Editorial: BoG explores climate and financial risk management

As the recent flooding claimed about seventeen lives in Accra this week, Ghanaians are fully aware of the dangers from climate-related risks.

Consequently, the Bank of Ghana (BoG) has launched a national Sustainable Finance Roadmap aimed at coordinating financial sector regulation, strengthening resilience to climate-related risks and positioning Ghana to attract growing pools of global capital for climate, infrastructure and sustainable development projects.

BoG Governor Dr. Johnson Pandit Asiama notes that the framework marks a shift from fragmented sustainability initiatives toward a unified regulatory approach spanning banking, insurance, pensions and capital markets, as climate-related risks become increasingly material to financial stability.

He said climate change is no longer solely an environmental concern but also a financial risk that directly affects asset values, insurance claims, lending decisions and stability of the financial system.

“Recent flooding illustrates how climate shocks can quickly transmit into financial markets, requiring regulators to rethink supervision, risk pricing and long-term planning.”

The roadmap establishes, for the first time, a common framework for Ghana’s financial regulators to coordinate sustainable finance policies.

It is built around three pillars: integrating environmental, social and governance (ESG) principles into financial decision-making, strengthening climate-related financial risk management and expanding financing for sustainable development.

The framework assigns clear implementation responsibilities to participating regulators – moving beyond broad policy commitments toward measurable actions intended to improve risk management while creating new investment opportunities.

This roadmap also seeks to mobilise private and institutional capital through green and blended finance, support the country’s energy transition, deepen domestic financial markets and position Ghana as a regional sustainable finance hub, the Governor said.

“Our purpose as regulators has always been the financial system’s safety and soundness. But soundness in this era means more than absorbing today’s shocks. It means positioning Ghana’s financial sector as a leading destination for sustainable finance”.

In 2015, BoG established the Sustainable Banking Principles Steering Committee with the Ghana Association of Banks and Environmental Protection Agency. That effort culminated in the 2019 Sustainable Banking Principles, voluntarily adopted by all 23 commercial bank chief executives to integrate sustainability into governance, risk management and business operations.

BoG subsequently introduced a compliance assessment framework in 2021 with support from the International Finance Corporation (IFC) and Swiss State Secretariat for Economic Affairs (SECO).

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