Fragmentation operating picture 2026

On 7 November 2025, Chapter Zero Kazakhstan and Nazarbayev University Graduate School of Business convened the forum “Governing Transitions: Climate, AI and a Sustainable Future for Kazakhstan and Central Asia.” During the plenary session “Governing Fragmentation, Climate Risks & Resilience”, ambassadors, representatives of think tanks, and business leaders reflected on the growing complexity of governing climate risks and their implications for energy transition, resilience, and energy security.

Building on these discussions, the analysis presented in this article synthesizes key insights into eight critical uncertainties facing Kazakhstan, alongside practical considerations for governing boards navigating an increasingly fragmented regulatory, technological, and geopolitical environment. A comprehensive Forum Report, detailing the methodology, findings, and board-level implications, is available at the end of this article.

Key Panel Takeaways:

1. Kazakhstan faces an urgent need to meet its carbon-neutrality targets and manage climate risks, while also navigating a multipolar world where regulations vary, and price volatility and protectionism are causing market problems. 

2. Building resilience depends on strong legal and institutional frameworks, such as risk assessments, integrated planning mechanisms, and clear accountability structures, that ensure continuity beyond political cycles. 

3. At the same time, transitioning to a more sustainable economy requires improving resource efficiency and accelerating circular-economy practices to increase productivity and meet emerging global trade and supply-chain standards. 

4. The effectiveness of these shifts ultimately depends on institutional capacity, particularly at the mid-management level, where short-term decisions are often made.  

8 Uncertainties that Kazakhstani Businesses Face and indicators to be tracked: 

1. Energy Transition Uncertainty: Between Decarbonization and Coal 

   • Kazakhstan’s continued reliance on coal (more than 70% of its energy) and slow institutional adjustment create uncertainty about its net-zero trajectory.

   • While gas and nuclear energy projects are promising for Kazakhstan’s decarbonization, their capacity to ensure a sufficient energy supply remains limited. The UK ambassador suggested legal anchoring (UK’s Climate Act, adaptation cycles) and community-oriented transitions can convert uncertainty into a managed pathway.

   • Key Indicators to Watch:

     1. Coal’s share in the power mix, where are renewables being added.

     2. Announced vs. actual coal-plant retirement timelines, signaling whether transition plans are being delivered.

2. Local Governance Uncertainties: 

   • There was consensus that Kazakhstan’s governance challenge is not a lack of plans but a lack of institutional follow-through in policy implementation.

   • There is a need for evidence-based policymaking and stronger integration among universities, analytical centres, and boards to manage data-driven uncertainty rather than relying on intuition.

   • Key Indicators to Watch:

     1. Gap between announced policies and implemented measures, including delays or partial execution affecting operations;

     2. Use of data, modelling, and scenario analysis in decisions;

     3. Engagement with analytical centres and universities, particularly where evidence informs operational or investment decisions.

3. Local Resource Uncertainties: Water and Climate Volatility

   • Droughts and flooding in Kazakhstan were flagged as constraints, an uncertainty multiplier that compounds sectoral risks.

   • Kazakhstan’s dependence on transboundary rivers shared with neighboring countries and uneven river distribution across the country create water scarcity and reduce long-term water availability.

   • Key Indicators to Watch:

     1. Operational dependence on single river basins for production, processing, or cooling needs;

     2. Exposure to transboundary water agreements, particularly critical assets that rely on water flows governed by external actors; 

     3. Frequency and severity of climate-driven water disruptions affecting operations.

4. Local Social Uncertainties: Human Capital Maintenance

   • The UK transition example underscored how neglecting social conditions during decarbonization could create long-term instability. 

   • Kazakhstan could experience an industrial decline without retraining or social support, which would exacerbate political and regional tensions, particularly in coal-dependent areas.

   • Key Indicators to Watch:

     1. Share of workforce employed in coal-dependent regions and sectors, and trends in employment concentration;

     2. Availability and uptake of retraining and reskilling programmes

5. AI Governance Uncertainty:

   • The EU remarks cautioned that AI is both a tool and a new source of risk: energy-intensive, data-sensitive, and regulation-dependent.

