1. Executive Summary

On 17 February 2026, the Egyptian Financial Regulatory Authority (FRA) published Decision No. 36 of 2026 in the Official Gazette (Al-Waqa'i Al-Masriya, Issue 39, Supplement B), effective from 18 February 2026. This regulation introduces, for the first time, mandatory carbon footprint disclosure and partial carbon offsetting requirements for Egypt's non-banking financial sector. Below are the key takeaways.

2. Regulatory Requirements — What FRA Decision 36/2026 Requires

The following table extracts every binding obligation from FRA Decision No. 36/2026 as published in Al-Waqa'i Al-Masriya, Issue 39 (Supplement B), 17 February 2026. All citations refer to the original Arabic text.

Key legal references underpinning this Decision: Capital Market Law No. 95/1992; Law No. 10/2009 on non-banking financial markets supervision; FRA Board Decision No. 107/2021 (ESG disclosure for NBFIs); FRA Board Decision No. 163/2023 (VVB registration standards). The Decision was approved by the FRA Board on 28 January 2026.

3. Mapping the Egyptian Market Landscape

3A. In-Scope Egyptian Entities

FRA Decision 36/2026 applies to all companies operating in non-banking financial activities with issued capital or net equity exceeding EGP 100 million (approximately USD 2.0–2.2 million at current exchange rates). The FRA regulates a broad universe of NBFIs across the following segments:

Estimated number of in-scope entities: Based on publicly available capital data and FRA reporting, an estimated 80–200+ NBFIs could meet the EGP 100 million capital/equity threshold across all segments. The exact number will depend on FRA's interpretation and individual company financials.

3B. Market Infrastructure for Carbon Credits in Egypt

Egypt has built a comprehensive regulatory infrastructure for its voluntary carbon market since COP27 (2022):

• Governing framework: Prime Minister's Decree No. 4664/2022 amended the Executive Regulations of the Capital Market Law to establish a voluntary carbon market platform on the Egyptian Exchange (EGX). Carbon Emission Reduction Certificates (CERCs) are classified as tradable financial instruments, with each CERC representing 1 metric ton of CO2 equivalent reduced.
• Egyptian Climate Exchange (EGCX): Originally launched on 13 August 2024 as AFRICARBONex and now operating as the Egyptian Climate Exchange (EGCX — www.egcx.com.eg), it is Africa's first regulated voluntary carbon market, operated by the EGX. It supports auction trading, continuous trading, and pre-arranged deals.
• Climate Project Registry: The FRA maintains a database of carbon emission reduction projects (CERPs). As of 2026, 27 projects are registered across 5 countries, with 139,989 CERCs issued and approximately 41,997 retired (per EGCX).
• Local carbon registries: FRA Decree 30/2024 sets accreditation standards for local voluntary carbon registries. The first accredited local registry is the Egyptian Biodynamic Agriculture Association (EOL). International registries recognized by ICROA are automatically accepted.
• Listing and delisting rules: FRA Decree 31/2024 (as amended by Decrees 252 and 253/2024) governs the listing of CERCs on the EGX, including eligibility requirements, disclosure obligations, and delisting procedures.
• Trading rules: EGX Resolution No. 795/2024 establishes trading rules for CERCs and their forward contracts.
• Settlement and clearing: All trades are cleared and settled through TASWYAAT Clearing Services Company (a subsidiary of EGX). Settlement covers both cash and physical delivery of certificates.
• Brokerage requirements: FRA Decree 1732/2024 requires brokerage firms trading CERCs to have minimum issued/paid-up capital of EGP 15 million, technological infrastructure, a designated trained trader, and data protection measures.
• Retirement process: CERCs are retired (cancelled) through the registry to prevent double-counting. Companies must obtain retirement confirmation documentation from the registry/EGX as proof of offset.

Early Trading Activity & Price Indications

Trading on EGCX has been limited but informative. Early transactions include:

• August 2024: Isis Organic purchased 500 CERCs from EBDA at EGP 1,040/certificate (~USD 21) via Beltone Securities.
• August 2024: DALTEX purchased 1,500 CERCs at USD 18/certificate via VNV Advisory and CI Capital Securities.
• November 2024: Additional trades executed through Beltone Securities on EGCX.
• May 2025: Further trades confirmed on the platform.

