GSE launches green bonds rules
Coming swiftly on the heels of it launching a guidance manual for disclosures on Environmental, Social and Governance (ESG) reporting for listed companies, the Ghana Stock Exchange (GSE) has introduced rules for the issuance of green and sustainability-linked bonds (SBLs) to guide listing and trading such bonds on the local market.
The launch, which coincided with the Accra bourse’s 32nd anniversary, formed part of a broader revision of rules for the Ghana Fixed Income Market (GFIM) and was in fulfilment of the GSE’s pledge to put in place a working green and sustainable framework before close of the 2022 fiscal year.
A running theme through remarks on the day was that ‘sustainability-linked securities are not an end in themselves, but vehicles to achieve a more equitable and sustainable future in the face of adverse effects from climate change’.
The International Finance Corporation’s (IFC) Regional Director for West and Central Africa, Aliou Maiga, said while Africa appears to have been spared the worst effects of climate change, for now, there is a need to accelerate measures aimed at protecting the continent as it is likely to significantly be affected in the near-future. This, he said, informed his outfit to partner with GSE in developing the rules.
“What we are trying to do is to work with our partners, like the Ghana stock exchange, to develop the rules that will help them invest in creating an equitable, just and sustainable future for our kids and their kids and their kids. It is more than just a fancy concept,” he noted.
His comments come as a recently-published Country Climate and Development Report (CCDR) by the World Bank suggests that an additional one million Ghanaians could be pushed into extreme poverty by 2050 from climate shocks, with household incomes for some of the most vulnerable falling as much as 40 percent in that time.
With the IFC estimating that the potential for investments in clean energy infrastructure projects in sub-Saharan Africa (SSA) to be nearly US$783billion by 2030, Mr. Maiga is optimistic that the move by GSE will prove critical in attracting some of this capital into the country.
Describing the theme for the day – Investing into a Green and Sustainable Future – as “both well-timed and opportune”, Director General of the Securities and Exchange Commission (SEC), Daniel Ogbarmey Tetteh, said exponential growth in the green and sustainability bond market points to a shift in what investors consider important. He added that the domestic market must adjust to these developments.
“It is now globally posited that a failure to integrate ESG factors into investment decisions constitutes a failure to meet the fiduciary responsibility to clients, beneficiaries and the world at large,” he remarked.
“The Ghanaian capital market must not be left out of this global trend. We need to be well-positioned to take advantage of the rising tide of green capital by showcasing green and sustainable investment opportunities that are available in our markets,” Mr. Ogbarmey Tetteh added.
For his part, Senior Capital Markets Specialist at FSD Africa, Victor Nkiiri, noted that the issuance of green securities will have broad applications, as it will provide more sustainable solutions in areas such as agriculture, energy, affordable housing and waste management.
In what is expected to be his final public address as Managing Director of the GSE, Ekow Afedzie bemoaned the continent lagging behind other emerging markets in attracting green finance. This he attributed in part to, “a lack of interest from institutional investors and corporate bodies, and the government”.
He however noted that green bonds provide an opportunity not only for government and companies to raise finance, but also to support the drive toward sustainable development goals.
Mr. Afedzie said recent moves by the GSE – such as its admission into the UN Sustainable Stock Exchanges (SSE), the World Federation of Exchanges (WEF) and signing the Marrakech Pledge – seek to reverse the trend that has seen more than 70 percent of green bonds on the continent being issued in South Africa, Morocco and Nigeria.
“As we launch the rules today, I would like to challenge the listed companies in Ghana to issue green and sustainable bonds; so that together we can all contribute to the sustainable future that we all desire.
We will also urge companies to incorporate ESG initiatives into their strategic priorities and support efforts to create a sustainable future for us all,” the GSE’s MD said.