   • Kazakhstan’s uncertainty centers on digital sovereignty and regulatory coherence—how to promote innovation while ensuring the ethical, secure, and sustainable use of technology.

   • Key Indicators to Watch:

     1. Energy intensity of digital and AI-enabled operations, particularly data centers and automated systems;

     2. Clarity and stability of AI-related regulatory requirements, including data protection, accountability, and risk-tiering frameworks.

6. Financial and Investment Uncertainty: Green Finance and Capital Flows

   • Global capital increasingly favors low-carbon and transparent markets, so failure to meet EU environmental standards (e.g., CBAM) may restrict access to affordable green finance and export competitiveness.

   • Boards that integrate climate alignment and regulatory preparedness (e.g., align with EU taxonomy) may benefit from lower capital costs and increased access to international markets.

   • Key Indicators to Watch:

     1. Cost of capital differentials between climate-aligned and non-aligned firms (e.g., interest rates);

     2. Share of financing linked to green, sustainability-linked, or transition instruments, including access to IFI and ECA funding;

     3. Exposure of revenues and exports to CBAM-covered sectors.

7. Uncertainty in Standards and the Circular Economy: Fragmentation and Regulatory Divergence

   • For example, the emerging ISO 59000 Circular Economy Standard (2024) is a new certainty in global supply chains: firms unable to meet circularity requirements will be excluded from them.

   • This could make Kazakhstan’s position in the international market uncertain in the long term if it doesn't commit to meeting these standards.

   • Key Indicators to Watch:

     1. Share of revenues dependent on markets requiring circularity or sustainability certification, particularly the EU.

     2. Investment in resource efficiency, recycling, and lifecycle management across operations and supply chains.

8. International Structural Uncertainty: Geo-economic blocs, sanctions, financial/techonolgical fragmentation

   • Boards operate in markets that don’t have borders and require governance systems that can withstand shifting rules and transit disruptions.

   • Kazakhstan needs to be prepared for geopolitical and geo-economic shifts in the region, which are certain to affect export access, financing, and compliance.

   • Key Indicators to Watch:

     1. Exposure to sanctions or sanctions spillovers through financing channels, or transit routes.

     2. Dependence on specific trade corridors, payment systems, or technology providers;

     3. Restrictions on access to finance, technology, or data flows arising from bloc-based regulation or geopolitical tensions.

Moving Forward

In 2026, boards will need to: 

1. redirect capital toward assets and projects that will remain viable under tightening climate, water, and trade rules including pricing water and regulatory risk; 

2. redefine risk appetite and portfolio composition to withstand regulatory divergence and climate volatility particularly stress testing major investments against CBAM exposure, water security and supply-chain disruptions; and 

3. strengthen talent, data, and disclosure capabilities so that uncertainty is governed proactively rather than managed through crisis response.

For Kazakhstan’s boards, the task ahead is to translate uncertainty into institutional resilience. This means incorporating the uncertainties into strategies and capital allocation cycles, while reviewing them regularly alongside financial and operational risks.Those companies that align institutional capacity, climate ambition, and innovation will not only withstand volatility but define Kazakhstan’s position in the emerging global sustainable economy. Ultimately, climate transition and economic growth are not competing objectives but the same strategic challenge.

Increasing capabilities is a key part of this, and targeted training and dialogue with institutes like Nazarbayev University and Chapter Zero Kazakhstan ensure informed oversight of climate, energy transition, AI and geo-economic risks. Resilience depends on information and monitoring emerging risks so they can be acted on.

About the article

This article was prepared by Jessica Neafie, Assistant Professor and Director of Undergraduate Studies at the Department of Political Science and International Relations, Nazarbayev University, with research support from Adiya Akhmer, Master Student at Nazarbayev University.

The article was reviewed by Chapter Zero Kazakhstan and informed by expert insights shared by speakers and invited experts during the Governing Transitions Forum 2025.

Governing Transitions Forum 2025 — Forum Report.pdf

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