FRA Board Resolution No. 108 of 2021 on Disclosure Guidelines for Egyptian Exchange-Listed Companies Regarding ESG Practices and Climate Change Financial Impacts

Financial Regulatory Authority Chairman of the Authority

Board Resolution No. (108) of 2021 dated 5 July 2021 Regarding Disclosure Guidelines for Companies Listed on the Egyptian Exchange on Environmental, Social, and Governance (ESG) Practices Related to Sustainability and Financial Impacts of Climate Change

Board of Directors of the Financial Regulatory Authority

Having reviewed Law No. (159) of 1981 on Joint Stock Companies, Limited Liability Partnerships, and Single-Person Companies; Law No. (10) of 2009 on Regulating Supervision over Non-Banking Financial Markets and Instruments; Board Resolution No. (11) of 2014 on Listing and Delisting Rules for Securities at the Egyptian Exchange; and upon approval by the Board of Directors in its meeting held on 5 July 2021;

Resolved:

(Article One)

Companies listed on the Egyptian Exchange shall comply with disclosures related to Environmental, Social, and Governance (ESG) practices in their annual report prepared by the Board of Directors and attached to the annual financial statements, as detailed in Annex No. (1) to this Resolution.

Furthermore, companies listed on the Egyptian Exchange with an issued capital or net equity of no less than five hundred million Egyptian pounds shall comply with disclosures related to the financial impacts of climate change (Task Force on Climate-Related Financial Disclosure, TCFD) in their annual report prepared by the Board of Directors and attached to the annual financial statements, as detailed in Annex No. (2) to this Resolution.

(Article Two)

Companies subject to this Resolution are granted a grace period to comply with the disclosures in Annexes (1, 2) until the submission deadline for financial statements covering the fiscal year ending in 2022. They must provide the Authority with a quarterly statement regarding measures taken or to be taken concerning these disclosures, effective from 1 January 2022.

(Article Three)

This Resolution shall be published in the Egyptian Gazette and on the websites of both the Authority and the Egyptian Exchange, and shall take effect from the day following its publication in the Egyptian Gazette.

Chairman of the Board of Directors Dr. Mohamed Omran

Smart Village, Building 136, Giza, Egypt Postal Code: 110 Tel: +202 35345350 Fax: +202 35370036 WWW.FRA.GOV.EG Building Bridges not Walls

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Annex (1) Key Performance Indicators for Environmental, Social, and Governance (ESG) Disclosures Related to Sustainability

Key Performance Indicators for ESG Disclosures	Company's Action Taken	Answer (Yes)	Answer (No)	Comment or Clarification
Environmental Disclosures
Environmental Operations & Controls	Has the company established any formal environmental, social, or sustainability policy?	✓
	Is this policy internally driven or derived from national/global policies?	✓
	Does the company identify and assess environmental and social risks arising from its economic activities?	✓
	Does the company adopt specific policies regarding waste recycling/water/energy consumption?	✓
	Does the company set targets for reducing greenhouse gas emissions? (If yes, please clarify).	✓
	Does management have any system/certification regarding environmental practices (ISO 14001 certification)? (If yes, please clarify).	✓
Carbon Emissions	Does the company calculate total annual carbon emissions? (If yes, please clarify in metric tons).	✓
Energy Sources & Diversification	Does the company calculate total direct annual energy consumption?	✓
	Does the company calculate the percentage of energy consumption by generation source type annually?	✓
	Does the company calculate the percentage of energy saved annually, if any?	✓
Water Usage	Does the company calculate total annual water consumption?	✓
	Does the company calculate total annual recycled and treated water volume? (If any).	✓
Waste Management	Does the company calculate total annual volume of produced, recycled, or treated waste by type and weight?	✓
Social Disclosures
Gender Diversity & Wage Ratio	Does the company disclose employee numbers by employment type (temporary or permanent)?	✓
	Does the company disclose the percentage of total employees by gender?	✓
	Does the company disclose the percentage of positions held by males and females (specific to junior/mid-level roles)?	✓
	Does the company disclose the percentage of positions held by males and females (specific to senior/executive roles)?	✓
	Does the company disclose the ratio of average male wages compared to female wages?	✓
Employee Turnover Rate	Does the company disclose the annual percentage of permanent employee turnover?	✓
	Does the company disclose the annual percentage of temporary employee turnover?	✓
	Does the company disclose the annual percentage of employee/consultant contract turnover?	✓
Non-Discrimination	Does the company adopt a policy criminalizing sexual harassment and/or a non-discrimination policy based on ethnicity, religion, or gender?	✓
Global Health & Safety Standards	Does the company follow an occupational health policy and/or global health/safety standards (e.g., ILO occupational safety and health guidelines)?	✓
	What is the number of accident victims (if any)?	✓
	What is the number of training hours related to environmental, social, and occupational health/safety issues for employees?	✓
Children & Forced Labor	Does the company adopt a policy prohibiting child and/or forced labor? (If yes, does this policy apply to suppliers and vendors dealing with the company?)	✓
Workers' Rights	In addition to Egyptian labor law requirements, does the company follow ILO laws and standards or other international frameworks related to workers' rights? (If yes, please clarify).	✓
	Does that policy cover suppliers and vendors dealing with the company?	✓
Sustainability-Related Corporate Governance
Board Diversity	Does the company disclose the number and percentage of total board seats held by males and females?	✓
	Does the company disclose the number and percentage of committee chairs held by males and females?	✓
Bribery/Anti-Corruption	Does the company issue and follow decisions related to anti-bribery/corruption?	✓
Ethical Conduct & Code of Ethics	Does the company issue and follow ethical conduct rules and a code of ethics?	✓
Data Privacy	In addition to Egyptian personal data protection and consumer protection laws, does the company follow any other international frameworks, rules, or recommendations regarding data privacy? (If yes, please clarify).	✓
Reporting & Disclosure of Sustainability Practices	Does the company issue GRI-CDP-SASB-IIRC-UNGC reports or other sustainability reports?	✓
	Does the company strive to achieve specific UN Sustainable Development Goals (SDGs)?	✓
	Does the company define these goals and report progress within the UN SDGs framework?	✓
	Has the company clearly declared its commitment to corporate social responsibility standards?	✓
	Does the company adopt an explicit and clear policy/principle regarding community investment?	✓
	Does the company participate in public and private sector initiatives related to community development?	✓
External Assurance	Are the company's ESG disclosures reviewed by an independent third party?	✓

