الهيئة العامة للرقابة المالية

• The mandate applies to all entities with issued capital or net equity exceeding EGP 100 million.
• Companies must file an Annual Carbon Footprint Report quantifying their total greenhouse gas emissions.
• Companies must offset 20% of emissions via carbon credits within 90 days of report submission.
• Initial reports are due by June 2026, with subsequent filings due annually at the close of each fiscal year.

Financial Regulatory Authority (FRA) has issued a landmark resolution requiring Non-Banking Financial Institutions (NBFIs) to disclose their carbon emissions and offset a portion of their footprint. This initiative is part of an ongoing strategy to strengthen Environmental, Social, and Governance (ESG) practices and manage the financial risks associated with climate change.

FRA Board of Directors issued resolution No. 36 of 2026 on January 28, 2026. Chaired by Dr. Mohamed Farid – the current Minister of Investment and Foreign Trade and former FRA Chairman – the resolution is based on the Capital Market Law, regulations governing NBFIs, and Resolution No. 107 of 2021 regarding ESG disclosure standards for financial entities.

The resolution mandates that companies with issued capital or net equity exceeding EGP 100 million must prepare an annual Carbon Footprint Report. This report must quantify greenhouse gas (GHG) emissions resulting from business operations, specifically covering Scope 1 and Scope 2.

A carbon footprint is defined as the total GHG emissions produced by an entity, measured in tonnes of CO2 equivalent (tCO2e) per annum.

Scope 1 and Scope 2 are global standards for carbon accounting. Scope 1 measures direct emissions from sources owned or controlled by the company, such as stationary combustion (generators/heating), mobile combustion (company-owned vehicles), and direct manufacturing processes.

Scope 2 covers indirect emissions associated with the purchase of electricity, steam, heating, or cooling consumed within the company’s facilities.

FRA stipulates that all emission data must be audited and verified by FRA-accredited validation and verification bodies. Initial reports must be submitted no later than June 30, 2026, with subsequent filings due annually in alignment with the company’s fiscal year-end.

Companies are required to offset approximately 20% of the emissions disclosed in their annual report. This must be achieved by purchasing carbon credits (Certified Emission Reductions) registered within the FRA’s database in the regulated Voluntary Carbon Market. This purchase must be executed within 90 days of the report’s submission.

Full compliance with these obligations is now a prerequisite for license renewal for all subject entities. The resolution takes effect the day following its publication in the Official Egyptian Gazette and on FRA’s digital platforms.

This resolution is set to significantly stimulate Egypt’s regulated Voluntary Carbon Market (VCM) by institutionalizing demand. The market is supported by a robust supply of 170,000 carbon credits from 34 registered projects and verified by eight accredited bodies. This infrastructure ensures a transparent, high-integrity environment for companies to fulfill their mandatory offsetting obligations.

The primary goal of this resolution is to instill environmental disclosure within the NBFI sector, enhance alignment with international ESG standards, and incentivize companies to reduce their carbon intensity. Ultimately, this contributes to both national and global sustainability goals.

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