BoU mandates ESG integration, warns climate poses 3.1 percent GDP risk

KAMPALA, Uganda — The Bank of Uganda is mandating that financial institutions embed environmental, social and governance, or ESG, principles into their core strategies, warning that unchecked climate risks could cost the country 3.1 percent of its gross domestic product by 2050.

Speaking at the launch of the Sustainable Finance Curriculum, David Kalyango, head of bank supervision, who represented Governor Dr. Michael Atingi-Ego, emphasized that sustainability is no longer optional but an economic necessity. He declared that the mindset viewing ESG factors as “well-intended add-ons or burdens on the balance sheet” is “economically obsolete.”

Kalyango underscored Uganda’s acute vulnerability as an agricultural economy, noting that the country’s main engine of growth faces “systemic shocks” from climate volatility.

While the sector has shown resilience, a 2022 Bank of Uganda analysis revealed a critical gap: not a single supervised financial institution was performing environmental and social stress testing.

“This gap represents not just a regulatory blind spot, but a strategic vulnerability threatening the very stability we have worked to achieve,” Kalyango said.

The central bank is now demanding that institutions account for their finance emissions—the greenhouse gas output connected to the carbon-intensive clients they lend to. Institutions with high finance emissions face immediate risks, including difficulty accessing international capital and a higher cost of capital.

The Bank of Uganda’s mandate is clear: institutions must move beyond awareness to institutionalize ESG principles. The central bank has issued comprehensive guidelines and built infrastructure for compliance, including the National Green Taxonomy, the National Climate Finance Strategy and the Green Bond Framework.

The new Sustainable Finance Curriculum, launched by the Uganda Institute of Banking and Financial Services, or UIBFS, and funded by aBi Finance Limited and its partners, is intended to equip professionals with the required expertise.

Mona Muguma Ssebuliba, chief executive officer of aBi Finance, hailed the curriculum as a “strategic blueprint” to embed long-term, responsible growth, noting the sector needed “greater capacity, standardization and practical tools to translate intent into action.”

Goretti Masadde, chief executive officer of the UIBFS, confirmed the need, citing a survey that indicated 60 percent of respondents had limited awareness about sustainable finance. The curriculum targets a broad audience, including commercial banks and smaller Tier Four institutions.

Felix Okoboi, board chair of aBi Finance, called the curriculum a strategic enabler for continued growth, stating: “The future of finance must be sustainable, serve people, prosperity, and the planet—and I am confident that Uganda is ready to lead that future.”