Ghana's banking sector faces growing exposure to financial risks from biodiversity loss, as the degradation of forests, water bodies and other natural resources threatens the businesses and economic activities underpinning banks' loan portfolios, with nearly GHS 647 billion in assets managed by banks in Ghana.
The implications extend beyond environmental protection to the quality of lending, business continuity and the long-term stability of the financial sector in Ghana, with businesses in agriculture, manufacturing, mining, tourism and other nature-dependent industries relying heavily on natural resources for production and operations in cities like Accra and Kumasi.
The development has heightened calls for financial institutions to integrate biodiversity risks into their lending and investment decisions, using the Bank of Ghana's Sustainable Banking Principles as a framework for assessing the environmental sustainability of financed activities, with the Bank of Ghana playing a key role in promoting sustainable banking practices in Ghana.
Dr Saeed Abdul Razak, Environment and Climate Lead at UNDP Ghana, told the Ghana News Agency that the banking sector had a significant financial stake in biodiversity conservation because the businesses it financed depended largely on natural resources, with the UNDP working with the Government, through the Ministry of Environment, Science and Technology and the Ministry of Finance, to develop a Biodiversity Finance Plan to address the disconnect between economic development and nature conservation in Ghana.
Mr Kingsley Owusu Anom, Head of Environment, Social and Governance (ESG) at the Agricultural Development Bank (ADB), said the banking sector's assets under management represented about 45 per cent of Ghana's Gross Domestic Product (GDP), underscoring the scale of its exposure to environmental risks, with the ADB and other banks in Ghana needing to develop specific biodiversity-focused financial products and incorporate environmental and social risk assessments into their lending processes.
The Government is pursuing a unified governance framework to align the activities of different sectors towards environmental protection, with policy measures, including the Environmental Protection Authority Act, 2025 (Act 1124), and Ghana's Green Taxonomy, reflecting the country's commitment to integrating environmental sustainability into economic and financial decisions, with the Ministry of Environment, Science and Technology and the Ministry of Finance playing key roles in promoting environmental sustainability in Ghana.