Sustainable  Bonds: Mapping The Future of Sustainable Tourism Projects Finance in Egypt


Nagla Harb Sayed Ahmed

Tourism Studies Department, Alexandria University, Egypt




The contemporary climate changes have led to global movements at all levels to put pressure on all economic activities, including tourism, to shift towards sustainability. The transition to sustainable tourism requires sources of finance that provide environmental and social benefits. Sustainable bonds are fixed income securities where the proceeds are used to finance projects with environmental and/ or social benefits. This research aims at highlighting the potential of sustainable bonds to finance sustainable tourism projects. It further aims at exploring the main barriers that hinder the successful issuance of sustainable bonds to finance sustainable tourism projects in Egypt. It concludes with measures to overcome these barriers and allow the tourism industry to benefit from issuing sustainable bonds. The research is conducted using a combination of analysis of existing literature, case studies, and semi-structured in-depth interviews with 16 experts in this field. Results reveal that the main barriers are; lack of awareness of sustainable bonds potential to finance sustainable tourism projects, significant weakness of the local bond market, lack of integration in the institutional framework governing the issuance process, the project-revenue backed bonds may not be attractive to investors for tourism projects, scale mismatch between sustainable tourism projects and the minimum size of bond issuance. The study concludes with measures to overcome these barriers and to ensure the successful issuance of sustainable bonds to finance sustainable tourism projects in Egypt .

Key Words: Sustainable Finance, Green bonds, Sustainability bonds, Social bonds, Sustainable tourism projects, Egypt.





Climate crisis has become a devastating reality. It carries with it a grave threat to the future of the universe. Climate change impacts are now present in virtually every corner of the globe. With the accusations of human activities to bring 'irreparable' harms to this world, global climate strikes and global movements have emerged at all levels. They raise the call for the transition to more sustainable practices and adopting a business model that reflects social responsibility and inspire solutions to tackle this crisis ( EEA, 2019; UN, 2019; Wingard, 2019, Global Climate Strike, 2019)  

The UNEP's Green Economy Report (GER) calls for investment in sustainable tourism as a tool for creating jobs, eradicating poverty, and protecting the environment (UNWTO, 2012). It aims at encouraging policy makers to support investments in greening the tourism sector. It explains how greener scenarios could allow the sector to continue growing steadily over the coming decades, while ensuring significant social and environmental benefits, such as reductions in water consumption, energy use and CO2 emissions (UNWTO, 2012).

The transition to sustainability requires the provision of the necessary sources to finance or re-finance investments that provide environmental and social benefits. However, access to finance constitutes a critical challenge to sustainable tourism especially in developing countries. For large tourism projects, like resorts and hotels, commercial banks are unwilling to lend them due to their intrinsic characteristics, mainly seasonality and maturity mismatch (OECD, 2018). Small tourism businesses, such as restaurants or gift shops, face particular challenges in this regard too, as low productivity and lack of interest in growing the business mean that financial institutions are unwilling to lend them. With public budgets likely to remain tight for some time, financing sustainable tourism development requires connecting tourism projects with the available green instruments in the capital market (OECD, 2018) .

Recently, the capital market has introduced three types of sustainable fixed income securities; Green Bonds (GB), Social Bonds (SB), and Sustainability Bonds (STB). Green bonds are a type of bonds where the proceeds are exclusively applied to finance or refinance climate or environmental projects that meet the green bond principles (GBP) (ICMA, 2018a). In social bonds proceeds are used to raise funds for new and existing projects directly aim to address or mitigate a specific social issue or achieve positive social outcomes and meet the social bond principles (SBP) (ICMA, 2018b). While in sustainability bonds proceeds are applied to finance or refinance a combination of green and social projects and meet sustainability bond guidelines (SBG) which is aligned with  the four core components of both the GBP and SBP (ICMA, 2018c, ICMA, 2019a).

