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Kenyan banks unveiled a climate-related financial disclosure reporting template aimed at outlining how the nation’s commercial banks can effectively manage financial risks associated with climate change.
Habil Olaka, CEO of the Kenya Bankers Association (KBA), introduced the template in Nairobi, emphasizing its foundation on four fundamental pillars integral to banking operations: governance, strategy, risk management, and targets.
Olaka, speaking during the Africa Climate Week conference, highlighted that adherence to these disclosures enables banks to bolster transparency and communicate their strategies for addressing climate-related risks and opportunities.
Kenya, like several African nations, has grappled with the impacts of the climate crisis, including severe droughts, water scarcity, and food insecurity.
The financial disclosure reporting template offers guidance on how banks can conduct hazard mapping, enabling them to manage the effects of climate-related risks, such as floods and droughts, on their assets.
Paul Russo, a governing council member of the KBA, pointed out that the template incorporates risk identification and assessment tools, facilitating a reduction in commercial lenders’ energy consumption and resource wastage.
Russo emphasized that these guidelines will ensure that banks operating in Kenya maintain adequate capital reserves, enabling them to withstand extreme climate events.
Additionally, the financial disclosure reporting template directs financial institutions to disclose metrics for quantifying the carbon emissions associated with the assets they have financed for their clients.
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