Greening the Financial Future: EGX’s Climate Response

The Egyptian Exchange (EGX) believes that addressing climate action is essential to determining how the future will unfold. EGX drives sustainability in the Egyptian and African markets through initiatives, serious steps and actions.

EGX is leading by example by being a sustainable institution that issues its annual sustainability report, and for the first time this year, EGX started calculating its carbon footprint and developing a five-year action plan to reduce its GHG emissions.

EGX allocated efforts to raising awareness and building the market capacity by integrating sustainability & climate-related topics in the training programs provided to students in schools & universities.

EGX conducted nine training programs during 2022 & 2023 for (+500) university students, EGX employees, economic media representatives, listed companies as well as other market participants. Four out of the nine training programs are certified, namely:

• The CPD-certified Climate Disclosure training programme in collaboration with UN SSE, IFC and CDP
  • The TCFD 101 – Introduction to Climate-Related Financial Disclosures & TCFD 102 – Building Experience and Expertise on Climate-related Financial Disclosures in collaboration with Sustainable Stock Exchanges Initiative SSE.
  • The ESG Reporting Frameworks by ACFM & the London Institute of Banking.
  • The GRI-certified training program in collaboration with GRI-certified training partner in Egypt and the MENA Region.

• EGX has also planned for an awareness session on the Carbon Border Adjustment Mechanism CBAM for the listed companies exporting to EU countries, on the 2^nd of November 2023.

  
  

  Moreover, EGX aims to achieve just transition and leave no one behind, that's why EGX issued the “Model Guidance for Reporting on ESG Performance and SDGs" in Arabic & English to promote transparency and help companies highlight their performance and practices related to environmental, social and governance issues.

  
  

  In addition, EGX as the co-chair of the SSE Carbon Market Advisory group contributed in the issuance and publishing a guidance document by the SSE on carbon markets "How exchanges can maximize the opportunities of carbon markets – An action framework to guide exchanges"[1]

  
  

  As part of EGX's ongoing commitment to providing sustainability-related tools and instruments for enhancing market resilience and meeting investors' requirements, EGX was the first exchange in the region to provide an ESG-related index (S&P/EGX ESG index) in 2010. The index aimed to raise the profile of those companies that perform well along the three parameters of environmental, social, and corporate governance responsibility compared to their market peers.

  
  

  Furthermore, EGX announced setting up a regulated voluntary carbon market on the sidelines of COP27. The market will allow companies in Egypt and Africa working on emissions-reducing projects to issue and sell carbon credits.

  In this regard, EGX organized a training program for economic media representatives to introduce Carbon markets and shed the light on the importance of providing a regulated carbon market, together with the main benefits and challenges.

  

  In its efforts to secure the supply side, EGX Holding Company for Capital Markets Development together with the Agricultural Bank of Egypt, and Libra Capital Group signed a framework to establish Libra Carbon, which will work on developing emission reduction projects and strengthen the supply side of the market locally. This step aims to create new horizons for cooperation at the regional level to encourage green investment and diversify investment options for investors, thus enhancing Egypt’s competitiveness as one of the leading financial markets. The company plans to work as an aggregator for projects that gather small projects, farmers and lands under huge projects to cut the very high fixed cost of registering the project, validation, verification, and issuance. It also plans to recognize the significant environmental contributions made by Egyptian farmers and help them profit from the sale of their carbon credits.

  Besides, EGX signed a Memorandum of Understanding (MoU) with the Global Carbon Council (GCC) to strengthen the carbon market and improve the liquidity and accessibility of carbon credits. The collaboration will help in achieving global climate goals besides creating new business opportunities for companies and businesses through a transparent and fair ecosystem.

  
  

  EGX Participated in the 8^th World Investment Forum in Abu Dhabi, in October 2023, whereby SSE launched the UN SSE’s publication "How exchanges can maximize the opportunities of carbon markets – An action framework to guidance exchanges" prepared by the carbon market advisory group chaired by the Egyptian Exchange & Bursa Malaysia.

  
  

  This publication marks a timely step towards strengthening the knowledge of exchanges on carbon markets. The framework can open doors for exchanges to explore ways to improve liquidity and accessibility of carbon markets through increased transparency, stable price discovery and reliability.

  
  

  Besides, EGX also shed the light on the challenges the market faces when it comes to understanding climate-related risks and the fragmentation of the multiple reporting standards and the necessity to converge toward a more standardized sustainability-reporting framework.

  
  

  EGX hosted a side event at the African Climate Summit in Nairobi, Kenya on 5 September 2023. EGX team presented EGX's vision on the green economy in Africa in general and the carbon markets in particular clarifying the role that the African financial market can play to participate more effectively in building sustainable carbon markets that contribute to managing and funneling green economy investments and financing.

  
  

  EGX chairs the African Securities Exchanges Association's Sustainability Working Group (ASEA-SWG) and promotes sustainability and climate-related practices within the African market. Besides, EGX publishes an annual sustainability progress report that highlights the progress achieved by African exchanges from sustainability & climate perspectives.

  EGX participated in building African financial Markets during April 2023 and highlighted the role of exchanges in addressing climate action with market participants and shared information and insights about carbon markets with all participants and attendees.

  
  

  EGX is also an active member of the WFE Sustainability working group and contributes to climate-related white papers and documents published by WFE.

  In closing, sustainability has been and will continue to be an ongoing journey at EGX. We remain committed to the continuous improvement and innovation. We will continue to collaborate with our stakeholders, learn from best practices, and adapt to emerging trends and global standards.

  EGX believes that by cooperation and coordination, we can build a more sustainable and prosperous future for our economies
  

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