Sustainable bonds could provide wide-ranging opportunities for financing or re-financing sustainable tourism projects, which could allow the tourism sector to significantly contribute to the UN's Sustainable Development Goals (SDG), as well as, to fulfill its obligations under the EU's 2030 climate and energy objectives, and  the Paris Climate Agreement (Accord de Paris) (UNEP, 2015).

In Egypt, despite the evident fast growth of sustainable bonds market globally, the issuance of sustainable bonds is still in the study phase. The full potential of sustainable bonds does not seem to be appreciated yet. Hence, there is an urgent need for unlocking the full potential of sustainable bonds market to finance or re-finance sustainable tourism investments in Egypt.

This study aims at highlighting the potential of sustainable bonds to finance sustainable tourism projects. It also aims at exploring the main barriers that hinder the successful issuance of sustainable bonds to finance sustainable tourism projects in Egypt. And finally, to recommend measures to overcome these barriers and allow the tourism industry to benefit from issuing sustainable bonds. The research is conducted using a combination of analysis of existing literature, case studies, and semi-structured in-depth interviews with 16 experts in this field.


2-Sustainable Bonds Market


The emergence and rise of sustainable bonds market is clearly reflected in the growth of the green bond market, that grew at a far faster rate compared to the markets of social and sustainability bonds. The green bond market emerged in 2007-08 with the first few issuances of green bonds by multilateral development banks, led by the European Investment Bank (EIB) and the World Bank (WB), kicking off the market with AAA investment grade issuance (UN, 2017). By 2013-2014 the market was extended with private sector issuers, including corporates and banks which were pushed by governments significant efforts aimed at making green bond standards more popular to investors (Ceres, 2014). A vivid growth in green, social and sustainability bonds started in 2015 with the publication of the UN Sustainable Development Goals (UNSDGs) and the Paris Climate Agreement (ICMA, 2019b) .

According to latest Climate Bonds data, the sustainable bonds market continues to grow rapidly. Green bond market grew by 3% from $162.1 billion in 2017 to $167.3 billion in 2018. Sustainability and social bonds markets saw stronger growth. Sustainability bond issuance totaled $21 billion in 2018. This represents 114% growth compared to 2017. Social bond issuance totaled  $14.2 billion in 2018, a 37% year on-year growth. Adding green bonds to sustainability and social volumes would yield an annual total of $202.5 billion, or 11% above 2017 volumes (Climate Bonds, 2019).

The growth of the sustainable bonds market has been attributable to multiple factors which worked together to promote sustainable finance globally. First, and most importantly, the global awareness of climate change risks that prompted world leaders to take serious steps to face these expected risks. In 2015, in the UN climate change conference (COP 21), 196 parties (195 States plus the European Union) signed the Paris Climate Agreement. They made commitments to adopt a binding climate deal aimed at cutting down greenhouse gas emissions and limiting the increase in temperatures to 2 degrees overall and 1.5 degrees by the end of the century (UNEP, 2015). In 2016, in the Group 20 (G20) summit at Hangzhou, the world leaders highlighted the importance of green economy, and they welcomed the options proposed by the Green Finance Study Group (GFSG) to develop voluntary proposals for scaling up private capital for green investment (UNEP, 2016). In 2018 G20 members have adapted the work of the (GFSG) to the broader concept of sustainable finance, leading to the change of its name to the Sustainable Finance Study Group (SFSG) (SFSG, 2018).

Secondly, the prevailing low-interest rates environment in most developed countries, after the 2008 financial crisis, has led many institutional investors to pursue new investment opportunities which could make their savings products more attractive for investors. This in turn led them to recognize green bond as a portfolio diversification instrument which match their investment horizons, and also of  low-carbon transition (Arezki et al., 2016; King, 2017).

The growth of sustainable bonds market was also a result of the growth of traditional investors’ appetite for green bonds due to their increased awareness about the benefits of green investments (Pham, 2016; Shishlov et al., 2016) and the potential impacts of climate changes on their financial assets. They have recognized sustainable bonds as an innovative financing model that reflects their environmental, social and governance (ESG) policies and guarantee their financial sustainability (Carney, 2016; Mercer, 2015; Schoenmaker, 2017; Caldecott, 2017).

