Ghana does not currently have a legislature that demands and enforces ESG reporting. But recent investor interest in sustainability has heightened the desire of businesses to employ ESG frameworks.
The West African State of Ghana, with its 30 million people, has had a young but burgeoning economy as demonstrated over the past two decades. There has been no doubt that economic indicators, fiscal policy, and a conducive political environment have made Ghana one of the most welcoming hubs of businesses in the West African sub-region.
Why ESG?
Recent happenings on the global stage and local quakes have however left pertinent questions and genuine concerns on the lips of investors. The COVID 19 pandemic, societal unrest and the socio-economic impact of climate change have left many businesses peering in the direction of ESG (Environmental, Social and Governance) principles, to help curb and ultimately allay investor apprehensions Globally.
Ghana does not currently have a legislature that demands and enforces ESG reporting. Recent investor interest in sustainability as well as factors outlined in the preceding paragraphs have heightened the desire of businesses to employ ESG frameworks. The central bank of Ghana and the Ghana Association of Bankers launched the country’s Sustainable Banking Principles and Sector guidelines in November 2019. Furthermore, in May 2021, The Securities and Exchange Commission signed an agreement with the International Finance Corporation to help develop green bonds in Ghana.
The African Potential
As a cluster of developing powerhouse economies, Africa is a hub of opportunities and this extends to the Social Impact, Sustainability and ESG sector. In economies where millions are awaiting access to stable internet, water, housing, education and energy – sustainability and social impact are major demands of the times and an excellent place for companies to give back.
Presently, Ghana’s per capita CO2 emissions stand at 0.51 tons (for reference, the USA’s per capita emissions are at 15.52 tons). This shows massive potential, especially since the main factor of emissions in Ghana is transport with sectors like construction, industrial and power only just coming up. Carbon management will likely be a major concern for the Ghanaian economy.
With more global companies shifting focus to sustainable solutions, Africa’s focus on ESG accountability could prove to be very beneficial in the long run.
The Natural Move Towards ESG
Ghana additionally hosted the 2022 West African Mining & Power Expo in June 2022. Some of the issues raised reflected a gravitation toward responsible and sustainable mining amid the increasing pressure on governments and businesses to transition toward greener economic growth. These policies and events have been perceived by many as huge steps and commitments toward the ESG agenda in Ghana.
Ghana appears to be fertile grounds for ESG implementation. The economic effects and social benefits may not be realized immediately, but certainly has the potential to be a major game changer in the economy. ESG provides a broader, deeply insightful way of doing business and holding businesses responsible for the resource pool from which derivatives capable of realizing profits are gleaned. Investor confidence globally, with Ghana being no different will see a significant boost if investors have a more comprehensive means of determining the risks that companies have incurred, a clear pathway for mitigating these risks and an effort to engage in socially responsible investments and practice.
