The Bank of Uganda has urged all commercial banks and financial institutions to integrate Environmental, Social and Governance (ESG) principles into their daily operations, warning that ignoring sustainability could expose the national economy to severe long-term risks.
The guidance was issued during the launch of the Sustainable Finance Curriculum in Kampala, where David Kalyango, the Executive Director for Bank Supervision, speaking on behalf of Governor Michael Atingi Ego said Uganda’s financial system must evolve to match global sustainability practices if it is to remain stable and competitive.
Kalyango noted that climate change is no longer an abstract risk but a direct threat to the country’s economic future, particularly given Uganda’s heavy dependence on agriculture. He cautioned that if climate and environmental risks are left unmanaged, they could wipe out nearly 3.1 percent of Uganda’s Gross Domestic Product by 2050, undermining growth and livelihoods.
“Our financial institutions can no longer treat sustainability as an option or public relations slogan,” he said. “It must become part of how we lend, invest, and make strategic decisions. The future of banking depends on responsible finance.”
Under the Bank of Uganda’s new expectations, regulated institutions will be required to assess climate related exposure in their loan books, conduct regular environmental stress test and measure what are known as “financed emissions”, the greenhouse gases generated by their lending and investment activities.
Officials said this approach is intended to future proof the financial sector by ensuring that environmental and social risks are properly priced, monitored and disclosed. It also aligns Uganda with global trends in sustainable finance, where regulators are increasingly demanding accountability for the social and ecological impacts of financial decisions.
Kalyango added that the central bank’s emphasis on ESG compliance will also encourage innovation and open new financing opportunities for green projects, renewable energy, and climate-smart agriculture.
Private-sector representatives welcomed the initiative, saying it would strengthen resilience, attract ethical investors and improve confidence in Uganda’s financial market.