KCB Group more than doubled green loans disbursed in 2024, emerging among the front runners in the race among banks to green up their loan portfolios.
The lender advanced Sh53.2 billion in the period to December 2024 to different customers undertaking diverse projects, up from Sh22.1 billion in 2023, a growth of 140 per cent.
Banks are racing to increase the amount of loans advanced to environmentally friendly projects as Kenya and the world battle to minimise the impact of climate change by increasingly financing less harmful projects.
“During the year, we disbursed green loans worth Sh53.2 billion,” said the bank in its integrated annual report for the financial year to December 2024.
“This reflects our strong commitment to integrating sustainability into our core lending practices, enhancing our role in promoting sustainable investments… As part of accelerating its climate commitment and increasing climate flows, KCB has committed to directing 25 per cent of the total loan portfolio to green investments by 2025.”
The Central Bank of Kenya (CBK) in April directed banks to start disclosing their exposure to climate-related risks emanating from projects and companies that they finance.
KCB Group has, over the last three years advanced Sh96.5 billion to its customers undertaking climate-friendly projects such as e-mobility, climate change adaptation and mitigation, energy efficiency and renewable energy.
The bank said it is expanding its green portfolio through partnerships and has a target of net-zero emissions by 2050.
“We are committed to driving sustainable development through our proactive approach to green finance. As we navigate the evolving landscape of environmental responsibility, we take pride in our initiatives aimed at fostering sustainable practices across various sectors,” said the lender.
Among the leading sectors in the uptake of green finance are manufacturing and agriculture, building and construction, and solar and energy efficiency.
“Our investment in green finance has significantly benefitted customers in the manufacturing and agriculture sectors, enabling businesses to adopt sustainable practices and reduce environmental footprints,” said the bank.
It added that in building and construction, it has been financing projects that promote sustainable infrastructure development, including energy-efficient buildings and sustainable construction practices.
To concretise its plans to increase disbursement of green loans to the building construction sector, KCB Group in 2024 hired a Head of Sustainable Finance within its Corporate Banking segment and Mortgage Division.
It said this would “further augment the entrenching of sustainable financing within our lending portfolio as well as commercialise products and services in the sustainability space, such as renewable energy, green buildings, energy efficiency, affordable housing and sustainable water usage.”
“The transition to renewable energy is critical in combating climate change. KCB has prioritised financing for solar energy projects and the use of energy-efficient materials, empowering businesses to contribute to a greener future,” said the lender.
Additionally, KCB Kenya said it had secured approval for Project Preparatory Facility funding from the United Nations Green Climate Fund.
“The funding is vital for empowering MSMEs (Micro, Small, and Medium Enterprises) to adopt sustainable practices and technologies that contribute to climate resilience. The approval places the Bank on a path to tap into project funding worth $118.25 million (Sh15.2 billion) to support lending to MSMEs offering climate-smart solutions,” said KCB in the report.
The bank further said it screened loans worth Sh513 billion in 2024, which is aimed at determining the impact that projects being funded by the bank have on the environment.
Such screening looks to enable the bank to integrate environmental and social considerations into our lending process. Using the Environmental and Social Due Diligence (ESDD) tool, the bank has been able to categorise and identify environmental and social risks associated with the projects it finances.
“The ESDD tool has proven to be an invaluable resource for KCB, enhancing the banking subsidiaries’ abilities to evaluate project risks effectively. By utilising this tool, we ensure that all facilities meet the highest standards of sustainability, reinforcing our leadership in sustainable finance,” said KCB.
“Most of the projects assessed have been categorised as Category B (medium impact), indicating a moderate level of environmental and social risks.”
Aside from disbursing loans for projects that are less harmful to the environment or aimed at playing a part in revitalising degraded areas, the bank says it is growing internal capacity for employees to understand different aspects that come with green finance.
“In 2024, 86 per cent of KCB Group staff successfully completed an e-learning course on green lending, a critical milestone that underscores the Bank’s unwavering commitment to sustainability and environmentally responsible financial practices,” said KCB.
Kenyan banks are increasingly coming under pressure for clear disclosure of financing to projects that could be harmful to the environment following the Central Bank’s April issuance of the Kenya Green Finance Taxonomy (KGFT), which guides banks on disclosing their exposure to climate-related risks.
CBK gave banks 18 months to put in place mechanisms to clearly disclose the impact that projects they finance have on the environment.
