الهيئة العامة للرقابة المالية

• The panel discussion took place on the sidelines of the GEMC Annual Meeting & Conference hosted by the Capital Markets Board (CMB) of Turkey.

Dr. Mohamed Farid,  FRA Chairman:

• Sustainability offers an opportunity for emerging markets to attract investments and is essential to support international efforts to combat climate change.
• Egypt has achieved global leadership in providing a mandatory framework for ESG reporting.
• FRA has taken proactive steps to ensure that the Egyptian market aligns with international trends.
• We are working to develop a framework that is in line with the latest international standards, particularly IFRS S1 and IFRS S2.

Dr. Mohamed Farid, FRA Chairman and Chairman of the Growth and Emerging Markets Committee (GEMC), participated in a panel discussion on the sidelines of the GEMC Annual Meeting & Conference held in Turkey.

Ali Erdogmus, Deputy CEO of the Turkish Capital Markets Board, moderated the session. Participants included Hasan Özçelik, President of KGK, Dr. Guler Aras, Founding Chair of the Integrated Reporting Network Turkey and independent board member of the Turkish Capital Markets Association, and Muge Cetin, Deputy Head of Institutional Communications Department at the Capital Markets Board (CMB). The session was a side event of the general conference organized by the CMB.

Dr. Mohamed Farid, FRA Chairman delivered a keynote speech at the GEMC annual meeting and conference hosted by the Capital Markets Board (CMB) of Turkey.

The event provided a platform for in-depth discussions on crucial issues and developments shaping the global capital market landscape. Participants exchanged insights and experiences on navigating these changes to optimize the role of capital markets in supporting economic growth. Key topics of discussion included: Financial inclusion and literacy, Cryptocurrency and digital asset regulation and Sustainability reporting.

Dr. Farid emphasized the transformative potential of sustainability for emerging markets. He highlighted that sustainability not only attracts investments but also plays a pivotal role in global climate change mitigation efforts. To make sustainability more accessible, he stressed the importance of simplifying the process, particularly for small and medium-sized enterprises. He emphasized that sustainability is not solely a concern for large corporations or financial institutions but is relevant to all businesses, including listed and unlisted companies.

FRA Chairman also underscored the significance of collaboration between IOSCO, GEMC and entities like registrars. This collaboration is essential to ensure a level playing field and assist companies across sectors in adhering to sustainability principles and fulfilling their carbon emission disclosure obligations.

Dr. Mohamed Farid highlighted that the Authority embarked on a transformative journey in 2021, positioning itself as a global pioneer and the first in the MENA region to introduce a mandatory framework for Environmental, Social, and Governance (ESG) reporting and Task Force on Climate-related Financial Disclosures (TCFD) disclosures. The issuance of decrees no. 107 and 108 of 2021 marked this significant achievement, which established clear guidelines for ESG and TCFD reporting, providing a solid foundation for companies to disclose their sustainability practices.

According to Dr. Farid, Decree no. 107 of 2021 mandated that non-bank financial companies with issued capital or net equity exceeding EGP 100 million must include ESG disclosures in their annual reports attached to the annual financial statements. Additionally, companies with issued capital or net equity exceeding EGP 500 million are required to include both ESG and TCFD disclosures in their annual reports attached to the annual financial statements.

He further drew attention to Decree no. 108 of 2021, which outlines the disclosure requirements for companies listed on the Egyptian Exchange regarding ESG practices and the financial implications of climate change. The decree mandates all listed companies to include ESG disclosures in their annual reports attached to the annual financial statements. Furthermore, listed companies with issued capital or net equity exceeding EGP 500 million are required to include both ESG and TCFD disclosures in their annual financial statements.

Dr. Farid emphasized FRA’s proactive measures to align the Egyptian market with global trends, particularly the growing emphasis on sustainability and the critical role of financial markets in driving change. He highlighted that these decrees not only represent a regional achievement but have positioned Egypt as a global leader in sustainability reporting. The framework is designed to encompass businesses of all sizes, with tailored standards for various activities and sectors.

Building upon this solid foundation, FRA Chairman stated that the Authority is working to develop a framework that fully aligns with the latest international standards, specifically IFRS S1 and IFRS S2. IFRS S1 outlines general requirements for sustainability-related financial disclosures, while IFRS S2 focuses on climate-related disclosures. These standards provide a comprehensive approach to sustainability reporting and are expected to foster global consistency in disclosures.  FRA plans to implement the updated framework for the non-bank financial sector by 2025, placing Egypt among the countries adopting these leading standards.

FRA Chairman highlighted several benefits of adopting IFRS S1 and S2. This includes enhancing global competitiveness in line with international standards, enabling Egyptian companies to attract foreign investment and participate in global markets, as well as improving transparency and accountability. The updated framework ensures companies disclose sustainability-related information, empowering them to make informed decisions. Additionally, adopting these standards enhances resilience and risk management.