The COVID-19 pandemic has revealed how fragile our business and global systems are. In our quest to rebuild our societies and economies, it is evident that we cannot go back to business as usual.
More than ever we require new types of business leaders, a regenerative strategy, and multi-stakeholder dialogues to promote the benefits and gains of embedding sustainability into corporate strategy.
In a study by KPMG on embedding ESG into banking strategies, it was revealed bank executives understand that new reality will require them to pivot their finance towards greener and more sustainable companies and investments i.e. creation of green assets. However, whilst brown assets continue to generate profits for the bank, executives will need to balance their duty to finance these new green assets and ESG transition against their fiduciary duties to shareholders.
Banks, regulators and politicians are also struggling to understand all the potential unintended consequences of their shift towards more ESG-related business strategies.
For example, declining loan renewal on existing coal mines can improve a bank’s carbon disclosures, but it could also lead to significant social implications as mines close and unemployment grows; which, in turn, would have a massive impact on that market’s retail lending and potential impairments.
It is in this light that the Ghana Green Building Summit under its Green Living Webinar Series organised the ‘Leadership in Business Sustainability’ webinar to further explore how sustainability can be embedded into corporate strategy.
Founder and convener, Cyril Nii Ayitey Tetteh, re-emphasized the imperativeness of this conversation from the view of all key actors in the value chain. “Shareholders are now keen on the adoption of Environment Social Governance (ESG) management principles especially as ESG assets are now first in line to attract bigger funding and investments” Cyril further reiterated that business leaders are left with little choice but to go green as consumers and employees are becoming the real drivers of sustainability adoption. Consumers, especially the younger generation, who are digital natives are demanding social and environmental commitments from businesses as well as quality, value for money products, and services. Employees are becoming socially conscious and are looking for firms with strong ESG credential; the latter are able to attract and retain the best talents due to their credentials.
Clearly, ESG, which is the consideration of environmental, social and governance factors alongside financial factors in the investment decision-making process, is imperative for modern businesses.
Companies who have incorporated ESG matters into their strategy have gained several benefits including increased market trust and value for shareholders.
Joined by 90 C-Suite executives and key decision makers for a lively session, the ESG session moderated by Mark Kwafo, Environmental & Social Risk Coordinator, Ecobank Ghana and AWA presented an overview of the general ESG principles. Taking into cognizance the role of the Sustainable Development Goals (SDGs), the panel also explored how to obtain the buy-in of business leaders with respect to incorporating ESG principles into overall corporate strategy.
The panel made their submissions as practicable and relatable to the audience, and for those who struggle to grasp the concept of sustainability, Pearl Uzokwe, Director for Governance and Sustainability, Sahara Group, Nigeria offered a simplified view “Sustainability is ensuring continuity as it concerns your environmental impact, social impact and interaction with society, your governance standards; determining that whatever you do as a corporate citizen does not leave things worse off, improve on things as opposed to making it worse”
Making a business case for sustainability, panelists urged business leaders to rethink the concept of ESG where it is seen as a cost and compliance issue and rather see it as a value creator.
In the second part of the webinar, the panel on impact investing and green bonds provided insight into raising funds for sustainable and climate friendly projects.
Setting the tone for the discussion, Raghav Gandhi, Managing Director of Acorn Investment Management Limited, Kenya shared with attendees their journey in raising the first listed green bond in Kenya where they raised a 4.3 billion Kenyan Shilling green bond and have since built a green-certified accommodation for 5,000 students in Nairobi.
Raghav recommended focusing on building proof of concepts that could attract institutional investors who have patient capital to support such development projects.
Expanding further on green bonds, Dr. Jubril Adeojo – MD, SME Funds, Nigeria & Climate Finance Expert, Nigeria reminded attendees on the need to focus more on the end goal of bonds rather than the label of the bond.
“There are instances where the bond isn’t labelled green but are called strongly aligned green or climate bonds because the underlying project either mitigates or adapts to climate change to deliver sustainable projects, and that should be the real message” Dr. Adeojo asserted.
Ebenezer Arthur – Founder and CEO of Wangara Green Ventures, Ghana, also highlighted the available options to measure impact; one of which is to tie them to SDGs to see which of them is being impacted, be it job creation, gender equality etc.; other options, especially for climate focused funds is to use the Impact Management Project (IMP) or the Operating Principles for Impact Management by the IFC. He intimated that there isn’t a one size fits all approach as different funds have different criteria “it is basically about intentionality and deciding what you want to see as the outcome before investing and agreeing that with the investee company” Ebenezer reiterated.
The webinar brought to fore not only the environmental and social gains of adopting sustainability but also the financial benefits thereof. It demonstrated that balancing purpose with profit is indeed achievable and everyone in the chain wins; shareholders, employees, and consumers whilst protecting the environment for the sustenance of future generations.
These sentiments were reechoed by Dennis Papa Odenyi Quansah, Green Building Lead-Ghana, IFC EDGE Program, in his closing remarks. IFC EDGE Program supported the webinar was which organised by Ghana Green Building Summit and Yecham Property Consult with support of donors Ecobank, Ahaspora, Business & Financial Times and Joy News.