CBK’s Commitment to Greening Kenya’s Financial Sector

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The Central Bank of Kenya (CBK) has reaffirmed its dedication to promoting sustainability in the Kenyan financial sector. It is urging industry stakeholders to adopt the guidelines on managing climate-related risks.

The guidelines, issued to commercial banks in October 2021, are designed to help banks integrate climate risk considerations into their governance, strategy, risk management, and disclosure practices.

Dr. Kamau Thugge, Governor of the Central Bank of Kenya (CBK), noted that progress has been made in implementing these guidelines, but there is more work to be done to consolidate them and make Kenya an attractive green finance hub.

The CBK is currently developing a green finance taxonomy that will identify environmentally friendly activities, investments, and projects. Additionally, a disclosure framework for banks will align with international standards, including those set by the International Sustainability Standards Board (ISSB).

Dr. Thugge emphasized that the transition to a green, low-carbon, and climate-resilient economy offers opportunities not only for corporations but also for Micro, Small, and Medium Enterprises (MSMEs) and households.

“We believe these reforms will enhance transparency in green finance and attract domestic, regional, and international investors to support Kenya’s transition to a green, low-carbon economy,” he stated.

Dr. Thugge revealed that CBK became a member of the Network of Greening Financial Systems (NGFS) in April 2022, a network comprising over 100 central banks and financial regulators.

The NGFS aims to strengthen the global response to meet the goals of the Paris Agreement and enhance the financial system’s role in managing risks and mobilizing capital for green and low-carbon investments within the context of sustainable environmental development.

Dr. Thugge emphasized the collaborative effort between central banks and other stakeholders at national, regional, and international levels to combat climate change. He expressed satisfaction that representatives from regional central banks participated in the forum.

He concluded by expressing confidence that, building on the ACS and the Forum, Africa’s stance at COP 28 would be stronger than ever before. Dr. Thugge also thanked the International Finance Corporation (IFC) for co-hosting the ACBF.

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