Sustainability In The Ghana Financial Sector

With the environmental and social challenges faced by societies today, conventional business models that do not consider the triple bottom line of people, profit and planet are likely to be unsustainable and uncompetitive.   Globally, the financial sector plays a key role in the sustainability conversation and it has introduced various initiatives to encourage integration of environmental and social considerations into financing decisions. 

New business opportunities and portfolios are also an outcome of the sustainable finance agenda and various financial entities have seized the opportunity to expand their portfolios to include green finance instruments such as green bondsrenewable energy and energy efficiency financing, green buildings and green mortgages.

In Ghana, the sustainable finance agenda is pioneered by the Bank of Ghana, and the Ghana Association of Bankers, which have developed a customized framework on sustainable banking for the Ghanaian banking sector.  Other financial service regulators must play a key role in promoting the sustainable finance agenda in Ghana. They are currently in various discussion phases aimed at creating agendas that key into the global conversations on sustainable finance. 

The banking sector underwent some reforms in 2017 and 2018 including the recapitalization efforts by the Bank of Ghana which required banks to meet up with a minimum paid up capital requirement of GHC400million (USD72 million.  Following the recapitalization, the number of licensed banks went from thirty-four (34) to twenty-three (23). In addition, there are 319 microfinance institutions, 135 rural banks and 40 non-banking financial institutions.

There are three categories of banking licenses for operating in the sector:

  • Class I Universal banking license – this allows the holder to transact domestic banking business (this was previously the UBBL)
  • Class II Banking License – this allows the holder to conduct banking or investment banking business with non-residents and other class II banking license holders in currencies other than the Ghanaian Cedi (unless otherwise permitted by the BOG.
  • General banking license – this allows both the Class I and II banking business in and from within Ghana

The convening national platform for the sector is the Ghana Association of Bankers (GAB).  The association’s objectives include:

  1. Creating an avenue for representation on issues pertaining to economic, fiscal, monetary and other matters affecting the performance of the financial system
  2. Providing a platform for the sector to express its views on regulatory legislative initiatives
  3. Carrying out research, analysing and disseminating information on issues affecting the sector
  4. Enhancing sector performance
  5. Participating and contributing to the activities of the West African Bankers Association

The Ghana Association of Bankers has played a key role in the Sustainable Banking Principles since the onset.

List of Ghanaian Banks as at May 2019

The framework is made up of seven principles that provide sustainability integration considerations for a bank’s business activities and operations.  In addition, there are five sector guidelines that provide additional guidance to banks on lending to these high-risk sectors – Energy and Power, Construction and Real Estate, Agriculture and Forestry, Manufacturing, and Mining, Oil and Gas.

Ministry of Finance

Ghana’s Finance Ministry is principally responsible for ensuring macroeconomic stability towards enhancing sustainable economic growth and development. Primarily, the functions of the Ministry include the formulation and implementation of sound fiscal and financial policies; effective mobilization and efficient allocation of resources; and the improvement of public financial management.

The Ministry of Finance, alongside the Ministry of Environment, Science and Technology, and the Environmental Protection Agencies, are key agencies in implementing Ghana’s Nationally Determined Contributions (NDCs) to Climate Change.

In April 2019, the Ministry signed a memorandum of understanding (MOU) with its partners including organised labour, the Ministry of Employment and Labour Relations, Trades Union Congress of Ghana and Ghana Employers Association. The MOU is geared towards achieving stronger collaboration and harmonious industrial relations. The Ministry is confident that this partnership will spearhead inclusive and sustainable growth towards transforming Ghana’s economy, expanding opportunities and creating jobs for all Ghanaians.

The Ministry of Finance  also considers that to achieve the UN Agenda 2030 for Sustainable Development, Ghana needs to adopt growth-enhancing policies while containing risk and protecting the vulnerable. The Ministry will support relevant institutions and ministries such as the Ministry of Environment, Science and Technology to realise this goal.

Securities and Exchange Commission

The securities market in Ghana is regulated by the Securities and Exchange Commission (SEC). The SEC was established by the Securities Industry Act, 2016, (Act 929). The objective of the SEC is to regulate and promote the growth and development of an efficient, fair and transparent capital market in Ghana.  

