Green financing has gained more and more attention in the recent past. While the US, China, and France are the top three countries issuing green bonds at the moment, Green Bond Markets are expected to reach a value of 2.36 trillion by this year, 2023, according to the World Economic Forum.
African countries like Kenya are slowly but surely embracing and holding conversations around global environmental initiatives like green financing. To take part in this initiative and conversation, Takataka Ni Mali Foundation held panel talks during the launch of TTNM Information Center, discussing and covering the green financing topic as one of the important subjects towards environmentally sustainable projects, initiatives, and businesses.
Before going on and on about green financing, it would be appropriate to define it. Green Financing is the action of increasing the level of financial flows (from banking, microcredit, insurance, and investment from the public, private, and not-for-profit sectors) to priorities for sustainable development. One of the panelists at the launch, Mr. Vellington Abongo, the branch manager of KCB at JKIA, defined green financing as providing funding for projects that are efficient, sustainable, and environmentally friendly as well as those that encourage aspects of re-use, recycling, re-purpose, reduce, and re-furbish.
The shift to a low-carbon economy is aided by green funding because carbon emissions are one of the factors contributing to a number of environmental issues, including climate change. This is accomplished through offering incentives for investments that lower greenhouse gas emissions, protect natural resources, and advance clean energy. There are various forms of Green Financing, including but not limited to green bonds, green loans, green mortgages, and green funds.
Financial Institutions and Green Financing
The panel comprising of representatives from different financial institutions, including SBM bank and KCB bank jointly agreed that banks have also been taking part in the green agenda. Banks have been partnering with DFIs (Development Finance Institutions) who give them funds to lend to climate sensitive enterprises at lower rates. They have been offering such support to smart agriculture projects and projects that promote reduction of carbon emission and promote green buildings. Ebenezer Madi of Sustainable Inclusive Business-SIB KEPSA encouraged the Central Bank of Kenya to give incentives to banks to transfer benefits to entrepreneurs engaging in environmentally friendly businesses.
Green Financing and Mobile Money Technology
Technology is being used in practically every element of life in the twenty-first century, including in matters of the environment. Technology aids in the improvement of green financing. According to Valentine Cheruyiot of Safaricom, mobile money technology can be incorporated into Carbon Crediting. She stated that the world is moving from only awarding carbon credits to multinationals, organizations, and institutions to including individuals at the household level in Carbon Crediting. An example is the African Carbon Markets Initiative that was launched at the Cop27, in November 2022. “This would involve grocers, small scale farmers and people perceived to be of the lower economic class. They would be receiving instant pay through mobile money technology for choosing to carry out their businesses in a more sustainable way,” said Valentine.
Accessing Data for Green Financing Through Technology
Additionally, data is necessary for all forms of funding, including green financing. A crucial component of green financing, especially for stakeholders, is data. Potential investors can use it to determine eligibility for funding of various green projects. They also use data to monitor the progress of green projects that they have invested in over time. “The majority of the environmental data,” according to Valentine Cheruiyot of Safaricom, “are disintegrated.” There is neither a standardized format of collecting environmental data nor a way of analyzing it. Without this data, it becomes difficult to appropriately allocate funds. Furthermore, even investors shy away from investing in environmental projects without adequate data. This is a niche that has not yet been explored as much and should be considered by innovation technologists.
Countries should continue to have these discussions of green financing and how they can come up with policies that encourage the incorporation technology into it in order to make the process more efficient and effective.
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