Kenya's Climate Change Act: Key Provisions and Implications for Businesses

Climate change is no longer only an environmental issue in Kenya. It is a legal and commercial one. The Climate Change Act, 2016 created a national framework for responding to climate change, and the Climate Change (Amendment) Act, 2023 added detailed rules on carbon markets. For businesses in energy, agriculture, manufacturing, real estate, finance and forestry, these laws now shape licensing, investment decisions, reporting and community relations. This article explains the key provisions of the Act and what they mean for companies operating in Kenya.

Key takeaways

• The Climate Change Act, 2016 requires climate change to be mainstreamed into all government planning and gives the State power to impose climate duties on private entities.
• The National Climate Change Council, chaired by the President, sets national climate policy; the Climate Change Directorate coordinates implementation.
• The 2023 amendments regulate carbon markets, require approval of carbon projects and set community benefit-sharing obligations.
• Businesses should expect climate obligations to appear in licences, financing terms, procurement and disclosure requirements.

The purpose of the Climate Change Act

The Act was enacted to develop, manage, implement and regulate mechanisms that enhance Kenya's response to climate change. It gives effect to the constitutional right to a clean and healthy environment under Article 42 and to the State's obligations under Article 69, including the duty to work towards achieving and maintaining tree cover of at least 10% of Kenya's land area. It also supports Kenya's international commitments under the Paris Agreement, including its Nationally Determined Contribution to cut greenhouse gas emissions.

The Act applies across all sectors of the economy and at both levels of government. It is guided by principles that include public participation, equity, the polluter-pays principle, and the protection of vulnerable groups and communities.

Institutions created by the Act

Key provisions businesses should know

National Climate Change Action Plan

The Act requires a five-year National Climate Change Action Plan (NCCAP) that sets out mitigation and adaptation measures for each sector. Government departments must reflect the NCCAP in their policies, which means sector regulators can translate climate targets into rules that affect businesses, for example in energy efficiency, waste management, transport and building standards.

Climate change duties of private entities

Section 16 of the Act allows the Cabinet Secretary, through regulations, to impose climate change obligations on private entities. These can include requirements to report on greenhouse gas emissions and to take measures to reduce emissions. NEMA is responsible for monitoring, investigating and enforcing compliance, and may issue orders to entities that fail to comply.

Climate Change Fund

The Act establishes a Climate Change Fund to finance climate change actions, research and innovation. Businesses developing climate solutions, renewable energy, climate-smart agriculture or adaptation projects may be eligible for support, and public funding often comes with reporting and governance conditions.

Public participation and access to information

Climate-related decisions must involve public consultation, and the Act protects the right of any person to access climate information. Any person may also apply to the Environment and Land Court alleging that an act or omission is likely to harm efforts to combat climate change. The court does not require the applicant to show personal loss, which makes climate litigation against both government and private actors possible.

Carbon markets under the 2023 amendments

The Climate Change (Amendment) Act, 2023 introduced a dedicated part on carbon markets, followed by the Climate Change (Carbon Markets) Regulations, 2024. The main features are:

• Project approval: carbon projects must be approved by the Designated National Authority, and projects are assessed for environmental and social impacts.
• Carbon registry: the Act provides for a national carbon registry to record projects, credits and transfers, and to support Kenya's reporting under Article 6 of the Paris Agreement.
• Benefit sharing: project proponents must enter into community development agreements with the communities affected by their projects. For land-based projects, a minimum share of aggregate earnings (at least 40%) must go to the community, while non-land-based projects carry a lower minimum share. Existing projects are required to migrate to the new framework.
• Trading and transfers: international transfers of carbon credits must be authorised, and corresponding adjustments may be required to avoid double counting against Kenya's own targets.
• Offences: operating unapproved projects, misrepresentation and failing to meet benefit-sharing obligations attract penalties.

Implications for businesses

Regulatory and licensing risk

Climate considerations are increasingly built into environmental impact assessments, energy licences and county approvals. Projects with significant emissions or land use should expect closer scrutiny and conditions on mitigation and adaptation. See our guide on environmental impact assessment in Kenya.

Access to finance

Kenyan banks are expected to manage climate-related risks under the Central Bank of Kenya's guidance on climate risk management, and capital markets offer green bonds. Lenders and investors increasingly ask borrowers for emissions data, climate risk assessments and transition plans.

Disclosure and reputational risk

Listed companies face growing expectations to report on sustainability and climate-related risks. Claims about being "green" or "carbon neutral" must be accurate, as misleading environmental claims can expose a business to consumer protection and competition law action.

Opportunities

The law also creates opportunities: carbon credit projects, renewable energy, clean cooking, e-mobility and climate-smart agriculture all benefit from a clearer legal framework and international climate finance.

Compliance checklist for businesses

1. Identify which of your operations produce significant emissions or depend on climate-sensitive resources such as water and land.
2. Start measuring and recording greenhouse gas emissions using a recognised methodology.
3. Monitor regulations issued under section 16 and sector-specific climate rules.
4. Integrate climate risks into board risk registers and governance processes.
5. For carbon projects, obtain approvals, register projects and put compliant community development agreements in place.
6. Review marketing and sustainability statements for accuracy.
7. Engage communities early and keep records of public participation.

Frequently asked questions

Does the Climate Change Act apply to private companies?

Yes. While many duties fall on government, the Act allows the State to impose climate change obligations on private entities, enforced by NEMA. Private companies can also be sued in the Environment and Land Court for conduct that harms efforts to combat climate change.

Can a company sell carbon credits from Kenya?

Yes, but carbon projects must be approved and registered under the amended Act, meet benefit-sharing obligations and obtain authorisation for international transfers where required.

Who enforces climate obligations?

NEMA monitors and enforces the climate duties of public and private entities, while the Designated National Authority oversees carbon markets. Courts also play a growing role through climate litigation.

How W.O.A. Advocates can help

We advise businesses, investors and project developers on climate change compliance, carbon market transactions, community development agreements and environmental disputes. Contact our advocates to discuss how Kenya's climate laws affect your business.