Kenya: CBK Gives Banks a Year to Effect Climate-Related Rules

The Central Bank of Kenya (CBK) has given all banks and mortgage finance companies one year to integrate climate risk management in their structures.

The rules, CBK said, should enable banks to integrate opportunities and risks arising from climate change into their governance structure, strategy, and risk management frameworks.

The regulator pointed out that while Kenyan banks do not highly contribute to greenhouse gas emissions, they have felt the effect of climate change through droughts, floods, and wildfires.

“The resultant socio-economic consequences ranging from loss of livelihoods, displacement, physical destruction of property, forced migration also pose significant challenges to the vision of globally shared prosperity by 2030,” it said in a statement.

The guidance will therefore accelerate the path towards integrating environmental considerations in banks’ business models.

Under the plan, banks will be required to channel their funds towards green projects( renewable energy), focus on resilient infrastructure, appropriate housing, and innovative agricultural practices.

“In addition, the banks will need to build their capacity to identify and mitigate the risks arising from climate change, It is for these reasons that the issuance of the guidance is timely,” the bank noted.