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Annex (2) Key Performance Indicators for Disclosures on Financial Impacts of Climate Change (TCFD)

Key Performance Indicators for Climate-Related Financial Disclosures	Company's Action Taken	Answer (Yes)	Answer (No)	Comment or Clarification
		Yes	No
Governance
Climate-Related Governance	Does the Board of Directors monitor climate-related risks and opportunities? (If yes, please clarify).	✓
	Does company management play any role in assessing and managing climate-related risks and opportunities? (If yes, please clarify).	✓
Strategy
Environmental Operations, Controls & Risk Mitigation	Does the company identify any short-, medium-, and long-term climate-related risks or opportunities? (If yes, please clarify).	✓
	Does the company incorporate climate-related risks and opportunities into its strategy and financial planning?	✓
	Does the company annually invest in climate-resilient infrastructure, adaptive capacity, and product development? (If yes, please clarify).	✓
Risk Management
Climate-Related Risks	Has the company established a specific approach to identify and assess climate-related risks? (If yes, please clarify).	✓
	Does the company adopt a clear approach to managing climate-related risks? (If yes, please clarify).	✓
	Does the company integrate climate-related risks into its overall risk management strategy? (If yes, please clarify).	✓
Metrics and Targets
Carbon Emissions / Greenhouse Gases	Does the company use any metrics to assess climate-related risks and opportunities in alignment with its strategy and risk management process?	✓
	Does the company disclose total carbon dioxide emissions, Scope 1 (if any).	✓

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Annex (3) List of Definitions for Key Performance Indicators

