NAIROBI, Kenya, Apr 5 – The Central Bank of Kenya (CBK) has unveiled the Kenya Green Finance Taxonomy (KGFT) and Climate Risk Disclosure Framework, key tools aimed at fostering a sustainable and climate-resilient banking sector.
The new measures build on CBK’s 2021 guidance on climate-related risk management and are part of its broader reforms to green the financial system.
Developed with technical support from the European Investment Bank (EIB) through the Greening Financial Systems Programme, the tools aim to support institutions in aligning their operations with climate objectives.
“The KGFT is expected to guide target institutions on evaluation and classification of their economic activities according to the extent to which the activities support or hinder climate objectives,” CBK said in a statement.
The KGFT draws from Kenya’s Nationally Determined Contributions (NDCs) under the UN Framework Convention on Climate Change (UNFCCC) and other national climate policies.
It will initially focus on climate change mitigation and adaptation, with future updates expected to include additional environmental goals such as biodiversity.
The Climate Risk Disclosure Framework, meanwhile, is designed to help banks present climate-related information in a “relevant, useful, consistent and comparable manner.”
It aligns with global standards including the International Financial Reporting Standards (IFRS) S2 and the Basel Committee’s principles on climate-related financial risks.
By increasing transparency and accountability, the CBK hopes the frameworks will “encourage businesses to adopt more sustainable practices” and assist investors in identifying companies best positioned for a low-carbon future.
The initiative is seen as a significant step toward greening Kenya’s financial sector and aligning it with international climate finance norms.
