The Central Bank of Egypt issued binding instructions on sustainable financing, which is one of the effective steps to increase the role of the banking sector in achieving the state’s vision and pushing the transformation wheel towards Green economy and conscientious consumption. This was done in line with the national trend in achieving the sustainable development goals in light of Egypt’s Vision 2030, and a belief in the important role of sustainable financing in supporting financial and banking stability.
The instructions mandate that each bank establish an independent sustainability and sustainable financing administration, as well as executive policies and procedures for sustainable financing within the bank’s credit and investment policies. Additionally, the use of an environmental consultant to assess the major companies’ projects that are to be funded from an environmental perspective is mandated.
It is important to note that the guidelines were created in accordance with international best practises and in a way that the Egyptian banking sector could use them to direct the sector toward financing more sustainable economic activities. This would increase investment opportunities, particularly by luring a new group of investors interested in industries that advance the principles of sustainable development and encouraging the infusion of more foreign currency into the Eg
The central bank issued these directives after finishing its analysis of the findings of the study it performed on the banking industry in March of this year, which made it necessary to establish a legally obligatory framework to improve sustainability and sustainable finance activities.
The central bank previously issued the sustainable financing guidelines on July 18, 2021, which established the fundamental concepts of sustainability and sustainable financing. The new instructions are a continuation of the central bank’s efforts to consolidate the concept of sustainable financing and include it in the activities of the banking sector.
Importantly, the central bank requires banks to assess the projects of businesses that will get funding from an environmental standpoint.
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