الهيئة العامة للرقابة المالية

Dr. Mohamed Farid – FRA Chairman:

• Launching the voluntary carbon market is a crucial step in accelerating the transition to a low-carbon economy and mobilizing private sector finance for climate action.
• The voluntary carbon market is committed to adhering to rigorous governance standards to ensure transparency and integrity
• The non-bank financial sector contributes to the green economy and supports efforts to reduce carbon emissions.

Dr. Rania Al-Mashat, Minister of Planning and Economic Development and International Cooperation:

• Egypt is actively pursuing decarbonization through ‘NWEFI’ platform.

Dr. Mahmoud Mohieldin , UN Special Envoy on Financing the 2030 Agenda for Sustainable Development:

• Innovative, affordable financing is crucial for accelerating emissions reductions, especially since developing countries have lower emissions

Dr. Mohamed Farid, FRA Chairman participated in a panel discussion entitled: “Climate Risk in Boardrooms” at Chapter Zero Egypt’s Annual Conference “The Path to Net Zero. Joining him on the panel were distinguished figures such as Dr. Mahmoud Mohieldin , UN Special Envoy on Financing the 2030 Agenda for Sustainable Development, Dr. Rania Al-Mashat, Minister of Planning and Economic Development and International Cooperation. Other distinguished panelists included Helmy Ghazy, Deputy CEO and Head of Global Banking at HSBC Egypt, Sebastian Reyes, President of Schneider Electric for Northeast Africa and the Levant and Hossam Seifeldin, CEO Capgemini Egypt. The session, moderated by Dr. Sabrina Bruno, Co-founder and Member of the Governing Board of the Climate Governance Initiative (Chapter Zero Italy).

FRA’s participation in the conference underscores its commitment to mitigating climate change and aligning the non-banking financial sector with the government’s decarbonization goals. Dr. Farid highlighted the role of the voluntary carbon market in stimulating green investment and fostering the development of sustainable finance products.

Dr. Farid emphasized the voluntary carbon market’s commitment to robust governance standards that prioritize integrity and transparency. This aligns with the Authority’s multifaceted approach, which combines regulation, guidance and market development. He highlighted the mandatory climate reporting requirements for non-bank financial institutions, in line with the TCFD disclosures. These disclosures cover climate-related risks and opportunities as well as governance structures.

In 2021, the Authority issued Decrees no. 107 and 108, mandating ESG and TCFD disclosures for specific financial institutions. This applies to all listed companies and non-bank financial institutions with capital exceeding 100 million Egyptian pounds. For larger institutions with capital exceeding 500 million Egyptian pounds, more comprehensive TCFD disclosures are required.

FRA is actively working to align ESG and TCFD disclosures with the ISSB S1 and S2 standards. Additionally, the Authority is promoting green financing frameworks to encourage investment in sustainable projects, including supporting green bond issuance and facilitating access to green financing.

Dr. Farid also noted that the Authority provides guidance and conducts training programs for financial institutions to enhance their capacity to manage climate risks. This includes the efforts of the Regional Center for Sustainable Finance (RCSF). Additionally, the Authority encourages the involvement of all stakeholders in integrating climate risk management into the non-banking financial sector.

Also, he highlighted the potential of organized and regulated voluntary carbon market to attract concessional financing from international institutions, such as the Green Climate Fund and regional development banks, for carbon reduction projects. He emphasized that the carbon market offers investment opportunities for financial institutions in trading carbon credits, green finance and sustainable projects, thereby directing capital towards sustainable initiatives.

Moreover, he underscored the importance of a sufficient supply of high-quality carbon credits, necessitating a robust infrastructure and the engagement of new market participants. Additionally, he stressed the crucial role of accurate data and disclosures in ensuring the integrity of carbon market.

Dr. Farid emphasized the crucial role of boards of directors in addressing climate change. He highlighted the importance of robust risk management frameworks, compliance with disclosure requirements, engagement in the voluntary carbon market, and fostering innovation. He stressed the urgency of action, especially for the non-bank financial sector, given its significant role in combating climate change.

The first step towards establishing Egypt and Africa’s inaugural voluntary carbon market involved amending the Capital Market Law No. 95 of 1992. A Prime Ministerial decree recognized carbon credits as financial instruments, designated the Exchange as a trading platform, and established a supervisory committee. This significant step was initiated by a proposal from FRA’s Board of Directors. Subsequently, FRA formed the first Supervisory and Control Committee on Carbon Emissions Reduction Units chaired by FRA Chairman and comprising representatives from FRA, Ministry of Environment, EGX and carbon market experts.

Dr. Farid announced that the Authority, through its Supervisory and Control Committee on Carbon Emissions Reduction Units, had recently approved the registration of several projects in FRA’s database. Furthermore, efforts are underway to offer these certificates in the voluntary carbon market.

Subsequently, the Authority issued listing and delisting rules for carbon credits. It also established standards for the approval of local voluntary carbon registries, which serve as centralized electronic systems that record the issuance, registration, and tracking of ownership transfers of carbon emission reduction certificates generated from the implementation of reduction projects in accordance with methodologies issued by standards-setting bodies. Concurrently, the Authority adopted trading rules on the Egyptian Exchange following extensive consultations and coordination and approved settlement rules for carbon credits.

Dr. Farid added that FRA has been actively working to accelerate the activation of the new market due to its pivotal role in enhancing Egypt’s efforts to reduce carbon emissions. In this regard, the Authority issued a decree regulating the criteria for registering validation/verification bodies (VVBs). The committee then began receiving applications from entities wishing to be registered as VVBs. After conducting interviews to assess their capabilities and qualifications, the committee registered three entities: two local and one foreign.

On her part, Dr. Rania Al-Mashat, Minister of Planning, Economic Development and International Cooperation stated that Egypt is moving towards decarbonization through ‘NWEFI’ platform, which aims to provide adequate financing from various sources to achieve sustainable food security, transition to clean and renewable energy and develop water sector.

In her speech, she highlighted that successive climate conferences have emphasized the importance of partnerships among various stakeholders to address climate change. She noted that Egypt’s hosting of COP27 demonstrated the importance of working with a wide range of stakeholders to address the three pillars of climate action, including mitigation, adaptation and fair finance. These principles form an integral part of Egypt’s climate strategies. Therefore, it was essential to integrate these priorities not only into government policies but also into private sector strategies. Also, she emphasized the importance of public-private partnerships to achieve climate and sustainability goals.

Al-Mashat said that adaptation to climate change is a fundamental element of achieving “high-quality economic growth” and ensuring resilience. She emphasized the need to consider climate and natural-related risks in national investment plans to ensure the sustainability of projects and minimize negative environmental impacts on future generations.

On the other hand, Dr. Mahmoud Mohieldin , UN Special Envoy on Financing the 2030 Agenda for Sustainable Development, stated in his speech that providing more innovative and accessible financing solutions has become necessary to accelerate the pace of reducing carbon emissions. He explained that developing countries produce fewer emissions compared to developed countries.