At a glance
Environmental, social and governance (ESG) risks are rapidly climbing the agenda of East Africa's banking sector as lenders grapple with climate change, evolving regulations, cybersecurity threats and growing stakeholder expectations.
Across the region, banks are increasingly exposed to climate-related risks ranging from prolonged droughts and floods to disruptions in agricultural production and supply chains. Financial institutions are also facing heightened scrutiny from investors and regulators over sustainability disclosures, while cyber threats and social risks such as financial exclusion and inequality continue to test resilience.
Why this matters
Lender channels KSh133 billion into trade while ramping up climate finance, affordable housing and support for women-led businesses.
To mitigate these risks, banks are strengthening environmental and social risk management frameworks, integrating climate considerations into lending decisions, adopting sustainability reporting standards such as IFRS S1 and S2, and increasing financing for green and inclusive economic activities.
Against this backdrop, Stanbic Holdings Plc is positioning sustainability as a core driver of growth rather than a compliance obligation.
The lender facilitated KSh133 billion in trade in 2025, surpassing its KSh90 billion target, while directing four per cent of its total financing towards green initiatives in a move that underscores the growing intersection between sustainability and commercial performance.
According to the bank's latest sustainability report, the financing supported 5,750 local businesses to expand into regional and international markets, reinforcing Stanbic's role in enabling trade-led growth while advancing environmental and social objectives.
Green Finance Gains Momentum
As climate risks increasingly shape business and investment decisions, Stanbic expanded its sustainable finance portfolio across several sectors.
The bank advanced KSh4.5 billion in green building finance and provided KSh273 million in solar energy financing, helping businesses and households invest in lower-carbon infrastructure and renewable energy solutions.
The lender also extended KSh2.5 billion in climate-smart agriculture financing, raising agriculture's contribution to its overall loan book to 9.9 per cent. The investment comes at a time when East Africa's agricultural sector is under growing pressure from erratic rainfall patterns, rising temperatures and prolonged droughts.
Joseph Muganda, the Group Chairman, said the bank had deliberately repositioned its portfolio towards sectors capable of supporting long-term economic resilience.
"We made a deliberate strategic shift, re-orienting our portfolio toward sectors and segments that foster long-term national resilience such as green financing. We have embedded sustainability into the fabric of our daily decision-making, ensuring that performance is measured against clear targets and that our strategic direction reflects this commitment," he said.
Financing Growth Beyond Capital
Support for micro, small and medium-sized enterprises (MSMEs) remained central to Stanbic's growth strategy during the year.
The bank extended KSh288.1 million in cumulative grants and catalytic funding to MSMEs, including KSh105.73 million disbursed in 2025. The funding helped businesses access working capital, strengthen operations and accelerate expansion into new markets.
Women entrepreneurs remained a key focus area. Through its D.A.D.A programme, Stanbic has now disbursed KSh49.5 billion to women-owned businesses while onboarding 112,640 users since inception.
The initiative seeks to address longstanding barriers faced by women entrepreneurs by improving access to finance, markets, mentorship and business networks.
The lender also exceeded its supplier diversity targets, directing 15.53 per cent of procurement spending to women-owned businesses, above its target of 12.5 per cent.
Housing and Food Security Take Centre Stage
Stanbic continued to deepen its contribution to national development priorities through investments in affordable housing and food security.
The lender advanced KSh1.79 billion in affordable housing finance, supporting home ownership among emerging middle-income households and contributing to efforts to reduce Kenya's housing deficit.
The bank also participated in the transformation of the Galana agricultural project, helping create more than 500 jobs while supporting efforts to convert arid land into productive farmland.
The initiative highlights the growing role of financial institutions in supporting strategic projects that combine economic returns with broader social and environmental benefits.
Strengthening Governance and Climate Risk Management
As regulators move towards mandatory sustainability disclosures, governance has become a critical pillar of ESG performance.
Stanbic accelerated climate risk testing during the year and strengthened its sustainability reporting capabilities. In a significant milestone, the Board approved a foundational set of sustainability and climate-related metrics aligned to IFRS S1 and IFRS S2 disclosure requirements.
The lender's governance framework also reflects a commitment to diversity and independent oversight. Independent directors account for 29 per cent of the Board, while women hold 43 per cent of Board seats.
The Board retains ultimate responsibility for sustainability performance and oversight.
Joshua Oigara, the Group Chief Executive, said the bank's Environmental and Social Risk Management framework plays a critical role in safeguarding both the institution and its clients.
"Our Environmental and Social Risk Management framework, which mandates screening for all loans above USD 1 million, provides a tool to enhance our loan portfolio. It protects us and our clients from financing projects that are environmentally and socially fragile, hence building a more resilient book that can weather economic storms," he said.
Investing in Communities and Future Skills
Beyond financing, Stanbic expanded its social impact initiatives across communities.
The bank planted 100,000 indigenous trees and restored more than 100 hectares of degraded land in the Mt Kenya region. It also supported Community Forest Associations, benefiting 554 community members who collectively earned KSh5 million through conservation-related activities.
Recognising the growing importance of digital skills in the modern economy, the lender equipped 100,000 young people with digital competencies through 139 training centres across eight counties.
Priscilla Were, Head of Sustainability, said the bank remains focused on creating shared value for both shareholders and communities.
"To deliver on our strategy and advance our purpose, we are focused on tackling critical challenges in Kenya and South Sudan while also contributing to greater prosperity for our people. We are able to generate strong financial returns for our shareholders and create meaningful social, economic and environmental value for the communities we serve," she said.
As ESG risks become increasingly material to business performance, Stanbic's results suggest that sustainability is no longer a peripheral concern for East African banks. It is emerging as a central pillar of risk management, competitiveness and long-term growth.
