Last week, South Korea-based Green Climate Fund (GCF) accredited a handful of institutions across the world, among them KCB.
As the first business institution to receive the accreditation in Kenya, KCB’s newly-earned credentials should inspire similar ones among other local and private firms.
The move paves way for the lender to receive GCF funding for on-lending to green and climate-friendly projects in Kenya as well as in the region where the bank has a footprint.
This arrangement will help fill existing climate finance gaps in the economy and enable development of projects at a mass scale to offset greenhouse gas emissions – the culprit behind global warming and climate change.
It’s part of GCF’s initiative to create synergies with businesses on the ground in efforts to advance climate mitigation and resilience projects faster and sustainably across the globe through green lending. Climate finance flow has over the years remained a trickle, but such partnerships offer promise of increased activity in the years to come.
Kenya was among first seven countries whose institutions were accredited by the Green Climate Fund board for direct access of resources. KCB’s accreditation, therefore, rubberstamps not only the institution’s green finance profile but also that of the country as a potential regional leader in climate finance.
Plans are afoot to float the country’s debut sovereign green bond whose proceeds would finance eco-projects, while firms such as Acorn Holdings have already issued green bonds towards construction of student accommodation units in Nairobi.
These developments bode well for Kenya’s stature as home to UN Environment Programme (Unep) headquarters.
The accreditation came after the National Treasury nominated the lender for the credentials. KCB was then subjected to due-diligence assessment by GCF officials to ascertain its preparedness in managing climate change through green finance. This highlights the need for closer synergies between governments, businesses and development partners in triggering a green finance revolution.
On their part, commercial banks should recognise the fact that as the allocators of capital flow in the economy, they have a role to play in fuelling growth of eco-enterprises by designing green financial products as well as sustainable finance.
With the intensifying effects of climate change such as floods, heat waves, drought and forest fires, it’s not business as usual as priority shifts towards sustainable and environmentally-responsible projects and operations. Lenders have no option but to turn their loan books green as far as climate finance is concerned.
Kenya has over the years played an active role towards sustainable development goals (SDGs) and climate change advocacy. The GCF accreditation is, therefore, a plus to the country’s efforts to support sustainable growth. The country is a signatory to the United Nations Framework Convention on Climate Change (UNFCCC), as well as to Kyoto Protocol, Paris agreement, and SDGs among other global and regional frameworks geared towards sustainable development and climate action.
Worth noting is that Kenya is on course to achieving climate action goal 13 of the SDGs ahead of the 2030 global target, according to a recent study by Sustainable Development Solutions Network (SDSN). Even then challenges remain that might derail progress.
While the country has performed exceptionally well in greening its electricity generation mix through progressive and climate-smart policies, the same cannot be said of its transport and building sectors. It boasts a green energy generation mix of over 85 percent.
Unfortunately, the gains made in the power space risk being wiped out by growing levels of air pollution from automobiles emitting noxious gases from tailpipes and putting millions of lives at risk. The country’s single-digit percentage tree cover is also in need of strategic interventions, so do sectors such as waste management, water management and agriculture.
Therefore, such green financing arrangements such as GCF’s should ensure the country’s march towards a carbon neutral economy is sustainable by allocating resources to areas in need of improvement such as clean transportation, commercial forestry, waste management and green buildings.
This article was originally published by the Business Daily