Coming at the backdrop of the Baku Initiative on Human Development for Climate Resilience, launched at the COP29 a few days ago; the Kenya Bankers Association, in collaboration with the International Finance Corporation and World Wilde Fund for Nature Kenya has launched the revamped Sustainable Finance Guiding Principles and the Landscape of Sustainable Finance in Kenya’s Banking Industry Report as part of ongoing efforts to deepen financial inclusion and sustainability within Kenya’s financial services sector.
Climate change impacts how financial institutions perceive risks, especially in the agricultural sector; therefore, this initiative will support financial institutions in exploring sustainable financing opportunities for the agricultural sector. The revamped Sustainable Finance Guiding Principles provide a robust framework for banks to integrate Environmental, Social, and Governance (ESG) considerations into their operations.
According to the Landscape Report, gross loans across 11 key sectors grew by 23 percent since 2020, reaching Sh3.6 trillion in 2022, with MSMEs receiving Sh783.3 billion. However, the report cites challenges such as high costs for sustainability-linked bonds, inconsistent sustainability reporting, and limited data standardization.
Speaking during the launch, WWF Kenya Chief Executive Officer Mohamed Awer highlighted the abundant opportunities for investment in green growth sectors, including agriculture, energy, water, manufacturing, and real estate.
“However, with these opportunities come significant responsibilities to adopt an integrated approach that aligns economic activities with the sustainable development agenda,” he added.
This launch echoes the Baku initiative which seeks to address the complex challenges posed by climate change and its impacts on human development and acknowledge the significance of a multi-sectoral approach in tackling these challenges.
Moreover, the major guiding principles of the Baku Initiative on Human Development for Climate Resilience are pegged on promoting green innovation and entrepreneurship, reskilling for green jobs in agriculture, transport, and construction, innovative financing for resilience, and strengthening social protection.
“Sustainable business models and green financing are not mere trends—they are essential pathways for ensuring long-term economic stability and environmental stewardship,” said Betty Kori, Kenya Bankers Association Vice Chairperson.
She added that by integrating sustainability into their lending and investment decisions, bankers can help mitigate climate risks, support green projects, and grow economies while safeguarding the future of our planet.
Consequently, adopting the revamped Sustainable Financing Guiding Principles by Kenyan banks is crucial as it will promote financing for renewable energy, energy efficiency, sustainable agriculture, and other eco-friendly projects, says Mary Potter Peschka, IFC Regional Director.
“It will also encourage banks to support projects that enhance social inclusion, gender equality, affordable housing, healthcare, and education,” she added, highlighting the Baku Initiative to build resilient education systems while integrating quality climate education and supporting communities.
Alongside the launch was the SFI Catalyst Award. KCB Bank came best in Sustainable Finance followed by ABSA Bank and NCBA Bank coming third.