Perhaps the distinction between sustainable bonds and conventional bonds cannot be made clearly yet due to the rarity of comparative analytical studies as well as the lack of robust analysis. According to Josué (2019) sustainable bonds are similar to any conventional bonds issued in the fixed-income market. They carry the same inherent risk/return profile. The pricing and yield to maturity (YTM) of sustainable bonds are similar to that of conventional bonds. The Green Bond Working Group (GRESB) conducted a data analysis of the overall performance trends of green bonds, and the pairwise performance of green vs. grey (non-green) bonds on a sample of green bonds issued by real estate corporates. Results revealed that for six of the seven real estate corporate issuers studied, green bond yields were above the issuer’s yield curve (or trend line for grey bond issues) which would imply an investor discount for green bonds. Also, green bond price volatilities were similar or slightly higher than the volatilities for their grey counterparts, However, according to GRESB  this pattern is highly issuer dependent (GRESB, 2016).

Another area of distinction between sustainable bonds and conventional bonds lies in the issuance process. Sustainable bonds issuance engages a second party opinion to ensure the eligibility of  the proposed projects and their alignment with the principles or guides of each type of sustainable bonds (Climate Bonds). Second-party opinions are also known as external review of a bond or an external verification of the bond. It is an independent assessment of an issuer’s green, social or sustainability bonds framework. It strengthens the credibility of the bond and helps gain the confidence of investors looking to invest in a green bond (Bahatia, 2019) . The two main stages of sustainable bonds can be clarified in Figure (1) .

Figure 1 Sustainable Bonds Issuance Process


It is noteworthy that this process may vary from one market to another. In all the cases,  the sustainable bonds issuance process carries additional internal and external costs:  (Climate Bonds):

1-Internal costs include the costs of establishing the internal processes and controls to meet the requirements of certification, in addition to the costs associated with tracking the performance of the projects tied to the bond and preparing  the annual report. 

2-External costs include fees paid for the second party opinion for pre-issuance and post-issuance assurance procedures and reports, in addition to a certification fee which is paid only one time immediately after the issuance of the bond.



3- Sustainable Tourism  Projects  and Sustainable Bonds


Tourism industry hasn't always maintained the best reputation for environmental friendliness. Unsustainable tourism has been accused by causing disastrous consequences to the environment. It can lead to soil erosion, increased pollution and CO2 emissions, natural habitat loss, and more pressure on endangered species. These impacts can gradually destroy the environmental resources upon which the tourism itself depends (Sunlu, 2003). Currently, one of the most important trends shaping tourism industry is moving to sustainability in practices and adopting a Triple Bottom Line (TBL) approach in development and investment. The TBL approach seeks returns on investment that are financial, social, and environmental (James et al., 2012)

In fact, sustainable tourism can potentially play an important role in responding to current global climate challenges. It can contribute significantly to the three dimensions of sustainable development as emphasized in the Rio 2012 document "The Future We Want" . In the 2030 Agenda for Sustainable Development, sustainable tourism particularly has been highlighted as a target for creating jobs and  promoting local cultures (targets 8.9, 12b).  Tourism is also identified  as a tool to boost economic benefits to small island, developing countries and least developed countries (target 14.7) ( UNWTO, 2015). As a response of the tourism industry UN World Tourism Organization declared 2017 as the "International Year of Sustainable Tourism". This aims at promoting tourism role in social inclusiveness,  resource efficiency, environmental protection, and cultural values and heritage maintenance (UNWTO, 2017).

