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Kenya · Section 7 of 9

Sustainable finance & green regulation

The Central Bank of Kenya issued climate risk guidance for banks in October 2021 and a green finance taxonomy, with an appendix for agriculture, forestry and fishing, in April 2025. Carbon markets have had a legal basis since the 2023 amendment of the Climate Change Act. The Green Climate Fund listed 28 projects in Kenya in October 2026, and in March 2026 it approved US$43.6 million through KCB for climate-smart lending to small firms and farmers.

7.1

What is in force

The CBK Guidance on Climate-Related Risk Management of October 2021 requires banks to embed climate-related financial risks in their governance, risk management and disclosure, and asked each bank for a Board-approved implementation plan by 30 June 20221. In April 2025 CBK published the Kenya Green Finance Taxonomy, which defines green activities with technical screening criteria and includes an appendix for agriculture, forestry and fishing, together with a Climate Risk Disclosure Framework for banks23.

On the capital market, the Nairobi Securities Exchange opened a green bond segment in 2020, on which Acorn Holdings listed a five-year green bond issued in October 20194. The Climate Change (Amendment) Act of 2023 regulates carbon market projects, which must share at least 40% of aggregate earnings with communities for land-based projects and 25% for others, and the Climate Change (Carbon Markets) Regulations, 2024 (Legal Notice No. 84 of 2024, in force since 17 May 2024) set up a national carbon registry56.

