Absa enlists IFC to weed out greenwashing projects

absa enlist ifc

Absa Bank Kenya Chief Finance Officer Yusuf Omari Speaking at the Media and Investor briefing session at Norfolk hotel, Nairobi on March 18, 2024.  

Photo credit: Lucy Wanjiru | Nation Media Group

Absa Bank Kenya has enlisted the help of International Finance Corporation (IFC) to weed out greenwashing projects in its climate financing portfolio.

The IFC, the private wing of the World Bank Group, is one of the institutions that Absa had relied on to certify projects that qualify for climate financing.

Greenwashing is conveying a false impression or misleading information about how products are more environmentally sound than they are.

IFC’s certification has also been extended to the Sh6.7 billion financing deal for students’ affordable housing, one of the largest green projects financed by Absa. The facility is certified as a green building under IFC EDGE, the internationally recognised green building certification system.

“We have specific metrics that we use in terms of appraising projects to say it is a climate-financing project,” said Yusuf Omari, Absa Kenya’s Chief Finance Officer.

“They (IFC) help us in terms of the specific metrics that we use for each of the projects that we are executing. Through (that)we can be able to say that this actually qualifies us to put it as a climate finance,” added Mr Omari.

Mr Omari was speaking on Tuesday, May 28,2024, during the 59th annual meeting of the African Development Bank (AfDB) held in Nairobi.

Besides IFC, Mr Omari said Absa has also partnered with Finance in Motion which certifies agricultural projects and African Guarantee Fund.

“And all of these are just to make sure there is inclusivity in terms of climate financing projects, and especially when we look at women, youth,” said Mr Omari.

Absa, a tier one bank listed on the Nairobi Securities Exchange (NSE), wants to double its commitment to climate financing in the next three years. It has so far committed Sh60 billion to climate financing.

Projects that have received climate financing range from green building, smart farming and renewable energy.

Africa is disproportionately affected by climate change—although it is not a major emitter—, yet it has received the least climate financing, a trend that African leaders are keen to reverse.

In a bid to curb deception, the Central Bank of Kenya (CBK) published the draft Kenya Green Finance Taxonomy (KGFT) that, if accepted, would guide banks in properly classifying projects as either ‘green’ or ‘not green’. In so doing, it hopes to minimise funding to projects that harm the environment.

Absa decried the fact there is no proper policy framework from the government to attract climate financing through, for example, having tax incentives.

Under the Finance Bill 2024, the government has removed the tax reliefs given to electric motorcycles and electric buses.

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