A survey by PwC Kenya on Chief Executive Officers shows that a majority of the industry leaders are making great strides in climate action.

PwC report shows that already, 60 percent of the captains of industry are focusing on improving energy efficiency. About half are enhancing climate-friendly products, services, and technology, while 42 percent of CEOs are investing in upskilling or re-skilling their workforce for climate-driven changes.

Additionally, 14 percent of CEOs are actively involved in selling products, services, or technologies supporting customers' climate-resilience efforts.

One of the notable moves in climate action in Kenya includes the August 2023 commitment by NCBA Group to mobilize Kes30 billion for green and sustainable financing by 2030.

NCBA has identified sustainability as one of its priorities and has set 15 ambitious commitments by 20230; notably to grow 10 million trees through strategic partnerships with private actors and government, fully eliminate single use plastic, ensure 100 percent waste recycling, green its supply chain and investing significantly in deploying EV charging stations across the region.

In September last year, telco giant Safaricom announced the closure of a multi-billion Sustainability Linked Loan (SLL) to strengthen its Environmental, Social and Governance (ESG) agenda. The Kes15 billion deal, which is upscalable to Kes20 billion, is the largest ESG linked loan facility ever undertaken in East Africa, and the first of its kind for Safaricom as well as the first Kenya Shilling-denominated SLL in the market.

"This year alone, we have advanced about Kes60 billion in sustainable finance, comprising components of green finance as well as inclusive finance," said Absa CEO, Mr Abdi Mohamed, during the release of the bank's Sustainability Report for the fiscal year ending December 2022.

"We aim to double this figure to more than Kes120 billion in the next two years. You can expect to see us playing an even bigger role in renewable energy, green building, and climate-smart agriculture sectors," Abdi added.

While the momentum is encouraging, the transition to climate-friendly investments is not without challenges, the PwC Kenya study shows. Considerable upfront expenditures for renewable energy infrastructure, energy-efficient technologies, and sustainable practices pose financial barriers, PwC says.

Furthermore, regulatory changes and evolving consumer preferences add complexity to the shift towards a low-carbon economy.

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Kenya's energy market

Edward Kerich, Partner and Environmental Social and Governance Leader at PwC Kenya, stated, “Climate-friendly investments often require significant upfront expenditure for renewable energy infrastructure, energy-efficient technologies, or sustainable practices. In addition, the transition to a low-carbon economy will involve regulatory changes and shifting consumer preferences. This uncertainty can create volatility in the market for climate-friendly investments and a higher perceived risk for investors.”

The 2023 Kenya Country Climate and Development Report (CCRD) released by the World Bank highlights the critical role of renewable resources in Kenya's energy market, constituting 90 percent of the country's electricity generation.

The report also warns of the substantial economic repercussions of inaction on climate change, with a potential dampening effect on real GDP ranging from 1.25 percent to 2.4 percent by 2030 and escalating to 3.61 percent to 7.25 percent by 2050.

This necessitates a proactive approach to climate actions, and Kenyan CEOs are actively engaged in various initiatives.

Despite challenges, there is a growing acknowledgment of the long-term value associated with climate-friendly investments.

As technology advances, costs decline, and market preferences evolve, the financial performance of such investments is poised to improve over time, according to the PwC Kenya Partner and Environmental, Social and Governance Leader.

However, Kenyan CEOs face common barriers in decarbonizing their business models, echoing sentiments on a global scale. Key obstacles include a lack of demand from external stakeholders (46 percent) and regulatory complexity (44 percent).

While climate action may not top the list of immediate priorities for Kenyan CEOs, it is undeniably a crucial component for both their business models and the broader economy. Therefore, as Kenya grapples with the challenges posed by climate change, the imperative for decisive action becomes evident for sustained economic growth.

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