Financial institutions in Africa are increasingly recognising the role they can play in financing environmentally sustainable economic activities. From climate resilient agriculture and renewable energy to sustainable fisheries and marine resources, the green and blue economies present opportunities for investment, enterprise growth and environmental protection.

For banks, translating these opportunities into viable financial products and institutional practices presents a complex challenge. Sustainability commitments must be supported by appropriate governance arrangements, operational capabilities, risk assessment processes and performance measurement systems. Without these foundations, environmental ambitions can remain disconnected from everyday lending and investment decisions.

This challenge formed the basis of an assignment undertaken by Impact Africa Consulting Limited (IACL) for the African Guarantee Fund and Absa Bank Tanzania.

Understanding the assignment: Assessing opportunities and institutional gaps

In 2025, IACL conducted a Green and Blue Economy Diagnostic Assessment in Tanzania, examining how environmental, social and governance considerations could be integrated into institutional strategy, management practices and implementation processes.

The assignment focused on understanding existing institutional capabilities, identifying material sustainability issues and examining opportunities to strengthen green and blue economy financing.

An important consideration was the relationship between strategic commitments and operational readiness. Financial institutions may recognise the commercial potential of sustainable investment, but translating that recognition into financing decisions requires internal coordination, suitable policies, relevant data and clearly defined responsibilities.

The diagnostic therefore examined not only the opportunities associated with sustainability financing, but also the institutional conditions necessary to pursue them.

Our approach: Understanding the institution before recommending solutions

IACL adopted an evidence based diagnostic methodology combining document reviews, institutional consultations and technical analysis.

The team reviewed corporate strategies, policies, operational records, performance information and relevant sustainability reporting requirements. This provided a basis for understanding existing practices, institutional commitments and areas requiring further development.

Consultations involved management representatives, technical teams, operational functions and relevant stakeholders. These engagements helped clarify institutional priorities, identify implementation barriers and examine how sustainability considerations interacted with existing business processes.

The assessment also considered applicable standards, sector expectations and institutional commitments, while recognising the importance of designing recommendations appropriate to the bank’s operating environment and implementation capacity.

Rather than approaching ESG as an isolated compliance function, the methodology examined how sustainability considerations could influence broader governance, operational decision making and performance management.

Translating findings into practical priorities

A central part of the diagnostic involved assessing institutional strengths, performance gaps, governance arrangements, stakeholder expectations and potential improvements.

For sustainability financing to become operational, banks require more than policy statements. They need processes for identifying relevant opportunities, assessing environmental and social considerations, assigning responsibilities and monitoring performance.

IACL’s analysis examined these dimensions to establish areas where institutional systems could be strengthened. The assessment also considered potential implementation risks and the resources required to translate recommendations into practice.

The resulting work included diagnostic findings, strategic and policy recommendations, governance considerations, implementation priorities and performance monitoring guidance.

These outputs were designed to support institutional decision making by connecting sustainability objectives with practical management responsibilities.

From technical recommendations to institutional ownership

The assignment recognised that successful implementation depends on the people and systems responsible for delivering institutional commitments.

IACL facilitated the review and validation of emerging findings, incorporating stakeholder feedback and refining recommendations to improve their relevance and usability.

The resulting guidance addressed implementation sequencing, coordination responsibilities, resource considerations, performance measures and follow up actions.

This helped establish a practical framework through which the participating institutions could consider sustainability priorities alongside existing operational and governance requirements.

The documented assignment focused on diagnostic assessment and implementation guidance. Subsequent changes in financing portfolios, investment volumes or environmental outcomes would require separate verification.

The broader lesson: Sustainable finance begins within institutions

The Tanzania experience highlights an important consideration for financial institutions seeking to expand green and blue economy financing.

The availability of investment opportunities does not automatically translate into institutional capacity to finance them. Banks must understand their sustainability exposure, assess internal readiness and establish processes that connect strategic objectives with financing operations.

For development partners supporting sustainable finance, institutional diagnostics provide a foundation for identifying where technical assistance, governance improvements and capacity development may be needed.

The central lesson is that sustainable finance requires more than identifying green investment opportunities. It requires institutions equipped to evaluate, finance and monitor them responsibly.

Through this assignment, IACL demonstrated how structured institutional assessment can support the transition from sustainability commitments toward practical implementation.