How to attract ESG financing in Ghana (1)
Ghana is committed to sustainable finance through ESG (Environmental, Social and Governance) financing, aligning with international standards.
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By actively promoting and facilitating the issuance of green, social and sustainability-linked financial instruments, Ghana channels capital towards a greener future.
Projects, activities that attract ESG financing
It is imperative for institutions, start-ups, small to medium-sized enterprises (SMEs) to conceive developmental projects that have positive sustainable impacts and benefits the environment, society and the economy at large.
Investors aim to invest in companies that demonstrate willingness to improve company performance in line with the Sustainable Development Goals (SDGs).
The questions businesses should be pondering over are, what are the types of projects and initiatives that should be undertaken to attract ESG Financing in Ghana?
Environmentally driven projects
Green financing has emerged as a significant development in Ghana's commitment to attaining its SDGs. The following types of projects can play a crucial role in supporting a sustainable and eco-friendly environment in Ghana.
Innovation in green technologies: Companies should make a conscious effort to develop and invest in innovative green technologies and solutions that will position them as leaders in sustainability, thereby attracting capital from investors interested in supporting eco-friendly innovations.
A typical example is solar desalination where solar energy is used to desalinate salt water to curb water shortages.
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Climate change mitigation, adaptation projects: Companies should invest in renewable energy projects, energy efficiency, and other initiatives to reduce external carbon emissions and internal carbon footprints.
By doing this, these projects attract funding from investors focused on addressing climate change. Electric vehicles, solar and wind-powered farms are examples.
Resource efficiency and conservation: Companies should implement sustainable practices that reduce resource consumption, waste and environmental impact. Such practices can be attractive to investors seeking resource-efficient businesses.
For example, a project that introduces environmentally friendly packaging materials such as plant-based packaging instead of petroleum-based plastic. These plant-based packages are recyclable and degradable, and such projects would attract ESG funding from foreign investors.
ESG integration in corporate strategy: In developing corporate strategies, businesses should integrate ESG considerations into the core of their strategies and decision-making.
This demonstrates a long-term commitment to sustainability, which can appeal to investors with a focus on sustainable and responsible investments.
Companies that set ESG goals that prioritise Greenhouse Gas (GHG) emissions, waste recycling, renewable energy, among others, attract ESG financing.
ESG financing and value for businesses
By adopting ESG initiatives and strategies, businesses can raise cheaper funds and become more resilient and better prepared to navigate potential disruptions to create value in this fast-changing world.
ESG financing can add significant value to business performance. For example;
Business innovation
The shift in consumer behaviour requires businesses to be innovative to incorporate sustainability in product designs to meet changing customer needs.
The demand for sustainable products and services is on the rise. Today, consumers prioritise sustainability in their purchasing decisions and are very well informed about environmental impacts of products consumed.
Driving long-term growth
Companies that integrate ESG principles can drive long term growth by easily getting access to funding, securing community and customer loyalty through sustainable products.
A study by the accounting firm, Moore Global, found that companies with strong ESG principles saw their profits grow by 9.1 per cent in the three years between 2019 and 2022.
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Cost reductions
Companies that adopt ESG can enjoy substantial cost reductions as green activities minimise cost of operations and cost to the environment at large.
The FedEx hybrid-electric vehicles have saved the company approximately 83,000 gallons of fuel and eliminated 950 tons of greenhouse gas emissions (FedEx Newsroom, 2008).
How can companies attract ESG Financing
Investors now consider the impact of a company’s activities on the environment and society in addition to financial returns, thus leading to a rise in environmentally and socially responsible investing.