FRA Decision No. 107 of 2021 dated 2021/7/5

Regarding the controls for disclosure by companies operating in non-banking financial activities regarding environmental, social, and governance practices related to sustainability and the financial impacts of climate change. Last amended on 2022-12-28

In accordance with Decision No. 196 of 2022

The Board of Directors of the Financial Regulatory Authority

After reviewing:

• The Law on Joint Stock Companies, Companies with Limited Liability by Shares, Limited Liability Companies, and Single-Person Companies issued under Law No. (159) of 1981;
• Law No. (10) of 2009 regarding the regulation of supervision over non-banking financial markets and instruments;
• The Board of Directors of the Authority Decision No. (100) of 2020 regarding corporate governance rules for companies operating in non-banking financial activities;

And after the approval of the Board of Directors of the Authority in its session held on 2021/7/5;

Decided

Article (1)
Companies operating in non-banking financial activities with a paid-up capital or net equity of no less than one hundred million Egyptian pounds shall comply with disclosures related to Environmental, Social, and Governance (ESG) practices in their annual report prepared by their Board of Directors and attached to the annual financial statements, as detailed in Annex No. (1) attached to this Decision.

Companies operating in non-banking financial activities with a paid-up capital or net equity of no less than five hundred million Egyptian pounds shall also comply with disclosures related to the financial impacts of climate change (TCFD - Task Force on Climate-related Financial Disclosures) in their annual report prepared by their Board of Directors and attached to the annual financial statements, as detailed in Annex No. (2) attached to this Decision.

Article (1 bis)

1. The provisions of Article (1) of this Decision shall not apply to companies engaged in any of the following activities:
   • Investment funds activity (including Exchange Traded Funds).
   • Securitization activity.
   • Factoring activity.

Article (2)
Companies subject to the provisions of this Decision are granted a period to comply with the performance indicators for the disclosures contained in Annexes No. (1) and (2) attached to it, until the deadline for submitting financial statements for the financial year ending in 2022. They must provide the Authority with a quarterly statement of the measures taken or to be taken regarding the aforementioned disclosures, starting from January 1, 2022.

Article (3)
This Decision shall be published in the Egyptian Gazette and on the Authority's website, and shall be enforced from the day following its publication in the Egyptian Gazette.

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Annex (1)
Performance Indicators for Environmental, Social, and Governance (ESG) Disclosures

Performance Indicators for Environmental, Social, and Governance (ESG) Disclosures	Action Taken by the Company	Answer (Yes/No)	Comment or Clarification
Environmental Disclosures
• Has the company established any environmental and/or social policy or a formal sustainability policy?
• Is this policy derived from within the company or adopted from national or global policies?
• Does the company identify and assess environmental and social risks arising from its economic activity?
• Does the company adopt specific policies regarding waste recycling/water consumption/energy?
• Does the company set any targets related to reducing greenhouse gas emissions? (If yes, please clarify).
• Does the management have any system/certification regarding environmental practices (e.g., ISO 14001)? (If yes, please clarify).
Operations and Environmental Control
• Does the company calculate the total carbon emissions annually? (If yes, please clarify in metric tons).
Carbon Emissions
• Does the company calculate the total volume of energy consumed directly annually?
• Does the company calculate the percentage of energy consumption by source type annually?
• Does the company calculate the percentage of energy saved annually, if any?
Energy Sources and Diversity
• Does the company calculate the total amount of water consumed annually?
• Does the company calculate the total amount of water recycled and treated annually? (If any).
Water Usage
• Does the company calculate the total volume of waste produced, recycled, or treated by type and weight annually?
Waste Management
Social Disclosures
• Does the company disclose the number of male and female employees by employment type (temporary or permanent)?
• Does the company disclose the percentage of total employees by gender (male and female)?
• Does the company disclose the percentage of positions held by males and females (for entry-level and mid-level jobs)?
• Does the company disclose the percentage of positions held by males and females (for senior and executive positions)?
• Does the company disclose the ratio of average male wages compared to average female wages?
Gender Diversity and Wage Ratio
• Does the company disclose the percentage rate of permanent employee turnover annually?
• Does the company disclose the percentage rate of temporary employee turnover annually?
• Does the company disclose the percentage rate of contract workers and/or consultants turnover annually?
Employee Turnover Rate
• Does the company adopt a policy criminalizing sexual harassment and/or a non-discrimination policy on any racial, religious, or gender basis?
Non-Discrimination
• Does the company follow an occupational health policy and/or a policy specific to global health and safety standards (such as ILO standards on occupational safety and health)?
• What is the number of accident victims (if any)?
• What is the number of training hours related to environmental, social, and occupational health and safety issues for employees?
Global Health and Safety Standards
• Does the company follow a policy prohibiting child labor and/or forced labor? (If yes, does this policy apply to suppliers and vendors dealing with the company?)
Children and Forced Labor
• In addition to Egyptian Labor Law requirements, does the company follow International Labor Organization laws and standards or any other international frameworks, standards, or laws related to workers' rights? (If yes, please clarify).
• Does that policy include suppliers and vendors dealing with the company?
Workers' Rights
Corporate Governance Related to Sustainability
• Does the company disclose the number and percentage of total Board of Directors seats held by males and females?
• Does the company disclose the number and percentage of committee chairs held by males and females?
Board of Directors Diversity
• Does the company issue any decisions related to combating bribery/corruption and follow them?
• Does the company issue a Code of Ethics/Conduct and follow it?
Code of Ethics and Code of Conduct
• In addition to Egyptian Personal Data Protection Law and Consumer Protection Law requirements, does the company follow any other international frameworks, rules, or recommendations regarding data privacy? (If yes, please clarify).
Data Privacy
• Does the company issue reports - SASB, CDP, GRI, UNGC, IIRC, or any other sustainability reports?
• Does the company seek to achieve specific targets of the United Nations Sustainable Development Goals (SDGs)?
• Does the company define these targets and report on progress made 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?
Sustainability Practices Reporting and Disclosure
• Are the company's environmental, social, and governance (ESG) disclosures reviewed by an independent third party?
External Assurance

