IFC and Egypt's CIB sign agreement to develop climate risk management framework

Doaa A.Moneim , Wednesday 22 Mar 2023

Minister Al-Mashat, the Vice President of the IFC, and CBE officials after signing the agreement. From the International Finance Corporation

The International Finance Corporation (IFC), a financial arm of the World Bank Group (WBG), and Commercial International Bank (CIB), Egypt's largest private sector bank, signed an agreement on Tuesday to develop and implement a robust climate risk management framework, according to a statement by IFC on Wednesday.

The advisory project under this agreement will include an initial portfolio screening against climate risk and the development of scenario planning and stress testing methodology for CIB, a long-term IFC partner. It will assist the bank in assessing its climate risk exposure and ensuring that any climate-related financial risks are disclosed in its portfolio.

This initiative follows IFC's investment in CIB's landmark issuance of Egypt's first private sector green bond in 2021. With support from IFC, CIB also developed the first credit line fully dedicated to certified green building in North Africa.

"Climate-related financial risks are increasingly becoming more relevant for financial institutions. Central banks, financial supervisors, investors, and other parties around the world are taking a keen interest in the risks and opportunities deriving from climate strategies. CIB believes that climate-related risks are cross-cutting drivers of the existing risk categories such as Credit, Operational, Market, Liquidity, and Reputational Risks. IFC's partnership with CIB will further enhance the Bank's process of integrating the climate-related risks into the existing risk management framework, as well as to support aligning with the evolving international standards and the best practices in this regard," said CIB's Chief Risk Officer, Talha Karim.

"Climate change is the defining issue of our time. Banks, like all institutions, must adapt to the risks it poses. We're delighted CIB is once again leading the way in accelerating the green transition and laying the foundations for a stronger, more sustainable financial sector, which can manage climate risks and meet the needs of its stakeholders," said Sérgio Pimenta, IFC's Vice President for Africa.

Egypt's Minister of International Cooperation, Rania Al-Mashat, said that this partnership agreement will provide technical consultation services to CIB, supporting the development of a climate risk management framework, which includes training and capacity building.

"This is not the first cooperation between the CIB and IFC, as in 2021, $100 million was dedicated to Egypt's first private sector green bond to help unlock finance for climate-smart projects, reduce greenhouse gas emissions, and support the country's transition to a greener economy," she added.

IFC's current investment portfolio in the country stands at $1.5 billion, and its advisory portfolio amounts to $32.5 million.

IFC's climate investments in Egypt amount to $1.8 billion since 2016, including mobilization, with a focus on renewable energy, green financing for financial institutions, industrial and commercial energy efficiency, and green buildings.

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