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18.12.2019 Business & Finance

Financial Institutions Urged To Focus On Environmental Sustainability

Financial Institutions Urged To Focus On Environmental Sustainability
LISTEN DEC 18, 2019

The Coalition of NGOs Against Mining Atewa Forest (CONAMA) is calling on financial institutions to be guided by the social and environmental sustainability in their decision-making.

According to the group, the Dr Mahamudu Bawumia gave the advice during the launch of Ghana’s Sustainable Banking Principles (SBPs) where he emphasised that “financial institutions must include climate disruption issues into their risk management and reporting.”

CONAMA also said the President called for the incorporation of sustainability issues “into the responsibilities and reporting of market actors to guide their decision making.”

According to the green campaigners, the Dr Mahamudu Bawumia went on to say, “there is no doubt that environmental risk, and risk arising from climate change, in particular, constitutes a significant systemic risk for the financial sector.”

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“In a nutshell, the VP is advising careful assessment of the environmental and social sustainability and climate impacts of investments options to guide decision making in the finance sector, warning that environmental damage and climate change is a huge risk to their business activities,” the group said in a statement.

While welcoming these statements, CONAMA is highlighting the inconsistencies of the government because, according to the group, on the one hand, it seems to be warning financial institutions and market actors against investment in environmentally and climate-damaging activities due to the risk of financial instability, while on the other hand, it is seeking investment partners for projects that will have profoundly destructive impacts on Ghana's forests and the climate.

“Most significant for this investment is the planned bauxite development in Ghana's protected forests. Yet bauxite extraction, gold mining and other activities that destroy the forest are not heeding Dr Bawumia’s cautions.

“Firstly, sustainability issues have not guided decision making because, if they had, bauxite development in the protected forests and anywhere close to watersheds would have been ruled out long ago; and second, the destruction of Ghana's forests will contribute to the very environmental damage and climate change that he says is a risk to financial stability. Ghana is seeking investment for bauxite development, yet by Dr Bawumia’s advice, this is not advisable,” CONAMA said.

“Again, even though we commend the government greatly for actions to address galamsey, there are blatant galamsey activities currently on-going in several state-protected forest reserves and along streams and river bodies in the country that need a decisive and strong commitment to clamp down on these destructive commercially viable enterprises.

“These activities are being supported by loans from Ghana’s rural banks, contradicting the sound advice given by Dr Bawumia to the finance sector,” the group said.

According to the group, Dr Bawumia also pointed to government’s announcement to implement climate change and green economy programmes and projects that will “promote a clean environment, increase job creation and accelerate poverty reduction”.

“While this is good news, the on-going and planned damage to Ghana’s forests and the environment will only undermine any good brought about by these ‘green’ projects, as the VP has himself acknowledged. It is a vicious circle and one that Ghana must break free from,” CONAMA said.

The group wants to know the environmental analysis and sustainability considerations which Ghana Integrated Aluminum Development Corporation (GIADEC) made in respect of valuing the trade-offs associated with the intended plans to mine bauxite in a watershed like Atewa.

“The leadership of GIADEC are oblivious to the need for environmental sustainability in decision-making and have failed to recognise the risks to financial stability from environmental damage and climate change that will result from tampering with the Atewa Forest.

“Like Ostriches, GIADEC hides its head in the sand, knowing very well that they cannot walk their talk of environmental sustainability. It is shameful for GIADEC, the EPA and the government to preach virtue and practice vice,” the group said in the statement.

It said where the government and GIADEC have failed, it expects the global Natural Climate Solution Ambassador for Climate Action, China, and its state banks to take urgent steps to amend a financing deal that will see to the destruction of Atewa Forest, an important natural climate solution for Ghana.

“Ghana’s Sustainable Banking Principles and Sector Guidance Notes should also send strong signals to the Ghana Exim Bank and all financial institutions, both at home and abroad, who will dare consider financing any mining activities that will put Ghana’s watersheds and natural climate solutions at risk. We all have a watchdog role to play, where the government and GIADEC are seen just to be talking but without action.

“The Coalition of NGOs against Mining Atewa Forest has long recognised the threat that environmental damage and climate change pose not only to the financial sector but to all sectors of Ghana’s sustainable development and achievement of the SDGs, and has been one of the reasons for advocating against such damaging developments and towards green development.

“As the Vice President has been so emphatic about how environmental damage and climate change will threaten financial stability, the Coalition of NGOs Against Mining in Atewa Forest urges for consistency between government’s words and actions by exempting Ghana’s forests and other protected areas from all damaging developments and to allow only green development projects – which Dr Bawumia himself said will promote a clean environment, increase job creation and accelerate poverty reduction” – throughout Ghana and most especially in and around Ghana’s forests and other areas of high biodiversity and natural resource value,” the group counselled.