The SEC can encourage ESG disclosure for companies, including developing a framework for disclosure.

Ghana Stock Exchange

The Ghana Stock Exchange (GSE) is the main regulatory body in the stock exchange of Ghana. There are more than 40 listed companies on the GSE. Some of these companies include AngloGold Ashanti Depository shares, Access Bank Ghana, Agricultural Development Bank, AngloGold Ashanti Limited, CAL Bank, Ecobank Ghana Ltd and many others whose activities influence E&S risk considerations.

The GSE can key into the Sustainable Stock Exchanges initiative, a UN partnership initiative that promotes responsible investments and green bonds issuance guidelines.

National Insurance Commission 

The National Insurance Commission (NIC) is responsible for regulating insurance business in Ghana. Apart from regulation, NIC also ensures effective administration and supervision of insurance businesses in Ghana. This includes licensing of entities, setting standards, approving rates of insurance premiums and commissions, providing the conduit for arbitration and complaints resolution, amongst others.

The NIC can key into the Principles on Sustainable Insurance (PSI), a United Nations framework that promotes ESG risk management for the industry.

National Pensions Regulatory Authority (NPRA)

The National Pensions Regulatory Authority (NPRA) is responsible for pension regulation through effective policy implementation aimed at securing sustainable incomes for retired Ghanaian workers. The Authority oversees the administration and management of registered pension schemes and trustees, as well as the Social Security and National Insurance Trust (SSNIT) management of the basic national social security scheme.

Key functions of the Authority include:

  • Register occupational pension schemes, provident funds and personal pension schemes
  • Establish standards, rules and guidelines for the management of pension funds under this Act
  • Regulate and monitor the implementation of the Basic National Social Security Scheme
  • Promote and encourage the development of the pension scheme industry in the country
  • Advise government on the general welfare of pensioners
  • Advise government on the overall policy on pensions in the country

Pension regulation is at the core of social cohesion amongst workers. This is why it is important that the NPRA develops sustainable pension policies that can lead to enhanced social benefits when workers retire. In this respect, the development of the contributory three-tier pension scheme, consequent to Act 766, will help ensure retirement income security.

Social Security and National Insurance Trust (SSNIT)

Under the National Pensions Act, 2008 Act 766 (amended in 2014), the Social Security and National Insurance Trust (SSNIT) is mandated to manage Ghana’s Basic National Security Scheme. This involves mandatory tier one contributions by all workers in Ghana. The Trust’s mission involves providing income security for workers in Ghana through excellent business practices.

In addition to being the largest non-financial institution in the country, the Trust is also the largest single institutional investor on the Ghana Stock Exchange. SSNIT has a vision of providing income security for workers in Ghana through excellent business practices. This falls within the social management and sustainability structure of employees’ welfare as the contributions managed by SSNIT on behalf of Ghanaian workers act as an economic and social safeguard when workers are on retirement.  SSNIT could therefore use its investment in and provision of social protection schemes as a way of influencing financial inclusion among its members.


Ghana Insurers Association

Ghana Insurers Association is a membership body of all insurance and reinsurance companies that have been licensed to conduct insurance business within Ghana. Its vision is “to provide effective, efficient and disciplined leadership for sustainable growth in the insurance and economic development of Ghana”.  The Association has over 50 members within the Life Insurance, General Insurance and Reinsurance sub sectors. 

Within the insurance sector, the opportunity exists for GIA to help the financial sector achieve sustainability. In line with its sustainability principles if any, gender equality and financial inclusion can be enhanced. Insurance companies can also help mitigate banks’ E&S risks by insuring transactions in the financial sector that have potentially harmful E&S considerations.

It is good practice for the commercial banks to develop a sustainability reporting framework that can be published on the bank’s website. These reports should meet reporting requirements as indicated by the Global Reporting Initiative Financial Sector Supplement. Where necessary, independent third-party reviews and quality assurance of reports should be undertaken. 

Globally, sustainability reporting performance has become an integral requirement for the issuing and renewing of  licenses for companies to operate. Many organisations are moving towards producing integrated reports, instead of separate sustainability and financial reports, as this represents a more encompassing approach to managing environmental and social aspects as part of a business’s overall performance. This is a trend Ghanaian businesses and banks should embrace as part of their business operations. Producing integrated reports will make financial institutions more attractive to the international and development financial institutions and improve guidelines to monitor their environmental and social performance.

