. As Tinubu confirms commitment to sustainability reporting standards
By Stanley Onyeka, Lagos
Nigeria on Friday said it will oblige companies to disclose their eco-friendly practices and how they manage the effects of climate change in their financial reporting within four years or face sanctions.
According to Reuters Global investors are now scrutinising companies for their environmental, social, and governance records. Nigeria, Africa’s largest economy and biggest oil exporter, has struggled to attract investments.
This comes as President Bola Tinubu yesterday, affirmed Nigeria’s commitment to diligently implement world-leading sustainability reporting standards aimed at unlocking capital investments, transforming business models, and safeguarding the environment in the country.
Reuters reported that Nigeria last June said it would adopt rules of the International Financial Reporting Standards (ISSB) relating to how companies report environment-related financial information and climate-related disclosures.
A working group comprising government regulators, company representatives and capital market operators have now issued a roadmap for implementing those standards.
“It’s not just about ticking boxes,” head of the Financial Reporting Council of Nigeria (FRC), Rabiu Olowo, said. “We want to address greenwashing by encouraging companies to embed sustainability practices into their operations, which will make reporting easier.”
Businesses are expected to voluntarily comply with the rules between 2024 and 2027. Those who fail to do so could face financial penalties, Olowo said, without giving details.
Small businesses have until 2030 to comply.
Nigeria is the first African country to adopt the standards but has a long history of poor environmental practices in areas including gas flaring and waste management.
…these standards, which Nigeria is willingly adopting, will unlock sustainable capital inflows through foreign direct investments, promote inclusivity in value chains, and facilitate the decarbonization of the national economy.
Sustainability reporting
A statement by the Special Adviser to the President (Media & Publicity), Ajuri Ngelale, had quoted the ISSB Chair, Emmanuel Faber, as saying that he had secured a commitment from Tinubu that Nigeria will ensure compliance with the rules.
The President was said to have given the assurance during a meeting with the ISSB chief on Thursday in Abuja.
According to the Statement, the President’s endorsement coincides with the launch of Nigeria’s Adoption Readiness Roadmap by the FRC, in collaboration with ISSB.
This roadmap aims to guide businesses towards comprehensive sustainability reporting standards.
Highlighting the importance of compliance within the sustainability agenda, President Tinubu pledged that Nigeria would continue to adhere to international standards and expressed readiness to collaborate with ISSB to effectively harness national resources through reformed and reinforced financial management systems.
“As an administration, we are committed to adopting cutting-edge models for financial reporting and process standardization. This applies to environmental regulation, where we are on the verge of significantly reducing the volume of gas flaring in the country.
“We are more transparent than ever before, and we are doing everything possible to represent the continent in a way that will be beneficial to humanity as a whole,” the President stated.
ISSB Chair, Faber, while recounting Nigeria’s commitment to sustainability reporting, noted that at COP 27 in Sharm el-Sheikh, Egypt, in 2022, Africa’s largest economy had expressed its intent to be among the earliest adopters of rigorous new standards, which is now a reality.
“I am extremely happy to be in Nigeria as the country announces its Adoption Readiness Roadmap. Nigeria is leading the pack in Africa and around the world, and these standards, which Nigeria is willingly adopting, will unlock sustainable capital inflows through foreign direct investments, promote inclusivity in value chains, and facilitate the decarbonization of the national economy,” Mr. Faber said.
FRC Executive Secretary, Dr. Olowo explained that Nigeria’s decision to join the global baseline for sustainability reporting marks the country as one of the earliest proponents committed to enhancing the transparency of financial information and business performance through sustainable reporting practices.
“The adoption readiness working group is set to pilot our affairs and roadmap to help us succeed on this journey. We are happy to inform the President that the work of the adoption readiness roadmap is ready, and we have the roadmap for businesses to follow.
“We have five sets of early adopters, and we have a period for voluntary adoption leading up to 2028 for mandatory adoption of the standards.”