Green Initiatives: African Banks and Climate Policies

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In the face of pressing climate challenges, the financial sector has become a key player in guiding the global economy towards sustainability. While traditionally seen as lagging, African banks are now advancing rapidly. This is marked by the adoption of green initiatives, climate-friendly policies, and a shift in spending patterns—away from fossil fuels.


A Rainforest Action Network report highlights global banks’ role in financing fossil fuel projects since the Paris Agreement in 2016. Despite international efforts to reduce greenhouse gas emissions, banks have invested an estimated $3.8 trillion in fossil fuels over this period. The world’s top banks, including US institutions JPMorgan Chase, Wells Fargo, and Citibank, and European banks such as Barclays, BNP Paribas, and HSBC, have been major financiers of fossil fuel projects, with a combined investment of over $2 trillion.


In Asia and Oceania, banks have also been major players in fossil fuel financing. Asian banks, led by institutions like the Industrial and Commercial Bank of China (ICBC) and the Bank of China, have invested around $900 billion in fossil fuels since 2016. Meanwhile, Australian banks such as ANZ, Commonwealth Bank, and Westpac have invested around $150 billion in fossil fuels since 2016.


Africa’s banks have invested an estimated $20 billion annually in fossil fuel projects, a substantial 5% of the global total. Although this figure may not measure up with the larger global figures, it is noteworthy considering the relatively smaller scale of the African banking sector.


Investment in Green Bonds

In 2023, African banks indicated a transition towards sustainability by investing approximately $2 billion in green bonds, a significant surge from previous years. This investment accounts for around 10% of their total annual investment portfolios, revealing their growing commitment to sustainability efforts. The African Development Bank (AfDB) has been a pioneer in this regard, issuing green bonds to fund renewable energy projects, sustainable water management initiatives, and climate-resilient infrastructure development.


The African Development Bank invested over $6 billion between 2016 and 2023. An investment that has supported a diverse range of projects designed to enhance climate resilience and promote low-carbon growth across Africa. The global trend towards green financing is evident, with banks in Europe, North America, and Asia making significant investments.

In 2023, European banks led the way with $150 billion invested in green bonds, followed by North American banks with $80 billion and Asian banks with $50 billion. Africa’s $2 billion investment may seem inadequate, but it represents a huge effort given the smaller size of the African banking sector. It is important to note that African banks dedicate 10% of their total investment portfolios to green bonds, compared to European banks’ 12%, North American banks’ 8%, and Asian banks’ 6%.

Key Green Initiatives by African Banks


African banks are driving sustainability through various large-scale renewable energy projects, such as the Lake Turkana Wind Power project in Kenya, which is the largest wind farm in Africa. They are also offering green mortgages with favourable terms for energy-efficient homes and loans for individuals and businesses to install solar panels and other renewable energy systems.


READ ALSO: 15 Strategic Lessons from Africa’s Thriving Tourism Sector

In addition, banks are incorporating green initiatives into their Corporate Social Responsibility (CSR) programs. For example, Ecobank has launched the “Green Business Initiative” to support small and medium-sized enterprises (SMEs) in adopting sustainable practices. Additionally, banks like Nedbank in South Africa are providing loans for sustainable agriculture projects that promote practices that reduce environmental impact and improve food security.


Despite the progress made by African banks in embracing green initiatives, several challenges still need to be overcome. Limited access to international green finance, regulatory uncertainties, and the need for capacity building are major obstacles that must be addressed to drive the continent’s sustainable development agenda and contribute to the global fight against climate change.

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