الهيئة العامة للرقابة المالية

• Mohamed Farid, FRA Chairman visit FRA’s office at GAFI headquarters.

Dr. Mohamed Farid, FRA Chairman:

• Sustainability initiatives are a key focus for FRA within the non-banking financial sector.
• FRA launched a voluntary carbon market and is actively enhancing corporate capabilities in social responsibility and climate action disclosures.
• Sustainability is a core pillar of FRA’s strategy and vision to enhance the competitiveness of non-banking financial sector, aligning with global best practices.
• Aligning business practices with sustainability principles is not just an aspiration but a fundamental requirement for building a resilient and inclusive economy.
• Sustainability offers emerging markets an opportunity to attract investments and is essential to support international efforts to combat climate change.

Dr. Mohamed Farid, FRA Chairman participated in the launch of the Arabic version of OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. The event organized by the Ministry of Investment and Foreign Trade in collaboration with the Organization for Economic Co-operation and Development (OECD). Dr. Farid also participated in a broad-ranging discussion with representatives from the OECD and Engineer Hassan Al-Khatib, Minister of Investment and Foreign Trade.

The event witnessed extensive discussions on issues related to sustainable development, economic growth and social inclusion, as well as the efforts of the Egyptian government and its various agencies to align with the United Nations Sustainable Development Goals. Several leading figures and experts in this field, including Dr. Mahmoud Mohieldin, the United Nations Special Envoy on Financing the 2030 Agenda and Hossam Heiba, CEO of the General Authority for Investment and Free Zones “GAFI” attended the event. In addition to Allan Jorgensen, Head of Responsible Business Conduct Centre ,  Nikolaos Zaimis, Head of Trade and Investment Section -EU Delegation to Egypt, Eric Oechslin , Director of the ILO Cairo Office and  Dr. Valérie Liechti, Head of the Office for International Cooperation – Embassy of Switzerland in Egypt.

Dr. Farid emphasized that aligning business practices with sustainability principles is not merely an aspiration but a fundamental requirement for building a resilient and inclusive economy. These efforts enhance the competitiveness of Egyptian companies in the rapidly evolving global marketplace. He congratulated GAFI and OECD on the launch of the Arabic version of OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. Dr. Farid also outlined FRA’s journey towards sustainability since 2021, highlighting Egypt’s pioneering role in the region in mandating ESG reporting.

He added that FRA Board of Directors issued Decrees no. 107 and 108 of 2021, which established clear guidelines for preparing reports that consider environmental, social, and governance (ESG) factors, as well as the Task Force on Climate-related Financial Disclosures (TCFD) framework. These guidelines serve as a primary reference for companies to disclose their sustainability practices.

He stated that Decree no. 107 of 2021 mandated that non-banking financial institutions with issued capital or net equity of at least EGP 100 million must include ESG disclosures in their annual reports, which are attached to their annual financial statements.  On the other hand, companies with issued capital or net equity of at least EGP 500 million are required to comply with both ESG and TCFD disclosures within their annual reports and accompanying financial statements.

Dr. Farid highlighted that FRA decree no. 108 of 2021 mandated that all listed companies on the Egyptian Exchange must disclose environmental, social, and governance (ESG) information, as well as the financial implications of climate change, within their annual reports and financial statements. This decree demonstrates Egypt’s proactive approach to aligning with global trends and underscores the critical role of financial markets in driving change. Dr. Farid noted that these decrees not only represent a regional achievement but also position Egypt as a global leader in sustainability reporting. The framework is designed to accommodate businesses of all sizes and includes tailored standards for various industries and sectors.

Dr. Farid further stated that FRA is developing a framework that is fully aligned with the latest international standards, particularly IFRS S1, which covers general requirements for disclosing sustainability-related financial information, and IFRS S2, which addresses climate-related disclosures.

He emphasized that these standards provide a comprehensive approach to sustainability reporting, and their adoption will have significant positive impacts, including enhancing global competitiveness by aligning with international standards, attracting foreign investment, improving transparency and accountability, and fostering better decision-making. Moreover, the adoption of these standards will enhance resilience and risk management.

Dr. Farid further noted that sustainability offers emerging markets an opportunity to attract investments and is essential for global efforts to combat climate change. In this context, he emphasized the importance of simplifying sustainability, highlighting the need to assist small and medium-sized enterprises in integrating sustainability into their operations, as it is not limited to large corporations or those operating in the financial services sector. He also stressed the importance of both listed and unlisted companies adhering to sustainability standards.

Dr. Farid pointed out that FRA aims to achieve a green and low-carbon economy, in line with Egypt’s commitment to the Paris Agreement signed in 2016 and the National Sustainable Development Agenda “Egypt Vision 2030.” He also mentioned that three non-banking financial institutions under FRA’s supervision have issued social bonds.

In addition, he highlighted that the issuance of these bonds represents a culmination of efforts by non-banking financial sector and regulatory Authorities in both non-banking and banking sectors to drive sustainability and decarbonization across Egypt, Africa, and the Middle East.

Also, Dr. Farid highlighted that the Voluntary Carbon Market serves as a crucial tool for supporting the environmental responsibility of Egyptian companies. This market enables companies to address their environmental impact, align with global sustainability objectives, and prepare for a more sustainable future. Furthermore, the trading of verified carbon credits facilitates emission offsetting and enhances operational transparency.

Moreover, the market fosters innovation by encouraging the adoption of sustainable practices and technologies, such as renewable energy projects and recycling which contribute to reducing carbon emissions. Additionally, it ensures that efforts to combat climate change are integrated into broader sustainable development strategies, in line with the OECD Responsible Business Conduct Guidelines.

Egypt launched the Voluntary Carbon Market in August, a unique initiative attended by six ministers. It is the first regulated carbon market in Egypt and Africa, overseen by the capital markets regulators. Moreover, FRA amended the Executive Regulations of the Capital Market Law to recognize carbon credits as a financial instrument. Additionally, the first committee overseeing the regulation of carbon reduction units and their competencies was established.

Subsequently, the Authority issued a decree setting forth the criteria for registering verification and validation bodies for emissions reduction projects in the established registry. Following this, the Authority issued regulations governing the listing and delisting of carbon credits on the Egyptian Stock Exchanges, as well as standards for the approval of domestic voluntary carbon registries. These registries serve as centralized electronic systems for issuing, recording, and tracking the transfer of ownership of carbon credits resulting from the implementation of reduction projects. Concurrently, the Authority approved trading rules on the Egyptian Stock Exchange and the settlement rules for voluntary carbon credits.

The Authority’s efforts have resulted in the issuance of nine decrees that have established a regulatory framework for the voluntary carbon market at the regional level. Furthermore, there are five registries in operation, along with four verification and validation bodies, enabling the registration of over 145,000 carbon credits, representing a significant reduction in emissions. Additionally, 21 projects have been registered, covering a diverse range of activities such as sustainable agriculture, afforestation, reforestation, re-vegetation, energy access, eco-stove and water treatment.

Dr. Farid subsequently visited FRA’s office at the Investor Service Center (ISC) within GAFI headquarters. This visit aimed to oversee the quality of services provided to investors.