Kenya Bankers, IFC Launch Sustainable Finance Guidelines and Report, Fete Top Lenders in ESG

 

Kenya Bankers Association (KBA), in collaboration with the International Finance Corporation (IFC) and World Wide Fund (WWF) Kenya, have launched the revamped Sustainable Finance Guiding Principles for commercial lenders. Kenya Bankers Association (KBA) acting CEO Raimond Molenje speaking during the Sustainable Finance Summit. 

The collaboration also released 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. Why banks need sustainable finance guides The Sustainable Finance Guiding Principles provide a robust framework for banks to integrate Environmental, Social, and Governance (ESG) considerations into their operations.  

KBA Vice Chairperson 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 economies while safeguarding the planet's future. “Sustainable business models and green financing are not mere trends—they are essential pathways for ensuring long-term economic stability and environmental stewardship. 

KBA acting Chief Executive Officer Raimond Molenje noted that the revamped guiding principles will equip banks with the ability to adopt best practices in governance and risk management to drive innovation and financial inclusion “The Sustainable Finance Initiative has enabled over 50,000 bank employees to make lending decisions that benefit the environment, society, and economy," said Molenje. 

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

The report indicated that gross loans across 11 key sectors grew by 23% since 2020, reaching KSh 3.6 trillion in 2022, with MSMEs receiving KSh 783.3 billion. However, the report cited challenges such as high costs for sustainability-linked bonds, inconsistent sustainability reporting, and limited data standardisation. 

The report identified opportunities for further investment in green growth sectors, including agriculture, energy, water, manufacturing, and real estate. To amass these opportunities, WWF Kenya Chief Executive Officer (CEO) Mohamed Awer affirmed a continued collaboration with the Kenya Bankers Association to ensure the future of financial prosperity grounded in sustainability – a safe legacy that connects people, nature, and the economy. ‘’Kenya is endowed with rich natural resources, a dynamic entrepreneurial spirit, and a robust financial sector that provides a unique platform to champion sustainability. 

However, with these opportunities come significant responsibilities to adopt an integrated approach that aligns economic activities with the sustainable development agenda. WWF-Kenya will continue to collaborate,’’ said Awer. IFC Regional Director Mary Potter Peschka said the application of the SFI principles is important for Kenyan banks as it will promote financing for renewable energy, energy efficiency, sustainable agriculture, and other eco-friendly projects. 

 "The principles will encourage banks to support projects that enhance social inclusion, gender equality, affordable housing, healthcare, and education. It will also help banks manage environmental and social risks, making informed decisions to protect financial stability," Peschka. Sophia Baumert, Project Manager for Sustainable Agricultural Systems and Policies (AgSys) through Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, affirmed a partnership with KBA to support financial institutions in exploring sustainable financing opportunities for the agricultural sector. 

Baumert explained that the partnership will enable financial institutions to implement sustainable financing options such as blended finance for investments into nature-based solutions that benefit the planet, beneficiaries, and financial institutions. "We believe that how we finance our agrifood systems – from both public and private sources of capital – may be the ultimate game changer since financing is both a driver of food system inefficiencies and an essential ingredient to their transformation. 

We recognise that climate change impacts how financial institutions perceive risks especially in the agricultural sector," she said. KBA Catalyst Awards KBA Director of Communications and Public Affairs Christine Onyango expressed the association's commitment via the Catalyst Awards to ensure sustainability in the lending sector. "Catalyst Awards was first introduced in 2015. Bank participation has increased year over year, and we now have over 60% of banks participating since last year. We are proud to see more banks integrating sustainability into their daily operations.

 "If we can get more than 60% of banks it means most banks are practicing sustainability," said Onyango. Banks submitted a total of forty-nine entries in 2024, an increase from forty-three in 2023. Absa Bank Kenya emerged third in the overall winner category led by Co-op Bank Kenya. 

Below is the list of other banks and trophies they won: CLUSTER CATEGORY WINNER Category 1 Best in Sustainable Finance 1. KCB Bank 2. ABSA Bank 3. NCBA Bank Category 2 Best Case Study – Retail MSME 1. CO-OP Bank 2. National Bank 3. Sidian Bank Best Client Case Study - Commercial 1. CO-OP Bank 2. KCB Bank 3. Stanbic Bank Best Bank Case Study – Bank Operations 1. DTB Bank 2. CO-OP Bank 3. I&M Bank Best Client Case Study – Promoting Gender Inclusivity 1. KCB Bank 2. KWFT Bank 3. CO-OP Bank Best Bank Case Study – Promoting PWD Accessibility 1. KCB Bank 2. ABSA Bank 2. CO-OP Bank 3. DIB Bank Kenya Category 3 Most Innovative Bank 1. ABSA Bank 1. CO-OP Bank 2. Equity Bank 3. I&M Bank Category 4 Most Improved Bank 1. DIB Bank Kenya 2. DTB Bank 3. Credit Bank Category 5 Overall Winner 1. CO-OP Bank 2. KCB Bank 3. ABSA Bank  

The Award gives firms a unique opportunity to showcase their industry leadership and their role in promoting sustainable development. Govt call to banks on sustainability Meanwhile, the government of Kenya has been urging financial institutions to cut financing to businesses polluting the environment. The Ministry of Environment has threatened to name and shame companies polluting the Nairobi River, pushing for accountability and stricter environmental compliance. 

The ministry is calling on financial institutions to halt funding for firms listed as environmental offenders and only restore it on proof of compliance. Banks in Kenya have been releasing their 2023 sustainability reports, which show heavy investments in Environmental, Social, and Governance (ESG) issues. 

by  Wycliffe Musalia