physical climate risks, as well as climate opportunities in the area of digital products and services.

The management of climate risks is fixed in the Regulation on the Audit and Sustainability Committee under the Board of Directors. The Committee considers issues of low-carbon development, the management of the carbon footprint, as well as the potential risks and limitations related to the global climate agenda, and also carries out monitoring of the quality of non-financial reporting and control over the implementation of corresponding ESG initiatives.

At the level of the board of directors, the development of climate expertise continues, including the conduct of ESG sessions with the involvement of independent experts and the discussion of scenarios of climate impact on the long-term sustainability of the business.

Role of top management

Operational management of the climate agenda is carried out at the level of executive management. In the structure of the Company, the functions of coordination of climate issues are assigned to the sustainability department in close interaction with subdivisions on technical operation, capital construction, energy and risk management. Responsible employees have been appointed, responsible for the assessment of climate risks, the development and implementation of adaptation measures, and also for monitoring the fulfilment of goals. The indicated officials and chairs of committees regularly report to the management board and, if necessary, provide information at the level of the board of directors.

The management is informed about climate issues on the basis of the results of internal monitoring, external analytical reviews, data on energy efficiency and emissions, as well as climate models and scenarios. Reporting is formed within the framework of a single system of ESG analytics and is verified before inclusion in annual reports for stakeholders.

Internal mechanisms of management of climate issues include regular cross-functional meetings, the inclusion of climate aspects in investment and project committees, as well as procedures of risk and opportunity assessment upon the development of new initiatives.

Structure of management of climate issues at Kazakhtelecom JSC

Board of DIrectors

The Board of Directors of Kazakhtelecom JSC oversees sustainability matters, including the management of climate risks and opportunities. The Board approves the ESG strategy, which outlines the key areas related to climate risks and opportunities.

Functions
  • Determining the strategy for sustainable development and climate risks.
  • Monitoring the process of integrating climate factors into the company’s strategic and operational planning.
  • Reviewing and approving reporting in this area.
  • Overseeing the implementation of sustainability principles and low-carbon development.
  • Managing sustainability-related risks, including climate risks.
Incentives for Managing Climate Risks
  • Defining incentive strategies related to climate goals for the Company’s executives and staff.
  • Approving a remuneration system based on the achievement of ESG targets, including climate-related targets.

AudIt and sustaInable development commIttee

Since July 2022, the Audit Committee has been renamed the Audit and Sustainable Development Committee. This committee is responsible for managing sustainable development risks, including physical and transition climate risks.

Functions
  • Preliminary approval of the Company’s Annual Report regarding the quality of the presented non-financial information.
  • Development of recommendations for the Board of Directors on topics related to sustainable development, as well as on the implementation of ESG principles and low-carbon development within the Company.
  • Monitoring the transformation of business processes in accordance with the principles of sustainable development, ethical behaviour, and responsible investing.
  • Development of recommendations for the Board of Directors regarding the approval of new policies and the evaluation of the effectiveness of existing policies, plans, and programmes in the field of sustainable development, as well as priority projects, key activities, and initiatives in the area of sustainable development and climate.
  • Review of issues related to low-carbon development and the management of the Company’s carbon footprint, including potential risks and limitations arising for the Company in relation to the global climate agenda.
  • Development of recommendations for the Board of Directors regarding the compliance of activities, corporate reporting, and documents with the requirements of international ratings in sustainable development, as well as monitoring the implementation of measures to improve the Company’s positions in international sustainable development ratings.
  • Monitoring the quality of the Company’s public reporting in the areas of sustainable development and climate.
Incentives for Managing Climate Risks
  • Evaluation of the effectiveness of climate incentives aimed at achieving the Company’s climate targets.
  • Monitoring the implementation of incentive strategies and the integration of climate factors into employee motivation.

