• Dr. Omran: The first strategic report puts sustainable development goals (SDGs) on top priority of investment decision maker within non-banking financial sector
• Dr. Omran: Women fill 40% of senior leadership roles within the organizational structure
• Dr. Omran: The first strategic report integrates environmental and social dimension in financial activities and aims at creating more sustainable, transparent and flexible economic system
Dr. Mohammed Omran- FRA’s Chairman emphasized that the first annual sustainability report outlined FRA’s strategy for Sustainable Development in the light of Egypt Vision 2030. The report included the Authority’s vision, mission and strategic approach. By the beginning of 2019, FRA deserved to be a key partner of the UN Global Compact initiative and it was the first Egyptian government Authority that adhered to the initiative and adopted its ten principles. It also strived to urge companies under its supervision and operating in non-banking financial activities to join the initiative, adopt its principles, and integrate them into its strategy.
FRA’s Chairman added that the first annual sustainability report disseminated the regulator’s point views on sustainability. Also, it presented the model for the non-banking financial sector to adopt this approach and put forward ideas to form sustainable development agenda. In addition, the report set a road map that build capacities and raise awareness; finally, ends with policies that are economically, environmentally and socially responsible.
This came during FRA’s Chairman meeting with pioneers of sustainability in Egypt, and officials of the German Agency for International Cooperation (GIZ) at FRA’s headquarters (Smart Village) this afternoon.
FRA’s Chairman said that the annual sustainability report monitored the social dimension of sustainability within the Authority, its focus on the human factor, good recruitment, development of performance and empowerment. Besides, creating an atmosphere to build positive functional and humanitarian relations among the employees. Moreover, the report monitored the basis set by the Authority to achieve sustainability of its human resources, namely, searching for competencies, creating stimulating work environment, maintaining equality and equal opportunities – without discrimination because of sex and color, following policies that support diversity and empowering employees, especially women. FRA’s annual report on sustainability shows that women holds 30% of total jobs, women fill 40% of senior leadership roles and shared chief executive positions with men.
Dr. Omran added that FRA’s first report on sustainable development monitored the growing global trend for investors around the world to integrate sustainability factors into their investment decisions. Also, the report focused on maximizing results of adopting and integrating sustainability process into corporate strategies in the near future in order to attract capital and enhance competitiveness in the market.
Based on this global approach and the prominent role played by non-banking financial activities in mobilizing savings and optimizing the resources available to achieve sustainable development goals, FRA has worked on a parallel approach to create an attractive climate for sustainable and green investment in light of applying a system (governance / environment / social dimension) and enhancing investors’ trust to pump their money to contribute to investment in green projects, that is besides raising their awareness and the society’s awareness in general about the importance of non-banking financial markets, especially those related to green projects so as to create communities capable of making sound investment decisions.
Dr. Omran also pointed out that the annual report shows the Authority’s efforts to apply sustainability in the non-banking financial sector, starting with governance of non-banking financial sectors and amending some provisions of Capital Market Law Companies Law, which regulate the rights of small shareholders, and listing and delisting rules.
In addition, companies shall submit governance annual reports pursuant to FRA’s BOD decisions issued in 2018, which requires companies to submit an annual report on corporate governance starting from the fiscal year ending by the end of December 2018 or which ends by June 2019. These reports shall be presented to the General Assembly and attached thereto a report including the comments and observations of the Company’s auditor on governance report, in accordance with the forms prepared by the Authority in this regard. Moreover, companies shall include the cumulative voting system in its statute. Proportional representation for small shareholders in the Board of Directors is allowed wherever possible, thereby enhancing minority rights and ensuring their effective participation in decision-making.
Dr. Omran noted that FRA’s annual sustainability report has shed light on the additional controls set for promoting minority rights through recent amendments to the Capital Market Law no. 95 of 1992. As the new amendments included provisions related to protecting rights of the minority where shareholders owning 5% of shares shall suspend the decisions issued by the General Assembly in favor of a certain class of shareholders. In addition, the new amendments imposed penalty on anyone who acquired securities or financial instruments without submitting mandatory tender offer to the minority in cases that require it, with the possibility of reconciliation in these crimes only after the purchase. That is besides, activating the role of sukuk holders and bondholders groups that protect the common interests of its members.
Deeping board governance through decisions issued by FRA’s BOD which stated that an independent BOD member in the Board of Brokerage Company, financial leasing and factoring companies shall not exceed a period of two consecutive cycles. In addition, Board member shall not combine Chair/CEO position except for the cases approved by FRA.
Dr. Omran noted that the auditor’s role has been expanded to ensure that the company complies with the Egyptian Accounting Standards upon preparing the financial statements. In this respect, a new rule was introduced and stated that the auditor shall be appointed by a recommendation of the Audit Committee and for a period of a maximum of six years, based on FRA’s BOD decision no. 59 of 2018 and decision no. 164 of 2018.
In order to combat corruption and expand the role of companies’ internal audit which plays several prominent roles in fighting corruption and reducing risks faced by financial institutions, brokerage companies and companies engaged in financial leasing and factoring shall form an Audit Committee, Risk Committee, Remuneration Committee and Governance Committee.
Also, the latest amendments to the Capital Market Law No. 95 of 1992 included the cancellation of bearer shares in order to strengthen anti- money laundering and protect shareholders.
Dr. Omran revealed that FRA’s Sustainability Report – in its first issue – presented a road map for sustainable development where no one is excluded within the non-banking financial sector. The report represented a commitment by the Authority to put this vision into effect within its institutional structure and within the non-banking financial sector.
In addition, FRA put its scientific and technical weight in a specialized department for sustainable development. Sustainable Development Department plays a prominent role in providing technical experience and consultancy for non-banking financial sector. The Department provides technical assistance in terms of sustainable development practices and participation of companies under FRA’s supervision in initiatives and awareness campaigns. Also, Sustainable Development Department helps companies in achieving Sustainable Development Goals (SDGs) internally and design a program to focus on the idea of environmental awareness and the financial inclusion for young people. The Department is targeting wide participation of all partners and stakeholders to disseminate sustainable development goals and linking them -widely- to economic development which is one of FRA’s social responsibility programs.
Moreover, Sustainable Development Department is moving progressively towards adapting all the reports issued by the Authority on Sustainability to be compatible with the Global Reporting Initiative (GRI) which developed sustainability-reporting framework for various international bodies. That is besides applying Principles of the UN Global Compact , as applying these principles will assist regulators in identifying and managing risks and enabling organizations to prepare reports that are consistent with reports submitted globally, thereby opening up greater opportunities for cooperation, exchanging experiences, enhancing reputation and building trust.