Practice ESG principles in financial sector — Banker
The Manager of Risk Governance, ESG, and Sustainability at Stanbic Bank Ghana, Joseph Amo Adjei, has underscored the importance of Environmental, Social and Governance (ESG) and sustainability principles in the financial sector.
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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).
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.”
“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,” he said.
Challenges
Speaking on the challenges faced in the past, Mr 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,” he stated.
“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,” Mr Amo Adjei added.
“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 stated. 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.
Way forward
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 contributes negatively to climate change may encounter difficulties accessing financing.