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EIB and CBK Pioneer Climate Finance Initiative For Green Transition

Date: 04/01/2024

The European Investment Bank (EIB) and the Central Bank of Kenya (CBK) have joined forces to introduce a pioneering climate finance best practice initiative. The two-year program, under the EIB’s Greening Financial Systems scheme, is financed by the German government through the International Climate Initiative Fund. This initiative aims to fortify Kenyan financial institutions’ commitment to climate-related investment, enabling commercial banks to play a vital role in achieving a net-zero economy and bolstering climate resilience in Kenya’s financial systems.

This groundbreaking scheme, the first of its kind in East Africa, will serve as a model for overcoming barriers hindering commercial banks’ engagement in climate finance. Additionally, it will assist the Central Bank of Kenya in integrating climate risk into the Kenyan regulatory framework. The program’s goals include developing a green taxonomy for the financial sector, and supporting increased investment aligned with the Paris Climate Agreement’s objectives.

The Greening Financial Systems initiative is set to enhance climate finance best practices across Kenyan banks and financial institutions. It aims to catalyze new funding for green projects, improve the assessment, monitoring, and reporting of climate-related risks, and contribute to global efforts outlined at COP28 in Dubai to limit temperature increases and adapt to climate change impacts.

EIB Vice-President Thomas Östros emphasized the importance of understanding barriers hindering green financing in Kenya. He highlighted the need to scale up climate finance, emphasizing that this technical best practice partnership with the Central Bank of Kenya builds on the EIB’s longstanding collaboration with Kenyan financial institutions.

Governor of the Central Bank of Kenya, Dr. Kamau Thugge, affirmed the commitment to greening the Kenyan financial sector. He noted the issuance of guidance on climate-related risk management in 2021 and acknowledged the progress made by banks in implementing the guidance but stressed the need for further efforts.

Over the past decade, the EIB, as the world’s largest international public bank and a leading climate financier, has played a pivotal role in enhancing the climate finance skills of over 40,000 African financial professionals. In the last five years alone, it has provided over €534 million (KES 88 billion) for private sector investment in Kenya, collaborating with local businesses, banks, financial partners, and microfinance institutions.

Source: Solar Quarter

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