The Greening Financial Systems Technical Assistance Programme (GFS Programme) was set up in 2021 by the European Investment Bank and Germany to help central banks and financial institutions focus on sustainability. The programme is funded by the IKI Fund, an EIB trust fund. The programme is a response to an initiative that the global NDC Partnership started to help central banks support green projects. NDC refers to the “nationally determined contributions” of each country to reduce emissions and contribute to the Paris Agreement. In addition to central banks, the GFS Programme helps commercial banks, microfinance institutions and development banks in the Western Balkans, other countries bordering the European Union, and Africa. The aim is to help financial systems adapt to the rising risks related to climate change and increase green finance.
“The GFS Programme demonstrates our commitment to building sustainable, low-carbon financial systems,” says Andrew McDowell, director general of EIB Global. “The EIB’s technical assistance helps financial systems respond to the realities of climate change, and it equips them for a just transition towards sustainability.”
Kenya: Small companies are especially vulnerable
Kenyan banks, like those in many countries, struggle to evaluate green investment projects. It’s difficult to assess the long-term environmental benefits of project proposals, and there is a lack of standard procedures to measure and define green investments. This makes it hard for banks to direct funds to green projects. This lack of financing especially hurts small and medium-sized companies, which are particularly vulnerable to climate change. Without standard frameworks, banks struggle to assess whether projects are genuinely sustainable or merely being labelled “green.”
With support from the GFS Programme, the Central Bank of Kenya developed the country’s first Green Finance Taxonomy, a tool enabling the financial system to understand how to classify activities as green. The support also helped develop a Climate Risk Disclosure Framework that shows commercial banks how to organise and disclose climate risk information.
Thugge says the new tool and framework will help identify investment projects that are green, and this will also help banks meet international standards, including the standards recently issued by the International Sustainability Standards Board.
On-the-job support
“The programme has a modular approach, allowing it to be easily adapted to the needs of the beneficiaries, who receive hands-on, on-the-job support as well as dedicated training aimed at building strong internal capabilities and ownership,” says Isabelle Van Grunderbeeck, head of the Financial Inclusion Unit at the European Investment Bank.
Peer exchanges can also help clients meet the challenges of sustainable finance. In December 2024, the Bank organised a Greening Financial Systems: Peer Learning Workshop for Central Banks, gathering representatives of central banks from Albania, Armenia, Egypt, Georgia, Kenya, North Macedonia, Nigeria, Rwanda, and Uganda. They were joined by experts from the European Investment Bank, the European Central Bank, the International Sustainability Standards Board, the Network of Central Banks and Supervisors for Greening the Financial System.
