The Central Bank of Egypt (CBE) released legally binding sustainable finance laws on November 3, 2022, in an effort to hasten the transition to a green economy and address present and future environmental and social hazards.
In line with the national strategy for achieving the Sustainable Development Goals (SDGs) and the conviction in the crucial role of sustainable finance in supporting financial and banking stability, they will also serve as a milestone in strengthening the role of the banking sector in achieving Egypt’s Vision 2030, the CBE said in a statement today.
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.
Additionally, periodic reports in this respect are prepared, and to analyse major corporate initiatives from an environmental standpoint, a consultant with expertise in the field is consulted.
According to the statement, the regulations were created in a way that suited the Egyptian context while adhering to international best practises.
Additionally, the policies aim to boost foreign currency resources, improve investment chances by luring investors who are more inclined toward sustainable initiatives, and drive banks toward funding more environmentally friendly projects.
The CBE released the regulations following a gap analysis it had carried out earlier in March 2022, the findings of which suggested the need to create a legally binding framework to improve sustainability and sustainable finance activities in the banking industry.
The Guiding Principles for Sustainable Finance, which were introduced on July 18, 2021, laid the groundwork for sustainability and sustainable finance concepts among Egyptian banks, are also seen as a continuation of the CBE’s efforts to strengthen and integrate sustainable finance within banking activities.
Egypt’s Central Bank establishes laws that must be followed in order to hasten the transition to a green economy.
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