Let banks lead environmental restoration bid

A lesson to be learnt from the ongoing rains apart from the fact that the Meteorological Department is the only government institution that says the truth nowadays is that nature is unforgiving.

From scampering to react over tree logging and looking for a rain god after taps ran dry two weeks ago to worrying about floods, the ability of Kenyans to adapt to sudden weather swings has been tested. We have failed. The water we had been crying for has suddenly become our enemy.

For Nairobians, especially who could not get to work on time on Thursday after it rained non-stop overnight till 11am, they cannot wait for the rains to return to where they came from.

Land grabbers who corrupted the system and constructed on wetlands are also praying nonstop for the rains to go away and spare them the annual embarrassment cycle when roads just outside their premises become impassable.

Although the government has made positive strides to deal with deforestation through gazettement of more water towers and launching tree planting exercises across the country, more still needs to be done.

The severe droughts and either low or excess rainfall do not occur by mistake. They are a consequence of our actions and the worst is yet to come.

In 2013, the government created the National Climate Action Plan which predicted that by the end of last year, climatic events could cost the economy as much as $500 million (Sh50 billion) a year.

These negative costs, according to the World Bank could hit 7 per cent of Kenya’s GDP by 2020. We all live in this environment and leaving environmental matters to the government will have little results. Financial institutions can play a big role through aligning their business models to green finance. 

Banks, which by the way are either reporting flat profits or declines, blame their predicament on the interest rate caps but the fact is going forward as the world becomes more environment conscious, the bottom line will not be the only thing that matters.

“Green finance” means supporting investments that lead to economic growth in a clean and sustainable manner. Such investments will encourage efficient use of natural resources.

Green energy projects

This would not only serve the bank or its creditors but also the broad interests of society. This message was reiterated at the recent Kenya Bankers Association Sustainable Finance Catalyst Awards.

Cooperative Bank stood out for financing investments in energy efficiency and renewable energy worth in excess of USD50 million.

These include financing of mini-hydro power plants such as the six megawatt Gura Power Project of the Kenya Tea Development Agency that replaced the use of fuel wood in tea factories.

This is an example worth emulating by other banks. In fact, it is appalling that only 13 banks made the shortlist at the awards of the over 40 that operate here.

This is a step in the right direction but more needs to be done. Kenya is home to some of the world’s largest private sector funded green energy projects like the Sh60 billion geothermal power plants and the Sh90 billion Lake Turkana Wind Power.

However, both are funded by foreign banks while local lenders concentrate on asset lending. It is important to help people acquire assets but banks also need to start thinking about the country's environmental needs when designing their loan portfolios.

Instead of only looking at a creditor’s records at the Credit Reference Bureau, they can also take into account the sustainability impact of an activity to determine access to finance and insurance pricing.

Additionally, financial institutions should ensure optimal management of resources and natural capital, so as to avoid compromising future generation’s needs. After all, the environment is the only worthy thing we can leave to future generations.

If you think I am lying, ask residents of Green Park estate on Mombasa road who bought houses for Sh8 million but slept outside on Thursday night after a harmless Stoni Athi stream broke its banks.

- The writer is an investigations reporter for The Standard. [email protected]