ESG-focused loans and green financing initiatives being offered by Kenyan financial institutions.

Leading Banks

1. KCB Bank
   • Authorized green loans of Sh21.4 billion (15.5% of its loan portfolio).
   • Aims for 25% of its loan portfolio to be invested in sustainable projects by 2025.
   • Has planted over 300,000 trees and screened Sh615 billion in clean credits.
2. Absa Bank
   • Secured a $300 million green syndicated term loan, its first such facility.
   • Funds will be used to finance and refinance qualified green assets under its Sustainable Finance Issuance Framework.
3. Diamond Trust Bank
   • Plans to allocate 25% of its loan book to green projects by 2030.
   • Aims to source 50% of procurement from green suppliers.
4. Stanbic Bank
   • Reduced its ESG compliance loan threshold from KSh 300 million to KSh 50 million.
   • Issued KSh 16 billion in sustainability-linked loans (SLL) in 2023.

Note: The Kenya Bankers Association named KCB Bank the best in Sustainable Finance, followed by ABSA Bank in second place and NCBA Bank in third on 20th November 2024.

Regulatory Frameworks and Initiatives

• CBK Guidelines: Introduced guidelines for climate risk management (October 2021), the Kenya Green Finance Taxonomy (April 2024), and a Climate Risk Disclosure Framework (September 2024).
• Sustainable Finance Initiative (SFI): Launched by the Kenya Bankers Association on November 20, 2024, to enhance understanding of ESG factors among banking professionals.

Examples of Major Projects Funded

1. Safaricom's Sustainability Linked Loan: Secured KES 15 billion to support its ESG strategy focused on social impact, gender diversity, and carbon emission reduction.
2. NCBA Group's Loan from Proparco: Obtained a $50 million loan for SMEs and climate change projects, benefiting around 1,600 SMEs.
3. Clean BRT Project: Approved KSh43.4 billion for the Clean Bus Rapid Transit System to enhance public transportation efficiency, supported by international financial institutions.
4. Acorn's Green Bond Initiative: Raised KSh 4.3 billion for green student housing in Nairobi through Kenya's first certified green bond.
5. Lake Turkana Wind Project: Financed with a USD 150 million loan from the African Development Bank to generate clean energy.

Conclusion

Kenyan banks are increasingly committed to sustainable finance, with significant investments in ESG-focused loans and green projects. This trend is supported by regulatory frameworks and initiatives aimed at promoting environmental sustainability while fostering economic growth.

References:

Capital Business

Absa

Fair Planet

Stanbic Bank

MMC ASAFO

KBA

Safaricom

Business Daily

Kenya News

fsd Africa