Ghana: UNDP Develops First Biodiversity Finance Plan for Green Lending

• Ghanaian financial institutions are being urged to consider environmental impact before granting loans, as the nation's natural assets valued at US$1.5 billion are at risk.
• The UNDP and the Ghanaian Government are developing the Ghana Biodiversity Finance Plan under the Biodiversity Finance Initiative, launched in April 2025, to identify funding gaps and explore innovative financing options like green bonds.
• Over half of Ghana's GDP and GH¢647 billion in financial assets are directly exposed to risks from natural resource degradation, impacting agriculture, businesses, and loan repayment capacity.
• Banks are advised to assess environmental and social impacts of projects, integrate sustainability into board discussions, and scrutinize practices in high-risk sectors like mining and agriculture.
• Ghana has lost approximately 80 percent of its original forest cover, primarily due to illegal mining, deforestation, and pollution, necessitating urgent action from both public and private sectors.

Financial institutions are specifically advised to meticulously scrutinize the environmental practices of businesses, particularly those operating in high-impact sectors such as mining, agriculture, and manufacturing, prior to granting credit.

Ghanaian financial institutions are being urged to fundamentally re-evaluate their lending practices, with a strong emphasis on the environmental impact of businesses seeking credit. This call comes as the nation faces significant risks to its natural assets, estimated to be worth US$1.5 billion, due to ongoing biodiversity loss. Financial entities are now encouraged to direct more capital towards enterprises actively involved in preserving vital natural resources like forests and water bodies, a move intended to bolster the economy and mitigate financial vulnerabilities.

This critical appeal was a central theme at a recent Biodiversity Finance Plan workshop held in Accra. The event, a collaborative effort between the United Nations Development Programme (UNDP) and the Ghanaian Government, aimed to galvanize private sector investment for biodiversity conservation. Stakeholders convened to explore avenues through which financial institutions could champion sustainable economic activities, thereby assisting Ghana in confronting escalating threats to its natural environment.

Mr. Abdul-Razak Saeed, the Cluster Lead for Environment and Climate at the UNDP Ghana Country Office, highlighted a significant misalignment between Ghana's economic development trajectory and its commitment to nature protection, despite the country's profound reliance on its natural resources. He articulated a clear "disconnect" in how nature is integrated into the national economic framework. In response, the UNDP is actively collaborating with the ministries responsible for environment and finance to formulate Ghana's inaugural Biodiversity Finance Plan.

This comprehensive plan is being developed under the broader Biodiversity Finance Initiative, which was launched in April 2025. Its primary objectives include identifying existing funding gaps in biodiversity conservation efforts and investigating innovative financing mechanisms. These mechanisms encompass instruments such as Ghana green bonds, biodiversity credits, and debt-for-nature swaps, all designed to attract crucial private sector investment into environmental protection.

The nation's economic stability is deeply intertwined with its natural environment, with more than half of Ghana's Gross Domestic Product (GDP) directly dependent on nature. This reliance means that the destruction of natural resources poses substantial risks to the financial sector, which holds assets valued at an estimated GH¢647 billion, representing approximately 45 percent of the country's GDP.

Mr. Nurokinan Chimbar, a Sustainable Finance Specialist, underscored how the degradation of critical ecosystems—including forests, water bodies, and marine environments—can severely undermine agricultural output, disrupt business operations, and ultimately diminish borrowers' capacity to repay loans. This vulnerability necessitates a proactive approach from financial institutions. Environmental Policy Analyst Ms. Pamela Quaye further emphasized the urgency, noting that Ghana has lost approximately 80 percent of its original forest cover, with only 21 percent remaining, largely due to illegal mining, deforestation, and pollution. This continued ecological destruction demands immediate and concerted action from both public and private entities.

To address these pressing concerns, Mr. Enoch Appiah, the Biodiversity Finance Manager, stressed that Ghanaian banks and other financial institutions must evolve beyond traditional lending paradigms. He advocated for a rigorous assessment of the environmental and social impact of projects before any financing is extended. This shift requires sustainability to become a regular agenda item in board and management meetings, with performance metrics expanding beyond mere loan volumes to include the environmental outcomes of investments.

Financial institutions are specifically advised to meticulously scrutinize the environmental practices of businesses, particularly those operating in high-impact sectors such as mining, agriculture, and manufacturing, prior to granting credit. This enhanced due diligence is crucial for mitigating the financial sector's exposure to environmental risks and aligning lending practices with the nation's broader sustainability goals, thereby strengthening the overall resilience of the Ghanaian economy.

Lawyers advising financial institutions in Ghana should monitor the development of the Biodiversity Finance Plan for new environmental due diligence requirements in lending, potentially impacting client loan applications and compliance frameworks. Compliance officers will need to prepare for integrating environmental and social impact assessments into their risk management frameworks for loan approvals.

Source: Original reporting via Ghanaian Times