Page 25 - October 2022 Issue 611 Part 1

For instance, in support of SDG 7 on Affordable and Clean Energy, ICIEC
has insured US$5.4 billion in renewable energy sector business.
Regarding SDG 13 on Climate Action, the Corporation is prioritizing
more de-risking solutions relating to climate action in the transition of
member states to a low-carbon economy.
After the COP26 summit in November 2021, the focus on ESG
(Environmental, Social, and Governance) reporting has been para-
mount for corporations. As a multilateral organization
that operates in an increasingly interconnected world and global mar-
kets, ICIEC understands the critical need for alignment with ESG princi-
ples both internally and externally. Through the Corporation’s com-
mitment to supporting six of the seventeen SDGs, which
include SDG2 – Zero Hunger, SDG3-Good Health and
Well-being, SDG7-Affordable and Clean Energy, SDG8-
Decent Work and Economic Growth, SDG9- Industry,
Innovation, and Infrastructure, and SDG17-
Partnerships for the Goals, ICIEC has been investing
in projects that align with Environmental and Social
causes.
Lessons learned from the outcome of the pandemic
require governments, organizations, and businesses to
build a collective resilience and capacity to reduce cli-
mate-related risks, improve health, and reduce rising
poverty and inequality of various forms to mitigate
adverse effects from future shocks. It is predicted that
the failure to confront the significant risks may
bring dramatic consequences when environmental
degradation intersects with societal fragmentation.
According to the United Nations, in 2022, 274 mil-
lion people are expected to need humanitarian aid,
which will increase by 17% from 2021.
Member States of the OIC face particular climate
threats due to declining agricultural productivity,
weather volatility, and receding water levels and
quality. These threats make the Member States most vulnerable because they depend
on high climate-sensitive natural resources. The Member States’ low adaptation capac-
ities are added due to technological and financial impediments.
There is a long-term risk management challenge posed by climate change, just as the long-
term risk management difficulty posed by COVID-19. However, eliminating carbon-intensive
businesses, which employ millions of people, would raise economic instability, unemploy-
ment, and social and geopolitical conflicts. Untested biotechnical and geoengineering tech-
nologies pose numerous unknown threats to nature, while the lack of public support for land
use shifts or new pricing systems creates political issues that further hinder progress.
The road to Net Zero 2050 and the Transition to Clean Energy
would be challenging for all countries
• Are there any additional initiatives you have adopted to enhance ICIEC’s climate
action credentials, ambitions and delivery to improve the wellbeing and socio-
economic conditions of the citizens in member states?
- A significant new development in September 2022 is ICIEC’s accession to member-
ship of the Bonn-based InsuResilience Global Partnership, the world’s leading platform
for inclusive, integrated collaboration, shared learning, and delivery for Climate and
Disaster Risk Finance and Insurance Solutions.
Our membership of InsuResilience is underpinned by the Corporation’s recognition of the key
role that the Partnership plays in bringing together many of ICIEC’s Member States, 15 of
whom are members of the V20 Group of Ministers of Finance of the Climate Vulnerable Forum
and the G20, as well as donors, the private sector, international organizations and civil society We are keen to consolidate our engagement with the Egyptian private sector. But this
groups for the achievement of broader Climate Action goals. InsuResilience was launched at
the UN Climate Conference COP23 in November 2017. Climate action has since then
assumed even greater importance and urgency, including for ICIEC’s 48 Member States con-
fronted with the socio-economic costs of climate change and disaster management.
We are committed supporters of the COP Process. I headed a high-level delegation to
the Climate Action Conference (COP26) in Glasgow last November, where we were
able to deliberate with the Member States, peer multilateral institutions, existing and
potential policyholders and other stakeholders. We are well into our preparations for
participating in COP27 in Sharm El-Sheikh with high expectations for collaborative
deliberations leading to realizable insurance contributions to Climate Action goals.
COP 26 showed that the road to Net Zero 2050 and the Transition to Clean Energy
under the 2015 Paris Climate Action Agreement would be challenging for all countries,
including the 48 Member States of ICIEC.
ICIEC’s development mission is aligned with the UN Sustainable Development Goals
(SDGs) and the ambitions of the Paris Agreement and is informed by the needs and
development agendas of our Member States. We welcome our accession to member-
ship of InsuResilience, and we remain committed to contributing to developing innova-
tive Islamic financial solutions towards climate action, mitigation, adaptation, and capac-
ity building in cooperation with partners through the InsuResilience platform, amongst
other climate finance initiatives aimed at advancing the objectives of climate action.
As the world’s only Islamic multilateral credit and political risk insurer, ICIEC cooperates
closely with peer climate action institutions in the Member States on an ongoing basis
towards the realization of their Climate Action needs as enshrined in their Nationally
Determined Contribution (NDC) reports. The fact that COP 27 and COP 28 will be held
in Egypt and the UAE – both important Member States of ICIEC – gives an added
urgency to ICIEC’s Climate Action Strategy and Activities.
