15 out of 100 loans at KCB Group target green initiatives - report

In 2023, the lender screened loans worth Sh615 billion under Environmental and Social Due Diligence (ESDD).

In Summary
  • It reduced greenhouse gas emissions by 28%.
  • Last year, the Group planted over 300,000 trees,
KCB Group head of Corporate and Regulatory Affairs Judith Sidi and Group Sustainability Manager Charllotte Obado, pose for a photo after the lender received the award for the best bank in the Sustainable Finance category during the Kenya Bankers Association (KBA), Sustainable Finance Initiatives (SFI) Catalyst Awards in 2023.
KCB Group head of Corporate and Regulatory Affairs Judith Sidi and Group Sustainability Manager Charllotte Obado, pose for a photo after the lender received the award for the best bank in the Sustainable Finance category during the Kenya Bankers Association (KBA), Sustainable Finance Initiatives (SFI) Catalyst Awards in 2023.

The biggest bank in Eastern Africa in terms of asset value, KCB Group dedicated 15 per cent of its total to bolstering its push for sustainable finance.

The bank's Integrated Report and Financial Statements for 2023 show it extended Sh615 billion worth of loans to environment-conscious businesses and partaking in efforts to cut back its carbon footprint through precise consumption to limit wastage.   

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

“We have refocused our efforts to deliberately address issues around environmental and social risk management in investment decisions to deliver a more inclusive, net-zero society for our stakeholders,” said Paul Russo, CEO, KCB Group managing director. 

"We place a strong emphasis on operating sustainably and dedicate significant resources to support our customers in integrating sustainable practices into their operations."

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. 

Last week, it signed a $95 million (Sh12.4 billion) deal withProparco, a subsidiary of Agence Française de Développement(AFD) Group to finance climate-related investment projects in Kenya on the sidelines of the 2024 Africa CEO Forum in Kigali, Rwanda. 

In a statement, the lender said it will use the funds for onward lending to projects that prioritize environmental sustainability and high social impact, particularly in the health and education sectors.

It added that 30 per cent of the credit line will be allocated to women entrepreneurs, aligning with the "2X Challenge", an initiative by G7 development institutions aimed at promoting women's economic empowerment.

Furthermore, the Bank launched the Female-Led and Made Enterprises (FLME) proposition in 2022, aimed at availing Sh250 billion in financing to these businesses over five years. 

This is a 360-degree intervention platform that seeks to grow the base of female entrepreneurs by offering more unsecured lending to address the challenges that most female customers cite as the major impediment to financing.

The proposition also prioritizes non-financial solutions through capacity-building programmes, training, workshops, mentoring, coaching, and networking opportunities through Biashara Club.

As of the end of 2023, total disbursements under FLME stood at Sh115 billion. The value of deposits stood at Sh85 billion across two million customer accounts.

The report seen by the Star shows the bank’s carbon footprint was cut by 28 percent on a deliberate push to be a net zero, carbon-emitting, tree-growing company by 2050. 

To accelerate this, it is participating in carbon offsetting initiatives such as tree-growing in partnership with schools.

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 further cut carbon gas emissions, the Group has been monitoring its resource usage since the establishment of the initial baseline in 2019 for scope 1 and 2 emissions.

It was aiming for an annual decrease of five percent.

The lender achieved a two and 10 percent reduction in electricity and water usage, respectively.

The reduction in electricity consumption was supported by the installation of LED lighting in 108 branches, solarisation of two branches and optimization of office space.

However, paper and fuel usage increased by 4 and 54 per cent, respectively.

The increase in fuel usage was due to frequent power outages experienced in 2023, which increased reliance on diesel generators across branches and increased resumption of business travel post-Covid-19 period.

"We continue to closely monitor resource usage across our branches to meet our annual reduction target of five per cent, and commitment to efficiency remains unwavering,'' the lender said in the report. 

In addition, the Group has mapped areas with frequent power outages, which increase fuel dependency.

This has seen 18 branches identified for solarisation by 2025 while others will undergo upgrades of their machinery and equipment such as data centres to ensure optimal energy efficiency.

The Group has started a process towards calculating its scope 3 emissions which entails emissions attributed to upstream and downstream activities.

In a bold stride towards sustainability, KCB has revolutionised the capabilities of its workforce, suppliers, and customers.

"The bank's commitment to ESG principles is evident in the extensive training initiatives implemented. In 2023, we trained up to 3,860 staff on ESDD processes, green lending, and climate risk management."

In 2021, KCB commenced an ambitious project to convert schools into alternative sources of cooking energy to reduce the reliance on wood fuel.

It developed an unsecured loan product for learning institutions, both private and public to take up alternative energy cooking solutions, the most popular being LPG cooking gas solution.

To incentivize the schools, the bank partnered with the KCB Foundation for a partial grant for schools.

The foundation extends a 30 per cent grant, while the bank offers the remaining balance through a loan facility.

In 2023, 72 secondary schools had benefited from the programme with the foundation contributing Sh72 million in grants

On the governance front, the bank managed to maintain a low staff attrition rate backed by a competitive employee value proposition that rewards productivity and attracts the requisite talent to deliver our strategy.

During the year under review, it had an attrition rate of 7.9 per cent compared to six per cent in 2022, of which 4.6 per cent was attrition through voluntary early retirement.

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