by Elorm Desewu
The framework for Ghana’s Green Finance Taxonomy is ready and its implementation would begin by next year May.
The Green Finance Taxonomy is designed to support interventions that address climate change, environmental protection, resource efficiency and promote sustainable development.
The framework serves as a critical tool for translating Ghana’s environmental and climate policy objectives into actionable criteria for investment and business decisions.
The Green Finance Taxonomy will be rolled out in phases: beginning with qualitative criteria development for the selected sectors (Phase 1), followed by the introduction of quantitative thresholds, tax exemptions and sector-based incentives by May 2025 (Phase 2), and the development of a transitional taxonomy thereafter to include carbon-intensive sectors like oil, gas, and mining (Phase 3).
This framework aims to unlock critical financing for sustainable investments, support Ghana’s climate goals, and enhance transparency and investor confidence while reducing the risk of greenwashing.
The Ghana Green Finance Taxonomy is a pioneering initiative that is intended to strengthen Ghana’s position as a leader in sustainable finance in Africa. By promoting environmentally sustainable activities, it ensures alignment of investments with both national and global sustainability targets, fostering long-term economic growth, climate resilience, and social equity.
A critical component of the taxonomy is its technical screening criteria, which encompass five main pillars: climate change mitigation, climate change adaptation, environmental protection, resource efficiency, and pollution prevention.
It aligns Ghana’s economic growth with sustainable environmental practices, outlining priority investment areas for consideration by investors and programme/project designers. The Ghana Green Finance Taxonomy aims to establish a clear and consistent classification system for identifying environmentally sustainable economic activities and what constitutes a green investment.
This framework serves as a guide for investors, businesses, financial institutions, and policymakers to channel investments towards projects that contribute to environmental sustainability and climate resilience.
The Green Finance Taxonomy is a critical component of Ghana’s broader strategy to transition to an orderly and just low-carbon, climate resilient, and sustainable economy.
The Ghana Green Finance Taxonomy is a strategic framework designed to guide investments toward a sustainable and climate-resilient economy.
As West Africa’s first green taxonomy, it establishes clear criteria for identifying environmentally sustainable economic activities, providing financial institutions, investors, businesses, and policymakers with a structured approach to direct capital toward projects aligned with Ghana’s environmental, social, and economic objectives.
Aligned with commitments under the Paris Agreement and the Sustainable Development Goals (SDGs), the taxonomy initially focuses on key sectors, including energy, transportation, agriculture, forestry, aquaculture, water and waste management, and building and construction.
The principles of “Do No Significant Harm” (DNSH) and minimum social safeguards further guarantee that green activities do not result in adverse social or environmental impacts and promote social inclusion and equity. The taxonomy is governed by a diverse stakeholder committee, ensuring it remains dynamic, transparent, and responsive to evolving environmental challenges.
Pursuant to the implementation of the Paris Agreement on Climate Change and the United Nations Sustainable Development Goals (SDGs), which cover climate change mitigation, adaptation, and finance, the world has witnessed increasing narratives on sustainable financing for investments.
In line with Ghana’s commitment to promoting and strengthening climate and environmental practices towards achievement of the Sustainable Development Goals (SDGs) by 2030 and beyond, the Green Finance Taxonomy Framework represents a key milestone in this journey.
Through this initiative, Ghana aims to position itself as a leader in sustainable finance within the African Continent, setting a benchmark for how developing nations can integrate environmental considerations into financing of environmentally and economically viable projects in key sectors of the economy.
A Green Taxonomy is a classification system that identifies and categorises activities, investments, and assets that contribute to environmental sustainability. According to the International Capital Market Association (ICMA), such a taxonomy serves as a framework for directing capital towards activities that align with specific environmental objectives, thus supporting a country in achieving its sustainability targets.
