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Why NMB prioritizes financing climate-friendly projects

In the spirit of sustainable finance and impactful development, NMB Bank prefers financing projects with less negative implications on nature, a senior official at the bank has said.

Speaking in Dar es Salaam on Thursday, Ms Hellen Dalali said the lender’s operations are now mostly pegged on eco-friendly aspects in order to lessen its carbon footprint and prevent other hazards of climate change.

She told a conference on nature-based solutions (NBS) to global warming that NMB prioritizes financing environment friendly and socially responsible projects because of their strategic role in sustainable development.

Ms Dalali who is NMB’s senior project manager responsible for sustainability said the impact of climate change is not only real but also a major risk whose effects are already being felt by businesses and economies across the world.

Commenting on the impacts of global heating during the introductory panel of the meeting, she said the financial sector has equally been affected hence the need to participate and adequately invest in climate action.

“None of us has been spared hence the need for everyone to be part and parcel of the climate change conversation,” Ms Dalali told the NBS Conference Tanzania 2023, which specifically focused on development of a robust local carbon trading market.

She said climate risks have necessitated NMB and other lenders to resort to new banking and operating practices to accommodate carbon reduction ambitions and meet other nature conservation requirements.

“Climate change is having significant impacts on businesses around the world, which in turn has a ripple effect on economies and the financial sector given that the majority of these businesses are financed by banks,” she noted.

According to her, the banks are not only focusing more on reducing their environmental footprint but also increasing climate, environmental and social assessments during credit on-boarding exercises.

The green endeavour seeks to support efforts to mitigate the climate crisis at the corporate level and ensure that financed businesses and projects have minimal or no environmental impact, she explained.

“Climate impacts from the banking sector perspective are experienced through climate risks which are categorized as physical risks and transition risks,” Ms Dalali said, noting that the former mostly emanate from damages to property and assets.

The latter have more to do with regulatory changes required to transition to a low-carbon economy and mitigate the impacts of climate change. Citing the climate-related Financial Risk Management Guidelines issued last December by the Bank of Tanzania, she said transition risks mostly arise from changes in regulations, policy, technology and markets.

She also told the one-day conference that despite its negative impact, climate change offers abundant business opportunities, which Natural Resources and Tourism Minister Angela Kairuki who graced the event said include carbon credits that have become a flourishing enterprise in the country.

Highlighting the recent flotation of the NMB Jamii Bond and the tree planting campaign the bank launched early this year, Ms Dalali said banks can play a forefront role to unlocking these opportunities through green finance and sustainable funding.

“Climate change impacts present opportunities and a good business case for the private sector and banks to participate in. This is through funds and capital mobilization to ensure climate adaptation and mitigation projects are able to be financed,” she noted and emphasized capacity building for better understanding and financing of climate-friendly projects.

Collaborations are also key for the involvement of the private sector in the climate change narrative, carbon markets discussions and nature based solution initiatives, she added, noting that a good example of that was the NMB partnership with Tanzania Forest Services in the carbon offsetting project to plant a million trees this year across the country.


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