الهيئة العامة للرقابة المالية

• FRA’s Chairman: We’re actively developing new and varied non-bank financial tools to tackle climate challenges
• Startups working on climate solutions can access funding through specialized bonds – climate and sustainability finance bonds
• The necessary legal and operational framework has been established for the launch of the first Voluntary Carbon Market. This market aims to accelerate progress towards carbon neutrality by allowing companies to list and sell carbon certificates

FRA’s Chairman and the British Ambassador, Gareth Bailey, attended the graduation ceremony for nine startups from the second Climate Finance Accelerator Program (CFA). Dr. Rania Al-Mashat, Minister of International Cooperation, was unable to attend but participated remotely. Nine startups celebrated their graduation from the second Climate Finance Accelerator Program (CFA) at a ceremony co-hosted by the British Embassy in Cairo and Flat6Labs.

As part of a £10 million partnership between Egypt and the UK, the Ministry of International Cooperation announced an initiative to support climate-focused startups in 10 countries. This £10 million commitment aims to empower startups working on solutions in various sectors like agriculture, energy, waste management and gender equality, according to the official statement of the Ministry of International Cooperation.

The Climate Finance Accelerator program equipped 8 startups across various sectors (energy, blue economy, manufacturing & circular economy, agriculture & land use, and waste management) to graduate last year.

The Climate Finance Accelerator Program (CFA) stands as a powerful model of collaboration with the British Embassy; the program tackles the critical and ever-growing need for climate action. By bridging the gap between promises and real-world solutions, the CFA actively fosters the transition from pledges to implementation.

Dr. Mohamed Farid – FRA’s Chairman emphasized the importance of collective action in tackling climate change during his speech at the British Embassy-hosted conference. He stressed the need for effective policies and concrete actions to achieve the global goal of carbon neutrality. Dr. Farid highlighted the urgency of addressing climate change, citing the increasing threats of natural disasters like floods and fires that endanger lives and livelihoods around the world.

Dr. Farid elaborated on the Authority’s efforts to create a supportive environment for startups offering innovative solutions for carbon reduction. He highlighted the importance of access to funding for these ventures. A key strategy, according to Dr. Farid, involves grouping climate-focused startups into larger entities. This allows them to tap into funding mechanisms designed for carbon reduction projects. He specifically mentioned instruments like green bonds, social impact bonds, gender bonds ,climate bonds and transition bonds. By facilitating access to such funding, the Authority aims to shift investment priorities towards projects with a demonstrably positive social and environmental impact.

FRA has taken a significant step by issuing new regulations specifically designed to promote green bonds. These bonds aim to achieve several goals: reducing emissions, mitigating climate change impacts, and supporting businesses that transition to more sustainable practices.

By creating these financing tools, Egypt sends a clear message to the international community , namely that it is actively adopting operational policies and action plans to address climate challenges. This commitment to on-the-ground implementation strengthens Egypt’s position as a leader in global environmental efforts.

Recognizing the critical role of data transparency in addressing climate change, FRA  is taking a multi-pronged approach.  FRA’s initiatives focus on empowering non-banking financial institutions (NBFIs) to effectively disclose their environmental and social practices. This includes preparing them for reporting under frameworks like ESG (Environmental, Social, and Governance) and the Task Force on Climate-Related Financial Disclosures (TCFD).

Furthermore, FRA is actively fostering the development of new financial instruments within the non-banking sector. These instruments aim to facilitate the flow of funds towards environmentally friendly projects through non-banking financial markets under FRA’s supervision.

Dr. Farid highlights the Authority’s significant progress in establishing the legal and regulatory framework for Africa’s first Voluntary Carbon Market. He points out companies can gain a competitive edge in the global market, especially in Europe, by participating in the Voluntary Carbon Market. This market provides them with investment options while allowing them to demonstrate their commitment to sustainability through carbon reduction projects aligned with international best practices.

Dr. Farid outlines the significant efforts undertaken by FRA to establish the first Voluntary Carbon Market. He illustrates that these efforts begin with the amendments to the Executive Regulation of the Capital Market Law and considering the certificate as a financial instrument as well as the establishment of a supervisory and oversight committee chaired by FRA’s Chairman. This committee includes FRA representatives as well as representatives of the Ministry of Environment and the Exchange and members with expertise in the field of carbon markets. Therefore, all regulatory decisions issued by FRA‘s Board of Directors shall accelerate the pace of activation of the Voluntary Carbon Market due of its pivotal role in enhancing the Egypt’s efforts to reduce carbon emissions.

In addition, FRA issued decision No. 163 of 2023 on listing verification and certification entities at FRA’s registry.  In the light of this decision , FRA issued decisions No. (339/340/341) of 2024 by approving listing of three verification and certification entities for the first time in the Egyptian market. This is in addition to, FRA’s decision No. (30) of 2024 that outlines the criteria for approving local voluntary carbon registers and  Decision No. (31) of 2024 on “listing and delisting rules of Carbon Certificates on Egyptian Exchanges.”

To ensure a comprehensive system for tracking carbon reduction efforts, new regulations have been issued. The Council of Ministers issued decree No. 636 of 2024, amending Egyptian accounting standards to specifically address carbon certificates. This includes a new accounting interpretation (No. 2 of 2024) that clarifies the accounting treatment for companies involved in these certificates, whether as developers, financiers, or traders.

It’s important to note that the accounting process will vary depending on the specific arrangement and the company’s purpose for buying or issuing certificates. Companies need to carefully consider these factors to determine the most appropriate accounting treatment and applicable standards.

The voluntary Carbon Market presents a double win for businesses. It opens doors to diverse investment opportunities, and crucially, helps them comply with the growing demand for sustainable products in European markets, particularly when companies implement carbon reduction projects that meet international standards|.