In an effort to promote sustainable finance in the tourism industry and overcome the financing related challenges in the sector, global organizations started in working together in an imitative to  facilitate the establishment of the Sustainable Investment in Financing for Tourism Network "SIFT". These organizations include, the United Nations Environment Programme (UNEP), UN Foundation, World Bank Group, Global Environment Facility (GEF), World Tourism Organization (UNWTO), the Global Sustainable Tourism Alliance, and the French Ministry of Ecology, Energy, Sustainable Development and the Sea (SIFT, 2018).  

Sustainable bonds market with its three types of bonds could provide additional financing instruments to bank lending and equity financing, and enable long-term financing for sustainable tourism. Sustainable tourism projects generally could qualify as green or social or sustainability use of proceeds according to the green bond or social bond principles or sustainability bond guides. The alignments of sustainable tourism projects with the three types of bonds depending on ICMA principles for green and social bonds and guides for sustainability bonds can be identified in table (1)


Table 1: Green, Social, Sustainability Bonds Tourism Eligible Projects

Sustainability Bonds

Green Bonds

Social Bonds

Green Building: Green hotels, resorts and eco lodges  which

-designed in harmony with the local environment

-built to withstand the natural elements

 -use local materials  

Renewable Energy and Energy Efficiency:

Accommodation facilities and restaurants which

 -use solar energy, smart grids and energy storage

-set energy green performance instructions

-use energy star appliances, such as fryers, steamers, broilers, griddles, ovens, coolers, freezers, and HVAC systems- Energy-efficient ventilation

-have structure design to reduce energy and maximize air flow to reduce the need for air conditioning

-use abundant plants to organically cool the units.

Eco-efficient and/or Circular Economy

Accommodation facilities and restaurants which:

-provide wait recycling stations

- adopt reusable options to reduce paper waste.

-use biodegradable alternatives to plastic goods

- composite food waste  

Pollution Prevention and Control

Accommodation facilities, restaurants, and travel agencies which:

-use organic paint, eco-friendly cleaning products and organic food

-choose non-toxic chemicals and biodegradable soaps and cleaning materials

-commit to  reduce carbon footprint via community clean-ups, replanting and non-chlorinated pools

-provide green transportation, bikes and electric cars

Sustainable Water and Wastewater Management  Accommodation facilities and restaurants which:

-improve internal water efficiency (i.e. installing flow restrictors in hand washing sinks, dishwashers, and dish sinks)

-have desalination plants

-recycles and optimize rainwater to meet all of their water needs

Environmentally Sustainable Management of Living Natural Resources and Land- use:

-natural reserves, terrestrial and aquatic biodiversity conservations (including the protection of coastal, marine and watershed environments) as attractions

-eco-lodges that actively involved in assisting the environmental rehabilitation process

-eco-travel agencies ( i.e. I wild tours agencies and earth changers) which brings together active, adventure and conservation trips

Cultural Heritage:

- projects that maintain the cultural heritage while offering opportunities for cultural tourism.

-transformation of historical sites to eco-lodges

   Employment Generation

-all tourism facilities can create employment opportunities for local people on different levels both directly and indirectly, with potential for career development.


Socioeconomic Advancement and Empowerment

-relational and community based tourism focused on local and marginalized groups integration in the workforce in many developing countries

-Kind travel agencies which organize tours to prevent poverty and hunger, and promote wellbeing for individuals and animals

-women and young people empowerment  opportunities (i.e. sustainable local food, production and handicrafts ).

-tours led by elders and local people to take guests through a journey of their culture that empower travelers to be a force for good

-providing accessibility to local people to essential services (e.g. education and vocational training, healthcare, financing and financial services)








According to the table sustainable tourism projects may have only environmental benefits or social benefits or both environmental and social co-benefits.  In all the cases, the classification of the bond as a green bond, social bond, or sustainability bond is determined by the issuer based on its primary objectives for the underlying projects (ICMA, 2018a).

Unfortunately, we cannot determine the actual contribution of sustainable bonds to financing investments in the tourism sector and assess the impact of sustainable financing on sustainable tourism development since the available data on sustainable bonds are general in nature on financing projects with sustainable solutions, while no sectoral data are available.


