Going green: financial institutions as champions of climate action

By Kenneth AMPONSAH

Are banks prepared to lead the way in climate action amidst the crisis caused by climate change pandemics and conflict? In this article, I seek to point out some key initiatives and guidance that we as banks can initiate to support this agenda.

But before we dive into the world of green investments and climate support, let me take a moment to commend the government of Ghana for developing a national strategy, encompassing 19 policy actions in 10 priority areas to achieve the country’s nationally determined contribution goals in the next decade.

In recent years, the world has woken up to the undeniable truth that our planet desperately needs a spa day. Climate change is real, people! It’s like that surprise pop quiz in school, only this time, the stakes are much higher.

Green investments, those magical funds directed toward renewable energy, sustainable agriculture, clean technology, and more, are not just an option anymore; they are like that lifebuoy on a sinking ship – absolutely necessary! They don’t just reduce our environmental footprint; they also make good financial sense, kind of like finding money in your old jeans.

Now, let’s talk about us, the financial institutions. We’re like the conductors of the economic orchestra, and we have the power to make the economy sing in a green, harmonious tune. By integrating environmental, social, and governance (ESG) principles into our operations, we can become the conductors of the environmental orchestra too.

But remember, this transformation isn’t just about saving the planet; it’s also about making some green of our own. Green investments are not only eco-friendly; they’re wallet-friendly too.

As we sail towards a low-carbon economy, we are entering a realm of opportunities as vast as a buffet with endless desserts. Clean energy, sustainable transportation, eco-friendly products – they are all on the menu. Ghana’s Energy Transition and Investment Plan even suggests we could create enough jobs to fill a football stadium (or maybe just a local park, let’s be realistic) by investing wisely.

This is evident in Ghana’s Energy Transition and Investment Plan, which affirms that ‘in a Net Zero scenario, Ghana would need around USD550 bn in capital investment by 2060 with the majority of investment going to the power and transport sectors. Delivering this investment could drive new economic activity in the energy sector and beyond, potentially supporting an additional 400 thousand net new jobs by 2060.’

How can financial institutions in Ghana ride the green wave to a prosperous and eco-friendly economy?

Banks in Ghana can play a crucial role in investing in the future by unlocking green growth opportunities through a variety of strategies and initiatives. Let me leave you with some 10 ways I think this can be possible:

Internal Sustainability Practices: Banks can lead by example by adopting sustainable practices within their operations. This includes reducing their own carbon footprint, implementing energy-efficient technologies in branches and offices, and minimizing paper usage through digital initiatives.

Green Financing and Loans: Banks can offer specialized green financing and loan products designed to support renewable energy projects, energy-efficient technologies, sustainable agriculture, and eco-friendly businesses. These loans can have favorable terms, including lower interest rates and longer repayment periods, to incentivize green investments.

Sustainable Investment Funds: Banks can establish sustainable and green investment funds that allow customers to invest in environmentally responsible projects and companies. These funds can focus on areas such as renewable energy, clean technology, and sustainable agriculture.

Promotion of Renewable Energy: Banks can provide financial support for renewable energy projects, including solar, wind, and hydroelectric power. This support can range from project financing to offering innovative leasing options for residential solar installations.

Environmental Risk Assessment: Banks should integrate environmental risk assessment into their lending practices. This involves evaluating the environmental impact of projects and ensuring that borrowers adhere to sustainable practices.

Sustainability Reporting: Banks can adopt sustainability reporting practices to disclose their environmental and social impacts. Transparency in reporting helps build trust with customers and investors.

Partnerships and Collaborations: Banks can partner with government agencies, international organizations, and non-governmental organizations (NGOs) to support green initiatives. Collaborations can include co-financing green projects or participating in public-private partnerships for sustainable development.

Customer Education: Banks can educate their customers about the benefits of green investments and provide resources and tools to help them make informed decisions. This includes offering financial literacy programmes focused on sustainable finance.

Green Bonds: Banks can issue green bonds to raise capital for green projects and investments. These bonds are specifically earmarked for environmentally friendly initiatives and can attract socially responsible investors.

Policy Advocacy: Banks can advocate for policies that promote green growth and sustainability at the national and regional levels. This can include engaging with policymakers to develop incentives and regulations that support green finance.

By embracing these strategies, banks in Ghana can help drive green growth, reduce environmental risks, and contribute to a more sustainable future for the country and her people.

Remember that by embracing sustainability, we will not only make some greens; we will ensure that our planet stays lush and beautiful.

Let’s go green!!!

The author is the Chief Risk Officer (CRO), United Bank for Africa (UBA) – Ghana

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