In view of the global direction towards sustainable development, Partner – Internal Audit, Risk and Compliance at KPMG, Kwame Sarpong Barnieh, has advised businesses in the country to adopt environmentally, social, and governance (ESG) principles in their practices in order to attract investments.
Over the years, investors have focused on returns and security of investments, however, attention is shifting towards how these investments impact the society and the environment and what corporate governance structures are in place to achieve this.
It is against this background that Mr. Barnieh, speaking at day two of the Ghana Economic Forum (GEF) 2021, organised by the B&FT, urged corporate institutions to incorporate the ESG principles in their activities in order to attract investors who have become sensitive to the impact of business practices on the environment, adding that out of every 10 investors, about seven look out for businesses that operate based on ESG principles.
“Scientifically and practically, if you break down the ESG principles, it is actually a better way of running a business in the sense that, the business is able to put out other things they do, other than the financials.
For instance, making money is one thing, but how you make the money and the resources you used to make that money, and the impact you made on society is being measured. As you are able to measure that, what happens is that the business is able to become friendlier to the society,” he said.
Global concerns in the past two decades have been on climate change and the need to protect and sustain the environment. Across different sectors and various levels of global leadership, concerns have also been raised with some solutions proffered to address this issue as well as social challenges and poor corporate governance practices.
Key among the approaches in dealing with issues of climate change is the promotion of sustainable financing. Sustainable financing requires the need for businesses to modify their traditional models and modus operandi to incorporate ESG principles.
A study by KPMG on embedding ESG principles into banking strategies shows that bank executives understand that a new reality will require them to pivot their finance towards greener and more sustainable companies and investments, which is the creation of green assets.
As part of its ongoing multi-billion-dollar investment program, KPMG plans to spend more than US$1.5 billion over the next three years specifically to focus on the environmental, social, and governance change agenda.
The ESG strategy is designed to support KPMG’s clients in making a positive difference. This strategy is underpinned by KPMG’s recognition of its responsibility to improve its impact on the world and the ESG commitments outlined in the company’s impact plan.
The collective investment will focus on training and expanding KPMG’s global workforce, harnessing data, accelerating the development of new technologies, and driving action through partnerships, alliances, and advocacy. The key to the transformation will be embedding ESG in the organization and client solutions to drive measurable change.
In 2019, the Bank of Ghana launched the Sustainable Banking Principles and Sector Guidance Notes for the banking industry, while the Securities and Exchange Commission (SEC) also signed an agreement in May 2021 with the International Finance Corporation (IFC) for the development of a green bonds market in Ghana.