Kenya Advances Sustainability in Banking with Updated ESG Principles and Report

Nairobi, Kenya, November 20, 2024 – The Kenya Bankers Association (KBA), in partnership with IFC and WWF Kenya, has launched the updated Sustainable Finance Guiding Principles alongside the Landscape of Sustainable Finance in Kenya’s Banking Industry Report, marking a pivotal moment in embedding sustainability into Kenya’s financial services sector.

Rose Lumumba, IFC Corporate Governance Officer, led the team of technical experts that updated and revamped the principles to provide Kenyan banks with a robust framework to integrate Environmental, Social, and Governance (ESG) considerations into their operations. This initiative aligns with global standards, fostering responsible lending, sustainable investments, and innovative financial solutions that address Kenya's socio-economic and environmental challenges.

Key Highlights:

• Promoting Green Finance: The principles encourage banks to finance renewable energy, sustainable agriculture, energy efficiency, and other eco-friendly projects.
• Enhancing Social Impact: They support social inclusion, gender equality, affordable housing, healthcare, and education.
• Managing Risks: The framework enables banks to assess environmental and social risks, ensuring financial stability and long-term resilience.

The Landscape of Sustainable Finance Report, supported by WWF Kenya, underscores the sector’s progress. It reveals that gross loans across key sectors grew by 23% since 2020, reaching KSh3.6 trillion in 2022, with MSMEs receiving KSh783.3 billion. However, challenges such as high costs for sustainability-linked bonds, inconsistent reporting, and limited data standardization persist. The report also highlights investment opportunities in green growth sectors like agriculture, energy, water, manufacturing, and real estate.

Mary Porter Peschka, IFC Regional Director, emphasized the significance of the updated principles: "These principles are instrumental in promoting financing for renewable energy, energy efficiency, and sustainable agriculture while advancing social inclusion, gender equality, and affordable housing. They are a testament to the power of collaboration in driving sustainability."

The launch event brought together key stakeholders, including KBA Vice Chairperson Betty Korir and Acting CEO Raimond Molenje. It showcased a shared commitment to fostering a resilient and sustainable financial ecosystem, ensuring that Kenyan banks remain at the forefront of ESG integration.