Morocco dominates its region in climate finance
According to the “Climate Finance Readiness Index” report covering the Middle East region from North Africa and Turkey (MENAT), Morocco has once again managed to rank at the top of the Maghreb countries in terms of preparing financial systems to support climate action. .
A recent report by Green For South, a Toronto and Casablanca-based consultancy, notes that the Kingdom is the first country in the sub-region, which also includes Algeria and Tunisia, to adopt “regulations and guidelines, relevant guidelines (mostly voluntary. At this stage) of interest.” a volume of climate finance activity (dealing with international funds and issuing green bonds) and effective advocacy mechanisms”.
The report also reviewed Morocco’s efforts to improve climate resilience, particularly in terms of mitigation, which requires significant investment, and recalled the overall value of climate mitigation and adaptation measures included in the NDC (Nationally Determined Contribution) as published in June. 2022 and is estimated at US$ 78 billion (US$ 38 billion for mitigation measures and US$ 40 billion for preventive measures).
Tunisia also has adequate regulation (on a voluntary basis), a good amount of climate finance activities, the report adds, but there has been no issuance of green bonds or Sukuk, and promotional provisions are still limited.
Algeria, on the other hand, “has no regulation to support climate action in the financial sector and climate finance activity is still limited,” Green For South said, estimating that the North African region as a whole is in the early stages of implementing these measures.
For this firm specializing in sustainable, green and climate finance, Morocco and Tunisia are being urged to strengthen their regulations (and make them mandatory) and promote green emissions and launch more awareness and training initiatives.
As for the MENA region, Egypt leads the way by mandating all regulations related to ESG and climate risks in various financial sectors (banking, insurance and capital markets), unlike countries such as Jordan, Morocco, Tunisia and Turkey, which generally report voluntarily. requirements.
In its assessment, the report takes a fair look at each country according to its local challenges, taking into account differences between sub-regions such as North Africa, the Middle East, the Gulf Cooperation Council (GCC) and Turkey. and limitations.
Indeed, 14 financial systems are assessed against different criteria to determine the progress each country has made in implementing climate finance mechanisms and instruments. These are Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Iraq, Kuwait, Qatar, Bahrain, Saudi Arabia, United Arab Emirates, Oman and Turkey.
Thus, the Climate Finance Readiness Index scores 31.33% for the North African sub-region, 40.23% for the Middle East sub-region (Egypt, Iraq, Jordan, Lebanon) and 17.53% for the Gulf Cooperation Council (GCC) sub-region. – 46.84% for the region and Turkey.
As for the GCC sub-region (excluding Oman), the authors of the report noted that most of them have a reporting requirement, noting that these countries will rely on their own resources to support climate action. Guidelines for public companies on ESG and green bonds / Sukuk.
For its part, Turkey has comprehensive regulations covering climate and ESG risk requirements. In addition, the Green Bond Guidelines are mandatory.
In addition, Ankara has already issued green bonds and mobilized more than US$1 billion in global green funds.
Along with Egypt, Lebanon and Turkey, Morocco is in the first sub-group of countries mobilizing resources from global green funds and green bond issues/”Sukuk” for green financial activities.
Addressing the awareness component, the text mentions that Morocco is in the first subgroup with special training programs in the field of green and climate finance, along with Turkey and Jordan.
Finally, in its report, Green For South made a number of recommendations to stakeholders, including regulators and financial institutions, to implement or strengthen the initiatives necessary to contribute to reducing climate risks and adaptation efforts.
These include creating a regulatory framework for financial institutions to manage climate risks, strengthening market incentives to stimulate supply and demand for climate finance through investments in green initiatives, and increasing knowledge and awareness in this area.