3- Case Studies


Carrying out a profound analysis of case studies and best practices on the use of sustainable bonds to finance sustainable tourism projects is very difficult at the present time due to the relatively recent emergence of sustainable bonds as a financing instrument as well as the available date on sustainable finance interventions are usually reported according to the environment solution provided rather than the sector served.

However, the following two case studies provide an illustration of the form sustainable bonds can take for financing sustainable tourism investments with the main insights highlighted. The first case illustrates an example for green hotel finance, while the second case illustrates a model for using sustainable bonds to finance a wide variety of tourism projects including the conservation of  living natural resources (terrestrial and aquatic biodiversity conservation), and clean transportation.


(3-1) Case (1) Davivienda Sustainable Buildings Project (Colombia)

Davivienda is a Colombian bank founded in 1972 that provides services to individuals, companies, and the rural sector. Currently, it is part of Group Bolivar and the third-largest bank in Colombia by assets and profits. The firm has a team of more than 15,000 personnel to serve more than 6.6 million customers through 743 offices, and close to 2,000 ATMs at the regional level. In addition to Colombia, the firm operates in Panama, Costa Rica, Honduras, El Salvador and Miami (Pitchbook, 2019).

Group Bolivar culture, as announced, is centered on the human being. The focus of its efforts is towards achieving levels of excellence and sustainability, and contributing to the progress of the country (

In 2017 Banco Davivienda S.A. made its first issue of green bond for a total amount of $ 433 billion pesos ($150 million) and a period of 10 years. The International Finance Corporation (IFC) which is considered one of the main promoters of green investment worldwide acquired the entire issue. The proceeds of the issued green bond allow the financing of the construction of three types of green buildings: hotels, housing, and offices, with the aim of reducing resource consumption (ICMA, 2018d).

Ernst & Young Audit S.A.S. (EY) in Colombia is the independent external reviewer of the project. It is a global organization with over 700 office locations in over 150 countries.

Project Eligibility

·    Sustainable green buildings (hotels) that reduce resource consumption (i.e. one building will consume about 35 % less water compared to benchmark buildings, and its energy consumption will be reduced by about 46 %).

·    Buildings with recognized local or international environmental certifications including: 

-      Energy Leadership and Environmental Design (LEED) certificate as defined by the US Green Building Council.

-      Certificate of Environmental Evaluation Method  (BREEAM)

-      Certificate of excellence in design for greater efficiencies (EDGE) of IFC.

-      Colombian Environmental Seal for Buildings

·    Buildings with designs that encourage the use of renewable energy, new material types, and clean technologies.


In the pre-issuance stage of the green bonds, a publication of information of green projects was performed (CAFI Tool).

After the issuance, in accordance with the IFC´s guidelines, Banco Davivienda uploads bonds information to the IFC platform. In addition, bonds information are placed in the sustainability report of the organization that has been published year after year until the maturity.


-The project demonstrates a model for collaboration between private sector and a large international financial institution, the IFC of the World Bank. The contribution of an international organization is crucial in the initial stages of the introduction of sustainable bonds to the market to support and promote sustainable financing, increase confidence and attract investors.

- The issuer of the bond is a global financial institution and one of the largest in the country according to assets and profitability and thus enjoys a high confidence of investors locally and globally.

- The issuer, under Group Bolivar, is engaged in the sustainability issues relevant to the performance of its business and portfolio.

- The project is a pooling of sustainable buildings in different sectors, not only in the tourism sector. This reflects a level of diversification strategy for risk management. It is worth noting hereby that the benefits of diversification hold only if the securities in the portfolio are not perfectly correlated

-The availability of local legislative framework or certifications for sustainable projects (Colombian Environmental Seal for Buildings) is important to ensure that the eligible projects are complied with local standards as well as global standards  .

- The second party opinion is a global institution, Ernst & Young Audit S.A.S. (EY), which is reflected on the accuracy and credibility of the reports prepared by it, and the confidence of international institutions.