Executive committee

Department of Corporate Governance and Sustainable Development

  • Responsible for the inventory of internal regulatory documents, managing sustainability risks, and regularly monitoring the achievement of the company’s targets in this area. Develops and updates policies related to climate risks and sustainable development, with regular presentations for discussion at the Audit and Sustainable Development Committee.

Compliance Department

  • Ensures compliance with norms and standards in the field of sustainable development and climate risk management.
  • Implements internal control to ensure adherence to sustainable development requirements.

Communications Department

  • Responsible for external communications, including informing the public and stakeholders about the company’s actions in the field of sustainable development.
  • Coordinates engagement with external partners and the media on climate integration issues.

Structural Units Responsible for Human Resource Management, Occupational Health and Safety

  • Oversee specific aspects of sustainable development management, including compliance with occupational health and safety standards.
  • Implement measures to minimise environmental impact and enhance energy efficiency.

Head Office of Kazakhtelecom JSC

  • Is directly responsible for the coordination and oversight of the implementation of sustainable development initiatives within the company’s structural units.
  • Ensures the execution of the company’s climate and ESG strategies at all levels.
Branches

The Chairman of the Management Board and the General Directors of the branches

  • Oversee the implementation of sustainability standards and policies within the company’s branches.
  • Ensure the provision of accurate information regarding the execution of plans and activities related to climate initiatives.
Branches

Managing Director of Kazakhtelecom JSC for Sustainability

  • Coordinates the Company’s efforts to achieve sustainable development goals.
  • Monitors the fulfilment of key performance indicators (KPIs) in the field of sustainable development and climate initiatives.
Incentives for Managing Climate Risks
  • Implementation of Strategies for Managing Climate Risks and Monitoring Their Progress.
  • Establishment of a remuneration system linked to the achievement of the company’s climate and ESG targets.

Strategy in the area of climate change

GRI 3-3

Kazakhtelecom JSC uses the results of an integrated assessment of climate risks and opportunities covering both physical and transition factors, as well as potential directions of creation of additional value in conditions of climate change. The analysis was conducted with the use of international methodological approaches, including the scenarios of the Intergovernmental Panel on Climate Change (IPCC), the analytical tools of McKinsey and S&P Global, and also with account for the climate features of the Republic of Kazakhstan and the specifics of the telecommunications sector.

The assessment is based on four scenarios of climate development — RCP 2.6, RCP 4.5, RCP 8.5 (IPCC), and also NZE 2050, reflecting global efforts on the achievement of carbon neutrality. Within the Company, the scenarios were interpreted as optimistic, baseline and pessimistic variants, which made it possible comprehensively to analyse the influence of climate factors on operational sustainability, the structure of costs, profitability and investment attractiveness.

Physical risks

Within the framework of the analysis of physical risks, 25 key data centres and technological facilities in major cities and regional centres of Kazakhstan were considered. The study covered segments of the value creation chain related to infrastructure, logistics, operation and operational activities.

The main risks identified:

Temperature
(chronic risk)

The growth of average and extreme temperatures leads to the overheating of equipment, the increase of costs for cooling, the reduction of the reliability of systems. According to climate modelling data, by 2060 in Almaty Region the growth of the average temperature is forecast up to 9.64 °C, and the maximum — up to 17.59 °C in the RCP8.5 scenario. Elevated temperatures create risks for the operation of data centres, communication nodes and engineering systems:

  • overheating of equipment;
  • growth of cooling costs;
  • reduction of reliability and increase of emergency shutdowns;
  • reduction of employee productivity and the growth of thermal load.

The most vulnerable are facilities in Almaty, Akmola and East Kazakhstan Regions, where the largest growth of average and extreme temperatures is expected.

Increased humidity
and precipitation

The increase of precipitation is registered under all scenarios, especially in South Kazakhstan, Atyrau and Mangistau Regions. For example, in South Kazakhstan Region annual precipitation under the RCP8.5 scenario may increase up to 894.6 mm by 2060 (growth of 45% from historical values). Influence:

  • risk of damage to cable networks and equipment due to high humidity;
  • corrosion of infrastructure;
  • growth of costs of technical service and replacement of network components.

