The Bank of Ghana (BoG) has set a December 2025 deadline for banks across the country to comply with the ambitious Climate-Related Financial Risk Directive, in the wake of the heightened global conversation on climate change.
The initiative introduced by the Central Bank this month is aimed at aligning the country’s financial system with global sustainability.
It is also expected to mitigate the risks posed by the impact of climate change and build a resilient financial system in the face of climate threats.
The Climate-Related Financial Directive cited by The High Street Journal demands that Regulated Financial Institutions (RFIs) including banks, mortgage companies, and leasing companies, among others amend their governance, operations, and business models to include climate-related risks.
RFIs that fail to comply with the new directive potentially risk falling behind in the world financial architecture which has become climate change conscious.
The Central Bank further argued that failure to adapt to climate-related issues could destabilize and threaten the resilience of the country’s financial system.
“Institutions must assess the financial materiality of these risks and ensure resilience in the face of severe climate events,” parts of the directive stated.
BoG said from catastrophic floods to economic shocks caused by the transition to a low-carbon economy, the financial sector must adapt swiftly.
To facilitate quick adaptation to this directive, banks have been given up until December 2025, ultimatum, to comply with the directive’s requirements, while specialized deposit-taking institutions (SDIs) and non-bank financial institutions (NBFIs) have an extended timeline until December 2026.
“The effective implementation date of this Directive shall be 1st January 2026 in the case of banks and 1st January 2027 in the case of SDIs and NBFIs,” the new directive indicated.
It further added that “RFIs are required to align their governance arrangements, risk management frameworks and internal policies and processes with the requirements of this Directive by 31st December 2025 in the case of banks and 31st December 2026 in the case of SDIs and NBFIs.
“To facilitate the monitoring of the implementation of this Directive by BOG, RFIs shall provide quarterly updates on the initiatives being undertaken to ensure compliance with this Directive.”
Some experts believe that the implementation of this directive will have a significant impact on consumers and businesses.
These changes, the experts say promise a more sustainable financial ecosystem, but they may also bring shifts in lending practices and investment priorities.
The latest development presents an opportunity for financial institutions to innovate, offering green financing options and supporting industries transitioning to sustainable practices.
