The Bank of Uganda (BoU) has directed all financial institutions to integrate environmental, social, and governance (ESG) principles into their core business strategies, warning that failure to address climate-related risks could reduce Uganda’s gross domestic product by up to 3.1 percent by 2050.
Speaking at the launch of the Sustainable Finance Curriculum in Kampala, David Kalyango, Executive Director of Bank Supervision, representing Governor Dr Michael Atingi-Ego, said sustainability is now an economic necessity rather than an optional corporate responsibility.
“The mindset viewing ESG factors as well-intended add-ons or burdens on the balance sheet is economically obsolete,” Kalyango said.
“Sustainability is no longer a choice; it is essential for long-term stability and competitiveness.”
He highlighted Uganda’s vulnerability as an agricultural economy, emphasizing that systemic shocks from climate volatility threaten the country’s primary growth engine.
A 2022 BoU analysis revealed that none of the supervised financial institutions had conducted environmental and social stress testing, exposing a strategic vulnerability that could undermine financial stability.
The central bank now requires institutions to measure and report finance emissions—the greenhouse gas output linked to their clients and projects.
Institutions with high finance emissions risk reduced access to international capital and higher borrowing costs as global investors increasingly demand sustainable practices.
To support this transition, BoU has developed several policy frameworks, including the National Green Taxonomy, the National Climate Finance Strategy, and the Green Bond Framework, providing clear guidelines for financing environmentally sustainable activities.
The Sustainable Finance Curriculum, developed by the Uganda Institute of Banking and Financial Services (UIBFS) and funded by aBi Finance Limited and partners, is designed to strengthen the sector’s capacity to implement ESG practices.
Mona Muguma Ssebuliba, CEO of aBi Finance, described it as a “strategic blueprint” for embedding responsible, long-term growth in Uganda’s financial sector.
“The financial sector needs practical tools to translate intent into action,” Muguma Ssebuliba said.
“This curriculum ensures that professionals can make sustainability measurable and actionable.”
Goretti Masadde, CEO of UIBFS, highlighted that 60 percent of financial sector respondents had limited awareness of sustainable finance, underscoring the importance of training across commercial banks, microfinance institutions, and Tier Four entities.
Felix Okoboi, Board Chair of aBi Finance, called the curriculum a vital step toward aligning Uganda’s financial systems with global sustainability standards.
The BoU’s directive marks a significant shift, positioning ESG principles not only as a risk mitigation tool but also as an opportunity to drive green investment and sustainable economic growth in Uganda.
