The African Financial Alliance on Climate Change (AFAC) has on Wednesday, Nov. 10, launched its report on the state of climate risk regulation in Africa’s financial industry, at the ongoing COP26 climate conference in Glasgow, Scotland,
The Communication and External Relations Department, African Development Bank (AfDB), Gershwin Wanneburg, disclosed this in a statement made available to newsmen on Saturday, in Abuja.
Wanneburg said that getting Africa’s financial sector ready to cope with climate risks was vital for a smooth transition to net-zero emissions and resilience, according to the new report published by three global institutions.
He said that the report entitled, “Climate risk regulation in Africa’s financial industry and related private sector initiatives.” was a joint publication by the AfDB, the Global Center on Adaptation, and the UN Environment Finance Initiative.
“It proposes action areas that will enable Africa’s financial industry to implement global best practices on environmental, social and governance integration, climate-risk disclosure and green finance.”
Wanneburg said that the study assessed the state of climate risk integration in prudential, financial, regulatory, and supervisory frameworks.
“It also identifies potential levers to stimulate deeper outreach and adoption of climate risk regulations in the financial system, especially in countries that are in the early stages of the process of integrating climate risk regulations in their financial sectors.”
He quoted Anthony Nyong, Regional Director of the Global Center on Adaptation, Africa, as voicing the sense of urgency for the sector, in his opening remarks at the launch of the report.
“Forty-nine banks in Africa have over $200 billion dollars in lending across sectors with high-potential for climate risks”, Nyong noted.
Nyong was joined by panelists, Admassu Tadesse, President & CEO of Trade and Development Bank; Patty Karuaihe-Martin, CEO, NamibRe; Caesar Mwangi, CEO, ICEA Lion; and Jahan Chowdhury, In-Country Engagement Director for the NDC Partnership.
“The panel agreed that the local financial industry must deliver solutions that fit African needs, learn from global best practices and increase collaboration among peers.
“They also noted that African Nationally Determined Contributions under the Paris Agreement were often disconnected from financial sector development plans, for that reason, regulators must pay closer attention to ensure that the industry aligned with the global landscape for climate action, in order to create policy environments that can attract climate finance at scale.
“To support this mission, the Financial Sector Development Department of the AfDB is developing the Africa Financial Sector Corporate Governance initiative to provide technical assistance to banks and regulators in building their capacity to identify, assess and manage climate risks,” Wanneburg said.
Also, at the event, Chief Investment Officer at the AfDB, Sofiane Sekioua, said that African banks were vulnerable to the increasing frequency and severity of climate change shocks, unless regulators and lenders take action to mainstream these risks into their regulations and operations.
He said that by strengthening their capacity, banks would be able to build quality portfolios and mobilize climate funding, thereby increasing the flow of capital for adaptation as well as mitigation.
Vice-President for Power, Energy, Climate and Green Growth at the AfDB, Kevin Kariuki, presented a win-win scenario, in his closing remarks.
“ Global alliances making net-zero pledges represent a large pool of liquidity, and as their membership grows, they will be looking for new frontiers for green investments”, he said.
He added that Africa had the natural assets needed to get to net-zero, to close the loop, while the African financial sector has a catalytic de-risking role to crowd in external capital.
Kariuki said that the AfDB would deploy resources within the framework of its ten-year Climate Change and Green Growth Strategy (2021-2030) to position Africa’s financial industry at the forefront of the low-carbon and climate-resilient transition.(NAN)
