CBK Launches Kenya’s Green Finance Taxonomy to Guide Climate-Aligned Finance

Introduction: Aligning Finance with Climate Action

In a historic move toward sustainable development, the Central Bank of Kenya (CBK) officially launched the Kenya Green Finance Taxonomy (KGFT) in April 2025. This taxonomy serves as a unified national framework to identify, classify, and guide financial investments toward environmentally sustainable activities.

As Kenya faces increasing risks from climate change—ranging from droughts to biodiversity loss—this launch marks a significant milestone in steering the country’s financial system toward climate-aligned growth.

What Is the Kenya Green Finance Taxonomy?

The KGFT is a classification system that defines which economic activities qualify as “green” or “climate-aligned.” Its purpose is to enhance transparency, prevent greenwashing, and direct capital toward activities that support:

• 🌿 Climate change mitigation
• 💧 Climate change adaptation
• 🧼 Pollution prevention
• 🌳 Conservation of biodiversity and ecosystems
• 🔄 Circular economy initiatives

It aligns with global standards such as the EU Taxonomy, but is tailored to Kenya’s national context, priorities, and climate commitments under the Paris Agreement.

Why the Taxonomy Matters

The taxonomy provides a critical foundation for Kenya to:

• ✅ Mobilize green investments
• ✅ Strengthen ESG compliance across industries
• ✅ Reduce climate and transition risks in the financial system
• ✅ Drive low-carbon, climate-resilient growth

By guiding both public and private sector finance, the taxonomy bridges the gap between economic development and environmental sustainability.

Sectors Covered

The KGFT applies to several priority sectors, each with detailed technical screening criteria:

Each activity is assessed on environmental performance, social safeguards, and “Do No Significant Harm” (DNSH) principles.

Key Users of the Taxonomy

• 🏦 Banks and Investors – to classify loans and portfolios aligned with green objectives.
• 🏢 Businesses and Corporates – to report sustainability performance and attract green capital.
• 🏛 Regulators and Policymakers – to design policies, incentives, and disclosure requirements.
• 🌍 Development Partners – to identify projects that qualify for climate finance.

Expected Impact on Kenya’s Economy

📈 Increased Climate Financing

The taxonomy will help channel both domestic and international capital into green projects.

🌍 Enhanced Climate Resilience

Supports the transition to a low-carbon economy while protecting natural ecosystems.

👩‍💼 Job Creation

Encourages green entrepreneurship and supports industries in renewable energy, waste management, and sustainable agriculture.

📊 Transparent Reporting

Sets standards for monitoring environmental performance and ESG disclosures.

Challenges & Considerations

Despite its potential, successful implementation will depend on:

• Capacity building for financial institutions and regulators.
• Robust data systems for tracking impact.
• Stakeholder awareness and ongoing consultation.
• Periodic updates to respond to scientific, technological, and policy changes.

Conclusion: A Blueprint for Green Finance in Africa

The launch of the Kenya Green Finance Taxonomy by CBK marks a transformational shift in how the country approaches finance and sustainability. It positions Kenya as a regional leader in aligning financial systems with global climate goals.

By offering clear, science-based criteria and a shared language for green investments, the taxonomy sets the foundation for a more resilient, inclusive, and sustainable economy.

🔍 FAQs

Q1: Who developed the Kenya Green Finance Taxonomy?
It was led by the Central Bank of Kenya in collaboration with national stakeholders and international development partners.

Q2: Is the taxonomy mandatory?
While it currently serves as a voluntary guide, it is expected to influence future regulatory and reporting frameworks.

Q3: How does it differ from international taxonomies?
While inspired by global models, it’s customized for Kenya’s environmental, social, and economic context.

Q4: Where can I access the taxonomy?
The full document is available on the Central Bank of Kenya’s website and through sector-specific appendices.