Ghana’s banking sector faces growing exposure to financial risks from biodiversity loss, as the degradation of forests, water bodies and other natural resources threatens the businesses and economic activities underpinning banks’ loan portfolios.
With banks managing nearly GH¢647 billion in assets, the implications extend beyond environmental protection to the quality of lending, business continuity and the long-term stability of the financial sector.
Businesses in agriculture, manufacturing, mining, tourism and other nature-dependent industries rely heavily on natural resources for production and operations. As these resources deteriorate, businesses could face higher operating costs, reduced productivity and weaker revenues, potentially affecting their ability to repay loans.
The development has heightened calls for financial institutions to integrate biodiversity risks into their lending and investment decisions, using the Bank of Ghana’s Sustainable Banking Principles as a framework for assessing the environmental sustainability of financed activities.
Participants at a stakeholder engagement on Ghana’s Biodiversity Finance Plan said the banking industry needed to move beyond conventional credit and market risk assessments to recognise environmental degradation as a potential source of financial instability.
The workshop, organised by the United Nations Development Programme (UNDP) Ghana, brought together government officials, regulators, financial institutions and development partners to explore mechanisms for redirecting capital towards activities that protect and restore nature.
Dr Saeed Abdul Razak, Environment and Climate Lead at UNDP Ghana, told the Ghana News Agency that the banking sector had a significant financial stake in biodiversity conservation because the businesses it financed depended largely on natural resources.
He said banks needed to give biodiversity the same level of attention as credit and market risks by screening clients for activities such as deforestation, overfishing and pollution that could undermine the sustainability of their operations.
He said financial institutions also needed to increase investments in biodiversity-friendly businesses and direct part of their Corporate Social Responsibility funding towards conservation, training and public awareness.
Dr Razak said the UNDP was working with the Government, through the Ministry of Environment, Science and Technology and the Ministry of Finance, to develop a Biodiversity Finance Plan to address the disconnect between economic development and nature conservation.
He explained that the initiative would go beyond mobilising additional funding to examine existing financial flows, identify expenditure patterns and remove incentives that encouraged environmentally harmful activities.
Work was underway on a Biodiversity Finance Needs Assessment, a Policy and Institutional Review, and a Biodiversity Expenditure Review, which would inform the development of financing mechanisms for nature protection.
Mr Kingsley Owusu Anom, Head of Environment, Social and Governance (ESG) at the Agricultural Development Bank (ADB), said the banking sector’s assets under management represented about 45 per cent of Ghana’s Gross Domestic Product (GDP), underscoring the scale of its exposure to environmental risks.
He warned that biodiversity loss could undermine the financial institutions financing businesses whose operations depended on healthy ecosystems.
“When there is an impact on nature, an impact on biodiversity, it means that it is going to create risk for the very survival of the banks that we run,” he said.
Mr Anom said banks needed to develop specific biodiversity-focused financial products and incorporate environmental and social risk assessments into their lending processes rather than relying solely on general environmental screening.
He also urged financial institutions to use their CSR budgets more strategically to support conservation initiatives and build the capacity of businesses and communities to adopt environmentally sustainable practices.
To make biodiversity financing commercially attractive, he called on the Government to introduce incentives, including tax rebates and support for financial institutions seeking funding from multilateral institutions, the Green Climate Fund and other development partners.
Mr Raymond Ohene Ofori, Deputy Director at the Ministry of Environment, Science and Technology, said the Government was pursuing a unified governance framework to align the activities of different sectors towards environmental protection.
He said policy measures, including the Environmental Protection Authority Act, 2025 (Act 1124), and Ghana’s Green Taxonomy, reflected the country’s commitment to integrating environmental sustainability into economic and financial decisions.
