In 2015, KCB embraced sustainable finance initiative guiding principles under the aegis of the Kenya Bankers Association. The initiative provides a compass for financial institutions, harmonising business objectives with economic development and socio-environmental considerations. The Star's Gilbert Koech spoke to head of corporate and regulatory affairs Judith Sidi on the strides made.
Excerpts:
How much has the bank invested in conservation?
We have the Linda Miti Initiative as one of the ways for the bank to contribute towards reducing carbon emissions. We are investing Sh12 million every year. KCB will have invested about Sh60 million in five years under the initiative.
How many trees do you plan to grow as part of the 15 billion tree agenda by the state?
Last year, we planted 314,000 trees and this year we plan to plant 320,000.
In 2022, KCB planted 10,781 trees in the first two months of Linda Miti Initiative.
How do you rally schools and communities towards this initiative?
The partnership with public schools is to ensure the trees they plant grow to maturity. We train the students to understand the importance of environmental conservation and once they learn it at an early age, it will become part of their DNA as they grow older.
All our 207 branches are partnering with schools. We have partnered with 12,684 schools to plant and nurture more than 1.8 million trees over the next five years.
Where do you get seedlings and how many are you planning to secure for this initiative?
We partner with communities and buy tree seedlings from our customers, especially those in women's groups. We also partner with persons living with disabilities. So what we have done, is ensure our branch managers coordinate with the community to buy seedlings.
Which tree species do you promote?
What use seedlings relevant for that area. For Coast, they work with mangroves. In Central region, they prefer fruit trees. The choice ranges from region to region. We encourage them as much as possible to pick what is indigenous and what is relevant to the place, because that will also assure the maturity of the trees.
Do you involve experts such as the Kenya Forestry Research Institute, and the Kenya Forest Service when undertaking these initiatives?
Our branch networks work closely with the Kenya Forest Service and the Kenya Forestry Research Institute officials. They help them identify the right seedlings.
As part of your conservation efforts, what standard operating procedures do you have to ensure you do not finance projects that harm the environment?
We have what we call environmental and social due diligence. This helps the bank manage its risks in any facility that we give to a customer that has the potential to harm the environment. We have various sectors: manufacturing, environment, transport and agriculture. We look at all cases to see where the risks are. When our relationship managers go to our clients and before they approve loans, they are able to assess. We have a criteria that we use. We use IFC aid performance standards to evaluate and categorise the project into high-risk, medium-risk and low risk.
What initiatives do you have to adopt circularity as a bank?
The other initiative is resource consumption in which we monitor our usage of water, paper, electricity and fuel. Basically, that helps us to see if we have a high utilisation of water and what actions we can take to save water and electricity. That helps us manage our resources internally. It's not just in Kenya, but we look at it in all the markets in which we operate.
We also have our green facility that we give to customers. We have customers doing projects where they want to instal solar power.
We have seen a lot of opportunities, especially in transport. We have seen a lot of opportunities in agriculture, manufacturing and energy.
What are some of the strategies that the bank has put in place to enhance sustainability?
Part of our strategy for this year is to manage our sustainable development goals. The bank has adopted 14 sustainable development goals, which we monitor every year to see how we are performing.
The first SDG is the one on no poverty, zero hunger, gender equality, clean water and sanitation, decent work and economic growth, industry, innovation and infrastructure. The others are reduced inequalities, sustainable cities and communities, responsible consumption and production, climate action, peace, justice and strong institutions, and partnerships for the goals. So every division has one of the elements they support under that pillar.
We also have climate risks, which we are going to be monitoring. We have adopted the task force for climate related disclosures, where we are looking at our fiscal risks, our liability risks and transitions in our business and the way our customers do business. One of the things that we are doing this year is to evaluate our loan book.
What we are hoping is that out of the assessment of that loan book, we must have a decarbonisation strategy for sectors that are high emitters. And that decarbonisation strategy is what will inform our net zero commitments to reduce our carbon emissions to zero by 2060.
The next one is the task force for nature, as we are talking about biodiversity, so all that will be part of that assessment. Those risks will be looked at in our book to see which sectors have a higher risk in terms of destruction of biodiversity, nature and what plans we have in place to address them with timelines.
Green lending is a very big part of the bank's business. Our corporate and retail part of our assessment with customers is to look at the other opportunities in terms of green in their portfolio they can take advantage of and implement. We have been doing that since 2022, and so far, our green book has increased by 30 per cent.
KCB has been accredited under the Green Climate Fund. How many projects have you received and what do you look at?
Whatever projects you are doing should not have any negative carbon emissions for the environment. We have two projects-one on SME and the other on e-mobility. Those are the two projects being reviewed, so once we get approval, we shall be able to implement them.
