Nigerian Sustainability Reporting and Practices

Background

• Sustainability reporting has evolved from a non-essential business practice to a responsible business practice.
• Key trends shaping the corporate sustainability landscape are consolidation among standard-setters, regulation focused on ESG-related disclosures, and maturation of ESG data and disclosures within private markets.
• Prior to the issuance of the IFRS sustainability disclosure standards (ISSB Standards), Nigerian entities used different frameworks for ESG disclosures.
• The CBN sustainable banking principles require Nigerian Banks to emphasize sustainability reporting and disclosures.
• The NSE (now NGX) sustainability disclosure guidelines provide a framework for listed companies to disclose their ESG performance.
• The Nigerian Sustainable Finance Principles issued by the Securities and Exchange Commission require public interest/listed entities to integrate ESG considerations in their operations and decision-making.
• The challenge with these initiatives is the absence of a common framework across entities, which hampers comparability.

IFRS Sustainability Disclosure Standards (ISSB Standards)

• Nigeria supported the establishment of the ISSB to deliver a comprehensive global baseline of sustainability-related disclosure standards.
• These standards provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions.
• At COP 27, Nigeria announced its intention to early adopt the IFRS S1 & S2, the first two standards issued by the ISSB.
• The Financial Reporting Council of Nigeria (FRC) is working in collaboration with the Federal Ministry of Finance and other relevant regulators and professional accounting organizations to develop a strategy for early adoption of the standards.
• The FRC Act of Nigeria 2011 was amended to mandate the FRC to promote compliance with standards issued by the International Federation of Accountants (IFAC), International Financial Reporting Standards (IFRS) Foundation, International Public Sector Accounting Standards Board (IPSASB), or any other designated body.

Benefits of Adopting ISSB Standards

• The ISSB standards provide a global baseline for a single set of high-quality sustainability reporting standards.
• Adoption of the ISSB standards has the effect of unlocking capital.

Background

• Sustainability reporting has become a business responsibility
• Key trends in the corporate sustainability landscape include consolidation among standard-setters, regulation on ESG-related disclosures, and maturation of ESG data and disclosures in private markets.
• Prior to the ISSB Sustainability Disclosure Standards (ISSB Standards), Nigerian entities used different frameworks, including the CBN sustainable banking principles, NSE (now NGX) sustainability disclosure guidelines, and the Nigerian Sustainable Finance Principles.
• The challenge with these initiatives is the lack of a common framework, which hinders comparability.
• Nigeria supported the establishment of the ISSB to deliver a comprehensive global baseline of sustainability-related disclosure standards that inform investors and other market participants about companies’ sustainability risks and opportunities.
• In COP 27, Nigeria announced its intention to early adopt ISSB S1 & S2 through the Financial Reporting Council of Nigeria (FRC).
• The FRC is collaborating with the Federal Ministry of Finance and relevant professional accounting organizations to raise awareness, engage stakeholders around the standards, and develop a roadmap for timely implementation.
• The FRC Act of Nigeria 2011 was amended to mandate the FRC to promote compliance with standards issued by IFAC, the IFRS Foundation, the IPSASB, or other designated standards setting bodies.
• Nigeria's decision to adopt the ISSB standards stems from their global baseline for high-quality sustainability reporting standards, which unlocks capital.