The Egyptian Securities Association – ECMA held a specialized workshop titled “Corporate Carbon Emissions Disclosure Mechanisms and How to Compensate for Them,” with participation from several representatives of the non-banking financial sector and the capital market. This workshop aimed to discuss environmental disclosure requirements and the mechanisms for preparing carbon footprint reports in accordance with international standards, amid a rising regulatory trend towards integrating sustainability considerations within the Egyptian financial sector.
During the workshop, Ahmed Rushdi, former advisor to the Chairman of the Financial Regulatory Authority, emphasized that Decision No. 36 of 2024 represents an important regulatory step in the context of environmental disclosure and sustainability. He explained that this decision addresses an existing gap in the market concerning the mechanisms for measuring, preparing, and auditing carbon footprint reports, noting that the authority has been enhancing sustainability standards within non-banking financial activities since 2021.
Event Details
Rushdi clarified that the decision mandates regulated companies with a capital or net equity exceeding 100 million EGP to prepare an annual carbon footprint report. Additionally, companies are required to have these reports audited and verified by accredited certification bodies recognized by the authority.
The scope of application includes insurance companies, factoring, leasing, real estate financing, consumer financing, microfinance, as well as capital market companies. Reports must be submitted no later than the end of June each year, in preparation for their gradual integration with the annual financial cycle of companies.
Background & Context
The decision also includes an additional commitment to compensate for 20% of total annual carbon emissions by purchasing emissions reduction certificates traded within the “voluntary carbon market” managed by the Egyptian Exchange. This must be completed within 90 days of the carbon footprint report being approved by the authority.
Carbon certificates are financial units that reflect the reduction or removal of one ton of carbon dioxide equivalent, generated through emissions reduction projects such as renewable energy or afforestation initiatives. Companies use these certificates for “carbon offsetting.”
Impact & Consequences
Rushdi confirmed that the authority has established a precise regulatory framework to govern the voluntary carbon market in Egypt, ensuring the quality of traded certificates and their alignment with international standards in terms of transparency, traceability, and environmental integrity. He also stressed that companies subject to the decision are prohibited from purchasing carbon certificates from outside the database of approved emissions reduction projects maintained by the authority.
He pointed out that Article 4 of the decision is the most impactful, as it links the obligation to prepare carbon footprint reports and purchase offset certificates with the continued licensing of regulated companies. This makes environmental compliance a fundamental part of operational conditions within the sector.
Regional Significance
Sustainability reports and climate disclosures have become a key element in evaluating companies by investors, especially foreign institutions, which now require the existence of ESG (Environmental, Social, and Governance) reports as a prerequisite for considering any investment or acquisition deal. Furthermore, the mandatory verification of carbon footprint reports aims to mitigate the phenomenon of “greenwashing,” characterized by inaccurate environmental claims.
The decision sets 2026 as the baseline year for all regulated companies, to be used as a reference point for measuring emissions progress and assessing environmental performance in the future. This will allow for the development of accurate comparative indicators in the medium and long term.