Equity Group has committed not to lend to any coal-related projects, with the policy prompted by the International Finance Corporation (IFC) that has just acquired a 6.71 percent in the country’s largest bank.
Equity’s new anti-coal policy comes as the country prepares to exploit the commodity, with major quantities discovered in Kitui County’s Mui Basin.
Equity Group #ticker:EQTY has committed not to lend to any coal-related projects, with the policy prompted by the International Finance Corporation (IFC) that has just acquired a 6.71 percent in the country’s largest bank.
The international financier is leveraging its capital to fund environment-friendly ventures and block financing of polluting industries in an effort to counter climate change.
Equity’s new anti-coal policy comes as the country prepares to exploit the commodity, with major quantities discovered in Kitui County’s Mui Basin.
“Through this equity investment, Equity Group commits to zero lending for coal-related projects such as the development or expansion of coal-fired power plants, coal mines, transportation assets used exclusively for coal,” IFC and Equity said in a joint statement.
The bank will also refrain from funding any utility company that generates more than 20 percent of energy or revenues from coal, or have an annual coal production of 10 million tonnes or more, or have an installed coal-fired capacity of 5,000 megawatts or more.
Burning coal is estimated to account for nearly half of carbon dioxide emissions and 72 percent of greenhouse gas emissions from the electricity sector worldwide.
Bamburi Cement #ticker:BAMB is among the major manufacturers that use coal to fuel production.
Equity joins other African banks that have developed anti-coal policies on request from shareholders and investors, a trend that started in the developed economies.
Standard Bank of South Africa earlier adopted a policy that made it more selective in the coal projects it can finance, with a focus on limiting emissions.
Kenya’s proposed 1,050MW coal power plant in Lamu collapsed after critical partners, including financial institutions and General Electric withdrew their support.
IFC acquired its Equity stake from Britam #ticker:BRIT and has tightened its commercial ties with the bank by mobilising major loans to be on-lent through its subsidiaries in the region.
The global financier and its partners on Tuesday announced it has signed a deal to lend a total of $165 million (Sh19.1 billion) to the bank.
IFC will provide $50 million while UK fund British International Investment will provide $65 million. Another $65 million will come from Symbiotic, Responsibility, and FMO.
The new loans bring total credit marshalled from IFC to $300 million (Sh34.7 billion).
