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The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) have initiated a climate finance initiative to boost low-carbon, climate-resilient development to help Kenya’s attempt towards achieving its climate objectives and fostering sustainable growth.

CBK Governor Kamau Thugge said the initiative will involve tapping Kenya’s financial institutions in climate-related financing, which is key to achieving a sustainable, resilient, and net-zero economy in Kenya.

“The Central Bank of Kenya is committed to the greening of the Kenyan financial sector. Towards this end, CBK issued Guidance on Climate-Related Risk Management in October 2021, to commercial banks.
The Guidance was intended to facilitate banks in incorporating climate-risk related considerations in their governance, strategy, risk management and disclosures frameworks. Considerable progress has been made by banks in implementing the Guidance, but more remains to be done,’ Thugge said.

According to Thugge, the Green Financing programme will help Kenyan banks and financial institutions to better embrace climate finance best practice across all activities, catalyse new funding for green projects and better assess, monitor, and report on the climate related risks.

EIB Vice President, Thomas Östros said the programme reflects the urgent need to mobilise climate finance outlined at the COP 28 in Dubai and contributes to global efforts to limit global temperature increases 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,” Östros said, acknowledging that  barriers holding back the full engagement of banks in climate dedicated finance still abound.

“It is hindered by the lack of long-term funding that matches the economic life of green investments, the higher perceived risk of climate investment and limited experience on how to originate and monitor climate finance,” Ostros added.

Over the last five years, EIB has lend more than €534 million (Sh88 billion) for private sector investment across Kenya in partnership with Kenyan businesses, banks, financial partners and micro-finance institutions.