(3-2) Case (2) First Abu Dhabi Bank Green Bond Project


FAB is the UAE’s largest bank and one of the world’s largest financial institutions. It is the result of the merger between First Gulf Bank (PJSC) and National Bank of Abu Dhabi (NBAD), which was completed in April 2017. As of March 2018, FAB had approximately $ 182 billion of assets and a market capitalization of USD 35 billion (Bank FAB, 2019a).


NBAD was the first UAE bank to adopt the Equator Principles in 2015, joining over 90 other international institutions in implementing a responsible approach to environmental and social risk in its lending decisions and advisory assignments (Bank FAB, 2016). Moreover, FAB is one of the initial signatories to the Dubai Declaration on Sustainable Finance (DDSF). The DDSF is a commitment of the UAE banking sector in 2016, to promote sustainable business and increase sustainable finance and investment, under the leadership of the UAE Ministry of Climate Change & Environment, the UAE Central Bank, the UN Environment Programme Finance Initiative (UNEP FI) and the UAE Banks Federation (UNEPFI, 2016).


FAB’s green bond issue, of USD 587 million on 5 years, was originally made in 2017 by the National Bank of Abu Dhabi (NBAD), prior to the merger. The proceeds of the green bond allow  the finance, in whole or in part, projects  whose contents are relevant to sustainable management of living natural resources, terrestrial and aquatic biodiversity conservation, clean transportation, renewable energy, energy efficiency, pollution prevention and control water management, climate change adaptation, eco-efficient products. The proceeds will also be used to refinance existing eligible projects that are currently funded by FAB (Bank FAB, 2019b).

The projects are subject to effective governance via the FAB Green Bond Committee made up of senior management including representatives from FAB’s sustainability, treasury, investor relations, corporate finance, group funding, specialized credit, enterprise risk management, credit risk, operational risk and fraud risk; and group internal audit teams ( ICMA, 2017).

Vigeo Eiris, a global rating and environmental, social and governance (ESG) research agency, was commissioned to provide an independent opinion. Also, FAB engaged KPMG, a global network of professional firms providing Audit, Tax and Advisory service, to provide third party independent assurance.

Project Eligibility

·  The selected projects should be aligned with

- The ICMA Green Bond Principles.

- The FAB Green Bond Framework.

- Vigeo Eiris environmental, social and governance (ESG) assessment criteria.


FAB delivers an annual Green Bond Report in line with ICMA green bond principles. The report is made publicly available on FAB’s website continuing until the maturity of the bond,


- The project demonstrates a model of cooperation between state institutions and relevant ministries to provide the regulatory and legislative framework to support the process. These institutions include the UAE Ministry of Climate Change & Environment, the UAE Central Bank, and the UAE Banks Federation.

- The availability of a supportive external financial environment that promotes sustainable financing is important. In this case the issuance process is backed by sustainable finance initiative from the banking sector and a specialized supranational organization (UNEP FI), in addition to, the a well consolidated financial sector that is committed to sustainability .

 - The existence of a well established internal structure for transactions also provides the enabling environment for the successful issuance of sustainable bonds. Hereby it is represented in  the FAB Green Bond  committee and framework .

- The bond issuance aimed to finance a wide variety of sustainable projects including projects which could relate to tourism. the issuer with this high level of flexibility by defining projects according to environmental solutions may make bonds attractive to the private sector as well as government and gain a supranational support.

-This model reflects a wider level of diversification, compared to the previous case of Davivienda,  that mixes a wide variety of investments within a portfolio. Diversification will lower the volatility of the portfolio and provide consistent medium-long-term returns as not all asset categories, industries, or stocks move together .

- FAB has a good credit rating which is critical to investors who perceive green bonds as risky

- While hiring a global second  party opinion and third party for the project seems to be adding to the cost of the project, however, it reflects the commitment of the issuer to sustainability and make the issuance attractive to abroad range of international organizations.



