Board-Level Perspectives on Climate Risk Governance: A Phenomenological Study of Kenya’s Banking Institutions

Abstract

Climate change is increasingly recognized as a systemic financial risk, prompting financial institutions globally to incorporate climate-related considerations into their governance and risk management frameworks. For corporate boards, lived experiences in navigating climate-risk governance, particularly in developing economies, remain underexplored. This paper  explores the lived experiences of corporate boards of Kenya’s banking institutions with regard to climate-related risk management. The study was conducted between June and November 2025 and adopted an exploratory qualitative approach grounded in interpretive phenomenology. Data were collected from corporate board members, senior executives, and senior managers purposively sampled from 19 selected banking institutions in Kenya through semi-structured interviews. The results of this study demonstrate that, for corporate boards, climate risk management is an emerging governance priority that has led to risk re-identification, portfolio diversification, loan restructuring, enhanced due diligence processes, and human capacity development. These approaches are informed by contextual lived experiences. Challenges include: data availability constraints, gaps in technical expertise, and increased regulatory demands. The study identified strategic leadership as a key enabler, driving the extent to which banking institutions' boards integrate and prioritize climate risks in their governance processes. Recommendations include mainstreaming climate-risk governance processes across all Kenyan banking institutions; corporate boards implementing regulatory guidelines on climate change with fidelity. Other recommendations include governance boards setting the tone at the top by making strategic commitments; being agile to adapt to an ever-changing context; and adopting context-sensitive climate risk management practices.