Green finance-linked bankers bonus timely

President of the Republic of Congo Denis Sassou Nguesso (left), Senegal President Macky Sall (right) and Rwandan President Paul Kagame (Centre) follow proceedings at Kenyatta International Convention Centre Nairobi on September 5, 2023, during day two of the Africa Climate Summit 2023. PHOTO | DENNIS ONSONGO | NMG

A small but important step in the race to sustainable business and address humanity’s biggest threat was made this past week when banks announced they will start tying their bonus payments to green financing targets.

Over the decades, delegates have gathered in one summit after another and adopted ambitious targets backed by significant monetary pledges.

However, they have been slow to honour their commitments, derailing green projects crucial to facilitating the great transition.

For perspective, the $100 billion in annual climate finance promised 14 years ago at the Copenhagen conference is yet to be honoured.

Closer home, financing was at the heart of the agenda of the inaugural Africa Climate Summit held in Nairobi last week, where a commitment of $23 billiion was announced. Whether they will honour these pledges remains to be seen.

The bonus move by banks, however, offers hope. By tying bonuses to green financing targets, they incentivise executives responsible for designing, innovating and marketing loan products.

We have seen before how things move quickly when bankers are properly incentivised.