@Johannes Boyne Thank you for reaching out.
This GUC was added to the azure extension only for version 11 of Postgres, because it was required for migration scenarios from Single Server to Flexible Server. Once the server is migrated to Flex, you can upgrade to higher versions, but that GUC isn't available, because it isn't necessary outside of the specific context of migration from PGSS 11 to PGFS 11.
As shared by Mahesh above. It is not supported on higher version of Azure PostgreSQL flex.
Regards,
Oury