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ICIEC also sees its role in engaging with the private sector as a catalyst for closing
the Climate Action financing gap, estimated at US$20 billion annually.
ICIEC has participated in several Green Finance transactions
• Impact investment and development effectiveness are important to measure
the extent multilateral institutions carry out their mandates. ICIEC is no excep-
tion in this respect. What has been the real economic impact of ICIEC opera-
tions and support?
- ICIEC actively targets real impact and change in all its financing, insurance
policies it underwrites, and projects it supports, and acts as a catalyst for
private sector capital mobilization towards achieving the SDGs.
The IsDB Group’s current renewable energy financing, for
instance, totals US$3.4 billion, and ICIEC, as the Group’s
insurance arm, has provided US$470 million in insurance
for renewable energy projects in member states. Since its
inception, ICIEC has provided US$27.33 billion to clean
energy projects alone.
Despite the current global uncertainties, ICIEC maintains
its resilience in mitigating these risks, ensuring the con-
tinued flow of international trade and sustainable invest-
ment between OIC member countries and the world. As
countries slowly recover from the impacts of the pan-
demic and global shocks, we will be there to support
them as they rebuild a healthier, inclusive and resilient
OIC community with sustainability as a priority.
The development impact of our operations and sup-
port in sustainable development, including Climate
Action, is felt in several Member states, including
Senegal, Uzbekistan, UAE, and Türkiye, to name a few.
Perhaps a good example to illustrate this impact is to focus
on one market, namely Egypt, the host of COP27 in November
2022 and where the Ministry of Environment last year announced
Egypt’s National Climate Strategy 2050, in which Egypt aims to con-
vert half of its national projects into green projects by 2024 among other objectives and col-
laborations with the public and private sectors.
ICIEC has participated in several Green Finance transactions in Egypt, including pro-
viding Breach of Contract and PRI cover under its Foreign Investment Insurance
(Equity) Policy to the UAE-based Alcazar Energy for its US$68 million equity investment in
the giant Benban Solar Complex in Aswan. The cover is for seven years. The complex
involves constructing and operating four 50 MW solar power plants, providing the generat-
ed electricity to the Egyptian national grid under a 25-year power purchase agreement.
ICIEC also provided a Non-Honouring of a Sovereign Financial Obligation (NHSFO)
policy for US$56 million, covering the participation of Japan’s Sumitomo Mitsui Banking
Corporation (SMBC) in the Syndicated Green Term US$3 billion Loan arranged by
Emirates NBD Capital and First Abu Dhabi Bank in favour of the Ministry of Finance of
Egypt to finance Green Projects.
The Eligible Green Projects are expected to have a significant positive impact on
Egypt’s environmental and social programs. The projects include seawater desalination
plants with the most energy-efficient technologies that reduce water consumption and
improve the efficiency of resources (such as collection, treatment, recycling, or reuse of
water). Some 1.2 million people in four Egyptian governorates expect to have access to
better sanitation and sewerage upon completion of the Sanitation and Sewerage
Infrastructure Project. This is impact investment and development in reality.
Egypt is highly vulnerable to climate change’s impacts; such climate adaptation projects
aiming to increase resilience and adaptive capacities are highly vital to the country.
engagement is confined to a few companies, partly because credit and investment
insurance’s importance and benefits are not that well established within the Egyptian
manufacturing, trading and exporting sectors.
Egypt is a prime mover in renewable energy projects in the country and penetrating neigh-
bouring Sub-Saharan Africa. ICIEC has an excellent role model, 17-year cooperation with
Elsewedy Electric, a leading integrated sustainable energy solutions provider in the Middle
East and Africa region with over 22 production facilities across 15 countries.
That relationship has mushroomed into impressive real economy benefits over the
years. As of 2022, Elsewedy Electric has some 50 active insured buyers under ICIEC’s
insurance policy in Africa, Europe and Asia, with an exposure of around US$50 million.
ICIEC credit insurance policies are a vital contributor to Elsewedy’s export business’s
development, accounting for around 34% of the company’s total revenue.
ICIEC has also supported Elsewedy by providing insurance cover for long tenor con-
tracts up to a 7-year credit period; ICIEC, for example, provided insurance cover for a
total of US$75 million and EUR115 million receivables for the Ethiopian Electric Power
Corporation under supply contracts for transmission lines, sub-stations, cables, trans-
formers and related electrical products.
We are well positioned to play a key role in private sector engagement through the cred-
it enhancement its policies provide to financial institutions and access to its Member
State national and sub-national bodies, who are the custodians of the relevant Climate
Action projects and transactions.
Another important development is that ICIEC, subject to the final approval of the Arab
Africa Trade Bridges (AATB) Program Board, is also launching a landmark multi-billion
dollar Climate Action Finance Trust Fund with institutional partners, peer multilaterals,
and ECAs in the Member States and beyond, which would offer a discount to the insur-
ance premiums needed for the financing of Climate Action projects in the Member
States that are not investment grade.
AL BAYAN ECONOMIC MAG - ISSUE 611 - OCTOBER 2022