In light of Egypt’s 2030 Vision, the national direction towards achieving the UN’s sustainable development goals (SDGs), and the conviction in the pivotal role of sustainable finance in supporting financial and banking stability, the Central Bank of Egypt (CBE) issued binding sustainable finance regulations last week.
These regulations are a milestone in strengthening the role of the banking sector towards achieving Egypt’s vision and will accelerate the transition towards a green economy and respond to current and emerging environmental and social risks.
The regulations encompass several pillars, including the establishment of an independent department for sustainability and sustainable finance within each bank, as well as binding banks to integrate policies and procedures for sustainable finance within their credit and investment policies. This is un addition to preparing periodical reports in this regard and finally consulting an environmental expert to assess the large corporate projects from an environmental perspective.
This new set of policies was prepared in accordance with international best practices in a manner that suits the Egyptian context with the aim of directing banks towards financing more sustainable projects, enhancing investment opportunities by attracting investors who are more inclined towards sustainable projects, and encouraging investments in foreign currencies.
The CBE issued these regulations after conducting a gap analysis earlier in March 2022, the results of which implied the need to develop a binding framework to enhance sustainability and sustainable finance activities in the banking sector.
This is also considered a continuation of the efforts exerted by the CBE to reinforce and integrate sustainable finance within banking activities after introducing the Guiding Principles for Sustainable Finance on 18 July 2021, which set the foundation for sustainability and sustainable finance concepts among Egyptian banks.
