Green initiatives received half of KCB's loans in 2023 - report

East Africa's largest bank in terms of asset value allocated half of its loans went to support projects with positive environmental impacts.

According to the lender's Sustainability Report for 2023 released on Tuesday, it lent Sh615 billion out of the Sh1.09 trillion businesses engaged in efforts to cut back their carbon footprint through precise consumption to limit wastage.   

According to the report, the lender allocated Sh21.4 billion, representing 15.5 per cent of its total loans towards projects in e-mobility, climate change adaptation and mitigation, and renewable energy. 

This was an increase from 12.3 per cent in 2022 driven by the on-boarding of projects in infrastructure, transport, and manufacturing.

KCB is leading the country to seek a huge climate finance gap currently estimated at Sh11.16 trillion.

Kenya requires the amount to meet Nationally Determined Contributions (NDCS) — the country's climate change mitigation and adaptation commitments — by 2030.

According to the report, the bank's green projects portfolio encompasses renewable energy, sustainable agriculture, waste management and recycling, and climate-smart infrastructure projects.

The bank is targeting to channel 25 per cent of its loans to green projects by next year, perhaps the reason it has embarked on a broad partnership journey with like-minded entities. 

KCB Group CEO Paul Russo said the lender has become the first financial institution in Africa to assure its report through external auditors, ushering in a new era of transparency and ESG disclosures.

“We are increasing focus on sustainability and environmental responsibility. We are proud to announce the release of the first assured report, setting a new standard in ESG reporting in Africa,'' Russo said.

He added that the report confirms the Group's key performance indicators and metrics accurately reflect the bank's performance, enhancing transparency and accountability.

A notable initiative includes the bank's calculation of its financed emissions for 2023, including Scope 3 emissions, by concentrating on its primary carbon-intensive sectors.

"This is borne from a belief that by aligning business practices with sustainability principles, financial institutions can drive long-term value creation, enhance their reputation, and mitigate risks associated with environmental and social challenges.”

He added that the Group has expanded its focus to encompass 14 Sustainable Development Goals, enhancing its efforts to tackle a wide array of global challenges.

Last year, the Group planted over 300,000 trees, and the goal is to plant over 1.2 million trees in the next five years to reduce carbon footprint.

Furthermore, the bank achieved an 11.14 per cent reduction in carbon footprint intensity per staff member and increased its installation of LED lighting by 50 per cent to optimise resource usage.

“As we confront the pressing challenges of climate change, it is crucial that we all play our part. KCB’s investments in green finance, reforestation, and sustainable development demonstrate that financial institutions can lead this effort,'' Russo said.

Speaking at the event, Cabinet Secretary in the Ministry of Environment, Aden Duale said the government is committed to supporting such initiatives that align with national goals of environmental conservation, climate resilience, and inclusive growth.

He hailed KCB for staying true to sustainability, saying the Group’s socio-economic initiatives underscore the vital role of ESG factors in fostering inclusive growth.

In 2023, the bank supported 2,877 youth through entrepreneurship incubations under the 2jiajiri programme, creating 13,352 direct jobs.

It also extended Sh115 billion in loans to women-owned businesses, empowering female entrepreneurs and advancing gender equality.

The bank also disbursed Sh100 billion in loans to Micro, Small, and Medium Enterprises (MSMEs), which are essential drivers of economic development in the region.