Floods
(acute risk)

Floods are recognized as one of the most significant acute risks. In South Kazakhstan and Mangistau Regions, floods with a depth of up to 0.7 m are possible, which creates the threat of flooding and failure of telecommunications infrastructure. Consequences:

  • damage to equipment;
  • interruptions in the provision of services;
  • potential multi-million losses from downtime.

Wind
load

Zhambyl Region demonstrates the highest wind indicators — up to 28.17 m/s under the RCP2.6 scenario and 27.44 m/s under RCP8.5 by 2060. Akmola and South Kazakhstan Regions are also subject to it. Risks:

  • destruction of communication masts and antennas;
  • structural damage;

interruptions in operation due to destruction.

Table 29. Register of climate risks of Kazakhtelecom JSC

Type of risk Category Risk Impact Horizon6 Potentially vulnerable Kazakhtelecom assets/areas
Physical Chronic Temperature
  • Deterioration of production capacities.
  • Some equipment may not withstand high temperatures.
  • Additional costs (investments in cooling systems).
  • Impact on employee health: increase in the risk of heat-related illnesses and the risk of making wrong decisions.
  • Annual damage expressed in the increase of costs for energy consumption related to heating.
  • Increase of structural damage to physical infrastructure.
Medium-term/long-term Akmola, Almaty and East Kazakhstan Regions
Precipitation
  • Increased costs for maintenance and replacement of equipment.
  • Risk of corrosion of metal parts of infrastructure.
  • Interruption of operations due to equipment damage and failures.
Medium-term/long-term Atyrau, Mangystau and South Kazakhstan Regions
Acute Floods
  • Flooding of infrastructure and serious damage to equipment.
Medium-term/long-term Atyrau and Mangystau Regions
Extreme weather
  • Increase in costs for repair and restoration.
  • Interruption of operations due to infrastructure damage.
  • Impact on employee safety.
Medium-term/long-term Zhambyl, South Kazakhstan and Akmola Regions
Transition Legal Tightening of climate regulation
  • Increase in operating costs.
  • Significant investments in infrastructure modernization.
Medium-term/long-term Data centres, energy-dependent infrastructure
Technological Implementation of new technologies
  • Significant investments in infrastructure modernization.
Medium-term/long-term Ageing network equipment, cooling systems, IT infrastructure
Market Changes in demand and expectations
  • Necessity of developing new “green” solutions and adapting the business model.
Medium-term/long-term Product line, telecom services
  1. Kazakhtelecom is not subject to significant impact from physical climate risks in the short term.
Transition risks

For the assessment of transition risks, particular attention was paid to the influence of possible changes in legislation, market trends, the policy of carbon regulation and technological shifts on the business model of the company.

Regulatory

The possible introduction of a carbon tax and new energy efficiency standards may affect operational costs, the necessity of modernization of equipment, CAPEX and the cost of provision of services.

Technological

The obsolescence of non-energy-efficient infrastructure and the necessity of introduction of new solutions corresponding to the ESG expectations of clients and investors.

Market and reputational

The growth of interest in sustainable suppliers and the necessity of ESG rating transparency for retaining competitiveness and access to sustainable financing.

Climate opportunities

The Company regards climate changes as a source of risks and a factor of development of sustainable technological solutions, the enhancement of energy efficiency and long-term cost savings. In this connection, the Company continues to take into account climate opportunities in a number of key directions.

Enhancement
of energy efficiency

Data centres (data centres) are the main consumers of electricity. In this connection, the Company regards the enhancement of their energy efficiency as a significant source of cost reduction and the enhancement of the sustainability of operational activities. The analysis previously conducted showed the potential of reduction of expenses for electricity through energy-efficient solutions in data centres at the level of USD 3.5–4 million until 2030.

