The Bank of Ghana (BoG) Governor, Dr. Ernest Addison, has outlined plans to address climate risk and strengthen the financial system – including issuing a climate-related financial risk directive to provide guidance on addressing environmental risks and related issues in the industry.

Speaking at the Chartered Institute of Bankers-Ghana’s 60th anniversary launch, Dr. Addison revealed that the BoG is working on a climate directive as a means of safeguarding the industry as it charts the path toward recovery.

He stated that climate risk is increasingly becoming a material risk, especially for institutions exposed to vulnerable sectors of the economy.

“These initiatives are aimed at building a robust financial system that is resilient to climate-related shocks,” Dr. Addison said.

In addition to the climate-related financial risk directive, the BoG is also working on scaling-up the regulatory reform agenda through engagements with the Ghana Association of Banks (GAB) on the roll-out of Pillar 2 of the Basel II/III capital framework.

Pillar 2 of the Basel II/III capital framework will ensure that banks hold adequate capital for all material risks inherent in their operations.

The Governor also said the BoG has successfully completed industry training on all seven Ghana Sustainable Banking Principles.

The Ghana Sustainable Banking Principles and the Sector Guidance Notes reflect a process-led initiative to take account of environmental considerations, social inclusion and good governance in lending decision-making by banks in the country.

“It is also a guide to banks in mainstreaming the fundamental tenets of sustainability in business and operations, leading to enhanced growth and increased returns,” he added.

The BoG has also incorporated a limited asset quality review in its supervisory programme for 2023.

This special exercise is being conducted by the Bank to assess the health of banks’ loan and investment portfolios – in order to determine whether their asset classifications are in line with the required classification norms as well as International Financial Reporting Standards.

Dr. Addison said the BoG is committed to ensuring a safe and sound financial system that supports economic growth and development.

“We will continue taking steps to address challenges facing the financial sector, including climate risk,” he said.

Taking his turn, Chief Executive Officer-CIB, Robert Dzato, reaffirmed the institute’s commitment to ethics and professionalism in banking, saying the ethical conduct and professionalism of bankers will play a pivotal role in advancing or hindering efforts to restore faith in the financial sector

Consequently, he said, the institute will allocate significant resources in the medium-term to focus on this critical aspect.

Mr. Dzato further announced that this year’s annual conference, which coincides with its 60th anniversary, will be known as the National Banking Ethics Conference – centred on the theme.

He also announced the introduction of an executive leadership programme by the institute, which is targetting executive level bankers who seek to lean on the experience and expertise of their forebears.

Governor Addison proposed expanding the programme to include modules on financial crime, cybersecurity, the role of boards in governance, operational resilience, risk management and senior management culture and conduct.