Green Finance Becomes Essential for Ghanaian Businesses

Accra:Ghanaian businesses can no longer afford to ignore the growing importance of green financing. Climate change has already started to impact businesses across the country, with rising energy costs, disrupted supply chains, and logistics delays due to floods becoming common challenges. These issues have particularly affected small and medium-sized enterprises (SMEs), which make up about 92% of registered businesses in Ghana and contribute nearly 70% of the country's GDP. According to Ghana Web, sustainability, once seen as a concern primarily for large corporations, is now a critical factor for businesses of all sizes. The way a company manages energy, water, and waste can determine its ability to win contracts, secure financing, and maintain competitiveness in the market. The financial sector in Ghana is also evolving, with the introduction of the Bank of Ghana's Sustainable Banking Principles and the Climate-Related Financial Risk Directive, which require financial institutions to consider environmental and social risks. The Ministry of Finance's publication of Ghana's first Green Finance Taxonomy in October 2024 has provided a clearer framework for banks, investors, and businesses to identify genuinely 'green' activities. This move supports the transition towards sustainable practices in sectors such as energy, transport, and agriculture. Green financing is becoming embedded in mainstream lending, making it easier for businesses that manage environmental risks and resource efficiency to attract capital and compete locally and internationally. However, the main barrier to accessing green capital is not the availability of funds but a lack of information. Many SME owners are unaware of the opportunities available to support sustainable transitions. Access Bank Ghana, in partnership with Birmingham City University, is addressing this information gap. They have organized workshops focusing on sustainable business models and green financing structures to help SMEs understand what lenders expect and how to qua lify for green financing. Sustainability assessment is being integrated into credit processes, offering better financing terms to businesses with strong environmental practices. Businesses are encouraged to engage with banks now to position themselves as sustainability becomes a standard rather than a differentiator. Access Bank's initiatives, alongside collaborations with other organizations, aim to support SMEs in navigating this shift towards sustainability, ensuring that they are well-prepared to thrive in the future.