The Bank of Ghana (BoG) has completed a draft document on climate risk assessment to be issued to the commercial banks operating in the country.
This directive is expected to guide banks and other deposit taking institutions on how to asses disaster and other climate risk factors during acquisition of loans.
Director of Sustainability at the Supervision Department of the Bank of Ghana, Stephen Armah disclosed this during an interaction with Small and Medium Enterprise Businesses at the Absa SME clinic in commemoration of this year’s world MSME day under the theme; adopting ESG practices for business growth.
“This Directive sets out the supervisory expectations for stakeholders in relation to the approach to management and disclosure of climate-related financial risks
with a focus on corporate governance, internal control framework, assessment of adequacy of capital and liquidity, risk management process, management monitoring and reporting, comprehensive management of specific financial risks, scenario analysis and disclosures” he noted.
At the same event, interim Managing Director for Absa Bank, Adolph Kpegah assured SMEs that the bank will continue to provide such platforms as the SME clinic to support knowledge sharing on their business growth.
The event underscores the bank’s commitment to promoting sustainable business practices within the SME sector.
The clinic aimed to educate SME owners on the importance and benefits of integrating environmental, social and governance practices into their operations.
Bank of Ghana (BOG) recognizes that Regulated Financial Institutions (RFIs)
In Ghana are potentially exposed to climate-related financial risks regardless of their size, complexity or business model, and that climate-related financial risk drivers can translate into traditional financial risk categories including: credit, market, liquidity, and operational risks. According to the draft document,
RFIs shall therefore consider the potential impacts of climate-related risk drivers
On their individual business models and assess the financial materiality of these risks.
RFIs in Ghana are also expected to manage their climate-related financial risks in a manner that is proportional to the nature, scale and complexity of their activities and the overall level of risk that it is willing and able to accept.
The aim of this Directive is to enhance the management of climate-related financial risks by RFIs and, consequently, contribute to a more resilient financial system in Ghana that can effectively contribute to sustainable
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