Green financing, Kenyan style

topic:	Sustainable Development
located:	Kenya
editor:	Bob Koigi

As the net zero debate intensifies in Africa, focus has shifted to the private sector and its crucial role in enhancing the transition for the benefit of countries’ economies and global sustainability.

There have been varied opinions on the level of contribution from the private sector to climate action. Some companies have shown remarkable effort in meeting their emission targets by boosting efficiency in their operations, shifting to clean and green energy sources and investing in voluntary carbon credit.

The Kenyan banking and financial services sector has risen to the occasion by revising its operations and strategies to respond to changing times even as it strikes a balance between people, the planet and profits.

Alive to the opportunities in green financing and the need to shift financing to more sustainable avenues, the Kenya Bankers Association, the umbrella body of the banking entities in Kenya, developed the Sustainability Finance Initiative (SFI). This blueprint aims to introduce the players in the sector to the industry’s environmental, social and governance financing and risks.

Guided by the SFI, the association has crafted a training module that seeks to assist banks in creating value for the economy, environment and society, with bankers and banking institutions benefitting from the module. As a result, the East African green funding market is on a meteoric rise with ambitious targets and innovative green products such as sustainable mortgages, loans and bonds.

Indeed, Kenya Commercial Bank, one of the top financial services firms in the country, became the first bank in East Africa to be accredited by the UN Green Climate Fund as the first financial intermediary to aid in the execution of green financing in the region.

According to its sustainability report, the bank has disbursed millions of dollars worth of loans to environmentally friendly projects. It has also cut its carbon footprint by over 11 per cent on its premises while reducing resource consumption by more than 17 per cent. It has set 2025 as the year it targets to turn its loan portfolio into green finance. It has so far invested its green projects spanning renewable energy, manufacturing, real estate, agriculture and transport sectors.

Diamond Trust Bank, another Kenyan-based lender, has been on a journey to achieving its net-zero targets, committing to increase its lending to green projects to a quarter of its loan book by 2030. It hopes to source at least 50 per cent of its procurement requirements from green supplies across the value chain even as it works with its partners to track their carbon status.

As the private sector in Kenya steps up to sustainable and green financing, the herculean task is to ensure that the targets and commitments can be measured and reported accurately and that the momentum towards implementing net zero is sustainable for the sake of people and the planet.

Image by Nuno Marques.

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