{"id":647859,"date":"2021-11-02T19:36:05","date_gmt":"2021-11-02T16:36:05","guid":{"rendered":"https:\/\/www.capitalfm.co.ke\/news\/?p=647859"},"modified":"2021-11-03T05:45:46","modified_gmt":"2021-11-03T02:45:46","slug":"greening-kenyas-banking-sector","status":"publish","type":"post","link":"https:\/\/www.capitalfm.co.ke\/news\/2021\/11\/greening-kenyas-banking-sector\/","title":{"rendered":"Greening Kenya\u2019s Banking Sector"},"content":{"rendered":"<p class=\"s4\"><span class=\"s5\"><span class=\"bumpedFont15\">We have a problem. <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">The recently released <\/span><\/span><a href=\"https:\/\/library.wmo.int\/doc_num.php?explnum_id=10833\"><span class=\"s7\"><span class=\"bumpedFont15\">State of the Climate in Africa 2020<\/span><\/span><\/a><span class=\"s5\"><span class=\"bumpedFont15\"> report<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> indicates that<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">in 2020,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">the climate indicators in Africa<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">were characterized by <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">extr<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">eme weather events <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">such as floods and droughts,<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">increasing<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> temperatur<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">es<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">accelerat<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ed rise in<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> sea-level<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">s<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">. The <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">associated<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">impact was <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">devastating<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">. The report also<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">notes <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">that <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">b<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">y 2030<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">up to 11<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">8 million extremely poor people<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">will be exposed to drought, floods and extreme heat in Africa,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">if response measures are <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">in<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">adequate<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">Additionally<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">, <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">climate change could further lower gross domestic product (GDP) <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">i<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">n <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">S<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ub-Saharan Africa <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">by up to 3<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> percent<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> by 2050.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> And Africa is not alone.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">It is against this dire backdrop<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">in Africa<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">the world<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">that <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">the <\/span><\/span><a href=\"https:\/\/ukcop26.org\/\"><span class=\"s7\"><span class=\"bumpedFont15\">26th UN Climate Change Conference of the Parties (COP26)<\/span><\/span><span class=\"s8\"><span class=\"bumpedFont15\">\u00a0<\/span><\/span><\/a> <span class=\"s5\"><span class=\"bumpedFont15\">is<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> conven<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ing<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> in <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">Glasgow, Scotland<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">. <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">It brings <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">together governments, businesses, civil society and citizens <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">with the expectation of <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">commit<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ments<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">to a<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">mbitious ac<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">tions <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">that are needed <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">to counter climate change.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> Further delays in these commitments or if they are unambitious would spell doom to our destiny.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">In the build up to COP 26, <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">Kenya and other <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">countries<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">have been scaling up their climate actions at the sectoral and national levels. It is in this context that the Central Bank of Kenya<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> (CBK)<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> issued <\/span><\/span><a href=\"https:\/\/www.centralbank.go.ke\/wp-content\/uploads\/2021\/10\/Guidance-on-Climate-Related-Risk-Management.pdf\"><span class=\"s7\"><span class=\"bumpedFont15\">Guidance on Climate-Related Risk Management (Guidance)<\/span><\/span><\/a><span class=\"s5\"><span class=\"bumpedFont15\"> to the banking sector,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">on October 15, 2021.<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">The <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">Guidance<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> is aimed at enabling banks to integrate climate-related risks into their governance, strategy, risk management and disclosure frameworks.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">Climate change poses three broad risks to banks. First, the <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">physical risk<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">to the loan portfolio <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">arising from damage or loss caused by climate and weather related events such as floods and drought. Second, the <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">transition risk<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">arising from the change<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">s towards a low carbon (green) economy. For instance, the <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">abandonment of previous<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ly<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> well<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">&#8211;<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">entrenched energy sources such as coal<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">may lead to banks<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> be<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ing<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> left with obsolete <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">stranded assets<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">that were used to secure loans.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> Third<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s6\"><span class=\"bumpedFont15\">liability risk<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">that could arise from banks being sued for financing companies whose activities negatively impact the environment.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">Nevertheless<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">, efforts to mitigate and adapt to climate change also generate business opportunities for banks. These include the adoption of low emission energy sources, development of new products and services, access to new markets, housing and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">resilient <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">infrastructure.