The Bank of Ghana’s move to compel banks to factor in climate risks when financing construction projects has stirred debate among industry stakeholders. While the central bank argues it’s a step toward sustainable development, critics warn the directive could stifle growth in Ghana’s already fragile construction sector. Developers fear that stricter lending criteria may slow down access to credit, further inflating building costs and deepening the housing deficit.
Speaking at the opening of the Ghana Sustainable Banking Principles Construction Sector Deep Dive in Accra, Second Deputy Governor of the Bank of Ghana, Mrs. Matilda Asante Asiedu, underscored the rising financial risks posed by climate-related disruptions in the construction industry.
She noted that while traditional credit assessments focus on indicators like cash flow and collateral, banks must now factor in climate variability, regulatory compliance, and resource efficiency as core components of risk evaluation.
“The construction industry is deeply linked with climate, resource efficiency and financial risk,” Mrs. Asiedu said.
She said delays in environmental permits or the impact of rising temperatures and erratic rainfall can derail project timelines and push costs beyond projections, increasing default risks.
The event is the third in a series of sector-specific engagements under the Ghana Sustainable Banking Principles (GSBPs), following earlier sessions focused on agriculture and manufacturing. These sessions are designed to help banks better understand how ESG issues intersect with credit risk and to encourage proactive risk management.
The Deputy Governor emphasized that ESG considerations should not be treated as an afterthought or a branding exercise. “ESG is not about PR. It’s a framework for measuring an organization’s long-term sustainability and resilience, I t’s about how they manage their footprint, treat their community, and govern themselves,” she said.
Highlighting the Bank of Ghana’s journey toward embedding sustainability in the financial sector, Mrs. Asiedu said the central bank began this process in 2015 with the formation of the Sustainable Banking Committee. The Ghana Sustainable Banking Principles were formally launched in 2019, and in 2021, banks began using a standardized ESG reporting system via the Online Regulatory Analytics and Surveillance System (ORASS).
Since then, the compliance rate among Ghana’s 23 commercial banks has risen steadily from 42.28% in March 2021 to 73.06% as of March 2025.
Mrs. Asiedu commended the banks for their progress, attributing the gains to capacity building, enhanced oversight, and stakeholder cooperation.
She also mentioned key partnerships with the International Finance Corporation (IFC), Ghana Association of Banks (GAB), Environmental Protection Agency (EPA), and Ghana Meteorological Agency (GMET), which have helped develop critical tools such as the Green Finance Taxonomy and the Sustainable Finance Roadmap.
To further institutionalize climate risk management, the BoG issued its Climate-Related Financial Risk Directive in 2024. Banks are expected to fully comply with the directive by December 31, 2025, ahead of full implementation on January 1, 2026.
The directive mandates regulated financial institutions to update their governance structures, risk management frameworks, and disclosure practices to address climate-related financial risks.
The Deputy Governor also acknowledged the establishment of the Bank’s dedicated Climate and Sustainability Office in 2023 to drive ESG integration and stakeholder engagement.
Turning the spotlight back on the construction sector, Mrs. Asiedu stressed that today’s discussions must go beyond theory and lead to concrete actions that align risk management with sustainability. “Banks must not merely react after risks materialize,” she said. “They must embed sustainability at the core of project due diligence, client engagement, and portfolio monitoring.”
She urged participants drawn from banks, regulators, professional bodies, and development partners to engage openly, share insights, and develop practical tools for embedding ESG into construction financing.
“Let us build not just roads and bridges,” she said, “but also a resilient and forward-looking financial system.”
