Egypt has mandated that non-banking financial institutions with capital exceeding EGP 100m must measure their carbon footprints and offset 20% of their annual emissions through the purchase of carbon credits, Minister of Investment and Foreign Trade Mohamed Farid said on Sunday.
Speaking at the International Finance Corporation (IFC) “Innovation for Resilience – Financing for a Sustainable Future” conference, Farid stated that the country has moved from the theoretical stage of sustainability concepts to a comprehensive institutional application of a sustainable financing system. The event was attended by Central Bank of Egypt Governor Hassan Abdalla, IFC Regional Vice President for Africa Ethiopis Tafara, German Ambassador to Cairo Juergen Schulz, and Nigerian Central Bank Governor Olayemi Cardoso.
Farid emphasised that Egypt has implemented an integrated package of structural reforms across both the banking and non-banking financial sectors through cooperation between the Central Bank and the Financial Regulatory Authority (FRA). These reforms have resulted in a qualitative shift in the environment for issuing sustainable financing instruments and increased the market’s capacity to attract international investment, the minister said, adding that these gradual changes have opened new horizons for funding sustainable development projects.
The real starting point for sustainable finance involved establishing precise regulatory and legislative frameworks to govern the issuance of sustainability-linked debt instruments, according to Farid. This included the inclusion of clear definitions and classifications within the executive regulations of the Capital Market Law for green bonds, transition bonds, and gender-linked bonds, which facilitated multiple issuances by financial institutions and banks operating in the market.
The minister explained that building an accurate and integrated database on carbon emissions served as the “cornerstone” for developing the sustainable finance system. He noted that clear disclosure requirements regarding sustainability standards and carbon footprints were approved based on the principle that “what cannot be measured cannot be managed,” ensuring that green financing tools are directed efficiently according to actual market needs and developmental priorities.
Farid also highlighted that the FRA’s decisions requiring non-banking financial institutions to prepare periodic reports on their carbon footprints and offset a portion of their emissions via the carbon trading market reflect a clear direction to integrate environmental considerations into the core of financial and investment activities.
The current phase aims to expand the application of sustainability concepts to various companies and institutions while adhering to the principle of proportionality. Under this approach, larger companies are subject to more extensive disclosure requirements in line with international standards, specifically the S1 and S2 requirements issued by the International Financial Reporting Standards (IFRS) Foundation. The minister underscored the pivotal role of the banking and non-banking financial sectors in financing companies and supporting their transition toward more sustainable practices.
Egypt’s voluntary carbon credit system has seen significant development, with approximately 160,000 carbon credits now registered, Farid confirmed. He added that the regulatory and accounting frameworks necessary to organise registration and trading processes have been completed, paving the way for a new stage of expansion in financing sustainability projects.
Farid concluded by stressing the importance of enhancing regional and international cooperation in sustainable finance. He praised the IFC for its role in supporting developing nations and commended the organisation of the event for bringing together decision-makers and financial institutions to discuss innovation mechanisms for a more sustainable and resilient economic future.