The Central Bank of Kenya (CBK) and the European Investment Bank (EIB) have jointly introduced a fresh initiative aimed at promoting best practices in climate finance among local commercial banks.
The initiative seeks to enhance the involvement of Kenyan financial institutions in financing climate-related investments.
Enabling commercial banks to mobilise climate finance will play a crucial role in advancing towards a net zero economy and bolstering the climate resilience of Kenya’s financial systems, the two entities said.
The two-year Kenyan technical assistance scheme is the first of its kind to be implemented in East Africa under the EIB’s Greening Financial Systems Programme, financed by the German government through the International Climate Initiative Fund (IKI Fund).
“The initiative will serve as a model for mobilising climate finance by tackling barriers that hold back engagement by commercial banks and will enable CBK to incorporate climate risk into the Kenyan regulatory framework,” they said.
They added the scheme will also help increase the impact of climate-related investment by developing the green taxonomy for the financial sector that supports scaling up green investment aligned with the goals of the 2015 Paris Climate Agreement.
“The Greening Financial Systems programme will help Kenyan banks and financial institutions to better embrace climate finance best practices across all activities, catalyse new funding for green projects, and better assess, monitor, and report on the climate-related risks,” they said.
The tower institutions noted that the programme reflects the urgent need to mobilise climate finance outlined this past week at COP 28 in Dubai and contributes to global efforts to limit global temperature increase and adapt to the impact of climate change.
“As highlighted by world leaders at COP 28, scaling up climate finance is essential to mobilise new investment to boost the green transition and help reduce the impact of climate change,” said EIB Vice President Thomas Östros.
“This new technical best practice partnership with CBK builds on the European Investment Bank’s long-standing partnership with Kenyan financial institutions to increase the impact of climate finance and unlock investment that better protects infrastructure and business from climate change.” “The Central Bank of Kenya is committed to the greening of the Kenyan financial sector,” added CBK Governor Kamau Thugge.