Absa Bank Kenya is increasing its focus on sustainable lending, with more than Ksh 200 billion channelled into green projects and inclusive financing over the past five years as the bank seeks to make sustainability a bigger part of its business.

The lender disbursed Ksh 55.3 billion in sustainable finance in 2025 alone, including Ksh 6.5 billion for climate-related financing, according to figures shared during the GreenShift Forum 2026 in Nairobi.

Absa now wants sustainable finance to account for at least 30% of its total portfolio by 2030, setting a longer-term target for how it allocates capital to businesses and projects with environmental and social benefits.

The strategy comes as companies face growing pressure to consider how they use energy, manage waste, serve communities and respond to climate-related risks. However, making these changes often requires money that businesses, particularly smaller firms, may not have readily available.

For banks, the opportunity lies in financing these investments while ensuring that borrowers can repay their loans and projects remain commercially viable.

Small Businesses in Focus as Green Financing Expands

A significant share of Absa’s sustainable finance has gone to small and medium-sized enterprises (SMEs), women in business and young people, alongside initiatives aimed at addressing climate-related risks.

The focus on smaller enterprises is important because many businesses need financing to expand their operations, purchase equipment or adopt more efficient technologies. The cost of making such changes can be a barrier, even when the investment could improve their operations over time.

For example, a business seeking to reduce its energy costs may need to invest in more efficient equipment or alternative energy sources. The potential savings may be attractive, but the upfront expense can delay the decision.

Sustainable finance seeks to bridge this gap by directing capital towards investments that combine business objectives with environmental or social benefits.

Absa Bank Kenya’s Head of Sustainability and Corporate Affairs, Charles Wokabi, said companies needed to integrate sustainability into their core operations rather than treat it as a separate activity.

“If you are an organisation that is serious about sustainability, then sustainable business practices must be reflected in your core business; both in the way you manage your operations and, in the propositions, you offer to your customers,” Wokabi said.

He added that tree planting, while useful, should not be the only measure of an organisation’s sustainability efforts.

“Planting and growing trees is good, but it should not equate to your entire sustainability story,” he said.

His remarks point to a broader issue for businesses: sustainability requires decisions about how a company operates, the products it offers and the resources it uses, rather than relying on occasional environmental campaigns.

Why Absa Wants to Increase Green Lending

One of the obstacles to financing sustainable projects is the risk associated with certain investments. Some projects require substantial upfront capital, while others involve technologies or business models that lenders may be less familiar with.

Absa is looking at financing arrangements that could make such projects more attractive to banks.

Wokabi said guarantees and risk-sharing mechanisms could encourage lenders to support viable initiatives that might otherwise struggle to obtain financing.

“In the financial sector, there’s a growing need for innovative financing mechanisms that make sustainable projects more viable, including guarantees and risk-sharing arrangements that can encourage banks to expand their appetite for opportunities and initiatives that might otherwise struggle to secure funding,” he said.

Such mechanisms can help distribute potential losses among participating parties, reducing the risk carried by an individual lender. Their effectiveness, however, depends on the terms of the arrangement, the quality of the project and the ability of the business to generate sufficient returns.

For Absa, these approaches form part of its effort to grow its sustainable finance portfolio towards the 2030 target.

The bank’s Sustainability Strategy for 2026–2030 sets a goal of allocating at least 30% of its total portfolio to sustainable finance. Reaching that level will require the bank to continue identifying eligible projects and businesses while managing the financial risks attached to lending.

Green Finance Takes Centre Stage in Nairobi

The financing question featured at the GreenShift Forum 2026, held in Nairobi on October 22 under the theme Powering Kenya’s Sustainability Transformation.

Participants examined how businesses could incorporate environmental, social and governance (ESG) considerations into their operations, as well as opportunities in renewable energy, electric mobility, carbon markets and the circular economy.

The discussions also covered public-private partnerships, which can bring together government institutions and private investors to support projects requiring substantial capital or coordination across different sectors.

For Kenya, access to financing will be an important consideration as businesses explore ways to manage environmental risks, improve resource efficiency and invest in cleaner technologies.

However, the amount of money committed to sustainable finance is only one part of the picture. The quality of the investments, the businesses reached, and the results achieved will also matter in determining whether the funding delivers lasting economic and environmental benefits.

Absa’s reported disbursements provide an indication of the scale of its current activity, while its 2030 target sets out the direction it intends to take.

The challenge ahead is to ensure that sustainable finance does more than expand the figures on a bank’s balance sheet. It must also help businesses access the capital they need, support commercially viable investments and deliver measurable outcomes for the wider economy.