Assumption for cost modeling: Based on observed transactions and international voluntary carbon market benchmarks, this study uses a price range of USD 10–30 per tCO2e (approximately EGP 500–1,500 per CERC at current exchange rates) for planning purposes. Actual prices will depend on supply/demand dynamics, project type, and vintage.

3C. Verification/Assurance Ecosystem

FRA Decree 163/2023 established standards for registration of Validation and Verification Bodies (VVBs) for carbon reduction projects. The FRA's Carbon Credits Supervisory Committee conducted interviews and assessments:

• Current capacity: As of early 2026, 8 accredited VVBs are registered with the FRA (per official FRA statements). Initially, 3 VVBs were registered (2 local, 1 international), with the number subsequently expanding.
• Bottleneck risk: With potentially 80–200+ NBFIs needing verification simultaneously before June 2026, the 8 VVBs face extreme capacity pressure. Typical verification engagements take 4–8 weeks, meaning VVBs would need to process 10–25+ engagements each in a ~4-month window.
• Types of verification needed: Note that VVBs registered for carbon project verification (project-level emissions reductions) are not necessarily the same as assurance providers for corporate GHG inventories. Companies should confirm whether the FRA's registered VVBs are authorized for corporate-level footprint verification or if separate assurance providers (e.g., ISO 14064-3 accredited bodies) are also accepted.
• Lead times: Under normal circumstances, GHG verification takes 4–12 weeks depending on complexity. Given the surge in demand, companies should engage VVBs immediately to secure slots.

Suggested VVB Selection Criteria

• Registered in the FRA's official VVB registry (mandatory).
• Experience with corporate GHG inventories (Scope 1 & 2), not only project-level verification.
• Familiarity with GHG Protocol Corporate Standard and/or ISO 14064-1.
• Capacity to complete engagement within required timeline.
• Clear fee structure and deliverables (verification statement, management letter).

3D. Corporate Readiness in Egypt

Based on market observation and the maturity of ESG practices among Egyptian NBFIs, readiness can be characterized across several dimensions:

Key observation: The FRA's earlier Decision 107/2021 introduced ESG disclosure requirements for NBFIs, providing a foundation. However, that framework focused on qualitative ESG narrative, not quantitative GHG measurement. Decision 36/2026 represents a significant step-up in technical rigor, requiring auditable quantitative data, third-party verification, and financial commitment through carbon offset purchases.

4. Impact Assessment

This section assesses the multi-dimensional impact of Decision 36/2026 on in-scope Egyptian NBFIs, grounded in the market realities described in Section 3.

4.1 Compliance and Governance Impact

• Board accountability: Boards of in-scope NBFIs will need to formally acknowledge the new obligation, assign oversight responsibility (typically to the Audit Committee or a newly formed ESG/Sustainability Committee), and ensure adequate resources are allocated.
• Policy development: Companies will need to adopt a Carbon Management Policy covering measurement methodology, data governance, verification procedures, and offset procurement rules.
• Internal controls: New controls are needed for GHG data collection, calculation accuracy, documentation, and audit trail maintenance — similar to financial reporting controls but applied to non-financial data.
• Regulatory reporting: Annual submission of the verified Carbon Footprint Report to FRA becomes a recurring compliance obligation, with licensing implications for non-compliance.

4.2 Data and Systems Impact

• Scope 1 data requirements: Companies must identify and quantify all direct emission sources: fuel consumption (generators, boilers), company-owned/controlled vehicle fleet (fuel logs), refrigerant leaks (HVAC systems), and any on-site combustion.
• Scope 2 data requirements: Companies must collect electricity consumption data (kWh from utility bills), district heating/cooling if applicable, and apply appropriate emission factors (typically the Egyptian grid emission factor published by IEA or derived from national energy data).
• Data owners: In most NBFIs, this data resides across Facilities/Administration (electricity, fuel), Fleet Management (vehicles), Procurement (refrigerants), and Finance (utility invoices). A central coordinator is needed.
• IT considerations: While sophisticated GHG software is not mandatory for initial compliance, companies need a structured data collection mechanism (even a well-designed spreadsheet) with version control, audit trail, and access controls.
• Egypt-specific data challenge: Many Egyptian companies lack sub-metered electricity data by facility. Leased office spaces may require landlord cooperation to obtain consumption data.

