Banks in Kenya have 18 months to start disclosing their climate-related exposure arising from the financing they give to individuals, businesses, and projects.

This initiative’s objective is to prompt banks to reduce activities that contribute to climate change while simultaneously supporting endeavors that foster sustainability and a climate-resilient economy.

The Central Bank of Kenya introduced the Kenya Green Finance Taxonomy (KGFT) on April 4, 2025, to guide this mandatory disclosure. The taxonomy aims to assist banks in distinguishing between financial assets with high and low greenhouse gas emissions, enabling them to make informed decisions when selecting green investments.

Additionally, this measure will help combat greenwashing, a deceptive practice in which organizations overstate their environmentally friendly investments.

The KGFT serves as a classification system that identifies environmentally sustainable investments and those that are not. By adhering to this framework, banks can align their financing activities with sustainable practices and contribute to a greener future.