4- Barriers to Sustainable Bonds  in Egypt


This part of the research aims to explore the main barriers that hinder the issuance of sustainable bonds to finance sustainable tourism projects in Egypt. A semi-structured in-depth interviews with 16 experts on financial market tools and tourism projects finance were conducted. The insights from the interviews are classified into two main groups, industry barriers that focus on the tourism industry barriers, and market barriers that are  related to the financial market barriers . These barriers are highlighted as follows.



 (4-1) Industry Barriers


- Lack of awareness of sustainable bonds potential to finance sustainable tourism projects represents one of the main barriers that hinders the issuance of sustainable bonds to finance tourism in Egypt. Neither the tourism development institutions nor the traditional investors in the tourism sector have caught the concept of sustainable finance and its role to support sustainable solutions finance or refinance relevant to tourism development.   

-The project-revenue backed bonds for tourism investments may not be attractive to investors as investors may perceive bonds based on revenue in tourism as more risky than other projects mainly because the fluctuation and instability of cash flows due to high sensitivity of the sector, political instability in the area in addition to the seasonality of tourism in Egypt.

- A crucial challenge for sustainable bonds to finance sustainable tourism investments in Egypt is the revenue articulation. Sustainable tourism projects can achieve a wide array of benefits, however reaching an agreement on articulating revenues between the issuers, writers and investors for sustainable tourism developments seems to be difficult. If financial benefits can be well articulated for investors sustainable bonds could be attractive to the investors in the sector.

-Another obstacle is the scale mismatch between sustainable tourism projects and the minimum size of bond issuance. Many sustainable tourism development initiatives in Egypt may be too small to appeal to the investors. As for investors, the size, tenure, and liquidity of green bonds are key elements they consider before lending their money.

- Information asymmetry and inadequate analytical capacity in the tourism sector in Egypt also impede the forecasting, planning and preparation of accurate information forms for sustainable bonds proposals and further reports.

- Lack of a commonly agreed standards for sustainable tourism projects in Egypt which can be used to provide local certifications or norms also represents a barrier for sustainable bonds issuance and the identification of eligible projects for each type of sustainable bonds.



(4-2) Market Barriers


- The main barrier that hinders the successful issuance of sustainable bonds in Egypt is the significant weakness of the local bond market. The bond market in Egypt in general is inactive and illiquid and there is no secondary market for corporate bonds.

- Lack of integration in the institutional framework governing the issuance process is also a constraint to the successful issuance of sustainable bonds in Egypt. A successful issuance process requires cooperation between the Tourism Development Authority, the Ministry of Environment, the Ministry of Planning, The Central Bank of Egypt, the Egyptian Financial Supervisory Authority, and the Federation of Egyptian Banks, which is not on the land yet.

- Also, the legislative and regulatory framework for the issuance of sustainable bonds in Egypt is not fully completed yet.

- According to the interviewers, many market players in Egypt don't show strong support to sustainable bonds. The conventional investors see sustainable bonds labeling as just a convenient marketing tool for the issuer for projects they would have funded. They are not convinced  that sustainable labeling could provide a real sustainable finance instrument in the local financial market, and so as they are unwilling to pay a premium for the green label that would in turn lower the interest rate for borrowers.  

- Lack of knowledge and technical skills in sustainable bonds transactions in Egypt also hinders the issuance of sustainable bonds.

- Lack of commonly agreed standards for sustainable finance in the Egyptian capital market  also represents a constraint for the issuance process.

- Also, the international agreements and standards related to environmental sustainability, including those related to carbon emissions, are not fully implemented in Egypt yet. A situation which does not ensure the commitment of Egypt to sustainability and may affect the international sustainable investors confidence.

- The high costs from pre-issuance to post-issuance transactions could ultimately stand as important obstacles for small sustainable bond issuers. Mainly the relatively high cost of obtaining a second opinion.