Development of digital
services and infrastructure

The Company actively develops solutions in the sphere of:

  • The Internet of things (IoT) for the reduction of the carbon footprint;
  • Smart networks and remote monitoring;
  • Digital modelling of telecom infrastructure for the Optimization of energy consumption;
  • Commercialisation of carbon offsets — mechanisms of compensation of emissions through climate projects.

Development
of RES

Transition to renewable energy sources, the reduction of dependence on carbon-intensive types of fuel. Within the framework of the ESG strategy until 2032, the possibility of increasing the share of RES from the current 0% to 10–15% is being considered. Savings on fuel and emission compensations may amount to up to USD 5 million in the long-term horizon.

Access to sustainable
financing

Enhancement of attractiveness for ESG investors, green bonds and the financing of projects of a climate orientation.

The aggregate economic benefit from the implementation of climate opportunities may reach more than USD 20 million by 2060.

Based on the results of the climate analysis, a list of recommendations aimed at enhancing the resilience of the company to climate risks was formed.

Among the key measures — introduction of a public reporting system, regular revision of climate risks, development of monitoring plans for vulnerable regions, enhancement of energy efficiency of data centres, calculation of Scope 3 emissions, as well as the elaboration of participation in the Net-Zero initiative.

Table 30. Register of climate opportunities of Kazakhtelecom JSC

Opportunities Measures Horizon
Enhancement of energy efficiency and process optimization
  • Decommissioning of copper lines and replacement with LED light sources;
  • Implementation of intelligent management systems;
  • Optimization of the operation of networks and data centres.
Short-term
Transition to renewables
  • Purchase of green certificates;
  • Development of smart grids;
  • Procurement of alternative energy and transition to environmentally friendly fuels.
Short-term/Medium-term
Commercialisation of carbon offsets
  • Implementation of climate projects and subsequent emissions compensation.
Medium-term
Digital modelling
  • Use of digital technologies to optimise infrastructure design and operation.
Medium-term
Minimisation of resource consumption
  • Reduction of consumption of imported electrical, thermal energy and fuel.
  • Reduction of consumption of fossil fuels at stationary and mobile sources.
Short-term
Digitalization and development of sustainable products
  • Development and promotion of digital and telecommunication services and products to reduce the carbon footprint.
  • Promotion of IoT solutions.
Short-term

The assessment included financial modelling, including the analysis of costs for energy supply, technical servicing and adaptation of facilities, as well as forecasting of possible indirect influence on revenue, the structure of capital investments and access to sustainable financing.

Climate risks in the short and medium term do not exert a significant influence on the financial sustainability of the Company. In scenarios with a low and moderate level of emissions (RCP2.6 and RCP4.5), the Company demonstrates stable growth and a high ability to adapt to changes in climate conditions. Substantial impact is possible after 2050 in the scenario with a high level of emissions (RCP8.5), including growth of costs and reduction of profitability. The consideration of long-term climate risks is envisaged in strategic planning.

4.2.3.3. Risk management in the area of climate change

Management of climate risks at the Company is carried out within the framework of the corporate risk management system and is integrated into a single Risk Register. Environmental and climate risk is included in the category of operational risks and covers such factors as violation of environmental legislation, problems with waste disposal and insufficient environmental management. The consideration of climate risks is carried out on a regular basis upon the updating of the risk map, with account for the probability of occurrence and the magnitude of impact. For key risks, measures on reduction and management are developed.

Approach to the identification and assessment of climate risks

For the identification and assessment of climate risks, the Company applied a structured and scientifically grounded approach corresponding to the international TCFD recommendations, as well as the methodological materials of the IPCC, the European Bank for Reconstruction and Development (EBRD) and the Network of Central Banks and Supervisors for Greening the Financial System (NGFS).

The assessment covers both transition risks (regulatory changes, market and technological shifts, ESG expectations of investors) and physical impacts (extreme weather phenomena, overheating, floods, disturbances in energy supply). The analysis is conducted with account for the territorial distribution of infrastructure and the climate vulnerability of facilities.

