ESG: Realities, insights, implications for financial sector

The Manager of Risk Governance, ESG and Sustainability at Stanbic Bank Ghana, Joseph Amo Adjei, has underscored the importance of ESG and Sustainability principles in the financial sector. Mr. Amo Adjei was speaking at a conference organised by the Association of International Certified Professional Accountants (AICPA) on the theme ‘ESG: Realities, Insights and Implications for Organisations’.

Mr. Amo Adjei singled out the Sustainable Banking Principles as a significant measure that is changing the face of Ghana’s financial sector in relation to environmental, social and governance (ESG). He said: “In a significant development for Ghana’s financial sector, the Bank of Ghana Sustainable Banking Principles have emerged as a game-changer, ensuring a level playing field for all commercial banks. This shift reflects the growing global emphasis on responsible and sustainable banking practices”.

Speaking on the challenges faced in the past, Joseph Amo Adjei highlighted the dilemma banks encountered prior to the introduction of the Sustainable Banking Principles. “For financial institutions that had already integrated ESG criteria into their lending practices prior to the launch of the Sustainable Banking Principles, turnaround time in credit delivery was a pain point for these banks as the credit assessment process was considered lengthy and customer requirements exhaustive. Applicants found themselves subjected to rigorous scrutiny before being granted credit. However, the recent launch and implementation of the Sustainable Banking Principles by the regulator means that all commercial banks will have to undertake the same level of ESG due diligence as part of its credit delivery process.”

“With the implementation of these principles by our regulator, the playing field has been levelled for all commercial banks. Now, we are required to embed ESG factors in our assessments, which means that the assessment process for all applicants will be standardised,” Mr. Amo Adjei noted. He also mentioned that Stanbic Bank in particular has been quick to adapt to this regulatory shift, aligning its practices with the Sustainable Banking Principles. The bank, he said, views this transition as an opportunity to strengthen its commitment to the nation and its communities.

Looking ahead, the banking sector anticipates a significant shift in how capital is deployed to support projects. Traditional assessment of an obligor’s creditworthiness will be complemented by rigorous evaluations of its ESG record. Clients engaged in activities with adverse environmental impacts or who contribute negatively to climate change may encounter difficulties accessing financing. There is already mounting pressure on clients in sectors such as oil and gas and mining to transition to more sustainable practices. Banking institutions must partner clients in this journey toward sustainability, aligning their strategies with responsible and ethical banking principles.

Furthermore, commercial banks should expect to hold capital for ESG risk in the near future. While the Basel frameworks have been focused on credit risk, market risk and operational risk, new types of risk – or at least drivers for it – are emerging due to ongoing climate change. As ESG risks become a new risk driver throughout the banking industry, it can be expected that there will be a supervisory response as to how to incorporate such ESG risks into the risk-based capital framework.

As Ghana’s financial sector continues to evolve in response to global ESG trends, Stanbic Bank Ghana remains committed to fostering economic growth and inclusive development while upholding the principles of sustainability and responsibility. The bank’s sustainability strategy and approach are built on two pillars i.e., Social, Environment, Economic (SEE) and Environmental, Social and Governance (ESG), and anchored by one purpose – ‘Ghana is our home, we drive her growth’!

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