In light of Egypt Vision 2030 and in line with the national direction towards achieving the 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. It serves as a milestone in strengthening the role of the banking sector towards achieving Egypt’s vision. As well as accelerates the transition towards a green economy and responds to current and emerging environmental and social risks.
The regulation encompasses 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. In addition to preparing periodical reports in this regard and finally consulting an environmental expert to assess the large corporate projects from an environmental perspective.
The regulation was prepared in accordance to international best practices in a manner that suits the Egyptian context. It seeks to direct banks towards financing more sustainable projects, enhance investment opportunities by attracting investors who are more inclined towards sustainable projects and encourage foreign currency resources.
CBE issued the regulation 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.
The regulation is also considered a continuation of the efforts exerted by the CBE to reinforce and integrate sustainable finance within the 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.