4.3 Assurance/Verification Impact

• Availability risk: With only 8 FRA-registered VVBs and potentially 80–200+ NBFIs seeking verification before June 2026, early movers will have a significant advantage. Late engagements risk missing the deadline.
• Timing risk: A typical GHG verification engagement requires 4–8 weeks from data readiness to final verification statement. Working backward from the June 2026 deadline, data must be ready by April–May 2026 at the latest.
• Evidence requirements: Verifiers will request: (a) organizational boundary definition, (b) emission source inventory, (c) activity data with supporting documentation (invoices, meter readings, fuel logs), (d) emission factors with sources, (e) calculation methodology documentation, (f) materiality threshold, (g) management assertion letter.

4.4 Financial Impact

The following cost estimates are indicative ranges based on Egyptian and regional market benchmarks. Actual costs will vary by company size, complexity, and chosen service providers. All figures are approximate.

Carbon Credit Procurement Cost Illustration

For a typical mid-size NBFI (office-based, 200–500 employees, multiple branches):

• Estimated annual Scope 1+2 emissions: 500–5,000 tCO2e (depending on fleet size, branch network, diesel generators)
• 20% offset requirement: 100–1,000 CERCs
• At USD 10–30/CERC: USD 1,000–30,000 (approximately EGP 50,000–1,500,000)

Total Year-1 compliance cost range: EGP 600,000–3,400,000 (approximately USD 12,000–68,000) for a typical mid-size NBFI, excluding carbon credit costs for very large emitters.

4.5 Strategic/Market Impact

• Investor expectations: International institutional investors and DFIs (IFC, EBRD, etc.) increasingly screen for climate disclosure and carbon management practices. Compliance positions Egyptian NBFIs favorably for international capital.
• ESG ratings: Compliance with Decision 36/2026 will directly improve ESG scores for in-scope companies, relevant for those seeking inclusion in sustainability indices or green bond issuance.
• Access to green finance: Demonstrated carbon management capacity strengthens eligibility for green/sustainability-linked loans and bonds, which typically offer favorable pricing.
• Competitive positioning: Early compliance leaders gain reputational advantage, both locally (with FRA/regulators) and internationally.

4.6 Carbon Market Impact

• Demand shock: If 100+ NBFIs simultaneously need to purchase CERCs, demand could significantly exceed the current supply of ~140,000 credits from 27 projects (with ~42,000 already retired, leaving ~98,000 available). This could create a supply squeeze.
• Price pressure: Increased demand may push CERC prices upward from the observed range of USD 10–30. Companies should budget conservatively and consider early procurement.
• Supply response: The FRA has been actively registering new projects and streamlining listing rules (Decrees 252 and 253/2024). New project registration is expected to increase supply, but the typical 1.5–2 year project-to-issuance cycle means near-term supply may remain constrained.
• Procurement strategy considerations: Companies should (1) begin engaging licensed brokers immediately, (2) explore forward contracts for future CERC deliveries, (3) consider diversifying across project types and vintages, and (4) monitor FRA announcements for newly registered projects.

5. Way Forward — Implementation Roadmap

5.1 Phased Implementation Plan

5.2 Minimum Viable Compliance vs. Best Practice

5.3 Common Pitfalls (Egypt-Specific) & How to Avoid Them

6. Company Guidance Toolkit

6A. FRA Compliance Checklist (One-Page, Copy-Ready)

6B. Evidence Pack Checklist

Archive the following for FRA audit/inspection and verification purposes:

• Board minutes acknowledging Decision 36/2026 and approving compliance plan
• Organizational boundary documentation (legal structure, operational control determination)
• Scope 1 source inventory (complete list of direct emission sources)
• Scope 2 source inventory (all purchased energy sources)
• Activity data files: utility bills, fuel invoices, fleet fuel records, refrigerant purchase/disposal records
• Emission factor register (factors used, sources, dates, applicability rationale)
• GHG calculation workbook (showing all calculations, methodological choices, and assumptions)
• Internal review/quality assurance records
• Management assertion letter (signed by CFO/CEO)
• VVB engagement letter and verification plan
• VVB verification statement and management letter
• Final verified Carbon Footprint Report (as submitted to FRA)
• FRA submission confirmation/receipt
• CERC purchase order and transaction confirmation from EGCX
• CERC retirement certificate from registry
• Brokerage agreement and fee documentation

6C. Data Collection Checklist — Scope 1 and Scope 2 Minimum Data Fields

Scope 1 (Direct Emissions)

Scope 2 (Indirect Energy Emissions)

