Ghana’s financial system driving the transition towards green economy

Accra, Ghana 28 March 2018 – In Ghana, the national bank is in the process of developing sustainable banking principles – that is, a set of rules that would require financial institutions to develop a management approach that balances the social and environmental risks with profit opportunities.

The move takes place in a context of significant leadership by the Ghanaian government on putting into place green economic policies in line with the Sustainable Development Goals and the country’s ambitions under the Paris Agreement on Climate Change. It is now becoming evident that these efforts are piquing the interest of the private sector, which is recognizing that business models that promote environmental and social well-being have enormous potential to thrive in Ghana.

Now, the Government and the private sector are working together to build to a sustainable financial system; exemplifying the importance of multi-stakeholder and cross-sectoral action towards green economy. With support from the IFC and the Government of Switzerland, the Bank of Ghana has already set seven principles to guide all banking activities. Additionally, private sector stakeholders have identified five sectors of the Ghanaian economy that will be targeted for improved environmental and social governance: manufacturing, energy and power, construction and real estate, mining, oil and gas, and agriculture and forestry. 

To understand how best to apply sustainable banking principles in these five priority sectors, the Bank of Ghana hosted a stakeholder consultation on March 28 in Accra. Representatives from the Bank of Ghana, Ghana Association of Bankers, Environmental Protection Agency, Ministry of Finance, banking institutions, businesses, academia and international organizations attended the consultation.  

The Partnership for Action on Green Economy (PAGE) is aiming to identify the gaps in the policy environment that, once filled, would drive demand for socially and environmentally sustainable banking services. To do this, and to complement the sustainable banking principles, PAGE is collaborating with the UN Environment Finance Initiative (UNEP FI) to undertake a green finance study in Ghana. The PAGE-supported study will assess the level of integration of sustainability in the business sector’s operations, value chains and products and services in Ghana, and the taxonomies, frameworks, capacities, assessment methodologies and practices, structures and information disclosures available or needed for the identification and scaling up of green finance opportunities.

Representatives from PAGE and UNEP FI participated in the stakeholder consultations and presented the aims of the green finance study.

The forthcoming study will support the implementation of the Sustainable Banking Principles, particularly Principle 1 which requires banks to work with their clients to identify, measure, mitigate and monitor environmental and social risks.