Egypt’s Central Bank issues binding regulations to accelerate transition toward green economy

CAIRO – 3 November 2022: The Central Bank of Egypt (CBE) issued binding sustainable finance regulations, which are set to help accelerate transition towards a green economy and respond to current and emerging environmental and social risks.

They will also serve as a milestone in strengthening the role of the banking sector towards achieving Egypt’s Vision 2030 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 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.

This is 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 regulations were prepared in accordance to international best practices in a manner that suits the Egyptian context, the statement said.

The regulations also seek 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.

The CBE issued the 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.

The regulations are 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.