In ensuring that environmental and social risks associated with projects financed by banks are well managed, banks will henceforth be guided by seven key sustainable banking principles.
The Sustainable Banking Principles provide the guiding principles that will underpin effective Environmental and Social Risk Management (ESRM) policy frameworks for banks.
At the launch of the guidelines, the Governor of the Bank of Ghana, Dr. Ernest Addison said responsible banking practices will have to ensure that environmental and social risks associated with projects financed by banks are well managed.
“For banks to remain sustainable over the long-term, it is important that their own internal operations and financing activities meet the present needs of economic agents today, while not compromising the ability of future generations to meet their own needs,” the Governor said.
The seven principles include: identifying, measuring, mitigating and monitoring environmental and social risks and opportunities in banks’ business activities; as well as, promoting good environmental and social governance practices in banks’ internal business operations.
Other principles are: the strengthening of good corporate governance and ethical standards; fostering gender equality; facilitating financial inclusion; enhancing resource efficiency and sustainable consumption and production; and ensuring compliance reporting.
SBPs for Ghana’s banking sector are expected to be applied to five sectors of the economy including agriculture and forestry, mining and oil and gas, construction and real estate, energy and power as well as manufacturing.
The Bank of Ghana, in collaboration with the International Finance Corporation (IFC), initiated the creation of a national platform to discuss the establishment of sustainable banking principles in April 2015.
A Sustainable Banking Committee made up of representatives of the Bank of Ghana, the Ghana Association of Bankers (GAB), the Environmental Protection Agency (EPA), was inaugurated in December 2015 to spearhead work in this direction, with the mandate of coming up with relevant sustainable banking principles for the banking sector. The Committee produced the first draft of the Sustainable Banking Principles and Sector Guidance Notes sometime in late 2017.
To further deepen collaboration with other stakeholders, a stakeholders’ Forum was organized by the Sustainable Banking Committee in March 2018, with support from IFC’s Africa ESRM program to discuss the draft principles.