The Financial institution of Ghana (BoG) has known as on banks to align their operations with the sustainable banking ideas because it steps up efforts to combine local weather threat and environmental sustainability into the nation’s monetary sector.
The BoG has additionally issued a Local weather-Associated Monetary Threat Directive, requiring all banks to combine local weather threat into governance and threat administration buildings.
The directive seeks to boost the resilience of Regulated Monetary Establishments (RFIs) by integrating local weather threat issues into governance, threat administration, and disclosure practices.
Banks are required to replace their governance buildings, threat administration methods, and inner insurance policies to adjust to the directive by December 31, 2025, with full implementation beginning on January 1, 2026.
A newly established Local weather and Sustainability Workplace throughout the central financial institution will lead the implementation.
Talking at a session on the development sector, Second Deputy Governor of the BoG, Matilda Asante-Asiedu, stated the transfer was a part of broader efforts to safeguard the banking sector from rising Environmental, Social and Governance (ESG) monetary dangers via the implementation of the Ghana Sustainable Banking Rules.
She stated the development trade, like different sectors, was deeply linked with local weather, useful resource effectivity and monetary threat, including that rising temperatures and erratic rainfall patterns may push timelines and prices past projections, thereby posing dangers to banks.
“These are more and more a part of the chance panorama and might amplify loss given defaults for a financial institution, create reputational points, or probably result in regulatory penalties,” she stated.
“Our purpose is to make sure that banks don’t merely react to those dangers after they happen, however proactively incorporate sustainability issues into challenge due diligence, shopper engagement and portfolio monitoring,” she added.
Mrs Asante-Asiedu stated BoG sustained engagement was serving to monetary establishments to undertake practices that combine environmental, social and governance (ESG) components, notably in high-impact sectors similar to development.
She stated this had led to a rise in sector-wide compliance with the ideas from 42.2% in 2021 to over 73.6% as of March 2025.
She urged the banking sector to be on the forefront of the ESG evolution, including that the Financial institution of Ghana considered sustainability not as a peripheral challenge, however as a central pillar of economic stability, long-term worth creation and accountable financial stewardship.
For his half, Mr John Awuah, CEO of Ghana Affiliation of Banks, stated regardless of the development sector’s vital contributions to progress, it offered appreciable environmental and social dangers that, if left unchecked, may undermine the very growth beneficial properties the nation seeks to consolidate.
He stated the Ghana Sustainable Banking Rules weren’t only a compliance device however a strategic framework to reorient monetary intermediation practices in ways in which respect environmental boundaries, shield weak communities and future-proof our banking establishments towards local weather and ESG-related dangers.
“As banks, we can not finance the longer term with instruments from the previous. ESG should develop into the brand new language of threat, the brand new language of alternative and the brand new logic of worth creation,” Mr Awuah stated.
He known as on growth companions to assist mitigate the perceived and precise dangers related to sustainable development lending via a assure scheme tailor-made to ESG-aligned initiatives to incentivise banks to lend extra assertively on this house.
As well as, the supply of reasonably priced and long-term financing to banks, which may then be lent to builders for credible sustainability plans.
This strategy can considerably cut back the value burden on debtors and enhance challenge viability.
He known as for help for the co-development of sector-specific ESG screening instruments, environmental threat calculators, and construction-specific sustainability benchmarks to assist diligence and monitoring in addition to capability constructing and technical help.
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