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Egyptian FRA: Mandatory ESG and Climate Disclosure Regulation

FRA issued resolutions requiring companies listed on the Egyptian Stock Exchange, and companies operating in non-bank financial activities to submit environmental, social, and governance disclosure reports related to sustainability (ESG standards).

Dr. Muhammad Omran, Chairman of the Financial Supervisory Authority, said that with this regulatory step, the capital market in Egypt will be more attractive to many international financial institutions, which have reformulated their strategies to meet the challenges of climate risks and shift towards supporting environmentally friendly projects, and sustainability and climate change disclosure reports will reveal to them the extent to which sustainable development principles are applied. 

The Chairman of the Authority stated that ESG disclosure reports will be applied to all companies whose securities are listed on the Egyptian Stock Exchange, in addition to companies operating in non-banking financial activities whose issued capital or net ownership rights are not less than 100 million Egyptian pounds.

Whereas, companies whose issued capital or net ownership rights are not less than 500 million Egyptian pounds and that are listed on the Egyptian Stock Exchange, and which are engaged in non-banking financial activities, will be required to complete disclosures related to the financial effects of climate change in accordance with the Task Force on Climate-Related Financial Disclosures (TCFD), with its annual report prepared by its board of directors and attached to the annual financial statements. More details here

FRA is a strong supporter of sustainable finance

Earlier this year FRA launched a new think-tank and training center, “the Regional Center for Sustainable Finance”. The center has been established in recognition of the urgency to bridge the finance gap to fulfill the Paris Agreement on Climate Change and the UN Sustainable Development Goals.  The center, focusing on Egypt and the Middle East and Africa, is part of an ambitious initiative at the FRA aimed to bring together all training and educational institutes providing services to Non-Banking Financial Institutions, within the FRA mandate to support the development of the non-banking financial markets.

SSE and FRA 

The FRA is an active member of the SSE Regulator Working Group and has participated in many SSE projects, including Dr. Omran’s Chairmanship of the SSE Advisory Group that led to the report How Securities regulators can support the Sustainable Development Goals “I applaud the SSE and its Advisory Group for making a valuable contribution to the ongoing discussion among securities market regulators, exchanges, investors and issuers to promote sustainable finance.” said Mohammed Omran Chairman of FRA  in the SSE’s 10 year anniversary report. Prior to joining the FRA, Dr. Omran was the head of the Egyptian Exchange and in this role was one of the five founding signatories of the SSE.