Accelerating Climate Finance in Ghana through the Utilisation of Green Bonds

Photo credit: Available with a Creative Commons BY-NC 4.0 licence

Situation

The use of green bonds - debt instruments whose proceeds are used to fund initiatives that create benefits for the environment and contribute towards climate change prevention and mitigation - has grown in popularity across Africa, representing a commitment to accelerate and unlock climate finance and advance sustainable development. They can be used to fund projects across diverse sectors, such as renewable energy, efficient energy use, forest conservation and waste management. Green bonds therefore have significant implications for food security, livelihoods and economic stability. However, they are also inherently vulnerable to abuse, weak implementation and inadequate monitoring and evaluation: issuers may engage in greenwashing by misrepresenting projects as environmentally sustainable, while funds may be diverted from their intended purposes. Clear guidelines need to be set to monitor their use.

In 2024, the Ghana Securities and Exchange Commission developed the Securities Industry (Green Bond) Guidelines, 2024. ILP assisted its partner, Green Tax Youth Africa (GTYA) to assess these Guidelines against international standards and determine whether they provide an adequate and credible framework for green bond governance and implementation.

ILP’s Action

ILP and its network of volunteer lawyers completed a comprehensive study that analysed the Guidelines, identifying both their strengths and weaknesses and the role of green bonds in financing environmentally sustainable projects. The study evaluated the Guidelines’ provisions that aim to ensure that only eligible green projects are financed, and the requirement to mandate regular reporting to assess how funds are spent and the environmental results achieved. The study made recommendations for a structured framework for green finance project selection, management of proceeds, reporting and external verification. The findings were then presented by our pro bono lawyers to civil society organisations, academics, state representatives and financial institutions at a validation session led by GTYA and ILP.

Impact

The study increased the capacity and expertise of members of the public and representatives from civil society organisations on the use of the Guidelines. In particular, the study’s findings and recommendations were used to guide GTYA’s advocacy, helping civil society organisations, academics and state institutions to highlight current gaps in the legal framework regulating green bonds. As a result, they will be better able to progress change in Ghana by ensuring transparency, comparability, credibility and accountability in the green bond market, while also aligning national initiatives with global goals such as the Paris Agreement and the UN Sustainable Development Goals.