6D. Verification Preparation Checklist

VVBs will typically request the following. Have these ready before the verification engagement begins:

• Completed Carbon Footprint Report (draft for verification)
• Organizational chart and boundary documentation
• List of all facilities/offices included in the boundary
• Scope 1 and Scope 2 source inventory
• Raw activity data with supporting evidence (utility bills, invoices, fuel logs)
• Emission factors used and their published sources
• GHG calculation methodology description
• Materiality threshold determination
• Data management and internal control documentation
• Prior year report (if applicable, for subsequent years)
• Management assertion or representation letter
• Contact list of data owners for VVB interviews
• Access to sites/facilities if physical inspection is requested

7. Recommendations

7.1 Immediate

• Board notification: Circulate an internal memo to the CEO and Board summarizing the Decision, obligations, deadlines, licensing implications, and requesting authorization to mobilize resources.
• Appoint project lead: Designate a Carbon Footprint Project Lead (ideally with ESG/sustainability background). For smaller entities, this may be the Compliance Officer or CFO on a dual-mandate basis.
• Conduct rapid gap assessment: Identify what data is already available, what data gaps exist, and which departments hold the required information.
• Engage VVB immediately: Contact FRA-registered VVBs and secure an engagement letter. Given capacity constraints, this is the highest-urgency action item.
• Send data request to departments: Issue a formal data request to Administration/Facilities, Fleet Management, Finance, and Procurement for all Scope 1 and Scope 2 activity data.

7.2 Near-Term

• Complete data collection: Gather all utility bills, fuel invoices, fleet logs, and refrigerant records for the reporting period.
• Select emission factors: For Scope 2, use the latest available IEA grid emission factor for Egypt or IGES default factors. For Scope 1, use IPCC/GHG Protocol default factors by fuel type. Document all factor choices.
• Calculate GHG inventory: Use the GHG Protocol Corporate Standard methodology. Activity data × emission factor = emissions (tCO2e).
• Draft Carbon Footprint Report: Include: organizational boundary, reporting period, methodology, source inventory, calculations, total emissions by scope, data quality statement.
• Internal review: CFO/CEO reviews and signs management assertion letter before submission to VVB.

7.3 Medium-Term

• Complete verification: Work with VVB to address any findings. Obtain verification statement.
• Submit to FRA: Submit the verified Carbon Footprint Report to FRA by end of June 2026.
• Initiate carbon credit procurement: Engage a licensed broker on EGCX. Calculate 20% offset requirement. Execute purchase within 90 days of FRA submission.
• Complete retirement: Ensure purchased CERCs are formally retired through the registry. Obtain retirement certificate.
• Archive evidence: Compile the complete evidence pack (Section 6B) for regulatory and audit purposes.

7.4 Recommendations for Smaller Entities with Limited ESG Capacity

• Leverage external consultants: For Year 1, consider engaging a sustainability consultancy to build the GHG inventory and report. Cost: EGP 200,000–500,000. This is faster than building in-house capability under time pressure.
• Use simplified data collection: Focus on the highest-impact data sources first (electricity bills and fleet fuel are typically 80–90% of NBFI emissions). Refine in subsequent years.
• Pool resources: Industry associations (e.g., Egyptian Insurance Federation, Egyptian Leasing Association) could coordinate shared training, bulk VVB procurement, or knowledge-sharing workshops.
• Start with spreadsheet-based approach: A well-structured Excel workbook is sufficient for Minimum Viable Compliance. Invest in software only if/when the process matures.

7.5 Carbon Credit Procurement Guidance

Eligibility requirements (regulatory): CERCs must be registered in the FRA's Climate Project Registry (Art. 3). Purchased through the regulated voluntary carbon market (EGCX on EGX). Via a licensed brokerage firm (per FRA Decree 1732/2024).

Procurement process:

1. Identify the 20% offset volume from verified Carbon Footprint Report.
2. Engage a licensed brokerage firm authorized by FRA for CERC trading.
3. Review available CERCs on EGCX (project type, vintage, price).
4. Obtain internal approval.
5. Execute purchase through the brokerage firm on EGCX.
6. Settlement processed by TASWYAAT Clearing Services.
7. Request formal retirement of CERCs through the registry.
8. Obtain and archive retirement certificate as proof of compliance.

Documentation to retain: Brokerage agreement; purchase order; trade confirmation; settlement statement; retirement certificate; internal approval memo; board notification (if material amount).

Glossary