Introduction
The demand for sustainable business practices has greatly intensified in recent times. All businesses are encouraged to incorporate sustainability principles and report on the environmental, social and governance aspects of their operations. Strides are being made in various sectors. The financial sector is particularly important for ESG advancements because of its pivotal influence on resources for every other industrial sector. Hence, a focus on the sector in the ESG conversation has moved regulatory bodies and financial institutions around the world to create well-defined frameworks and guidelines.
In Ghana today, several industry authorities are establishing frameworks, directives and actionable roadmaps to aid adoption and reporting in their jurisdiction. The Central Bank, Bank of Ghana introduced its Sustainable Banking Principles in 2019 to provide a framework for financial institutions to integrate sustainable practices into their operations. The Ghana Stock Exchange also developed the ESG Disclosures Guidance Manual in 2022 to guide listed companies in reporting on ESG initiatives and performance. The purpose of these adopted sustainability frameworks and guidelines is to increase accountability and confidence in these entities and improve transparency for investors and other stakeholders.
In this publication, we put both issuances under the lens and review them as enabling frameworks for ESG in the Ghanaian banking sector. We discuss the challenges and opportunities that listed banks will experience in their implementation of both guidelines, offering invaluable insights for them as they move towards being sustainable in their business practices.
Sustainability Reporting Insight from Global Banking Sector
Banking as we know it is undergoing a significant shift. Post-Cop 26, more responsibility is being demanded from the industry making sustainability reporting an essential cog in managing operational transparency. Various regulatory directives like the EU’s Corporate Sustainability Reporting Directive (CSRD), the US SEC’s climate-related disclosures for investors and industry-specific standards like the United Nations Principles for Responsible Banking (PRB) and GRI sector standard for banking – are laying the foundation on which comprehensive ESG disclosures is fast becoming a mainstay.
This systemic shift is reflected in recent micro-level advancements globally. Leading finance institutions like Morgan Stanley, Allianz and Caisse des Dépôts are making bold commitments to achieve net-zero carbon emissions by 2050. Banks are innovating financial products that support sustainability, such as green bonds and sustainability-linked loans. Additionally, ESG considerations are increasingly being integrated into core business strategies. Technological advancements, including big data, artificial intelligence, and blockchain, are all aiding in improving data accuracy and streamlining reporting processes. Furthermore, banks are prioritising stakeholder engagement to build trust, align expectations and create shared value. These efforts collectively underscore a growing commitment to sustainability across the financial industry.
This global movement towards responsible banking has significant implications for Ghanaian banks. Sustainability reporting is not just of local concern, but rather best practice to operating within the broader financial landscape. Embracing this change is critical for Ghanaian banks to ensure they remain competitive and contribute to a more sustainable future.
Joyceline Coleman
Partner, Advisory
KPMG in Ghana
