Kenya Green Finance Taxonomy Explained: What Banks and Firms Need

Updated 2 November 2026

The Kenya Green Finance Taxonomy (KGFT) is the Central Bank of Kenya’s official rulebook for deciding which loans, investments and business activities count as “green”. CBK released it on 4 April 2025 for the banking sector, together with a Climate Risk Disclosure Framework. An activity is taxonomy-aligned only if it makes a significant contribution to climate change mitigation or adaptation, does no significant harm to other environmental objectives and meets minimum social safeguards. For businesses, the practical effect is that banks now need evidence, not just a label, before they book a loan as green.

Updated November 2026. Based on CBK’s April 2025 public notice and the Kenya Green Finance Taxonomy, first edition (April 2025), published on centralbank.go.ke.

What the Kenya Green Finance Taxonomy is

A green finance taxonomy is a classification system that defines a minimum set of assets, projects, activities and sectors that can be called environmentally sustainable. CBK says the KGFT is meant to help institutions evaluate and classify their economic activities according to how far they support or hinder climate objectives and the move to a low-carbon economy.

Key facts from CBK’s documents:

It builds on CBK’s Guidance on Climate-Related Risk Management, issued to banks in October 2021. CBK reviewed banks’ progress against that guidance and found they lacked a standard definition of what qualifies as green, which is the gap the taxonomy fills.

Why it matters: Kenya’s climate finance gap

The KGFT notes that the funding needed to deliver the mitigation and adaptation actions in Kenya’s updated NDCs is estimated at US$62 billion. Kenya has committed to mobilise about 13% of that (around US$8 billion), with about US$54 billion expected from international support and the private sector. A common definition of green is meant to make it easier for local and foreign lenders to channel money into Kenyan projects and to cut the cost of labelling green loans and bonds.

The 11 priority sectors in the Kenya Green Finance Taxonomy

CBK chose priority sectors using their share of GDP, foreign direct investment, private sector credit and greenhouse gas emissions. Activities are coded using the Kenya Standard Industrial Classification (KeSIC).

1. Manufacturing (for example cement, aluminium, iron and steel, fertilisers, batteries)
2. Agriculture, forestry and fishing
3. Mining and quarrying
4. Electricity, gas, steam and air conditioning supply
5. Water supply, sewerage, waste management and remediation
6. Transportation and storage
7. Real estate activities
8. Construction (including construction of new buildings and building renovation)
9. Information and communications
10. Financial and insurance activities
11. Wholesale and retail trade

Some listed activities, such as manufacture of glass, paper and batteries, do not yet have technical screening criteria in the first edition, so they cannot be assessed as aligned until criteria are added.

The three tests every green activity must pass

• Make a significant contribution to at least one objective: climate change mitigation or climate change adaptation, measured against the activity’s technical screening criteria.
• Do no significant harm (DNSH) to the other environmental objectives, such as water, pollution and ecosystems.
• Meet minimum social safeguards, grounded in Kenyan law including the Constitution, the Employment Act 2007 and the Labour Institutions Act 2007.

The result is binary: an activity is either taxonomy-aligned or it is not.

The seven-step alignment check

1. Understand the three principles above.
2. Decide which objective the activity aims to contribute to.
3. Check whether the activity is listed in the taxonomy’s catalogue of sectors and activities.
4. Test it against the technical screening criteria for that objective.
5. Test it against the DNSH criteria.
6. Confirm it meets the minimum social safeguards.
7. Conclude and disclose the result as a financial metric, such as the share of revenue, turnover or spending that is aligned.

The taxonomy also sets a grandfathering rule: activities that were fully aligned under the first edition keep that status if later editions change the criteria, and disclosures must state which edition they are reported against.

What this means for businesses seeking green loans

• Expect more questions. A bank booking your solar, green building or clean transport loan as green will need data that shows the project meets the technical criteria, not just a description.
• Keep records of energy use, emissions, permits, environmental assessments and labour practices, because DNSH and social safeguards are part of the test.
• Know your KeSIC activity. Matching your business to the right activity code is step three of the process.
• Link it to reporting. Firms already preparing sustainability reports, like the Safaricom 2026 sustainable business report, can reuse much of the same data.

Projects selling carbon credits sit under a separate regime; see how to apply for carbon credits in Kenya. For the renewable energy market that many green loans fund, see Kenya’s off-grid solar sales and how Safaricom cut diesel costs with solar.

The Climate Risk Disclosure Framework

Released alongside the taxonomy, the CRDF helps commercial banks collect and disclose climate-related information in a consistent, comparable way. CBK says it is aligned with IFRS S2 on climate-related disclosures and the Basel Committee’s principles on climate-related financial risks. For investors, it gives the information needed to judge how climate change affects a bank’s lending book.

Frequently asked questions

What is the Kenya Green Finance Taxonomy?

It is the Central Bank of Kenya’s classification system for deciding which economic activities and financing count as green or environmentally sustainable. CBK released it on 4 April 2025 for the banking sector.

Who must use the KGFT?

The first edition is designed for the banking sector. CBK says companies, project developers, policymakers and other financial institutions can also use it, and later editions are intended to cover the wider financial sector.

Which objectives does the KGFT cover?

Climate change mitigation and climate change adaptation. Biodiversity and other environmental objectives are to be added in future updates.

How many sectors are in the Kenya Green Finance Taxonomy?

Eleven priority sectors, from manufacturing and agriculture to construction, ICT, financial services and wholesale and retail trade.

Is the KGFT based on the EU Taxonomy?

Yes. It uses the EU Taxonomy for Sustainable Activities as a reference but is adapted to Kenya’s NDCs and national climate policies.

Sources: CBK, Issuance of the Kenya Green Finance Taxonomy and Climate Risk Disclosure Framework (4 April 2025); Kenya Green Finance Taxonomy, first edition, April 2025.