… seeks to bridge US$23bn climate investment gap
By Ebenzer Chike Adjei NJOKU
The Securities and Exchange Commission (SEC) has officially launched its guidelines for issuing green bonds, a move that aims to unlock billions in climate-focused investments and align the nation with rapidly expanding global green finance trends.
The development, which has been described as “monumental, is expected to position the nation at the forefront of sustainable finance within the sub-region and across the continent – helping to raise the approximately US$23billion in climate action investments from domestic and international sources that the country needs.
Speaking at the launch event, Director-Financial Services, Ministry of Finance, Sampson Akligoh stated that the launch marks a critical milestone in the nation’s quest to not only deepen its financial markets but also address ongoing climate issues.
“Green bonds are innovative instruments necessary to mobilise private capital toward solving the climate challenge. They drive capital into low-carbon emission and renewable energy infrastructure projects, proving crucial in our policies for a sustainable green economy,” the minister said in remarks read on his behalf by Head of the Banking and Non-Bank Unit at the ministry, Andrew Ameckson.
The guidelines, developed in collaboration with the International Finance Corporation (IFC), are designed to ensure transparency, disclosure and integrity in green bond issuances while preventing ‘greenwashing” – the practice of falsely promoting an environmentally responsible public image -in the burgeoning green securities market.
IFC’s Senior Manager for the Ghana Country Cluster, Kyle Kelhofer, said the move forms part of its longstanding partnership with Ghana, which has seen more than US$2.5billion brought into the local economy through the corporation.
“These guidelines are intended to support the establishment of a domestic market for green securities, ensure their credibility through transparency and integrity, and prevent issuance and investment in bonds that are falsely marketed as ‘green’… the guidelines are a blueprint for linking capital to sustainability, ensuring investments are not only sound but also environmentally responsible,” he insisted.
Director-General of the SEC, Daniel Ogbarmey Tetteh, highlighted that these guidelines are aligned with international best practices including the International Capital Market Association’s Green Bond Principles, ensuring transparency, credibility and risk mitigation. This alignment, he said, is crucial to instilling confidence among domestic and international investors.
“These guidelines are poised to reshape our financial landscape, unlock new avenues for investment and accelerate our nation’s progress toward a greener, cleaner and more prosperous tomorrow,” Mr. Ogbarmey Tetteh stated.
He also explained that the initiative aligns with the broader Capital Market Master Plan, a 10-year strategy launched in 2021 that focuses on diversifying investment products and strengthening market regulation.
“The guidelines are about harnessing the power of finance to address the most pressing challenges of our time. They are about investing in our planet, our people and our shared prosperity. To this end, I call on market operators to take advantage of these guidelines and create products that advance the capital market.
“I also call on asset owners, such as pension funds, to incorporate green issuances or products into their investment portfolios or asset allocations. Let us seize this strategic opportunity by working together to build a thriving green bond market that can drive sustainable growth, create green jobs and protect our environment for generations to come,” he elaborated.
This comes at a time when global green bond issuance has reached a record US$575billion annually, with World Bank projections suggesting it will surpass the US$1trillion mark imminently.
Despite this growth, green bonds currently account for only one percent of the total bond market – indicating significant room for expansion. The overall bond market size for green bonds is estimated at US$100trillion, presenting a vast opportunity for countries like Ghana to tap into sustainable finance.
The launch follows successful green bond market developments in other African nations. Kenya and Egypt have already made strides in this arena with the support of IFC expertise. Globally, countries are seeing rapid growth in their green bond markets.
For instance, India’s market – which started in 2015 – reached around US$6billion in 2021; and Singapore’s sustainable debt market grew from about US$2billion in 2018 to more than US$20billion in 2022.
The United States issued over US$70billion worth of green bonds in 2023, while China currently leads the pack with green bond issuances exceeding US$85billion as of end-2022.
To bolster the initiative, government is establishing an International Financial Services Centre (IFSC) to serve as a hub for regional green finance. Additionally, the domestic Credit Rating Agency Ghana (CRAG) is being set up to provide independent assessments of green bond issuances.
The Ghana Stock Exchange, which introduced rules for green and sustainability-linked bonds in April 2022, is expected to play a crucial role in the market’s development. This formed part of a broader revision of the Ghana Fixed Income Market (GFIM) rules to promote market opportunities.