Following the United Nations (UN) Conference on Sustainable Development in Rio de Janeiro, the Partnership for Action on Green Economy (PAGE) was launched in 2013 as a joint initiative of the UN Environment, ILO, UNDP, UNIDO and UNITAR. PAGE exists primarily to support member countries who wish to undertake greener and more inclusive growth trajectories. PAGE believes that in developing any economic policies and practices, sustainability should be the overriding consideration. This will help advance the 2030 Agenda for Sustainable Development. PAGE offers support to countries that want to restructure their economic policies and practices around sustainability. The idea is to improve economic growth, create incomes and jobs, reduce poverty and inequality, and strengthen the ecological foundations of their economies.

In 2014, Ghana became a member of PAGE. As part of its activities, PAGE supports the country in identifying priority areas and provides guidance in key strategies and policy implementation. From 2014 to 2017, PAGE assisted in the implementation of the Ghana Shared Growth and Development Agenda (GSGDA II). In addition, it supported Ghana’s National Climate Change Policy and the UNDP-UNEP’s Green Economy Study and Assessment.  More importantly, as the country made progress on sustainability, PAGE conducted a study which sought to analyse the green economy opportunities in Ghana, financial and private sector participation in green financing and investment, and the barriers to green financing. The overall goal was to support the Ghana government in reframing policy across sectors, and to build individual and institutional capacity to ensure sustainability and scaling up of green financing in Ghana. The study found that among many factors, the main drivers of green financing in Ghana are the environmental regulatory framework, commitment of relevant actors, globalization of standards in the financial sector, external stakeholder support, stakeholders’ gatekeeping role and the existing national sustainable development frameworks.

The United Nations Environment Programme – Finance Initiative (UNEP FI) is a collaboration between the United Nations Environment and the global financial sector. This partnership with the UN Environment has over 240 financial institutions including banks, investors and insurers working towards sustainable financing of environmental, social and governance operations.

In 2013, UNEP FI organised its first ever Introductory Environmental and Social Risk Analysis training program in Ghana. The workshop was organised with support from its member Ecobank and hosted by the Ghana Association of Bankers. Relevant stakeholders such as bank credit risk managers, loan portfolio officers and many others were trained on the need and importance of incorporating environmental and social considerations into their business operations. In 2018, UNEP FI, through colleagues at PAGE, also undertook a study to measure Ghana’s level of integration of sustainability into business decisions of the financial sector and its clients. In addition, the study created an opportunity to promote sustainability awareness within the business community.

Global Reporting Initiative (GRI) is an international organization that engages businesses and governments on sustainability issues. Since 1997, GRI has spearheaded communication on Environmental and Social Risk including the impact of climate change, governance and social well-being and human rights.  GRI seeks to influence decisions that result in environmental, social and economic benefits for all.

One of the ways in which they undertake to empower decision making is through the GRI Sustainability Reporting Standards. These Standards are the most widely accepted standards on sustainability reporting the world over. GRI Sustainability Reporting enhances accountability, helps manage risks and improves corporate governance in general. With the support from SECO (the Swiss State Secretariat for Economic Affairs), the sustainability reporting for SMEs to gain better access to global value chains was introduced in Ghana.  

GRI core areas include:

  1. Creating standards and guidance to advance sustainable development
  2. Harmonizing the sustainability landscape
  3. Leading efficient and effective sustainability reporting
  4. Driving effective use of sustainability information to improve performance

The EDGE building certification tool was developed by the IFC to provide an easy and affordable system that can be leveraged by residential and commercial buildings to integrate green building design.  EDGE comprises a web-based software application, universal standard and certification system. The EDGE program is supported by the Swiss donor agency – SECO.

The Climate Investment Fund is a funding vehicle geared towards bridging the financing and learning gap needed for climate change mitigation and adaptation.  In Ghana, the CIF has approved investment plans in the Forest Investment Program (FIP) ($75million) and Scaling up Renewable Energy Program (SREP) ($40million). The World Bank and Africa Development Bank (AfDB) are the implementing multilateral development banks for the CIF projects