ESG in EGYPT, are we ready for more Green Funds?
Ahmed Elashkar CPA, CIA, CVA, CertIFR
Sr. M&A advisor, add value to firms via maximizing Shareholders’ value.
ESG is the acronym for Environmental, Social, and (Corporate) Governance, the three broad categories, or areas, of interest for what is termed “socially responsible investors.” They are investors who consider it important to incorporate their values and concerns into their selection of investments instead of simply considering the potential profitability and/or risk presented by an investment opportunity.
Welcome back to our bi-weekly newsletter coming to you from Cairo, Egypt.
In today's bulletin we will discuss what are the main pillars of the ESG according to "Paris Agreement" signed unanimously in 2015, maturity levels in Egypt, what advisory products are offered in respect to the ESG. "Stay with us,.....".
"Before Egypt, First of all, what's the international update on the ESG? Ok, bear with me in the next lines!"
The Biden administration’s latest efforts to reestablish the U.S. as a global leader on climate in the aftermath of the country’s official withdrawal from the "Paris Agreement" under the Trump Administration. With the U.S. having rejoined the Paris Agreement in February 2021, the announcements are a crucial step in rebuilding America's credibility on climate in what so called the "Nationally Determined Contribution (NDC)".
Worth to mention that, Trump Administration lifted the US sanctions on "Nordic 2" the gas line to Europe out of Ukraine, (that already have Nordic 1), giving the time and legitimacy for Putin to continue building the line so, avoid any disruptions in the gas supply through Ukraine in case of a potential Russian invasion at that time. "In simple words Trump was giving the blessings to Putin to invade Ukraine!!"
Whereas, Trump was benefiting from this situation as withdrawing from the agreement will give the U.S. the opportunity to heavily produce the "Shale Oil", which is more pollutive and not of a long-term economical benefit as, generally, the oil contracts are long-term in nature. Trump was aiming for more production of the Shale Oil, would level-up the employment rates, taxes, more leverage with GCC and finally, secure U.S. from diminishing gas supply on Russian invasion.
"Wow, politics! but, what's the NDC? can you elaborate more?
" Sure,.....!"
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The "Paris Agreement" places climate actions by each of its signatory countries somewhere between a national goal setting exercise and a binding international treaty commitment. Each party to the Agreement was obligated to prepare an initial NDC following the agreement's conclusion in 2015, representing the level of "Climate-Warming Greenhouse Gas (GHG)" reductions it aimed to achieve over subsequent years. Accordingly, the global strategic investors and PEH's would allocate funds into more greener way, meaning the more green you are, the more funds you would take.
Companies here in Egypt, as part of the signatory countries, are aiming for the full compliance with the "Paris Agreement", thus, not to be deprived from the green investments. Also, the Government in an attempt to get what so called the "Sustainable Finance", issued "Green Bonds" in 2022.
Now Egyptian companies are engaging with the big four firms seeking the following services:
Local Big four firms are having the ESG products on their taxonomy, while, depending on the wider network, and meanwhile, still developing the capacity internally.
For more information on the "Paris Agreement", please watch my YouTube video at:
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