Bankers of Kenya, IFC presented “Guide and report on sustainable finance”, noted leading lenders in the field of ESG

• The Kenya Bankers Association (KBA), in collaboration with industry stakeholders, has published the Sustainable Finance Guide and Report.
• The KBA noted that the sustainable development guidelines will help strengthen efforts to mitigate climate risks in the country.
• KBA also recognized various commercial banks with Catalyst Awards, demonstrating their commitment to sustainable development.

TUKO.co.ke journalist Wycliffe Musalia has over five years of experience in financial, business, technology and climate reporting, providing in-depth insight into Kenyan and global economic trends.

The Kenya Bankers Association (KBA), in collaboration with the International Finance Corporation (IFC) and the World Wide Fund (WWF) Kenya, has launched updated Sustainable Finance Guidelines for commercial lenders.

The collaboration also released the Kenya Banking Industry Sustainable Finance Report as part of ongoing efforts to deepen financial inclusion and sustainability in Kenya’s financial services sector.

Why banks need guidance on sustainable finance

The Sustainable Finance Guidelines provide banks with a strong framework for integrating environmental, social and governance (ESG) considerations into their operations.

KBA Vice-Chair Betty Korir explained that integrating sustainability guidelines into banks’ lending and investment decisions can help mitigate climate risks, support green projects and grow the country’s economy while protecting the future of the planet.

“Sustainable business models and green finance are not just trends – they are important ways to ensure long-term economic stability and environmental protection.

KBA Acting CEO Raymond Molenier said the updated guidelines will enable banks to adopt best practices in governance and risk management to drive innovation and financial inclusion.

“The Sustainable Finance Initiative has empowered more than 50,000 bank employees to make lending decisions that benefit the environment, society and the economy,” Molenje said.

Features of the Sustainable Finance Report

The Sustainable Finance Initiative Landscape Report, supported by WWF Kenya, highlighted key achievements and challenges in sustainable finance.

The report found that gross loans across 11 key sectors grew by 23% from 2020, reaching KSh3.6 trillion in 2022, with MSMEs receiving KSh783.3 billion.

However, the report cites issues such as the high cost of sustainability bonds, inconsistent sustainability reporting and limited data standardization.

The report identifies opportunities for further investment in green growth sectors, including agriculture, energy, water, manufacturing and real estate.

To seize these opportunities, WWF Kenya Chief Executive Officer (CEO) Mohamed Awer has confirmed continued collaboration with the Kenya Bankers Association to ensure a future of financial prosperity rooted in sustainable development – ​​a secure legacy that connects people, nature and the economy.

“Kenya is endowed with abundant natural resources, a dynamic entrepreneurial spirit and a resilient financial sector that provides a unique platform for promoting sustainable development. However, with these opportunities comes significant responsibility to adopt an integrated approach that aligns economic activity with the sustainable development agenda. WWF Kenya will continue to cooperate,” Awer said.

IFC Regional Director Mary Potter Pawn said the application of SFI principles is important for Kenyan banks as it will help finance renewable energy, energy efficiency, sustainable agriculture and other green projects.

“The principles will encourage banks to support projects that improve social inclusion, gender equality, affordable housing, health and education. It will also help banks manage environmental and social risks, making informed decisions to protect financial stability,” Peschka said.

Sophia Baumert, Project Manager for Sustainable Agricultural Systems and Policies (AgSys) through Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, confirmed the partnership with KBA to support financial institutions in exploring sustainable finance opportunities for the agricultural sector.

Baumert explained that the partnership will enable financial institutions to implement sustainable finance options such as blended finance for investments in environmental solutions that benefit the planet, beneficiaries and financial institutions.

“We believe that the way we finance our food systems – from both public and private sources of capital – can be a game-changer, as finance is both a driver of food system inefficiency and a critical component of food system transformation. We recognize that climate change is affecting how financial institutions perceive risk, particularly in the agricultural sector,” she said.

KBA Catalyst Awards

KBA Director of Communications and Public Affairs Christine Onyango, through the Catalyst Awards, expressed the association’s commitment to ensuring the sustainability of the lending sector.

“The Catalyst Awards were first introduced in 2015. Bank participation has increased every year and now we have over 60% of banks participating since last year. We are proud that more and more banks are integrating sustainability into their daily activities.

“If we can attract more than 60% of banks, it will mean that the majority of banks are practicing sustainability,” Onyango said.

Banks submitted a total of forty-nine entries in 2024, up from forty-three in 2023.

Absa Bank Kenya came third in the overall winners category, topping Co-op Bank Kenya. Below is a list of other banks and the trophies they won:

CLUSTER	CATEGORY	WINNER
Category 1	The Best in Sustainable Finance	1. Bank KKB2. ABSA Bank3. Bank NKBA
Category 2	Best Practice – MSME Retail	1. COOP Bank2. National Bank3. Sidian Bank
	Customer Best Practice – Commercial Use	1. COOP Bank2. KKB Bank3. Stanbeach Bank
	Best Banking Study – Banking	1. DTB Bank2. COOP Bank3. IM Bank
	Client Best Practice – Advancing Gender IssuesInclusivity	1. Bank KKB2. KVFT Bank3. COOP Bank
	Bank Best Practice – Promoting People with DisabilitiesAvailability	1. Bank KKB2. ABSA Bank2. COOP Bank3. DIB Bank Kenya
Category 3	Most innovative bank	1. ABSA Bank1. COOP Bank2. Joint stock bank3. IM Bank
Category 4	Most Improved Bank	1. DIB Bank Kenya2. DTB Bank3. Credit Bank
Category 5	Overall Winner	1. COOP Bank2. KKB Bank3. ABSA Bank

The Award provides a unique opportunity for companies to demonstrate their industry leadership and their role in promoting sustainable development.

The government calls on banks for sustainable development

Meanwhile, the Kenyan government is calling on financial institutions to cut funding to polluting businesses.

The Ministry of Environment has threatened to name and shame companies polluting the Nairobi River, demanding accountability and stricter environmental compliance.

The ministry urges financial institutions to stop financing companies listed as environmental offenders and to reinstate it only if there is evidence of compliance.

Banks in Kenya have released their 2023 sustainability reports, revealing significant investments in environmental, social and governance (ESG) issues.

Source: TUKO.co.ke