Building the green-finance framework
  1. May 2016
    Climate Change Act establishes the Climate Change Fund7Law
  2. Oct 2019
    Acorn Holdings green bond issued4Market
  3. 2020
    NSE green bond market segment4Market
  4. Oct 2021
    CBK Guidance on Climate-Related Risk Management1Finance
  5. Sep 2023
    Climate Change (Amendment) Act on carbon markets8Law
  6. May 2024
    Climate Change (Carbon Markets) Regulations, 20246Law
  7. Apr 2025
    Kenya Green Finance Taxonomy and climate risk disclosure framework2Finance
  8. Jul 2025
    GCF approves DaIMA dairy programme (US$150 m, four countries)9Climate
  9. Mar 2026
    GCF approves KCB climate-smart lending facility (US$43.6 m)10Finance
Climate Change ActCap. 387A (Act No. 11 of 2016)Kenya Gazette Vol. CXVIII No. 52 of 13 May 2016, assented 6 May 2016, commenced 27 May 2016
The Act establishes the Climate Change Council, the Climate Change Directorate and the Climate Change Fund, and imposes climate change duties on public and private entities, including mainstreaming into county plans711.
Kenya Law ↗Official text ↗Climate Change Laws of the World ↗
Climate Change (Amendment) ActAct No. 9 of 2023Assent 1 Sep 2023, Kenya Gazette Supplement No. 147 of 1 Sep 2023, commenced 15 Sep 2023
The amendment provides a legal framework for carbon markets, with carbon projects implemented through community development agreements recorded in a National Carbon Registry85. Land-based projects must contribute at least 40% of aggregate earnings each year to communities and non-land-based projects 25%5.
Official text ↗Climate Change Laws of the World ↗
Climate Change (Carbon Markets) Regulations, 2024Legal Notice No. 84 of 2024Kenya Gazette Vol. CXXVI No. 81 of 7 Jun 2024, commenced 17 May 2024
The Regulations set up the Designated National Authority, the role of the Climate Change Directorate, a National Carbon Registry with sector registries, and the procedure and obligations for carbon market projects6.
Kenya Law ↗
CBK Guidance on Climate-Related Risk ManagementIssued under section 33(4) of the Banking ActOctober 2021, Board-approved implementation plans due by 30 Jun 2022
The guidance requires banks to embed climate-related financial risks in governance, risk management and disclosure1. It applies to all institutions licensed under the Banking Act1.
Official text ↗
Kenya Green Finance TaxonomyCentral Bank of Kenya, first editionApril 2025
The taxonomy classifies assets, projects and activities that qualify as green and sets technical screening criteria, with a separate appendix for agriculture, forestry and fishing2. CBK published it together with a Climate Risk Disclosure Framework for the banking sector3.
Official text ↗CBK ↗
National Drought Management Authority ActCap. 388 (Act No. 4 of 2016)Kenya Gazette Vol. CXVIII No. 38 of 15 Apr 2016, assented 1 Apr 2016, commenced 21 Apr 2016. NDMA first operated under Legal Notice No. 171 of 2011
The Act mandates NDMA to coordinate all matters relating to drought risk management, including early warning and drought contingency planning1213.
Kenya Law ↗NDMA ↗
Updated first Nationally Determined ContributionUNFCCC submission, letter of 24 December 2020December 2020
Kenya committed to abate emissions by 32% by 2030 relative to a business-as-usual level of 143 MtCO2eq, at an estimated cost of USD 62 billion, of which it would mobilise 13% and seek international support for 87%14.
Official text ↗
Second Nationally Determined Contribution (2031–2035)UNFCCC submission, 20252025
Kenya aims to abate emissions by 35% by 2035 relative to a business-as-usual level of 215 MtCO2eq, up from 32% in the updated first NDC, at a cost of USD 56 billion for 2031–2035, of which 19% from domestic resources15.
MoECCF ↗
Green and sustainable finance framework
DateInstrument or eventIssuerContent
May 2016Climate Change Act No. 11 of 2016ParliamentClimate Change Council, Directorate and Fund, climate duties of public and private entities
October 2019First green bondAcorn Holdings LimitedFive-year bond at 12.25%, listed on the NSE green bond market in 2020, matured October 2024
October 2021Guidance on Climate-Related Risk ManagementCentral Bank of KenyaBoard-approved implementation plans due by 30 June 2022
September 2023Climate Change (Amendment) Act No. 9 of 2023ParliamentCarbon markets, community development agreements and a National Carbon Registry
May 2024Climate Change (Carbon Markets) Regulations, 2024 (Legal Notice No. 84 of 2024)Ministry of Environment, Climate Change and ForestryDesignated National Authority, carbon registries, project procedures, in force since 17 May 2024
April 2025Kenya Green Finance TaxonomyCentral Bank of KenyaEligible activities with technical screening criteria, including an appendix for agriculture, forestry and fishing
April 2025Climate Risk Disclosure Framework for the Banking SectorCentral Bank of KenyaDisclosure framework published with the taxonomy
March 2026GCF FP292 approvedKCB Bank Kenya (GCF direct access entity)US$43.6 million of GCF financing for climate-smart lending to MSMEs and farmers
Source: Kenya Law · NSE · CBK · Kenya Gazette · GCF — Dates as given by the issuing institution.
Green Climate Fund financing for agriculture-related projects in Kenya
GCF financing approved, US$ million (multi-country projects shown in full)
Source: GCF — GCF financing as shown on each project page, excluding co-financing. DaIMA also covers Rwanda, Tanzania and Uganda. The GCF listed 28 projects in Kenya with total financing of US$493 million in October 202618.
Cost of Kenya's second NDC
Estimated requirement for 2031–2035 by type of action, US$ billion
Source: MoECCF — Total of USD 56 billion, of which Kenya intends to finance 19% (USD 10.5 billion) from domestic resources.
Selected Green Climate Fund projects in Kenya related to agriculture
CodeProjectEntityApprovedGCF financing (US$ m)Total value (US$ m)
FP292Climate-smart solutions for hardest-to-reach MSMEs and farmers (CST Facility)KCB Bank Kenya28 Mar 202643.696.9
FP269DaIMA, Dairy Interventions for Mitigation and Adaptation (Kenya, Rwanda, Tanzania, Uganda)IFAD3 Jul 2025150.0358.0
FP255Climate-resilient agricultural value chains in the Lake Region Economic BlocFAO20 Feb 202529.250.0
FP220Africa Rural Climate Adaptation Finance Mechanism (Kenya, Rwanda, Tanzania, Uganda)IFAD25 Oct 202355.0200.0
FP113TWENDE, ecosystem-based adaptation in arid and semi-arid rangelandsIUCN8 Jul 201923.234.5
Source: GCF — GCF project pages, October 2026. Multi-country projects show the full amount.
7.2

What it means for agricultural lenders

A taxonomy that covers farming

The April 2025 taxonomy has a dedicated appendix for agriculture, forestry and fishing, which gives banks a common basis for labelling farm loans as green2.

