Banks achieve 62.5% compliance with sustainable banking principles by end-2023

Banks in the country reached a 62.5 percent compliance rate with the Ghana Sustainable Banking Principles by the close of 2023.

This was disclosed by the  Second Deputy Governor-Bank of Ghana (BoG), Elsie Addo Awadzi, who described it as a significant milestone in the country’s push for a more sustainable and resilient financial sector.

Speaking at the Environmental, Social, and Governance (ESG) Certification Programme launch by the Chartered Institute of Bankers (CIB), she noted that it underscores the progress made since implementing these principles in January 2020.

“The Bank of Ghana, with support from the IFC (International Finance Corporation), rolled out several programmes aimed at orienting, training and building the capacity of banks’ staff at all levels – as well as engaging with boards of banks to help with the principles’ smooth implementation and sector guidance notes, and to help with reporting on compliance.

“Based on the banks reporting to the Bank of Ghana, we observe a continuous improvement in compliance levels. The average compliance rate for banks as of end-December 2023 is 62.5 percent,” she explained.

She added that the apex bank recognises ESG as a key priority area that must be harnessed to help promote responsible, inclusive and equitable growth, development and resilience for the banking sector and wider economy.

The regulator consequently lauded the programme, describing it as a “game-changer” with potential to significantly enhance the industry’s ESG risk management capabilities – and urged banking professionals to embrace it.

“I strongly encourage the industry to take full advantage of this, and call on educational institutions to partner with CIB to make this even stronger,” she advised.

Chief Executive Officer-CIB, Robert Dzato, said the programme was a culmination of years of work and collaboration with the IFC, Environmental Protection Agency (EPA) and Swiss State Secretariat for Economic Affairs (SECO).

He added that despite a delay due to  COVID-19, the Institute is determined to press ahead with the initiative as it’s convinced the programme will play a pivotal role in shaping the future of Ghana’s banking sector – aligning it with global sustainability standards and ensuring long-term resilience.

“The ESG certification programme that we are about to launch today – thanks to the partnership between the CIB, EPA and supported by IFC and SECO – marks yet another milestone in our banking landscape,” Mr. Dzato said, adding that it represents a significant advancement in the banking sector’s capacity to manage emerging risks.

The certification programme, he added, is designed to equip financial institutions with essential frameworks and policies, aims to foster responsible business practices and mitigate environmental and social risks across six modules.

The programme comes as a recent ESG report from Bloomberg Intelligence showed that global ESG assets exceeded US$30trillion in 2022 and are expected to surpass US$40trillion by 2030, constituting more than 25 percent of the projected US$140trillion assets under management.

Also, at the event Kyle Kelhofer – IFC Senior Country Manager for Ghana, Liberia and Sierra Leone – highlighted the programme’s transformative potential.

Central to the initiative are IFC Performance Standards and global ESG principles which serve as benchmarks for ethical business operations.

“ESG principles are the bedrock of our investment philosophy and business operations,” he added, while highlighting the programme’s adherence to global standards.

Encouraging active engagement from the industry, the IFC representative urged stakeholders to challenge assumptions and contribute insights for the programme’s continual enhancement.