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Annex (2)
Performance Indicators for Climate-Related Financial Disclosures (TCFD)

Performance Indicators for Climate-Related Financial Disclosures	Comment or Clarification	Answer (Yes/No)	Action Taken by the Company
Governance
Governance Related to Climate Change
• Does the Board of Directors monitor risks and opportunities related to climate? (If yes, please clarify).
• Does the company management play any role in assessing and managing climate-related risks and opportunities? (If yes, please clarify).
Strategy
Environmental Operations, Control, and Risk Mitigation
• Does the company identify any climate-related risks or opportunities in the short, medium, and long term? (If yes, please clarify).
• Does the company include climate-related opportunities and risks in its strategy and financial planning?
• Does the company invest annually in infrastructure related to climate change resilience, adaptability, 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 manage 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 consistent 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 Performance Indicators

Term	Definition
Policy	Refers in this context to any policy, strategy, action plan, or performance indicators that the company establishes and implements to achieve the company's economic, environmental, and social objectives.
Environmental Policy	Is that which seeks to balance the benefits returned to society from economic activities related to environmental pollution with the damages caused by pollution. It refers to the policies applied by the company so that all its activities are environmentally compatible.
Social Policy	Primarily refers to the principles, legislation, and activities that affect living conditions leading to human welfare. In this context, it refers to the company's Corporate Social Responsibility strategy and/or its action plan and its impact on the local community.
Sustainability Policy	Is an integrated policy followed by the company that incorporates economic, environmental, and social dimensions into the core of its basic commercial activities as fundamental pillars.
Environmental Risks	Are environmental hazards which range from pollution to environmental degradation. In this context, they are divided into environmental risks related to the company's activity, as any economic activity has an impact on the environment and has its own Carbon Footprint, even non-production and industrial activities. That carbon footprint and environmental impact must be calculated for all companies operating in all economic sectors, and other investment risks related to the impact of the company's investments in various projects on the environment.
Carbon Footprint	An indicator that measures carbon dioxide emissions at various levels such as individuals, factories, products, or even countries, usually expressed in units of tons of carbon dioxide emissions per year (tons/year). This indicator highlights the impact of human activities on the environment. It consists of a primary carbon footprint and a secondary carbon footprint.
Fossil Fuel	Is fuel used to produce fossil energy, originating from the remains of living organisms (plants and animals) that settled under layers of the earth's crust and were exposed to very high temperatures and pressure over time, leading to carbon concentration and conversion into fossil fuel. Therefore, this type of fuel relies on the carbon cycle in nature and is extracted from fossil materials such as coal, black petroleum coal, natural gas, and petroleum. These materials burn in air with oxygen to produce heat and energy used in almost all fields.
Greenhouse Gas Emissions - Carbon Emissions	Gases derived from the combustion of fossil fuels or wood that concentrate in the atmosphere and are among the main causes of the greenhouse effect. The most important of these emissions are carbon and methane emissions. These gases are produced by all human and economic activities, even non-productive economic activities have a carbon footprint, and that footprint is calculated for all economic activities equally.
ISO 14001	Is the international standard that specifies requirements for an effective Environmental Management System (EMS), providing a framework that an organization can follow rather than specifying environmental performance requirements. There are many similar certifications such as Leadership in Energy and Environmental Design (LEED) and others.
Energy Consumed	A term referring to the total energy consumed to perform any work or activity, including any economic or manufacturing work and others. In this context, it refers to the total energy consumed by the company in its operations related to its economic activity, whether electrical, solar, or other, whether in the company's headquarters or its branches (kilowatt-hours).
Water Consumed	Refers to the amount of water that the company consumes annually, whether in its headquarters or its branches, if any.
Energy Generation Sources	Sources through which useful energy can be extracted either directly or indirectly. They are divided into renewable energy sources and non-renewable energy sources (such as 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 (i.e., the company dedicates separate trash cans for each type of trash such as paper, plastic, metals, and organic waste) and disposing of them by contracting with some companies that recycle waste.
Metric Tons	The metric ton, or