The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) have launched a two-year climate finance best practice program.
The program has been funded by the German government through the International Climate Initiative Fund.
The program, part of the EIB’s Greening Financial Systems scheme, aims to strengthen Kenyan financial institutions’ capacity and commitment to invest in climate-related projects, helping commercial banks support a net-zero and climate-resilient economy in Kenya.
This is the first program of its kind in East Africa and will serve as a model for addressing the challenges that prevent commercial banks from engaging in climate finance. It will also help the CBK to incorporate climate risk into the Kenyan regulatory framework. The program’s objectives include developing a green taxonomy for the financial sector and facilitating more investment in line with the Paris Climate Agreement’s goals.
The Greening Financial Systems program will improve climate finance best practices among Kenyan banks and financial institutions. It will enable new funding for green projects, enhance the evaluation, tracking, and reporting of climate-related risks, and support global efforts to limit temperature rise and adapt to climate change impacts, as outlined at COP28 in Dubai.
EIB Vice-President Thomas Östros stressed the importance of understanding and overcoming the barriers to green financing in Kenya.
Östros underscored the need to scale up climate finance and said that this technical best-practice partnership with the CBK builds on the EIB’s long-term cooperation with Kenyan financial institutions.
CBK Governor Dr. Kamau Thugge expressed his dedication to greening the Kenyan financial sector.
Dr Thugge mentioned the guidance on climate-related risk management issued in 2021 and recognized the banks’ progress in implementing it, but urged for more efforts.
The EIB, the world’s largest international public bank and a leading climate financier, has played a key role in enhancing the climate finance skills of over 40,000 African financial professionals in the past decade.
In the last five years, EIB has provided over €534 million (KES 88 billion) for private sector investment in Kenya, working with local businesses, banks, financial partners, and microfinance institutions.