This second part of our two-part series examines the critical role carbon credits play in strengthening Environmental, Social, and Governance (“ESG”) performance within Ghana’s private sector. While Part 1 explored the definition, legal foundations, and market mechanisms governing carbon credits in Ghana, Part 2 focuses on their practical relevance to corporate sustainability, investor confidence, and national climate ambition.
In a global economy where ESG performance influences investment flows, supply chain requirements, and regulatory compliance, carbon credits have become a strategic tool for companies seeking measurable climate impact, community development, and improved governance standards. With the introduction of the Environmental Protection Agency Act, 2025, Act 1124 (“EPA Act”) and Ghana’s emerging carbon market architecture, businesses now have a clear pathway to integrate carbon credits into their ESG strategies in ways that are both compliant and impactful.
This article explores how carbon credits enhance the Environmental, Social, and Governance pillars of ESG, outlines key features and compliance requirements under the new EPA Act, highlights emerging challenges, and identifies strategic opportunities for Ghana’s private sector in the evolving global carbon economy.
ESG Alignment and Private Sector Implications
Environmental (E): Climate Action and Nature Protection
Carbon credits allow companies to meet their environmental commitments through high-integrity carbon offsetting by investing in EPA-approved climate projects. These include:
● Afforestation and reforestation projects that remove carbon from the atmosphere and restore degraded landscapes;
● Improved cookstove initiatives: These cookstoves burn fuel more efficiently, reduce the need for firewood, cut down on indoor air pollution, and most importantly, reduce carbon emissions.
● Clean energy interventions, such as solar mini-grids and biogas systems, replace fossil fuels.
Beyond reducing emissions, these projects also:
● Protect biodiversity and conserve wildlife habitats;
● Improve air and water quality;
● Strengthen ecosystem capacity against climate-related impacts like flooding or drought.
By supporting such initiatives, companies directly improve their “E” score, demonstrating tangible efforts to reduce environmental harm and promote nature-positive development.
Social (S): Inclusive Development and Community Benefits
Ghana’s carbon market framework places strong emphasis on community engagement and equitable benefit-sharing. This aligns with key social impact areas such as:
● Create local jobs: for example, in tree planting, stove production, or project monitoring;
● Improve public health, such as reducing smoke exposure through clean cooking solutions;
● Promote gender inclusion: for example, involving women-led groups in implementation and revenue-sharing.
These social benefits strengthen a company’s social impact profile and support global reporting frameworks such as:
● The Global Reporting Initiative (GRI), and
● The Sustainability Accounting Standards Board (SASB).
By participating in carbon projects, companies can report measurable community-level impacts that bolster their ESG performance and reputation.
Governance (G): Compliance, Risk Management, and Transparency
Carbon markets inherently require high standards of governance, and Ghana’s regulatory framework formalizes this through obligations such as:
● Due diligence requirements: assessing environmental, social, and land-use risks;
● Monitoring, Reporting, and Verification (“MRV”): ensuring accurate data on emissions reductions;
● Regulatory compliance: obtaining EPA approval and aligning with Ghana’s Nationally Determined Contributions (“NDCs”).
These obligations push companies to strengthen internal controls, improve data accuracy, and maintain transparency, all of which enhance overall governance and investor confidence.
Key Features of the New EPA Act
The EPA Act, 2025, introduces a structured, enforceable framework for carbon market
participation. Key features include:
1. Mandatory National Approval:
All carbon market activities must be approved by the EPA and align with Ghana’s NDCs.
2. Host Country Authorisation for Internationally Transferred Mitigation Outcomes (ITMOs):
Private companies, NGOs, or partnerships must obtain formal EPA authorization before transferring internationally traded mitigation outcomes.
3. Benefit-Sharing Obligations:
Projects must clearly demonstrate how revenues and benefits will be equitably shared with host communities.
4. Due Diligence and ESG Screening:
Projects, especially those involving land use and forests, must undergo ESG risk assessments and comply with Ghana’s sustainability safeguards.
1. Market Awareness: Bridging the Information Gap
Despite strong regulatory progress, many local companies lack a clear understanding of:
● How carbon credits are generated and traded;
● The new rules under the EPA Act;
● How carbon credits fit into ESG strategies or reporting.
Solution:
Targeted education, industry-specific workshops, and simplified guidance are needed to empower businesses to participate confidently and compliantly.
2. Capacity Gaps: Limited Technical Expertise
Developing high-quality carbon projects requires specialized skills that remain scarce, including:
● Carbon accounting;
● Application of approved methodologies;
● MRV systems; and
● ESG impact assessments.
Solution:
Investment in local training programs, certification schemes, and partnerships with global climate institutions will be critical to building a Ghana-based talent pool.
3. Regulatory Navigation: Legal and Procedural Complexity
The new legal frameworks introduce complex requirements relating to:
● Environmental permitting;
● Host country authorization;
● Taxation and benefit-sharing;
● NDC alignment.
This complexity creates a compliance burden for businesses, requiring expert support from legal, ESG, and carbon market advisors.
Solution:
Clear procedural roadmaps, creation of a responsive EPA helpdesk, and simplified guidelines for different project types will ease participation.
Strategic Opportunities for Ghana
1. ESG-Driven Investments: Attracting Sustainable Capital
Ghana is positioning itself as a leading African destination for ESG-compliant investment, offering:
● Verified climate impact through EPA-approved projects;
● Reduced investor risk through government oversight; and
● Opportunities for public–private partnerships in clean energy, agriculture, and nature-based solutions.
This creates a strong incentive for international climate finance to flow into Ghana’s green economy.
2. Institutional Strengthening: Building Capacity for Climate Governance
The EPA is enhancing its institutional systems to ensure:
● Strong evaluation and monitoring of carbon projects;
● Robust MRV frameworks for transparency;
● Coordination across government agencies.
This builds investor trust and positions Ghana as a regional leader in climate governance.
3. Carbon Finance Mobilisation: Funding Green Growth
Through Article 6 of the Paris Agreement (a legally binding international treaty focused on combating climate change, which seeks to keep the rise in global average temperatures well below 2°C above pre-industrial levels, while pursuing efforts to limit the increase to 1.5°C) and international partnerships, Ghana can now access carbon finance, funding that supports:
● Large-scale renewable energy and clean transport;
● Climate-smart agriculture; and
● Community-based projects that deliver jobs, health improvements, and education benefits.
Carbon finance offers a sustainable pathway to inclusive green development, reducing reliance on traditional aid and loans.
Ghana is charting a bold, strategic, and structured path in carbon market development. As one of the first countries globally to operationalize an Article 6 bilateral agreement and one of the few African nations with a comprehensive regulatory framework, Ghana is setting a high standard for transparency, equity, and climate ambition.
The EPA’s reforms, including mandatory project approval, benefit-sharing requirements, and ESG screening, ensure that carbon credits generated in Ghana are credible, high-integrity, and aligned with global climate standards.
For companies and investors, aligning with these regulations is no longer optional. It is a strategic imperative essential for meeting sustainability goals, enhancing corporate reputation, and contributing meaningfully to Ghana’s climate resilience and global climate action.
To fully realise this promise, Ghana must now move decisively from policy design to practical enforcement, ensuring that the principles underpinning carbon credits are consistently applied, monitored, and upheld across all projects.
By: Eric Ofori Kwaah (Solicitor and Barrister of the Supreme Court of Ghana).