The identification and assessment of climate risks is carried out with the use of the following elements:

  1. At the first stage, the assessment of the external climate and economic environment was conducted:
  • historical and current climate trends (temperature, precipitation, wind loads);
  • dynamics of global and regional climate factors7;
  • key demographic, technological, political-legal and economic drivers;
  • potential changes in the supply chain, demand for services and consumer behaviour.
  1. Using the TCFD recommendations and the framework model of climate analysis, climate risks were classified into:
  • Physical (acute and chronic),
  • Transition (regulatory, market, technological, reputational).
  1. For carrying out the scenario analysis of climate risks, Kazakhtelecom JSC used a model combination based on the Representative Concentration Pathways (RCP) of greenhouse gases of the Intergovernmental Panel on Climate Change (IPCC), as well as on the target scenario NZE2050 (Net Zero Emissions 2050). The scenarios RCP2.6, RCP4.5 and RCP8.5 make it possible to assess the consequences of various levels of global warming and the related impact on infrastructure, energy consumption and operational sustainability:
  • RCP 2.6 — low-carbon scenario (target 1.5–2°C),
  • RCP 4.5 — medium level of emissions,
  • RCP 8.5 — inertial scenario with the strengthening of physical consequences.

The NZE2050 scenario focuses on the achievement of carbon neutrality by 2050 and is applied for the assessment of transition risks related to the introduction of climate policy, technological shifts and changes in market expectations.

  1. Regional climate forecasts were used (Kazhydromet, World Bank Climate Portal), which made it possible to localise risks by region and identify particularly vulnerable facilities — predominantly in the southern regions of the country.
Categories of climate risks and opportunities

Transition Risks

  • Policy and Legal
  • Technology
  • Market
  • Reputation
1

Physical risks

  • Acute
  • Chronic
2

Opportunities

  • Resource Efficiency
  • Energy Source
  • Products/Services
  • Markets
  • Resilience
3

Also, a STEEP assessment of external factors (Social, Technological, Economic, Environmental, Political) influencing the company was conducted.

STEEP model of the main types of factors

Social

  • Social/Lifestyle Factors
  • Demographic Patterns
  • Health & Education Trends
  • Civil Stability & Tensions
1

Technology

  • Basic Research Trends
  • Emerging Technologies
  • Technology Diffusion
2

Economic

  • Macroeconomic Trends
  • Microeconomic Trends
  • Regional/National Variations
  • Financial Capital Trends
  • Trade Rules/Protectionism
3

Environment

  • Ecosystem Trends Climate
  • Weather Trends
  • Pollution
  • Recycling and Waste Disposal
  • Energy
  • Land Use
4

Political

  • Policies
  • Laws/Regulations
  • Court Decisions
  • Political Attitudes
5

Assess materiality
of climate-related risks:

Market and technological changes

  • Reputational risks
  • Political and and capabilities legal risks
  • Physical risks


Assessment of the Company’s current and future climate-related risks. Do these have the potential to be material in the future? Are organizational stakeholders concerned?

1

Identify and define
range of scenarios:

Scenarios that include a range of transitional and physical risks relevant to the Company.

Determining which scenarios and interpretations are appropriate considering the identified impacts. Consider input parameters, assumptions, and analytical choices. What reference scenario(s) should be used?

2

Evaluate business
impacts:

Impact on:

  • Resource costs
  • Operating expenses
  • Revenues
  • Supply chain
  • Business interruption
  • Time


Evaluate the potential effects on the organization’s strategic and financial position under each of the defined scenarios. Identify key sensitivities.

3

Identify potential
responses:

Responses may include:

  • Change in business model
  • A change in the composition of the portfolio
  • Investments in technology and capabilities


Use the results to identify applicable, realistic decisions to manage the identified risks and opportunities. What adjustments to strategic/financial plans would be needed?

