A Glimpse of EGX’s Sustainability Strategy and Achievements

In 2023, the Egyptian Exchange (EGX) reached significant milestones that reflect its commitment to both market growth and sustainability. These achievements not only expanded EGX’s financial footprint, but also reinforced sustainability into its core operations.

A flagship achievement for EGX in 2024 was the successful launch of the regulated Voluntary Carbon Market, Africarbonx. Initially announced and positioned as the first pan-African VCM during COP27, Africarbonx officially became operational in August 2024, with the execution of its first three carbon credit transactions. Africarbonx facilitates the transparent trading of carbon emission reduction credits, supporting companies in offsetting their carbon footprint, while adhering to international environmental standards.

The rules governing the listing, trading and settlement of carbon credits were set in collaboration with the Financial Regulatory Authority (FRA) and the CCP - Taswyaat.

EGX also established a dedicated website to enhance transparency and accessibility, providing an overview of all market regulations and the registered projects, as well as up-to-date information for all market participants.

Promotion, Financial Literacy and Training

To ensure the successful activation of the market, EGX embarked on a series of promotional meetings with the supply and the demand side.

In that respect, EGX organised a workshop on CBAM, mainly targeting petrochemical, aluminium, steel and fertilizer companies that are listed to raise their awareness of the importance of carbon emission reductions. The sessions were designed to educate businesses on the opportunities and mechanisms of the voluntary carbon market. In parallel, EGX organised training programs for brokerage firms to equip them with the necessary skills and knowledge to enable and encourage them to engage in carbon credit trading and support the growth of Africarbonx.

EGX remains committed to human capital development, providing educational and professional development opportunities for both employees and stakeholders in the capital markets, with a special focus on financial literacy programs targeting youth and broader societal segments. In 2024, these initiatives were expanded to include sustainability-focused lectures, preparing the next generation of investors and professionals to embrace sustainable investing.

EGX has also focused on capacity-building programs to enhance companies’ capabilities in sustainable practices and transparent reporting. Notable efforts include:

1. Partnering with the Arab Federation of Capital Markets (AFCM) and The London Institute of Banking & Finance for in-depth training on ESG frameworks.

2. Introducing TCFD 101 and 102 courses, supported by UN SSE, for foundational and advanced understanding of climate-related financial disclosures.

3. Collaborating with S&P Global, REFINITIV and the Global Reporting Initiative (GRI) to enhance ESG reporting standards.

4. Facilitating training on new International Financial Reporting Standards (IFRS) for sustainability disclosures. The focus has been on IFRS S1 and S2, which emphasise climate-related risks and opportunities, ensuring greater transparency in sustainability reporting and aligning with global best practices.

5. Recognising the need for a more inclusive financial ecosystem, EGX has collaborated with the UN SSE and the International Finance Corporation (IFC) to address gender disparities within capital markets. Through dedicated initiatives and guidance, EGX is helping companies implement gender equality measures and foster diversity in leadership, contributing to a more balanced and equitable industry.

6. EGX organised an in-depth seminar on the Carbon Border Adjustment Mechanism, aimed at helping carbon-intensive industries understand and prepare for upcoming regulatory changes.

Furthermore, EGX continues to strengthen its leadership in sustainability through collaborations with global organisations. Key engagements in 2024 include:

1. Active participation in the UN SSE Initiative. EGX continues to take part in the quarterly meetings in which global sustainability efforts are reviewed and discussed. In 2024, EGX has joined two advisory groups within the SSE, contributing insights and expertise on critical topics such as climate transition plans and SME sustainability guidelines.

2. Chairing the African Securities Exchanges Association (ASEA) Sustainability Working Group and publishing the ASEA Annual Sustainability Monitoring Report, providing a comprehensive overview of sustainability initiatives and progress among African exchanges.

3. Supporting global campaigns such as "Ring the Bell for Climate," "Ring the Bell for Gender Equality" and "Ring the Bell for Financial Literacy."

4. Playing an active role in the sustainability working groups of the World Federation of Exchanges (WFE) and the Federation of Euro-Asian Stock Exchanges (FEAS).

5. EGX is also working on extending partnerships with influential organisations to strengthen sustainability leadership and governance in Egypt’s capital markets, such as Chapter Zero Egypt, part of a global initiative focused on improving climate governance at the board level.

In conclusion, the launch of Africarbonx marks a critical step in Egypt’s journey toward sustainability, positioning the country as a regional leader in climate action and green finance. EGX calls on all market participants to make sustainability a fundamental business priority. By adopting green finance practices, supporting the voluntary carbon market, and enhancing ESG disclosures, we can accelerate the transition to a sustainable and inclusive global economy.