The government has launched the first phase of its Green Finance Taxonomy at the 2024 Annual SDGs Investment Fair, in Accra.
This initiative, part of Ghana’s broader green economy strategy, seeks to provide clear guidelines on what constitutes environmentally sustainable investments and direct public and private finance towards projects that align with the country’s climate goals.
The Ministry of Finance is responsible for the development and implementation of this initiative. The Bank of Ghana, along with other regulatory bodies, is expected to guide the integration of this taxonomy into the financial sector, ensuring that banks and financial institutions adopt green financing principles. This move is expected to position Ghana as one of the leaders in green finance in Africa.
The Green Finance Taxonomy is a classification system that defines and categorizes green economic activities and investments. It provides a benchmark for identifying projects, assets, and businesses that are environmentally sustainable, helping to attract investment to sectors such as renewable energy, sustainable agriculture, clean transportation, and energy efficiency.
The taxonomy will serve as a guide for investors, financial institutions, and policymakers to channel investments into sectors and projects that promote environmental sustainability and climate resilience. By clearly defining what qualifies as “green,” the framework aims to prevent greenwashing and ensure that funds are directed towards genuinely sustainable initiatives.
The Green Finance Taxonomy aligns with Ghana’s commitments under the Paris Agreement and the country’s Nationally Determined Contributions (NDCs), which outline key actions to mitigate climate change and adapt to its impacts. The taxonomy will support Ghana’s goal of becoming a low-carbon economy while fostering economic growth and job creation in green sectors.
With the launch of the taxonomy, Ghana is expected to see an increase in the issuance of green bonds and other sustainable finance instruments. These tools will provide companies and government agencies with access to funds earmarked for climate-friendly projects, further boosting the country’s transition to a sustainable economy.
The government’s focus on climate-resilient infrastructure development is a key aspect of the Green Finance Taxonomy. By identifying projects that contribute to environmental sustainability—such as renewable energy plants, eco-friendly buildings, and sustainable transport systems—the taxonomy aims to build a more resilient and adaptive infrastructure capable of withstanding climate-related risks.
By establishing clear guidelines for sustainable investments, the Green Finance Taxonomy is expected to attract both domestic and international investors. Investors seeking to meet their Environmental, Social, and Governance (ESG) criteria will find it easier to identify opportunities in Ghana’s green sectors, helping the country tap into the growing global green finance market.
The taxonomy will encourage investments in projects that mitigate climate risks and enhance Ghana’s adaptation capacity. Sectors such as sustainable agriculture, forest conservation, water management, and renewable energy will benefit from increased financing, contributing to the country’s resilience against climate impacts like extreme weather events and biodiversity loss.
As Ghana transitions to a green economy, the government expects growth in sectors like clean energy, eco-tourism, and sustainable agriculture. This transition is likely to lead to job creation, especially for young people, in industries such as solar energy, recycling, and organic farming.
The Green Finance Taxonomy will play a key role in mobilizing climate finance, particularly from development partners, multilateral banks, and green funds. By providing a clear structure for evaluating green projects, the taxonomy will facilitate access to climate-related funding for both the public and private sectors.
Source:thehighstreetjournal.com