GHANA Trends and Developments Contributed by: Adelaide Benneh Prempeh, Michelle Nana Yaa Essuman, David William Akuoko-Nyantakyi and Audrey Nana Oye Addy, B&P Associates
Issuers must ensure that funds raised through green bonds are used to finance projects with a positive environmental impact, thus prevent - ing the misuse of funds for non-green purposes. In circumstances in which proceeds are used for refinancing, the Issuer is required to pro - vide an estimate of the share of financing and re-financing, identify the investments or project portfolios eligible for refinancing, and specify a look-back period for eligible green projects to be refinanced. The SEC Guidelines outline a vari - ety of eligible projects for green bond financing including: • renewable energy projects, such as the pro - duction and transmission of wind, solar, and geothermal energy; • energy efficiency initiatives such as energy storage and smart grids; • pollution prevention and control measures including reducing air emissions, controlling greenhouse gases and waste recycling; • environmentally sustainable management of living natural resources and sustainable land use; and • green buildings that meet environmentally sustainable standards. These projects reflect the broad spectrum of sectors that can benefit from green financing and align with Ghana’s overarching goals of environmental protection and sustainable eco - nomic growth. However, the Guidelines also impose strict prohibitions on the use of green bond proceeds for certain types of projects. Funds cannot be allocated to projects involving weapons and ammunition; alcoholic beverages (excluding beer and wine); or forced or harmful child labour, amongst others. These prohibitions align the green bond issuance with ethical stand - ards and reinforce investor trust and confidence.
Issuers must ensure that the evaluation and selection process for eligible projects is clear, precise, and transparent. This process should address: • the objectives of the projects and their envi - ronmental impact; • the eligibility criteria for projects; and • the process for identifying and managing environmental risks potentially associated with the projects. Management of green bond proceeds The net proceeds of the green bond, or an equivalent amount, should be credited to an account dedicated to the project. If there are sub-projects, the proceeds should be allocated accordingly. Alternatively, the issuer can track the proceeds through a formal internal process linked to the issuer’s operations for eligible green projects. While the green bond remains outstanding, the balance of the tracked net funds will be adjusted periodically to situate allocations with eligible green projects during that period. Issuers must disclose in the offer document the intended types of temporary placement for the balance of unallocated net proceeds and the estimated timeframe for full allocation of all the green bond proceeds to eligible projects. The issuer’s exter - nal auditor will report on how the issuer internally tracks and allocates funds from the green bond proceeds to the selected projects. Performance measurement and monitoring Issuers are to measure and monitor the perfor - mance of eligible projects by using quantitative and/or qualitative performance indicators to track outcomes achieved for eligible projects and specify the methodologies and assumptions used for the quantitative measurement. They
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