CENTRAL BANK OF KENYA
EUROPEAN UNION-KENYA GREEN DIPLOMACY CONFERENCE
Remarks by Dr. Patrick Njoroge
Governor, Central Bank of Kenya
Tuesday, May 11, 2021
As Prepared For Delivery
Excellencies, Ladies and Gentlemen:
I am pleased to be with you today and grateful to the organizers for arranging this
important conference. We meet at an important conjucture, where the ravages of floods,
droughts and other natural catastrophies continue to impact Africa, Kenya included,
despite contributing the least to global emissions. We also meet as the global discourse
increasingly shifts to recovering from the coronavirus (COVID-19) pandemic and
restoring the livelihoods shattered by the pandemic. Transitioning to a green economy
will be at the heart of sustainable growth and shared prosperity for our citizens.
At the Central Bank of Kenya (CBK), our vision is for a banking sector that works for
and with Kenyans. The sector should not only provide financial services, but should also
ensure they meet the needs of customers while also being aligned to environmental,
social and governance considerations. In a nutshell, we aspire for a world where all
financial services are green. And each step brings us closer to that goal.
What have we achieved so far towards realizing this vision? I will highlight three
milestones.
• First, in 2015, the Kenya Bankers Association (KBA) launched the Sustainability
Finance Initiative (SFI). The SFI is aimed at raising awareness on environmental,
social and governance risks and financing within the Kenyan banking sector. KBA
through SFI has set-up a comprehensive online training designed to enable financiers
to create long-term value for the economy, society and the environment. Currently,
38 banks are participating in the training and over 30,000 bankers have been enrolled.

• Second, the first corporate green bond in East and Central Africa, issued by the
Acorn Group, was listed at the Nairobi Securities Exchange (NSE) in January 2020.
The bond was admitted on the International Securities Market (ISM) segment at the
London Stock Exchange (LSE) in January 2020.
• Third, in November 2020, KCB Bank, Kenya’s largest bank was accredited by the
United Nations Green Climate Fund (GCF) as the first financial intermediary of the
implementation of green financing in East Africa. As you are aware, the GCF is the
world’s largest climate fund, mandated to support developing countries raise and
realize their Nationally Determined Contributions (NDC) ambitions towards lowemissions, climate-resilient pathways. It is a critical element of the historic Paris
Agreement.
While acknowledging these milestones, a lot more needs to be done to green Kenya’s
financial system. Accordingly, in this Year of Climate Action in the lead up to COP-26,
we will work with the banking sector to develop guidelines on climate risk assessment
and embedding climate related financial reporting disclosures in the financial sector.
Green finance presents significant opportunities to banks and other financiers. However,
as regulators, we must always be alive to climate risks. Climate risk is a growing threat
to the financial sector from physical risk to the loan portfolio arising from inter alia
floods and drought. Further, transition risk may arise from the move to clean energy with
abandonment of previous well entrenched energy sources such as coal. Bank customers
may therefore be left with obsolete stranded assets that were used to secure loans.
We must therefore provide guidance to banks on how to identify, measure and mitigate
climate risks. Further, as a regulator we need to incorporate climate risk in our prudential
surveillance framework as we pursue our core mandate of financial stability.
On disclosures, we do not intend to reinvent the wheel but rather draw from the Task
Force on Climate-related Financial Disclosures (TCFD or Task Force). The Taskforce
designed a set of recommendations for consistent disclosures that will help financial
market participants understand their climate-related risks. Beyond the disclosures, the
structuring of the recommendations around the core institutional elements of governance,
strategy, risk management and metrics and targets will embed integration of climate
related risks and opportunities in banks.

In our climate action agenda for Kenya’s banking sector, we cannot walk alone. In the
words of a proverb, if you want to go far, go together. We will strive to walk with others
on the same path, but who are further ahead. In this regard, collaboration with the
European Union (EU) and in particular the European Investment Bank (EIB) is pertinent.
We note the EIB’s transformation to being the EU’s Climate Bank with an associated
Climate Bank Roadmap-2021-25.
EIB has been actively supporting Kenya’s private sector development through the
provision of medium to long term funding to commercial banks for on-lending to Small
and Medium Enterprises (SMEs) and microenterprises. In the past 10 years, EIB has
availed over Euro 300 million to Kenyan banks to support critical sectors including
agriculture, tourism, manufacturing, transport, construction, health and education.
We look forward to continued support from the EIB to Kenyan commercial banks as they
emback on the climate action journey. The support required will also include technical
and advisory support as we green our financial system.
We remain committed to walking with our development partners including the EU,
private sector and other stakeholders to ensure that Kenya stays at the forefront of
innovation in green finance in Africa.
I look forward to the outcomes of this important conference as we build global collective
momentum in this Year of Climate Action.
Thank You