Joshua Malii: Green loan financing: Corporate bank, KCB is preparing to lend a KES.5Billion loan to an infrastructural firm in Kenya, being the first firm to receive green funds.

This comes almost two years after KCB’s accreditation in 2020 by the United Nations Green Climate Fund (GCF) for on-lending to investments and projects with a positive impact on the environment such as reduced carbon emissions.

The bank said that most of the applications it had received to finance projects supporting the latter cause were mostly from infrastructural, agricultural and building & construction sectors, albeit the bank remained obliged to keep the companies’ names undisclosed.

As the world celebrated women’s day, in an event by Global Compact Network Kenya in partnership with Nairobi Stock Exchange (NSE), United Nations (UN), Women Kenya and International Finance Corporation (IFC) Africa, KCB Group Director Marketing and Corporate affairs Rosalind Gichuru had this to say:

“The accreditation process is very long and rigorous. We are working with a number of clients going through the process. At the moment only one of whom has completed the technical assessment and we are looking to disburse the funds this year.”

The purpose of the event forementioned was to join stock exchanges across the globe and ring the annual bell for gender equality. She did not divulge details of the companies undergoing the accreditation process.

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KCB Bank was the first lender to receive accreditation from the UN for the Green Climate Fund (GCF), supporting the growth of its portfolio base under green space lending. The GCF is a fund established within the framework of the United Nations Framework Convention on Climate Change (UNFCCC) as an operating entity of the Financial Mechanism to assist developing countries in adaptation and mitigation practices to counter climate change.

The bank was accredited under the medium to large private sector category, allowing it to front projects ranging between 5Billion and 25Billion Kenya Shillings. The national treasury is the National Designated Authority (NDA) for accrediting institutions that apply for GCF funding in Kenya.

This disclosure comes more than a year after the accreditation of the bank and the slow transition of the country to a low carbon emission economy through green finance and bonds. There are concerns of default risk for investors and guarantees of yields from green finance to be used in sustainability projects.

This has seen the treasury put stringent requirements such as documents showing policies and practices meeting environmental and sustainability matters such as anti-money laundering, gender equality and whistleblowing.

KCB has been aggressive in the green funding space and supports lending to firms that want to aid in the fight against climate change. In 2021, KCB had announced plans to issue a green bond this year. It is also working with development finance institutions such as International Finance Corporation (IFC) and African Development Bank (ADB) to lend Small and Medium Enterprises (SMEs).

Therefore, SMEs can apply as one legal entity.

Climate adversity has been, for long, posing a high-risk threat to businesses. Its longevity is worrisome and actions are being implemented across the globe. As a result, investors and policy makers are requesting information from public and private companies on climate action and sustainability to assess risks and to price them in the market.