Table of Contents
Key Points:
- StanChart’s sustainable finance revenues grew ten-fold, earning KSh 1.29 billion ($9.7 million) from corporate and investment banking activities.
- The bank introduced new sustainable finance products and expanded its lending to low-carbon and sustainability-linked projects.
- StanChart ventured into carbon trading, facilitating the reduction of carbon emissions through buying and selling carbon credits.
StanChart, led by Kariuki Ngari, has achieved notable success in sustainable finance, with Standard Chartered Bank Kenya earning KSh 1.29 billion ($9.7 million) in revenues last year from its corporate and investment banking (CIB) sustainable finance business. This ten-fold growth highlights the increasing importance of sustainable finance as a major income earner for local banks.
Boost in sustainable finance revenue
Sustainable finance revenue for StanChart is derived from “green, social, and sustainable” lending activities, primarily to corporate clients whose revenues are largely generated from environmentally sustainable products and services.
The surge in these revenues reflects Kenya’s growing emphasis on green economic practices amid rising regulatory and international pressures for firms to report on sustainability.
For StanChart, income from sustainable finance was predominantly driven by lending to corporates and the investment banking business, which together accounted for more than 98 percent of such revenue last year, up from 84 percent in 2022.
The bank’s 2023 sustainability report attributes this rise to expanded lending to sustainability-linked projects and clients transitioning to low-carbon efforts, along with the introduction of new investment banking products.
Expansion of sustainable finance products
“We rolled out key sustainable finance products on the deposit side to allow our clients to deploy their cash balances towards sustainable lending linked through the Bank. We also offered clients a total of 29 sustainable funds,” stated StanChart.
Additionally, the bank has ventured into carbon trading as part of its sustainability agenda, engaging in the buying and selling of carbon credits to facilitate the reduction of carbon emissions.
StanChart recorded its first sustainable finance earnings from financial markets, totaling KSh 500 million ($3.7 million), while similar income from transaction banking increased to KSh 790 million ($5.9 million) from KSh 109 million ($819,571) in 2022. Despite a 32-percent decline in sustainable finance income from its wealth and retail banking business—from KSh 20 million ($105,266) last year to KSh 14 million ($105,266) this year — the overall growth in sustainable finance revenue is significant.
Future prospects and continued growth
Last year, StanChart’s lending for sustainable projects amounted to KSh 3.1 billion ($23 million), accounting for only 1.7 percent of its total loan book, which saw a marginal rise to KSh 177 billion ($1.3 bilion) as of December 2023. Despite the growth, sustainable finance still represents a small portion of the bank’s overall revenues, highlighting the nascent stage of the sector amid a global push for increased sustainable financing.
In 2023, StanChart’s total revenues rose by 28 percent to KSh 28.8 billion ($216 million), with income from sustainable finance constituting 4.2 percent of the bank’s total earnings, up from 0.5 percent in 2022. Investors worldwide are increasingly expecting public companies to engage in sustainability issues, including funding projects that positively impact the environment and society.
