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Climate Change and Environment
Climate Risk and Disclosure for Companies and Lenders
Climate risk assessment, taxonomy alignment and IFRS S2-aligned disclosure for banks, insurers and companies facing CBK guidance and ICPAK's 2027 mandatory reporting.
- Sector
- Climate Change and Environment
- Typical timeline
- 8 to 16 weeks
- Delivery
- Onsite or virtual
- Deliverables
- 5
The problem
The Central Bank of Kenya expects banks to integrate climate-related risks into governance, strategy and risk management under its 2021 Guidance on Climate-Related Risk Management, and in April 2025 it issued the Kenyan Green Finance Taxonomy and a Climate Risk Disclosure Framework for the banking sector. ICPAK has adopted IFRS S1 and S2, making sustainability and climate disclosure mandatory for public interest entities, including listed companies, banks and insurers, for periods beginning on or after 1 January 2027, with large entities outside that category following from 2028.
Boards must therefore show how physical risks such as drought and floods, and transition risks such as carbon pricing and shifts in energy policy, affect their strategy, portfolios and financial position. Lenders and insurers also need to understand their clients' exposure, because climate risk in a loan book or underwriting portfolio is the sum of the risks carried by the businesses and households it finances. That requires Kenyan hazard and policy evidence, scenario analysis, emissions data, governance arrangements and disclosures that auditors and supervisors can test.
Policy anchors
- Guidance on Climate-Related Risk Management (Central Bank of Kenya, 2021)
- Kenyan Green Finance Taxonomy and Climate Risk Disclosure Framework (Central Bank of Kenya, 2025)
- ICPAK roadmap for the adoption of IFRS S1 and IFRS S2
- National Green Fiscal Incentives Policy Framework (Sessional Paper No. 5 of 2024)
How we work
Gap assessment
We assess current governance, strategy, risk management and disclosure against IFRS S2 and, for banks, the CBK guidance and disclosure framework. We then set a phased plan to the first reporting date.
Climate risk identification
We identify the physical and transition risks relevant to the business or loan book, drawing on Kenyan hazard data, the NDC, carbon market rules, energy policy and green fiscal measures.
Scenario and portfolio analysis
We run qualitative and, where data allow, quantitative scenario analysis, and map lending or investment exposures to the Kenyan Green Finance Taxonomy.
Metrics and targets
We define climate metrics, including greenhouse gas emissions where required, set out data sources and controls, and test them for assurance readiness.
Disclosure drafting and board briefing
We draft the disclosures and board papers, and brief directors and management on their oversight duties.
- IFRS S2 and CBK gap assessment with a phased implementation plan
- Climate risk register covering physical and transition risks
- Scenario analysis report and taxonomy alignment assessment
- Metrics, data and controls framework
- Draft climate-related disclosures and board briefing pack
Banks, mortgage finance companies, insurers, listed companies and other public interest entities, together with their boards and audit and risk committees.
Questions clients ask
When must we report under IFRS S2?
Under the ICPAK roadmap, public interest entities apply IFRS S1 and S2 for periods beginning on or after 1 January 2027, large non-public interest entities from 2028 and SMEs from 2029. Voluntary adoption has been open since 1 January 2024, and early preparation gives time to build data and controls.
We are a bank. How does the CBK framework relate to IFRS S2?
The CBK Climate Risk Disclosure Framework sets supervisory expectations for how banks identify, assess and disclose climate risks in their portfolios, while IFRS S2 governs climate disclosure in general purpose financial reports. We build one evidence base and set of controls that serves both.
Do you provide assurance on the disclosures?
No. Assurance is the role of the entity's auditor. We prepare the analysis, data controls and drafts so that assurance can proceed on a sound basis.