Tuesday, 13 July 2021

EGX-listed companies + NBFS players will face mandatory ESG disclosures

Mandatory ESG reporting requirements are coming for EGX-listed companies and just about all NBFS players under a decree issued by the Financial Regulatory Authority (FRA), which will force corporates to report on key environmental, social and governance metrics and principles each year at the same time as they file their annual financial statements, according to a press release (pdf).

There are two levels of compliance under the decree (details here and here):

  • EGX-listed companies and NBFS players (listed or not) with issued capital of at least EGP 100 mn need to make an annual ESG disclosure.
  • Those with issued capital of EGP 500 mn or more will need to report on performance indicators that align with recommendations from the Task Force on Climate Financial Disclosure (TFCD), the statement said.

The reporting requirement comes into effect at the start of 2022. Companies will need to disclose quarterly the steps they’re taking to start complying with the decree, and their first full ESG disclosure is due on the same day they file their financial statements for FY2022.

BACKGROUND- The FRA is casting the requirements as part of a long-term strategy to position Egypt as a sustainable finance hub. Mainstream investors are increasingly making ESG a part of their investment decisions, and Egypt’s policymakers have taken note: The country issued its inaugural USD 750 mn green bond issuance last year (the region’s first sovereign offering of the climate-friendly securities). Our friends at CIB are following suit, becoming the first private sector entity to get clearance for a green bond. The FRA gave the nod earlier this month to its USD 100 mn offering.

NEED HELP COMPLYING? Our parent company, Inktank Investor Relations, is the leading IR and ESG reporting firm in frontier and emerging markets. If you need help or want to discuss how the new requirements apply to you, reach out to Moustafa Taalab on mtaalab@inktankIR.com or check out the firm’s credentials here (pdf).

ALSO ON THE ESG FRONT TODAY- The topic is the Financial Times’ Big Read of the day as the salmon-coloured paper looks at how investors are “weighing sovereign debt profits against human rights.” Egypt gets a mention, with the paper explaining that while we’re “very popular holding among emerging market bond managers,” our rights record is spotty.

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