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Experts meeting on classification of green projects to increase the attractiveness of bond market in Egypt - Thursday 2/1/2020

• Dr. Omran: Egypt is witnessing the first issuance of green bonds in early 2020

Dr. Mohammed Omran -  FRA’s Chairman revealed that the Authority held a  consultative meeting for a group of experts in the fields of sustainability , officials from the Ministry of Environment and representatives of international and regional organizations concerned with environmental affairs. The meeting discussed the Authority’s vision to develop a classification of green projects taxonomy in preparation for setting a guide for issuing green bonds in Egypt. Such guide will introduce all details related to green bonds issuance and their related tariffs.

FRA’s Chairman said that the Authority’s proposal to establish a classification of green projects shall set a common base between the state and the investor on investment concepts and opportunities in the green economy. In addition, the classification will facilitate the attraction of global financial institutions that target these types of green projects in a way that accelerates the growth of green bonds market in Egypt.

Dr. Omran added that during the year 2019, FRA was able to achieve positive steps within the non-banking financial sector.  During this year, sustainability was the center of attention and FRA sought to create a great deal of awareness among policy makers about paying attention to climate change issues and encouraging them to engage in projects related to sustainability. The authority has considered that setting a list of targeted sectors will increase the orientation towards green economy; he noted that FRA has worked with one of the global finance institution interested in sustainability and a local company that will soon issue the first issuance of green bonds in Egypt in early 2020.

Dr. Omran explained that FRA’s Sustainable Development Unit had prepared a proposal - after studying global experiences in this regard - that classify  green projects into three categories, namely low carbon emissions, climate change adaptation and mitigation projects and  Biodiversity Conservation Projects (including coastal and marine ecosystems). This classification aims at providing a guide for investors. The classification also emphasizes the standardization of language between investors, policy makers and observers, which contributes to ensuring that projects and investments meet environmental standards and are consistent with high-level international frameworks such as the Paris Agreement.

Experts also presented their views on the classification and dimensions of green projects, emphasizing that there is a real need for a guide that helps companies which believe in their social responsibility towards the environment and society and use their financial allocations to finance green projects.

It should be noted that by the end of August 2019, a decision was issued by FRA’s BOD to specify a list of independent international environmental observers, from which parties wishing to issue green bonds can choose to activate green bond issuance within the Egyptian economy. Also, the decision stated that a register for local environmental observers shall be established. In addition, FRA’s BOD decision exempted exporters of green bonds in Egypt from 50% of the services and inspection fees.

Green bonds are one of the financing tools available to governments and companies. Their revenues are used to finance environment-friendly projects, and the issuer is committed to fulfill the value of the bonds and their return. Also, green bonds are financing tools conditioned by respecting environmental standards and aiming at using clean energies and mitigating factors that contribute to global warming. Among the most important green projects targeted by green bonds are new and renewable energy projects, climate change adaptation projects, energy efficiency projects, pollution control and prevention projects, green building projects and clean transport projects such as electricity transport.