Kenyan banks scored an average of 43.7% in the WWF’s inaugural 2024 Sustainable Banking Assessment (SUSBA), second only to South Africa’s 50.1% among 25 banks surveyed across eight African countries.
In Kenya, Stanbic Bank ranked higher than four other banks in Sustainability strategy and stakeholder engagement in sustainable finance initiatives — fetching 100% and 80% scores respectively. KCB and Equity both scored 86% and 70% on these parameters with NCBA performing poorly with 20% in stakeholder engagement. Sustainable finance emphasizes a shift from resource-intensive financial models to a green, social, and inclusive investment culture.
“All five banks exhibit substantial progress in incorporating sustainability into their core business strategies, reflecting a long-term vision for sustainable growth, with Stanbic Bank fully integrating sustainability in its core business,” the report noted.
KCB outpaced other banks in client monitoring and engagement, scoring 75%. Equity Bank and Diamond Trust Bank (DTB) scored 42% while Stanbic Bank performed poorly at 33%. The bank, however, performed better — at 67% — in integrating its products and services with sustainable goals while every other bank scored less than 50%.
The inclusion of ESG objectives in strategies set by Kenyan banks has been facilitated by national initiatives like the Sustainable Finance Initiative (SFI) and regulatory directives from the Central Bank of Kenya (CBK).
The CBK has stepped up its climate oversight by pushing banks to integrate environmental risks into governance and risk frameworks, in line with global standards such as the Task Force on Climate-related Financial Disclosures (TCFD). A draft green finance taxonomy and climate risk disclosure framework aims to standardize how banks classify and report climate-aligned investments.
“Equity and KCB lead as early adopters of the TNFD, showcasing their commitment to advancing nature-related risk management. By setting the pace for the industry, these banks provide a model for others to follow, fostering innovation and leadership in addressing nature-related financial risks,” the report added.
Although Kenyan banks are progressing in their ESG commitments, certain challenges still linger. The WWF report highlights a wide disparity between policy ambition and implementation. Most Kenyan banks refer to sustainability in their strategies, yet less than half address climate risks at the portfolio level.
Across the continent, 84% of banks failed to report greenhouse gas emissions from their lending portfolios. About 48% of the banks lacked comprehensive climate risk management strategies and processes, and just 20% seek external verification of their ESG disclosures. These shortfalls have raised concerns that the banking sector is on a greenwashing endeavor.
The WWF Sustainable Banking Assessment ranked Tanzania third with an average score of 37.7%. Namibia and Zambia followed with scores of 21.1% and 19.3%, respectively.
Meanwhile, banks in Gabon (7.8%), Cameroon (1.1%), and the Democratic Republic of Congo (1.0%) are still at the very beginning of their sustainability journeys, showing minimal integration of environmental and social considerations into their banking operations.