Egypt's Financial Regulatory Authority Mandates Carbon Offsetting for Large Non-Banking Firms

Egypt's Financial Regulatory Authority has issued binding rules requiring non-banking financial institutions with capital exceeding EGP 100 million to measure their carbon footprints and offset 20% of their emissions through the carbon trading market. The mandate, set out in FRA Board Decision No. 36 of 2026 (approved on 28 January and announced on 15 February 2026), builds on the ESG disclosure requirements the FRA already imposed on non-banking financial firms under Decision No. 107 of 2021.

The FRA's new requirements apply to a wide range of entities operating outside the commercial banking system, encompassing insurance companies, leasing firms, mortgage finance providers, securities brokers, and capital market intermediaries that meet the capital threshold.

BANKING SECTOR RULES

The FRA's binding carbon rules sit alongside sustainable finance regulations that the Central Bank of Egypt introduced for the commercial banking sector in 2022. The CBE's 2022 rules introduced environmental and social risk management requirements for licensed banks.

COMPLIANCE REQUIREMENTS

Firms must buy carbon-reduction certificates registered on the FRA-regulated voluntary carbon market within 90 days of submitting their annual emissions reports.

Initial carbon-footprint reports, covering Scope 1 and Scope 2 emissions and verified by accredited validation and verification bodies registered with the FRA, are due by 30 June 2026 and annually thereafter, and compliance is a condition for keeping operating licences.