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">Finance sits <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">at the center of business, and CBK\u2019s <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">vision is a banking sector that <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">works for and with <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">Kenyans<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> as spelt out in the <\/span><\/span><a href=\"https:\/\/www.centralbank.go.ke\/wp-content\/uploads\/2020\/03\/Kenya-Banking-Sector-Charter-2019.pdf\"><span class=\"s7\"><span class=\"bumpedFont15\">Kenya Banking Sector Charter<\/span><\/span><\/a><span class=\"s5\"><span class=\"bumpedFont15\"> in 2019<\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">.<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">Banks<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">should not just provide <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">banking<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> services, but should ensure <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">they <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">meet the needs of customers while also being aligned to environmental, social and governance considerations.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> In the context of the actions to reverse the climate crisis,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">we aspire for a world <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">where all financial services are green<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">. <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">T<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">hree milestones have been <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">reached<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">in this journey<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s3\"><span class=\"bumpedFont15\">First,<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> in 2015<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">the Kenya Bankers Association (KBA) launched the <\/span><\/span><a href=\"https:\/\/sfi.kba.co.ke\/\"><span class=\"s7\"><span class=\"bumpedFont15\">Sustainability Finance Initiative (SFI)<\/span><\/span><\/a><span class=\"s5\"><span class=\"bumpedFont15\">. The SFI aim<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">s<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> at raising awareness on environmental, social and governance risks and financing within the banking sector. KBA has set-up a comprehensive online training designed to enable <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">banks<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> to create long-term value for the economy, society and the environment. Currently, <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">all <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">38<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">banks are participating <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">over 30,000<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> bankers have <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">so far been <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">enrolled<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s3\"><span class=\"bumpedFont15\">Second<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">, <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">in January 2020<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">the first corporate green bond in East and Central Africa<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">of Ksh.4.3 billion <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">was <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">issued by the Acorn Group<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">listed<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> at the Nairobi Securities Exchange (NSE). The bond was <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">also <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">admitted on the International Securities Market (ISM) segment at the London Stock Exchange (LSE). <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">The proceeds <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">were u<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">sed<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">to <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">build<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> e<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">nvironmentally-<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">friendly housing for university students.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s3\"><span class=\"bumpedFont15\">Third<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">, in <\/span><\/span><a href=\"https:\/\/www.greenclimate.fund\/news\/green-climate-fund-board-approves-usd-1-billion-climate-action-sets-out-strategic-vision\"><span class=\"s8\"><span class=\"bumpedFont15\">November 2020<\/span><\/span><\/a><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">Kenya<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">\u2019s largest bank,<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">KCB Bank<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> was accredited by the United Nations Green Climate Fund (GCF) as the first financial intermediary <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">for the<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> implementation of green financing in East Africa.<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">GCF <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">is the world\u2019s largest climate fund,\u00a0mandated\u00a0to support developing countries\u00a0raise and realize their\u00a0Nationally Determined Contributions (NDC)\u00a0ambitions\u00a0towards low-emissions, climate-resilient\u00a0pathways.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">While acknowledging these milestones, a lot more needs to be done to green Kenya\u2019s financ<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ial system<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">,<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> and i<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">ssuance of the <\/span><\/span><span class=\"s6\"><span class=\"bumpedFont15\">Guidance<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">will <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">quicken <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">the journey <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">for the<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">banking sector. Over the <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">next<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> one-and-a-<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">half years, CBK will walk with banks to build capacity and integrate climate-related risk management in their day to day operations. <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">In turn, t<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">his will attract global funds that are looking for opportunities to finance initiatives that build climate resilience, <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">and <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">thus <\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">positioning Kenya as a premier green finance hub.<\/span><\/span><\/p>\n<p class=\"s2\"><span class=\"s5\"><span class=\"bumpedFont15\">For Kenya and other countries, the time is now to build a truly sustainable financial system that works for and with the people. Ultimately all financing should be green.<\/span><\/span> <span class=\"s5\"><span class=\"bumpedFont15\">The stakes are high<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\">. There is<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> no<\/span><\/span><span class=\"s5\"><span class=\"bumpedFont15\"> planet B.<\/span><\/span><\/p>\n<p class=\"s2\"><em><strong><span class=\"s9\"><span class=\"bumpedFont15\">Dr<\/span><\/span><span class=\"s9\"><span class=\"bumpedFont15\">.<\/span><\/span><span class=\"s9\"><span class=\"bumpedFont15\"> Patrick Njoroge is Governor of the Central Bank of Kenya<\/span><\/span><\/strong><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>We have a problem. The recently released State of the Climate in Africa 2020 report, indicates that in 2020, the climate indicators in Africa, were characterized by extreme weather events such as floods and droughts,increasing temperatures and accelerated rise in sea-levels. The associated impact was devastating. The report alsonotes that by 2030, up to 118 [&hellip;]<\/p>\n","protected":false},"author":14306,"featured_media":647889,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1979],"tags":[2720,4235,1981],"coauthors":[4236],"class_list":["post-647859","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-fifth-estate","tag-cbk","tag-dr-patrick-njoroge","tag-featured"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.7.1 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Greening Kenya\u2019s Banking Sector &#187; Capital News<\/title>\n<meta name=\"description\" content=\"We have a problem. 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