The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) on Monday launched a new climate finance best practice initiative to strengthen engagement by the country’s financial institutions to finance climate-related investment.
The two institutions said in a joint statement issued in Nairobi, the capital of Kenya, that the partnership will enable commercial banks to mobilize climate finance essential to achieving a net zero economy and strengthening the climate resilience of the Kenyan financial systems.
“The scheme will also help to further 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 institution 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 Program.
The initiative will serve as a model for mobilizing climate finance by tackling barriers that hold back engagement by commercial banks and will enable the Central Bank of Kenya to incorporate climate risk into the Kenyan regulatory framework.
The banks said the greening financial systems program will help Kenyan banks and financial institutions to better embrace climate finance best practices across all activities, catalyze new funding for green projects, and better assess, monitor, and report on climate-related risks.
“The program reflects the urgent need to mobilize climate finance outlined this past week at the COP 28 in Dubai and contributes to global efforts to limit global temperature increase and adapt to the impact of climate change,” the banks said.
Kamau Thugge, the governor of the Central Bank of Kenya, said the apex bank is committed to the greening of the Kenyan financial sector.
Thugge said the CBK issued guidance on climate-related risk management in October 2021 to commercial banks intended to facilitate banks in incorporating climate risk-related considerations in their governance, strategy, risk management, and disclosure frameworks.
“Considerable progress has been made by banks in implementing the guidance, but more remains to be done,” he added.
