October 16, 2024
The Ministry of Finance has launched the first phase of a green finance taxonomy for Ghana (the GF Taxonomy). The GF Taxonomy aligns with Ghana’s climate action commitments under the Paris Agreement and the United Nations Sustainable Development Goals and is expected to guide investments toward a sustainable and climate-resilient economy.
The GF Taxonomy adapts a multiphase approach to implementation with the aim to mitigate potential disruptions while guiding a gradual shift to a low carbon economy.
The first phase of the GF Taxonomy:
(a) focuses on energy, agriculture, forestry, aquaculture, water and waste management, building and construction, and transportation which are identified as priority sectors with the potential to significantly reduce greenhouse gas emissions, strengthen climate resilience, and promote sustainable resource use; and
(b) outlines a technical screening criteria covering 5 key areas of climate change mitigation, climate change adaptation, environmental protection, resource efficiency and pollution prevention. These criteria, together with principles of “Do No Significant Harm” and minimum social safeguards will ensure that all classified activities are scientifically grounded, contribute positively to sustainability goals, and meets both national priorities and international standards.
The second phase of the GF Taxonomy (to be launched in May 2025) is expected to cover quantitative criteria for identification of green activities, tax exemptions and sector-specific incentives, while the final phase (to be launched in May 2026) will introduce carbon intensive sectors such as oil and gas, sustainable mining and heavy industry.
The GF Taxonomy which is the first in West Africa (and the fourth in Africa after South Africa, Kenya and Rwanda) will enhance transparency and investor confidence while reducing the risk of greenwashing. It establishes a clear framework for identifying and classifying environmentally sustainable economic activities and is a useful guide to financial institutions, investors, policymakers and project developers in directing sustainable finance to green projects and initiatives.
