This archive report was first published on 18 October 2021.
On October 18, 2021, the Central Bank of Kenya (CBK) issued a directive requiring all banks and mortgage finance companies to integrate climate risk management into their structures within a year.
This move aims to enable banks to incorporate opportunities and risks arising from climate change into their governance structure, strategy, and risk management frameworks.
Although Kenyan banks do not significantly contribute to greenhouse gas emissions, they have felt the effects of climate change through droughts, floods, and wildfires.
CBK noted that the resultant socio-economic consequences of climate change, including loss of livelihoods, displacement, and physical destruction of property, pose significant challenges to achieving global prosperity by 2030.
Under the new guidelines, banks will be required to channel their funds towards green projects, focus on resilient infrastructure, and promote innovative agricultural practices.
Additionally, banks will need to build their capacity to identify and mitigate the risks arising from climate change.