4

Based on the results of the scenario analysis, an assessment of the potential impact on the business model, key assets and financial indicators of the Company was conducted. The approach included qualitative and quantitative elements, including spatial analysis of vulnerability, the assessment of scenarios, and also financial modelling with the use of current climate and economic data. For the assessment of physical risks, 25 key infrastructure facilities were selected, including data centres in major cities and regional centres of the Republic of Kazakhstan.

These facilities represented 3 segments of the value creation chain:

  • infrastructure,
  • operation,
  • operational processes.

Geo-referencing of climate data by regions was used to take into account the expected changes in precipitation, temperatures, wind loads and other parameters.

Transition climate risks were assessed with a focus on the potential change of legislation, decarbonisation policies, market expectations and the development of technologies. It was taken into account how this may affect the structure of expenses and the investment plans of the Company.

For each climate risk, the scale and probability of impact were determined, with account for the scenario, the sensitivity of facilities and the level of dependence on external resources. The model took into account the possible growth of electricity costs, the necessity of modernization of facilities and the costs for adaptation measures.

Based on the results of the analysis, priority zones and assets most sensitive to climate impacts were singled out — first of all facilities located in the southern regions of the country, where the risk of overheating and interruptions in energy supply increases.

Assets of Kazakhtelecom JSC with the greatest exposure

Category Type Indicator/Unit Potentially vulnerable assets of Kazakhtelecom Number of assets
Temperature Chronic Average daily temperature (°C) Regions: Akmola, Almaty, and East Kazakhstan Cities: Astana, Kokshetau, Almaty, Taldykorgan, ­Ust-Kamenogorsk, Semey 13
Chronic Annual minimum daily temperature (°C)
Chronic Annual maximum daily temperature (°C)
Precipitation Acute Snowfall (mm) Regions: Atyrau, Mangystau, and South Kazakhstan Cities: Atyrau, Aktau, Shymkent 4
Chronic Annual precipitation (mm)
Flood Acute Flood (m) Regions: Atyrau, Mangystau Cities: Atyrau, Aktau 2
Extreme weather (wind load) Chronic Maximum wind speed (m/s) Regions: Zhambyl, South Kazakhstan, and Akmola Cities: Taraz, Shymkent, Astana, Kokshetau 9
Monitoring and risk management

Climate risks are included in the general process of management of corporate risks, which ensures their coordinated consideration on a par with other strategic and operational factors. The Company applies a dual assessment approach: both from the position of potential losses, and from the position of strategic opportunities. Response mechanisms are developed within the framework of adaptation and investment policy, including:

  • modernization of facilities in vulnerable regions;
  • introduction of energy-efficient solutions;
  • re-equipping of cooling and backup power supply systems;
  • strengthening of the resilience of networks and data centres to physical impacts.

Management decisions are made with account for the forecast influence on expenses (CAPEX, OPEX), the stability of revenues, the continuity of operations, the sustainability of the supply chain and the conditions of attracting financing. Risks capable of substantially affecting financial indicators or disrupting the provision of services are put forward as priority. For them, adaptation measures are formed, including at the level of correction of investment programmes and operational planning.

Monitoring is carried out on a permanent basis with the participation of responsible subdivisions. If necessary, information about the escalation of climate risks is promptly brought to the attention of the Management Board and the Board of Directors. The Company also tracks changes in the regulatory environment and international requirements, including the potential introduction of carbon regulation in the Republic of Kazakhstan.

4.2.3.4. Metrics and goals in the area of climate change

GRI 305-1, 305-2

Kazakhtelecom JSC attaches priority significance to the accurate accounting and comprehensive analysis of greenhouse gas emissions, regarding them as a most important part of the assessment of the impact of its activities on the climate. For the achievement of goals in the area of decar­bonisation and sustainable development, the ­Company has introduced a systemic approach to the control and management of carbon emissions. Regular monitoring and transparent reporting make it possible to track the dynamics of indicators, to identify trends in a timely manner and to make well-grounded management decisions aimed at the reduction of the environmental load.