KCB Group more than doubled green loans disbursed in 2024, emerging among the front runners in the race among banks to green up their loan portfolios.
The lender advanced Sh53.2 billion in the period to December 2024 to different customers undertaking diverse projects, up from Sh22.1 billion in 2023, a growth of 140 per cent.
Banks are racing to increase the amount of loans advanced to environmentally friendly projects as Kenya and the world battle to minimise the impact of climate change by increasingly financing less harmful projects.
“During the year, we disbursed green loans worth Sh53.2 billion,” said the bank in its integrated annual report for the financial year to December 2024.
“This reflects our strong commitment to integrating sustainability into our core lending practices, enhancing our role in promoting sustainable investments… As part of accelerating its climate commitment and increasing climate flows, KCB has committed to directing 25 per cent of the total loan portfolio to green investments by 2025.”
The Central Bank of Kenya (CBK) in April directed banks to start disclosing their exposure to climate-related risks emanating from projects and companies that they finance.
KCB Group has, over the last three years advanced Sh96.5 billion to its customers undertaking climate-friendly projects such as e-mobility, climate change adaptation and mitigation, energy efficiency and renewable energy.
The bank said it is expanding its green portfolio through partnerships and has a target of net-zero emissions by 2050.
“We are committed to driving sustainable development through our proactive approach to green finance. As we navigate the evolving landscape of environmental responsibility, we take pride in our initiatives aimed at fostering sustainable practices across various sectors,” said the lender.
Among the leading sectors in the uptake of green finance are manufacturing and agriculture, building and construction, and solar and energy efficiency.
“Our investment in green finance has significantly benefitted customers in the manufacturing and agriculture sectors, enabling businesses to adopt sustainable practices and reduce environmental footprints,” said the bank.
It added that in building and construction, it has been financing projects that promote sustainable infrastructure development, including energy-efficient buildings and sustainable construction practices.
To concretise its plans to increase disbursement of green loans to the building construction sector, KCB Group in 2024 hired a Head of Sustainable Finance within its Corporate Banking segment and Mortgage Division.
It said this would “further augment the entrenching of sustainable financing within our lending portfolio as well as commercialise products and services in the sustainability space, such as renewable energy, green buildings, energy efficiency, affordable housing and sustainable water usage.”
“The transition to renewable energy is critical in combating climate change. KCB has prioritised financing for solar energy projects and the use of energy-efficient materials, empowering businesses to contribute to a greener future,” said the lender.
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Additionally, KCB Kenya said it had secured approval for Project Preparatory Facility funding from the United Nations Green Climate Fund.
“The funding is vital for empowering MSMEs (Micro, Small, and Medium Enterprises) to adopt sustainable practices and technologies that contribute to climate resilience. The approval places the Bank on a path to tap into project funding worth $118.25 million (Sh15.2 billion) to support lending to MSMEs offering climate-smart solutions,” said KCB in the report.
The bank further said it screened loans worth Sh513 billion in 2024, which is aimed at determining the impact that projects being funded by the bank have on the environment.
Such screening looks to enable the bank to integrate environmental and social considerations into our lending process. Using the Environmental and Social Due Diligence (ESDD) tool, the bank has been able to categorise and identify environmental and social risks associated with the projects it finances.
“The ESDD tool has proven to be an invaluable resource for KCB, enhancing the banking subsidiaries’ abilities to evaluate project risks effectively. By utilising this tool, we ensure that all facilities meet the highest standards of sustainability, reinforcing our leadership in sustainable finance,” said KCB.
“Most of the projects assessed have been categorised as Category B (medium impact), indicating a moderate level of environmental and social risks.”
Aside from disbursing loans for projects that are less harmful to the environment or aimed at playing a part in revitalising degraded areas, the bank says it is growing internal capacity for employees to understand different aspects that come with green finance.
“In 2024, 86 per cent of KCB Group staff successfully completed an e-learning course on green lending, a critical milestone that underscores the Bank’s unwavering commitment to sustainability and environmentally responsible financial practices,” said KCB.
Kenyan banks are increasingly coming under pressure for clear disclosure of financing to projects that could be harmful to the environment following the Central Bank’s April issuance of the Kenya Green Finance Taxonomy (KGFT), which guides banks on disclosing their exposure to climate-related risks.
CBK gave banks 18 months to put in place mechanisms to clearly disclose the impact that projects they finance have on the environment.
By Macharia Kamau