Morocco is a regional leader in establishing channels to finance climate action, according to a new report from Green For South, a Toronto-based consultancy.
The report, titled ‘Climate Finance Readiness Index’, said that Morocco is the first country in North Africa to have adopted “appropriate regulations and guidelines (on a voluntary basis)” to support climate finance. It added that the kingdom has “an interesting volume of climate finance activity” involving international funds as well as the issuance of green bonds, and effective outreach initiatives.
The report, cited by several media organisations in the region, also noted Morocco’s efforts to improve its climate resilience capacity, particularly in mitigation efforts, which require significant investment.
Commenting on Tunisia, the report said the northern African country also has “appropriate regulations (on a voluntary basis), and an interesting volume of climate finance activity”. However, there has been no issuance of green bonds and outreach efforts are still limited.
In comparison, Algeria has no regulations in the financial sector to support climate action, and climate finance activity is still limited.
Regulations
Egypt has made regulations relating to ESG and climate risks mandatory in the various financial sectors including banking, insurance and capital markets. This is not the case in Jordan, Morocco, Tunisia and Turkiye, which “generally have voluntary reporting requirements”.
In its assessment, the report took into account the differences between sub-regions such as North Africa, the Middle East, the GCC and Turkiye, to reflect a fair view of each market, according to local challenges and constraints.
The index gave the North Africa sub-region a score of 31.33%, against 40.23% for the Middle East sub-region (Egypt, Iraq, Jordan, Lebanon), 17.53% for the GCC sub-region and 46.84% for Turkiye.
In all, the index assessed 14 financial systems based on a variety of criteria to determine the progress made by each country in implementing climate finance mechanisms and instruments. The countries are Morocco, Algeria, Tunisia, Egypt, Jordan, Lebanon, Iraq, Kuwait, Qatar, Bahrain, Saudi Arabia, the UAE, Oman and Turkiye.
The report presented several recommendations to all stakeholders to implement or strengthen the initiatives necessary to contribute to the mitigation of climate risks, namely:
- Establish a regulatory framework for financial institutions to manage climate risks
- Strengthen market incentives to stimulate both supply and demand for climate finance through investments in green initiatives
- Increase knowledge and awareness of climate risks and finance. M