With the aim of effective response to climate challenges, at the Company a Low-Carbon Development Programme is in effect, aimed at the integration of climate aspects into operational activities and the sustainable development strategy.

Methodology of calculation of greenhouse gas emissions

To ensure the accuracy of calculations, the Company adheres to recognized international standards, which makes it possible to take into account emissions more comprehensively. The calculation of emissions under Scope 1 is carried out according to the Methodology for the calculation of emissions and absorption of greenhouse gases approved by Order of the Minister of Ecology and Natural Resources of the Republic of Kazakhstan of 17 January 2023 No. 9.

The calculation of greenhouse gas emissions under Scope 2 is carried out in accordance with the Order of the Acting Minister of Ecology, Geology and Natural Resources of the Republic of Kazakhstan of 19 July 2021 No. 260 “On the approval of the list of benchmarks in regulated sectors of the economy”.

In 2021, Kazakhtelecom JSC carried out a baseline inventory of greenhouse gas emissions for the key structural subdivisions covering the entire territory of Kazakhstan. The following branches were included in the calculation:

  • Corporate Business Division;
  • Retail Business Division;
  • Association “Network Division”;
  • Information Technologies Division;
  • “Telecom-Complect” Directorate;
  • “Service Factory”;
  • “Academy of Infocommunications Technologies” Directorate;
  • Directorate for the Construction of Telecommunications and Infrastructure Facilities.

Subsidiary and affiliated organizations were not included in the boundaries of the inventory. The annual inventory is conducted in accordance with the GHG Protocol methodology, assuming the determination of operational boundaries and the classification of emissions by categories:

  • Scope 1 — direct emissions: GHG emissions from sources owned by or under the control of the Company;
  • Scope 2 — indirect energy emissions: emissions from the production of purchased electricity, heat or steam used by the Company.

Quantitative assessment of greenhouse gas emissions is subject to inherent uncertainty due to the limitations of scientific knowledge used in the determination of emission coefficients, as well as values necessary for the aggregation of emissions of various gases.

The results of this inventory laid the basis for the construction of a further system of climate monitoring and management of the carbon footprint.

Analysis of current greenhouse gas emissions of Scope 1, 2

In 2025, the aggregate volume of greenhouse gas emissions (Scope 1 + Scope 2) amounted to 227,654 tonnes of CO₂-eq., which is 6.95% higher than the 2024 level (212,847 tonnes of CO₂-eq.).

Main changes:

  • Scope 1 (direct emissions) decreased from 30,199 tonnes to 29,162 tonnes of CO₂-eq. (3.4%). The main share continues to be composed of carbon dioxide (CO₂) emissions — 28,699 tonnes. Insignificant growth was also registered for methane (CH₄) — from 214 to 217 tonnes, while emissions of nitrous oxide (N₂O) decreased from 299 to 247 tonnes.
  • Scope 2 (indirect energy emissions) increased from 182,648 tonnes to 198,492 tonnes of CO₂-eq., which corresponds to growth of 8.7%.

Kazakhtelecom JSC actively introduces measures on the enhancement of energy efficiency aimed at the reduction of greenhouse gas emissions. These initiatives are a key element of the Company’s climate strategy and demonstrate progress in the achievement of goals on decarbonisation and sustainable development.

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А In the reporting 2025 year, no material reductions in greenhouse gas emissions were registered. А

29,162

-3.4%

tonnes CO₂-eq

Scope 1 (direct emissions)

198,492

+8.7%

tonnes CO₂-eq

Scope 2 (indirect emissions)

227,654

+6.95%

tonnes CO₂-eq

total greenhouse gas emissions (Scope 1 + Scope 2) in 2025

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Table 31. Volume of greenhouse gas emissions, tonnes СО2-eq.