- Finally, according to the experts, the initial issuance requires a clear vision at the national level and international support from a supranational institution, like IFC, to stimulate Egypt's sustainable bonds market and raise its attractiveness and investors confidence.





It is clear that the sustainable bonds market is experiencing many challenges in Egypt that

hinder its development and the issuance of sustainable bonds to finance or refinance  sustainable tourism investments. However, recent trends in the financial market suggest that appropriate policy measures could help address these challenges and enable the  sustainable tourism investment to benefit from these instruments which are growing rapidly worldwide.

-  First, the establishment of a strong local sustainable bonds market in Egypt should be based on a top-down approach, in which government institutions play a central role by providing the enabling environment and promoting and giving support for local issuers.

- The Central Bank of Egypt in collaboration with the Federation of Egyptian Banks could lead an initiative on sustainable finance commitment of the Egyptian capital market. This initiative would work like UAE initiative (DDFS) to promote sustainable finance and investments in collaboration with the national ministries and the UN Environment Programme Finance Initiative (UNEP FI).

- Considering the establishment of a sustainable stock exchange in Egypt in alignment with the UN Sustainable Stock exchanges initiative (SSE). The SSE initiative is a UN partnership programme launched in 2009 by the UN secretary general and organized by UNCTAD, the UN Global Compact, UNEP FI to advance sustainability in the capital markets. The SSE’s mission is to provide a global platform for dialogue between UN, stock exchanges, investors, companies, issuers, regulators, policymakers and relevant international organizations, to explore how stock exchanges can create more sustainable capital markets (UN Global Compact).

- Launching a national-level vision or strategy that enjoys high political support and has clear goals and timeframe, in conjunction with accelerating the completion of the legislative and regulatory framework for the issuance of sustainable bonds in Egypt.

- Raise awareness of the potential of sustainable bonds to finance or refinance sustainable tourism development projects through the sharing of  global best practices.

-Providing incentives and support to encourage the initial issuance of sustainable bonds. For instance, the government could cover all the transaction costs associated with the pre issuance stage, so that the cost of issuing a sustainable bond is on par with that of issuing a conventional bond.

- For the first issuance of sustainable bonds in Egypt to be successful and attractive, the issuer should be a large financial institution (public/ private) that enjoys a high credit rating with the support of international organizations like IFC of the world bank or UNEP FI .

- For sustainable bonds of tourism projects to be attractive for investors in terms of revenue, tenure, and risk profile some strategies could be used like diversification and pooling projects in different sectors which are not correlated in the same portfolio. Flexibility within the framework for eligible sustainable project selection is essential in order to allow the finance of small scale sustainable tourism projects.

- Setting standards for sustainable tourism projects based on standards set by global organizations for sustainable tourism development such as the Green Hotel Association ( and The Sustainable Restaurant Associations (  

- Collaborating with international bodies concerned with the environment and climate change to provide technical support and capacity building for the private sector and capital market on sustainable tourism benefits reporting and revenue articulation.


Sustainable bonds market with its three types of bonds; green, social, and sustainability, could provide great opportunities for sustainable tourism projects in Egypt and allow it to contribute significantly to achieving its economic, social and environment objectives. The provision of  financing instruments with social and environmental objectives can also help expand tourism in isolated areas and marginalized communities, where tourism development projects and economic and social development opportunities could remain delayed due to lack of funding sources from traditional capital markets and lack of government resources.
Finally, if the issuance of sustainable bonds is notably delayed in Egypt, the current trends reflect a significant increase in interest in this promising market, which can contribute significantly to financing sustainable tourism projects and pushing the tourism sector in Egypt towards sustainability. The increasing international pressure associated with the shift towards sustainable practices will also accelerate serious steps in adopting sustainable financing. Sustainable bonds market growth would also supply more data and case studies on the performance and lead to a greater understanding of how sustainable bonds behave in relation to their non-green counterparts and best practices for issuing sustainable bonds to finance or refinance sustainable tourism projects.


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