A new report by the World Wide Fund for Nature (WWF) and KPMG East Africa indicates that banks across eight African countries are making gradual but steady progress in embedding sustainability into their operations, policies, and risk management frameworks.
The report, known as the Sustainable Banking Assessment (SUSBA), was discussed on a webinar with The Kenyan Wall Street. Jane Waiyaki — Senior Manager, Sustainable Finance in Africa and Europe at WWF, and Tracy Lane, Associate Director for Climate Change, Renewable Energy, and Sustainability at KPMG East Africa evaluate ESG maturity of financial institutions in Kenya, Tanzania, Namibia, Zambia, South Africa, Ghana, Nigeria, and Cameroon by relying exclusively on publicly disclosed data, examining 78 indicators across six thematic areas: purpose, policies, processes, people, products, and portfolio.
Findings show that South Africa and Kenya lead the region in ESG integration, with stronger disclosures, alignment of business strategy with sustainability objectives, and dedicated resources supporting implementation. In contrast, other countries display more fragmented or nascent efforts, with ESG considerations often addressed only at the level of individual products or initiatives.
“What we do within the finance practice is really to look at the role of financial institutions and regulators in really shifting to green investments and nature-positive investments,” Jane Waiyaki said.
Regulation emerges as a major driver of progress. Where financial regulators or central banks have introduced sustainability guidelines or frameworks, banks demonstrate more structured approaches and clearer ESG governance. In some markets, the absence of such regulation corresponds with limited disclosure and weaker sustainability integration.
In Kenya, the Central Bank has implemented phased guidelines on climate risk disclosure, starting with tier-one banks. Such frameworks are prompting banks to assess climate-related risks within their portfolios—a process that often spurs deeper institutional shifts once the scale of exposure becomes evident. Broader international standards, such as the IFRS’s S1 and S2 sustainability disclosure rules, are also gaining traction across East Africa.
“Regulation has proven to be a very important factor in how banks perform in assessments. This serves as a pointer to the financial sector in various countries: regulation can significantly enhance sustainability practices. While banks may eventually embark on this journey on their own, it could take much longer. Regulation can fast-track progress and move things forward much more quickly than if left to market forces alone,” Tracy Lane said.
As regulators and investors push African banks to embed sustainability into their operations, depositors, particularly high-net-worth individuals, are emerging as a quiet but potent force in the ESG equation. With more individuals becoming aware of the climate and nature-related risks tied to financial decisions, questions are now being asked not just about profits and interest rates, but about transparency and responsibility.
Banks that lag behind in ESG disclosures and climate risk assessments risk losing sophisticated clients who are increasingly aligning their personal capital with broader sustainability goals. These clients are in favor of financial institutions that offer green finance products or who integrate ESG factors into lending decisions.
“The depositor can use their voice and power as a shareholder to push their agenda and encourage the banking sector to embed environmental and social aspects into everything they do. It’s good for everyone — for you as a depositor, for the resilience of your funds, and for how those funds are invested. Using that power is crucial,” Jane Waiyaki said.
WWF is deepening its engagement with African financial institutions by going beyond diagnosis to implementation. In Kenya, that means embedding sustainability not just in public commitments, but directly into bank operations; through strategy, portfolio review, capacity building, and regulator alignment.
Rather than offering abstract recommendations, WWF has adopted a hands-on approach, working alongside individual banks to interpret and act on environmental and social (ENS) integration. The effort begins with internal capacity-building, enabling banks to map sector-specific risks and begin phased transitions.
Lenders are encouraged to focus on high-risk sectors in their portfolios—such as agriculture or mining—developing targeted transition plans with clear milestones rather than attempting an overhaul in one stroke.
In parallel, WWF is also lobbying regulators and central banks, whose influence has been shown to correlate with stronger ESG performance across markets. Kenya and South Africa, which have both made strides on financial sector regulation tied to sustainability, serve as examples of where supervisory guidance can drive measurable change.
This double-pronged strategy, working within both institutions and regulatory frameworks, seeks to elevate the sector as a whole. In Kenya, the Kenya Bankers Association has emerged as a key convening platform, offering sector-wide training and opening access to international initiatives such as the Glasgow Financial Alliance for Net Zero. These collective efforts aim to standardize understanding and create peer pressure, pushing lagging institutions to keep up with the pace.
“There’s a lot of opportunity to look sector by sector, each has different impacts, risks, and opportunities. The agriculture sector is different from minerals and mining, which is different from energy. It’s important to understand which sectors you’re working with, who you lend to, the risks they face, how that aligns with your commitments, and what tailored products you can offer them,” Tracy Lane said.
The discussion also emphasized that banks can no longer afford to treat ESG issues as isolated from core credit and investment decisions. By incorporating environmental and social considerations into their credit policies, institutions position themselves to lend more responsibly, foster financial inclusion, and catalyze growth in green business sectors.
Blended finance emerged as a critical enabler for banks looking to support sustainability transitions, especially in capital-intensive or high-risk sectors such as mining and cement. By combining concessional and commercial financing, blended models can lower risk thresholds and incentivize innovation. These approaches not only help companies shoulder initial investment costs but also allow banks to engage with newer, more experimental technologies that could drive sectoral transformation.
“I think this is where blended finance really helps. Sometimes you need patient capital or concessional capital to start the process. Embedding Environmental and Social (E&S) considerations differs across industries. Some sectors — like mining or cement — may take much longer due to the complexity involved,” Jane Waiyaki said during the webinar.
As the financial sector evolves, institutions are being encouraged to treat sustainability as a dual benefit strategy; mitigating risks while unlocking new revenue streams. With the availability of frameworks like the Sustainability Standards and Certification Initiative (SSCI), which outlines clear indicators and pathways, institutions have practical tools to guide their ESG integration.