Indicator name 2023 2024* 2025
Direct emissions (Scope 1) of greenhouse gases, including 24,319 30,199 29,162 А
- carbon dioxide (СО2) 23,797 29,686 28,699 А
- nitrous oxide (N2O) 321 299 247 А
- methane (CH4) 201 214 217 А
Indirect energy greenhouse gas emissions (Scope 2) (electricity and thermal energy) 200,538 182,648 198,492 А

Values for greenhouse gas emissions under Scope 1 for 2023 were recalculated in correlation with 2024 according to the IPCC methodology
For the calculation of the volume of GHG under Scope 2, the regional method recommended by the GHG Protocol was used.

Volume of greenhouse gas emissions under Scopes 1 and 2, tonnes СО2-eq.

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Table 32. Dynamics of carbon intensity

Indicator name 2023 2024* 2025
Volume of greenhouse gas emissions under Scopes 1 and 2, tonnes СО2-eq. 224,857 212,847 227,654 А
Revenue of Kazakhtelecom JSC, KZT million 299,725 314,673 348,014 А
Carbon intensity, tonnes СО2-eq./KZT million

Kazakhtelecom JSC systemically works on the enhancement of the energy efficiency of its data centres, taking into account their key role in the provision of digital infrastructure of the country. One of the priorities is the reduction of specific energy consumption with the simultaneous increase of computing capacities and reliability of operation of systems.

With the aim of enhancing energy efficiency, measures on the modernization of data centres are assumed, including the installation of new equipment and the build-up of capacities in existing premises. Particular attention is paid to the period of the summer months, when the load on climate equipment increases — it is at this time that enhanced energy efficiency and reliability are required to maintain the stable operation of the entire IT infrastructure.

Despite the positive dynamics of energy consumption, the share of RES in the structure of energy used remains at the level of 0%. This indicates the potential for transition to more sustainable sources of energy and the possibility of integration of renewable solutions into the architecture of the energy supply of data centres.

Kazakhtelecom JSC is considering the issue of phased inclusion of RES in the energy balance of data centres as part of the climate strategy for the medium term, which will make it possible to reduce the carbon footprint and to enhance the overall sustainability of the digital infrastructure. Within the framework of the climate strategy, expansion of the scale of programmes on the enhancement of energy efficiency, the introduction of innovative technological solutions and the reduction of carbon intensity in the long term is planned.

Goals of the Company within the framework of the Low-Carbon Development Programme and the ESG Strategy

Kazakhtelecom JSC sets clear and measurable climate goals aimed at the reduction of the carbon footprint, the enhancement of energy efficiency and the transition to sustainable sources of energy, in accordance with international approaches and the climate goals of the Republic of Kazakhstan. The goals established cover both the short and the long term and are based on calculations of greenhouse gas emissions by the categories of Scope 1, Scope 2 and, in the long term, Scope 3.

Long-term goals:

Achievement of carbon neutrality by 2060, in accordance with the national strategy of the Republic of Kazakhstan for the decarbonisation of the economy.

Medium-term goals (until 2032):

Reduction of greenhouse gas emissions of Scope 1 and Scope 2 by 13% as compared with the baseline level of 2021.

Reduction of consumption of imported electricity on average by 1.5–2% annually.

Reduction of consumption of imported thermal energy on average by 1% annually.

Implementation of compensatory measures: formation of a portfolio of offset projects until 2029.

Transition to RES: gradual increase of the share of renewable sources of energy in the structure of consumption, including the purchase of “green” electricity with I-REC certificates, with the achievement of the volume of 10,700 MW·h by 2032.

Plans for 2026 and the medium term:
  • Revision of the LCDP (low-carbon development plan) until 2032 with account for updated climate challenges and technological opportunities.
  • Development of a plan on interaction with counterparties on climate issues (within the framework of the supply chain and Scope 3).
  • Expansion of the public disclosure of climate risks in annual reporting.
  • Carrying out an assessment of Scope 3 (non-energy emissions) and disclosure of the results in open access.