Second Deputy Governor of the Bank of Ghana (BoG) Elsie Addo Awadzi has said that the recent occurrences in the global economy including the Covid-19 pandemic and macroeconomic challenges in most countries has created a lot of uncertainty.
Many countries, she said, are trying to recover from the devastating effects of Covid-19 crisis in addition to macroeconomic challenges including high inflation, unemployment and economic recession.
In times of uncertainties, Madam Awadzi said, sustainable banking is even more important as it can help mitigate inherent and potential risks and create long-term value for all stakeholders in banking business.
Sustainable banking is when a bank changes its internal operations to lower or eliminate its environmental impact through initiatives.
“One of the key challenges facing banking business is uncertainty and volatility of markets and economies. However, sustainable banking can help address these challenges by promoting risk management with a forward-looking view, as well as helping to build more resilient and sustainable economies.
“In order to remain resilient in times of uncertainty, sustainable banks need to focus on the following strategies Risk management: Sustainable banks should focus on understanding and managing the ESG risks and opportunities associated with investments and loans,” she said at the launch of IFC’s Environment, Social and Governance (IESG) Ghana Programme on Thursday April 27.
He further stated that this involves assessing and monitoring the social and environmental impacts of banks’ investments/loans, as well as the potential financial risks and opportunities associated with these impacts; Innovation: Sustainable banks should embrace innovation and new technologies to drive sustainable economic growth.
This includes investing in renewable energy, energy efficiency, sustainable agriculture, and other sustainable technologies; Stakeholder engagement: Sustainable banks should engage with a wide range of stakeholders, including customers, communities, and regulators, to build trust and ensure that they satisfy the needs and expectations of all stakeholders; Transparency and disclosure: Sustainable banking should be transparent about ESG performance and report on progress towards sustainability meeting goals.
This includes disclosing information about their ESG risks, impacts, and opportunities, as
well as strategies for managing these risks;and ▪ Collaboration: Sustainable banking involves working together with all stakeholders, including governments, NGOs, and other
banks, to create a more sustainable and resilient global economy.
“Overall, sustainable banking is a crucial tool for addressing challenges of uncertainty and volatility in the global economy.
“By integrating ESG criteria into banks’ decision-making processes, banks can create long-term value for both society and investors, while promoting a more sustainable and equitable future.”
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