Term	Definition
Policy	Refers in this context to any policy, strategy, action plan, or KPI that the company establishes and implements to achieve its economic, environmental, and social objectives.
Environmental Policy	Aims to balance the societal benefits from economic activities related to environmental pollution with the resulting damages. It refers to policies applied by the company to ensure all its activities are environmentally compatible.
Social Policy	Primarily refers to principles, legislation, and activities affecting living conditions leading to human welfare. In this context, it refers to the company's corporate social responsibility strategy and/or action plan and its impact on the local community.
Sustainability Policy	A comprehensive policy adopted by the company that integrates economic, environmental, and social dimensions into its core business operations as fundamental pillars.
Environmental Risks	Environmental hazards fluctuating between pollution and environmental degradation. In this context, they are divided into risks related to the company's activities (where any economic activity has an environmental impact and its own Carbon Footprint, even non-industrial activities, requiring calculation of that footprint and environmental impact across all economic sectors) and other investment risks related to the company's investments in various projects.
Carbon Footprint	A metric measuring carbon dioxide emissions at various levels such as individuals, factories, products, or countries, usually expressed in metric tons of CO2 emissions per year (tons/year). This metric highlights the impact of human activities on the environment. In this context, it refers to calculating carbon emissions produced by companies' operations at their main or branch offices.
Fossil Fuels	Fuel used to produce fossil energy, originating from the remains of plants and animals that settled under earth layers and were subjected to high temperature and pressure over time, concentrating carbon into fossil fuel. It relies on the natural carbon cycle and is extracted from coal, petroleum black coal, natural gas, and oil, which burn in air with oxygen to produce heat and energy used across almost all fields.
Greenhouse Gas Emissions - Carbon Emissions	Gases derived from burning fossil fuels or wood that concentrate in the atmosphere and are key causes of global warming. The most important emissions are carbon dioxide and methane. These gases result from all human and economic activities, even non-industrial ones having a carbon footprint, which is calculated for all economic activities.
ISO 14001	The international standard specifying requirements for an effective environmental management system (EMS), providing a framework institutions can follow instead of specifying performance requirements. There are many similar certifications such as Leadership in Energy and Environmental Design (LEED) and others.
Consumed Energy	A term referring to total consumed energy rather than specifying environmental performance requirements, with many similar certifications like LEED and others.
Consumed Water	Refers to the amount of water the company consumes annually, whether at its headquarters or branches.
Energy Generation Sources	Sources through which useful energy can be extracted directly or indirectly, divided into renewable and non-renewable energy sources (e.g., solid fuel, liquid fuel, solar energy, etc.).
Waste Recycling	Refers to reusing waste to produce other usable products. This is done by separating waste at the source (where the company assigns specialized trash bins for each type of waste like paper, plastic, metals, and organic waste) and disposing of them by contracting with companies that recycle waste.
Metric Tons	The metric ton, or "megaton," is an international unit of measurement for determining the volume of greenhouse gas emissions.
Water Recycling	Refers to using treated wastewater for purposes without direct human contact, such as irrigation and toilets.
Employee Turnover Rate	A term referring to the ratio of employees leaving the company compared to those joining within a specific period, usually one year.
Sexual Harassment	Refers to unwanted sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature. The following acts are considered core to sexual harassment: - When submission to such conduct is an explicit or implicit condition for employment, or when acceptance/rejection of such conduct is used as a basis for employment decisions affecting the individual. - When the purpose or effect of such conduct is to unreasonably interfere with an individual's work performance or create an intimidating, hostile, or offensive work environment.
Non-Discrimination on Any Basis	"Discrimination" is defined, for example but not exclusively, as conduct directed at a specific individual or identifiable group, where the individual or group receives treatment negatively affecting their work or education due to gender, social status, pregnancy, race, color, age, national origin, disability, religion, gender identity, expression, or any other characteristic protected under Egyptian law.
Occupational Health and Safety	A set of measures concerned with preserving human health and safety in the workplace by providing a safe environment free from accident, injury, or occupational disease causes, and maintaining work tasks, components, and the work environment (e.g., ILO occupational safety and health standards).
Forced Labor	Work or services exacted from any person under the threat of a penalty and performed without voluntary consent.
Child Labor	Refers to engaging in work that harms mental and physical development, depriving children of their natural childhood or affecting their dignity and potential. Under Egyptian law, employing a child before completing 15 full calendar years is prohibited, as well as training them before reaching 13 years.
Ethical Conduct Rules & Code of Ethics	A set of value-based principles and ethics by which the company makes decisions regarding right or wrong, while conduct rules are a set of regulations interpreting appropriate behavior in specific situations.
Community Investment	Social investment revolves around investing in individuals. It means policies designed to strengthen people's skills and capacities, supporting their full participation in work and social life. Key policy areas include education, quality childcare, healthcare, training, job search assistance, and rehabilitation.
Climate Risk Management	Climate change risks - risks facing businesses and government bodies resulting from climate change, affecting natural and human systems. Climate change risks include physical risks, litigation risks, reputation risks, shareholder risks, regulatory risks, and competitive risks.
Scope 1 Carbon Emissions	Scope 1 emissions are direct emissions produced from resources owned or controlled by the company. For example, all fuel types owned or controlled by a company (such as cars, light trucks, and heavy trucks) must be included. Leaked emissions are leaks of greenhouse gases (such as refrigeration and air conditioning units). In this context, it refers to emissions specific to the company's non-industrial administrative headquarters.