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ESG in PPP Projects in Uzbekistan

ESG in PPP Projects in Uzbekistan: Requirements of Resolution No. 720 and Preparation of a Consultant’s Opinion

Why environmental, social and governance risks need to be considered as early as the assessment stage of a public-private partnership project

Public-private partnership (PPP) enables the development of schools, hospitals, and transport, utility and energy infrastructure with private investment. However, a project’s long-term outcomes depend on more than its financial model and the allocation of responsibilities between partners. Errors in assessing environmental, social, climate and governance risks can lead to higher construction costs, delays, conflicts with local communities and additional obligations during operation.

Resolution No. 720 of the Cabinet of Ministers of the Republic of Uzbekistan dated 30 October 2024 requires the PPP Project Assessment Document to include relevant opinions from engaged consultants on risk assessment and management, taking international ESG standards into account. This makes ESG assessment a practical component of sound project preparation, rather than solely an element of corporate reporting.

What Does Resolution No. 720 Provide For?

Clause 13 of Section III of Annex No. 2 to Resolution No. 720 concerns the “General Conclusions” section of the Project Assessment Document. This section must include opinions from consultants engaged in the implementation of the PPP project on whether risk assessment and management comply with international environmental, social and governance (ESG) standards. It must also state the project’s main advantages and disadvantages and the reasons for selecting the optimal implementation option.

It is important to distinguish between the requirements for the content of the Project Assessment Document and those of a specific international lender. The resolution itself does not require all projects to obtain certification under a single standard, nor does it replace the environmental impact assessment and state environmental expert review procedures provided for under national legislation.

Which Risks Need to Be Assessed?

E — Environment and Climate

The assessment covers site characteristics, the impacts of construction and operation on air, water, soil and biodiversity, waste management, resource consumption, greenhouse gas emissions and resilience to heat, droughts, floods and other climate hazards. For infrastructure with a long life cycle, it is particularly important to compare options in terms of both capital expenditure and operating costs.

S — Social Aspects

The assessment covers worker and community safety, the accessibility and inclusivity of services, impacts on local communities, land use and potential displacement of land users, working conditions for contractors’ employees, and mechanisms for informing stakeholders and handling grievances. For schools and healthcare facilities, particular attention is paid to the safety of children and visitors, accessibility for people with reduced mobility, and the organisation of construction work near social infrastructure that remains in use.

G — Project Governance

The review examines the allocation of ESG responsibilities between the public and private partners, transparency in decision-making, anti-corruption procedures, contractor management, compliance monitoring, reporting and key performance indicators (KPIs). Each identified risk must have a designated responsible party, be reflected in management plans and, where necessary, be taken into account in the PPP contractual framework.

Which International Frameworks May Be Applied?

The methodology is selected based on the nature of the project, its risk category, stage of preparation and the requirements of potential financing institutions. Assessments often draw on the IFC Performance Standards (PS1–PS8), the World Bank’s approaches to environmental and social risks, and the requirements of the relevant lender, including the EBRD where it is involved. International standards serve as assessment benchmarks; whether specific standards are mandatory depends on the financing arrangements, contractual terms and applicable regulatory framework.

For buildings, additional energy efficiency and sustainable design tools may be applied, including EDGE, LEED or BREEAM, where these are included in the project objectives. Such tools do not replace a comprehensive ESG risk assessment and should not be presented as universal proof of compliance across all social and governance aspects.

How Can You Prepare a Well-Substantiated ESG Opinion?

  1. Define the project scope: sites, construction and operation stages, participants and key data sources.
  2. Carry out ESG screening: identify material risks and impacts, assess their likelihood and significance, and review existing control measures.
  3. Compare actual practices against relevant international standards and prepare a gap analysis.
  4. Compare realistic options for implementing the project in terms of location, technological and organisational solutions, resource costs, climate resilience and social impacts.
  5. Develop a matrix of risk management measures, assign responsibilities and set deadlines and measurable indicators.
  6. Prepare the final opinion for the “General Conclusions” section, with substantiated limitations, conditions and recommendations.

Example: School Construction under a PPP Model

In a project to develop several schools, ESG screening covers each site individually: the safety of pedestrian and vehicle access, the impacts of construction work, working conditions, access to education, building energy efficiency, water consumption and extreme heat risks. Where alternative sites or design solutions are being considered, ESG analysis allows these options to be compared using ESG criteria alongside financial and technical criteria.

For example, an option that is cheaper at the construction stage may entail higher cooling and operating costs or create additional risks for students. An ESG opinion helps document these differences and identify the required risk management measures throughout the term of the PPP agreement.

What Value Does ESG Assessment Create for PPP Participants?

  • For the public partner — a more transparent rationale for selecting an option and a mechanism for controlling risks of public concern.
  • For the private investor — early identification of risks that could affect costs, timelines and cash flow stability.
  • For potential lenders — structured information on applicable standards, identified gaps and the impact management plan.
  • For local communities — safer, more accessible and more sustainable infrastructure solutions.

The HPBS Approach: From Risk Analysis to Project Decisions

HPBS conducts preliminary and comprehensive ESG assessments of PPP projects, assesses risks against relevant international frameworks, analyses the ESG impacts of alternatives and prepares a consultant’s opinion for the Project Assessment Document. The result goes beyond a formal list of risks, providing a documented assessment of their manageability, priority measures and the conditions for further implementation.

Where necessary, the work is carried out jointly with specialist partners responsible for environmental impact assessment under national procedures, state environmental expert review and specialised field studies. The scope of an extended ESIA and the requirements of international financing institutions are defined separately.

For a consultation on the ESG assessment of a PPP project: info@hpbs.uz, +998 90 826 71 83

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