Addis Ababa, January 2025 – In a landmark initiative to integrate environmental sustainability into Ethiopia’s financial sector, the European Investment Bank (EIB)—with funding support from Germany’s International Climate Initiative (IKI)—has launched the Greening Financial Systems Programme.

This groundbreaking program is designed to equip the National Bank of Ethiopia and leading commercial banks with the tools and frameworks needed to embed climate-related risks and opportunities into financial regulation, risk management, and disclosure practices. By doing so, Ethiopia aims to safeguard its banking sector from the increasing physical and transition risks posed by climate change.

A central feature of the program is the development of a national green taxonomy—a standardized classification system to identify and promote environmentally sustainable economic activities. This taxonomy will provide clear guidance to financial institutions on eligible green investments and support the creation of green financial products.

Through enhanced regulatory oversight, the initiative encourages banks to increase green lending and finance projects that contribute to climate mitigation and adaptation, such as renewable energy, sustainable agriculture, and water resource management. This will help steer private capital toward Ethiopia’s sustainable development goals and transition to a low-carbon economy.

EIB officials highlighted the program’s importance in enabling Ethiopia to align its financial sector with global best practices on climate risk management, disclosure transparency, and sustainable finance. The initiative complements other efforts by international partners, such as the International Finance Corporation’s ESG integration program, to build a resilient and inclusive financial ecosystem.

As climate change impacts intensify, Ethiopia’s proactive approach to “greening” its financial system marks a critical step toward long-term economic stability, environmental protection, and inclusive growth.