Climate risk in bank supervision

Since the 2021 guidance banks are expected to assess climate risks in their portfolios, and agriculture held 4.6% of bank loans and 5.5% of bad loans in 2025120.

A local bank as GCF partner

KCB Bank Kenya is a GCF direct access entity, and FP292 combines a US$20.3 million guarantee, a US$15 million loan and a US$8.3 million grant for climate-smart lending1810.

Large financing needs

The second NDC estimates climate finance needs of USD 56 billion for 2031–2035, of which 19% (USD 10.5 billion) is to come from domestic resources15.

Sources cited on this page

  1. Guidance on Climate-Related Risk Management, October 2021 (PDF) — Central Bank of Kenya (CBK)verified
  2. Kenya Green Finance Taxonomy, April 2025 (PDF in ZIP, main document and eleven sector appendices) — Central Bank of Kenya (CBK)verified
  3. Kenya Green Finance Taxonomy and Climate Risk Disclosure Framework (web page) — Central Bank of Kenya (CBK)verified
  4. Green Bonds (web page) — Nairobi Securities Exchange PLCverified
  5. Climate Change Act (Kenya), document summary page — Grantham Research Institute and Climate Policy Radarverified
  6. The Climate Change (Carbon Markets) Regulations, 2024, Legal Notice No. 84 of 2024 (Kenya Law web page) — National Council for Law Reporting (Kenya Law)verified
  7. Climate Change Act, No. 11 of 2016, consolidated text (PDF, Climate Policy Radar copy) — National Council for Law Reporting (Kenya Law), via Climate Policy Radarverified
  8. Climate Change (Amendment) Act, No. 9 of 2023, Kenya Gazette Supplement No. 147 (Acts No. 9), 1 September 2023 (PDF, Climate Policy Radar copy) — Government Printer (Kenya Gazette Supplement), via Climate Policy Radarverified
  9. FP269 DaIMA – Dairy Interventions for Mitigation and Adaptation, project page — Green Climate Fundverified
  10. FP292 Scaling climate-smart solutions for hardest-to-reach MSMEs and farmers in Kenya (CST Facility), project page — Green Climate Fundverified
  11. Climate Change Act, Cap. 387A (Act No. 11 of 2016) (Kenya Law web page) — National Council for Law Reporting (Kenya Law)verified
  12. About NDMA (web page) — National Drought Management Authority (NDMA)verified
  13. National Drought Management Authority Act, Cap. 388 (Act No. 4 of 2016) (Kenya Law web page) — National Council for Law Reporting (Kenya Law)verified
  14. Kenya's First NDC (updated version), letter of submission of 24 December 2020 and NDC document (PDF, scanned) — Ministry of Environment and Forestry (Kenya), submission to the UNFCCCverified
  15. Kenya's Second Nationally Determined Contribution (2031-2035), 2025 (PDF, Climate Policy Radar copy of the UNFCCC submission) — Ministry of Environment, Climate Change and Forestry (Kenya), via Climate Policy Radarverified
  16. FP255 Transforming livelihoods through climate resilient, low carbon, sustainable agricultural value chains in the Lake Region Economic Bloc, Kenya, project page — Green Climate Fundverified
  17. FP113 TWENDE: Towards Ending Drought Emergencies, ecosystem-based adaptation in Kenya's arid and semi-arid rangelands, project page — Green Climate Fundverified
  18. Kenya country page (web page) — Green Climate Fundverified
  19. FP220 Africa Rural Climate Adaptation Finance Mechanism (ARCAFIM) for East Africa, project page — Green Climate Fundverified
  20. Bank Supervision Annual Report 2025 (PDF) — Central Bank of Kenya (CBK)verified
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