How developers cope with climate challenges: Insights from Aigerim Tleshova

With global temperatures having risen by approximately 1.3°C since the pre-industrial era, the Earth’s climate is undergoing significant changes. The consequences – such as heatwaves, floods, and wildfires – are now affecting the world’s population. While these natural disasters disrupt everyday life for millions, they also inflict billions of dollars in economic losses, as reported by the World Meteorological Organization (WMO). In 2024, devastating floods hit Kazakhstan, affecting 224 settlements and damaging over 17,000 residential homes, with estimated damages reaching approximately $444 million – surpassing the total economic losses from water-related disasters over the past 30 years. To understand how a construction business copes with such challenges, we turned to Aigerim Tleshova, an MBA and head of the Investment Department at BI-Group, a leading construction holding in Central Asia.

Aigerim, in your view, what is the most significant investment risk posed by climate change for the construction sector?

In my view, the biggest investment risk climate change poses to the construction sector is increased costs and delays due to extreme weather and regulatory changes.

Extreme weather—like floods, storms, and heatwaves—can damage sites, disrupt supply chains, and delay projects, leading to higher costs for repairs, labor, and protective measures. Insurance premiums may also rise in areas with unstable weather.

Additionally, stricter climate regulations will require investments in greener technologies, sustainable practices, and eco-friendly materials, increasing expenses. Failure to comply could result in penalties or project cancellations.

Lastly, buildings in climate-prone areas or those that don’t meet future sustainability standards could lose value, risking long-term asset devaluation.

You manage a remarkable investment portfolio, and you aim to increase the company’s investment opportunities by 15%. How do you stay ahead of these risks while maintaining profitability?

To achieve a 15% increase in investment opportunities while managing risks, a comprehensive strategy is essential. This should focus on diversification, sustainability, innovation, risk management, and stakeholder engagement to ensure long-term profitability.

Diversification is crucial – I ensure the portfolio covers different sectors, balancing projects with quick returns and those that offer longer-term stability. I also integrate ESG factors into my decisions, as companies that align with these principles are often more resilient to regulatory changes and market shifts.

Risk assessment is ongoing. I regularly evaluate the portfolio and adjust it based on emerging risks or new opportunities. Innovation plays a big role too – investing in technology, like AI in construction, allows me to enhance efficiency and sustainability. Staying engaged with stakeholders and policymakers is equally important; it helps me stay on top of regulatory changes and market demands, ensuring my strategies are both flexible and forward-thinking.

By staying actively involved in monitoring performance and regularly reviewing market conditions, I’m able to pivot strategies quickly in response to emerging risks or opportunities. This agility allows me to manage risks effectively while also uncovering new paths for growth. Overall, it’s about staying flexible and being ready to adapt at any moment, all while keeping a focus on long-term success.

BI-Group prioritizes environmental, social, and governance (ESG) principles. Given your success in leading a team to drive profit growth, especially through strategic cash flow management, how do you see ESG investments enhancing profitability while addressing climate challenges?

ESG-focused investments can significantly contribute to profitability while addressing climate challenges in several ways. First, companies that prioritize sustainable practices often experience reduced operational costs through energy efficiency and waste reduction, enhancing overall profit margins. Second, by investing in environmentally friendly technologies and practices, BI-Group can tap into the growing market demand for sustainable products, attracting eco-conscious consumers and expanding our customer base.

Additionally, strong ESG performance can mitigate risks related to regulatory compliance and reputational damage, ultimately leading to more stable financial returns. Engaging in ESG initiatives aligns with our corporate values and positions BI-Group as a leader in sustainability, which can enhance brand loyalty and drive long-term profitability.

In 2023, you adapted the McKinsey 5-Block methodology to BI-Group’s investment portfolio, facilitating strategic decisions. Did this impact the company’s initiative to provide over 500 million tenge in relief during the recent floods? What motivates you most about this work?

Adopting the McKinsey 5-Block methodology for the investment portfolio helped us identify investments where the value from disposal exceeded the potential future returns. This analysis allowed us to increase profitability within the investment portfolio, which positively impacted the company’s consolidated profit and loss statement, contributing to overall profitability. As a result of these enhanced financial outcomes, top management was able to make the decision to provide substantial financial support during the recent floods.

What motivates me most about this is the ability to use structured, strategic frameworks not just for financial gain, but also for meaningful, real-world impact. The ability to support communities in times of crisis while maintaining a strong business foundation is a powerful example of how corporate strategy can align with social responsibility. Helping the company make these impactful decisions such as supporting charitable projects Juldyzay, flooding issues, heating collapse in Ekibastuz or supplying breathing apparatuses during Covid-19, motivates me to continue seeking innovative ways to combine profitability with purpose.

As an executive overseeing investment strategy, what policy shifts would you like to see from governments to help real estate developers better address climate challenges?

I believe governments should implement several key policy changes to help the real estate sector effectively address climate challenges. First, providing incentives for sustainable practices, such as tax credits or subsidies for companies investing in eco-friendly construction methods, would encourage more developers to prioritize sustainability.

Establishing stronger building codes that mandate energy efficiency and sustainable design principles would also ensure that new developments meet higher environmental standards. It’s also important to support the integration of renewable energy sources into construction projects, perhaps through grants or low-interest loans, which could significantly reduce both carbon footprints and operational costs.

In addition, increased investment in green infrastructure, like public transit systems, renewable energy grids, and sustainable water management, can empower developers to create resilient, low-impact communities.

I think such policy shifts would help the development sector be more effective in addressing climate challenges and create opportunities for innovation and growth.

You implemented automated calculation models and optimized the decision-making process within Investment Committees. How does this help in responding to large-scale challenges such as significant flooding?

I think implementing automated calculation models and streamlining decision-making within investment committees enhances the ability to respond to large-scale risks like severe flooding. Automated models allow rapid risk assessment, providing real-time evaluation of flood impacts on investments for timely decisions. Streamlined processes enable efficient scenario planning, preparing the company for various flood-related risks.

With clearer insights, resources can be efficiently allocated to high-risk areas, and quick access to accurate data supports timely stakeholder communication, ensuring transparency. These advancements strengthen flood preparedness and reinforce the company’s commitment to responsible investing and sustainability.

As a renowned expert in investment management, what recommendations would you offer to other companies in the construction industry facing escalating climate threats?

There are a few key strategies I’d recommend for companies in the construction industry as they grapple with the growing threat of climate change.

First, it’s important to integrate ESG principles into every aspect of decision-making. This approach enhances a company’s reputation and helps identify potential risks and opportunities related to climate change. Next, it is crucial to leverage technology. By using advanced tools such as data analytics, modeling software, and AI, companies can improve risk assessment and project planning. These tools will allow them to predict climate impacts and optimize resource allocation.
Collaboration is another key factor. Partnering with governments and other stakeholders can lead to shared solutions for climate adaptation and sustainability. These partnerships can also open doors to funding and resources for innovative projects.

Investing in education and training for your teams is also critical. When employees understand climate risks and sustainable practices, they can make better decisions and drive innovation to address these challenges. Consider diversifying investments into sectors that are less vulnerable to climate risks, such as renewable energy or green technology. This can help reduce overall portfolio risk. Lastly, it’s important to regularly review and adapt strategies in response to evolving climate threats. Being proactive, rather than reactive, will enhance long-term sustainability and resilience.

With these approaches, construction companies can effectively manage the climate change risks while positioning themselves as leaders in sustainability.

Featured image credit: Emre Çıtak/Ideogram AI