Nigeria is pushing ahead with adopting International Sustainability Standards Board (ISSB) rules for mandatory sustainability and climate reporting, building on its position as the first African country to announce its intention to take up the global standards.
The country committed to the move in November 2022 and released an adoption roadmap in March 2024, promising a phased implementation, capacity building and a robust assurance framework ‘aligned with local realities’. Since then the country’s apex financial regulator the Financial Reporting Council of Nigeria (FRCN) has been working with the Securities and Exchange Commission (SEC) on adoption, creating a conducive environment and infrastructure, and raising awareness (see boxout).
‘The moment you understand why it is such a big deal, it becomes easy’
Implementation is unfolding in four stages, with requirements coming into force between 2028 and 2030, to allow time for entities to prepare for transition. The four early sustainability reporting adopters of 2024 have now swelled to more than 30 in the voluntary phase.
Nigeria’s pioneers
Rashidat Adebisi FCCA, chief client officer at AXA Mansard insurance company in Lagos and a long-time champion of sustainability reporting, has seen the landscape change around her in the past few years. She says ‘dozens’ of listed financial services and energy companies have begun voluntary ISSB reporting, building capacity and preparing for the mandatory date.
‘ESG conversations were happening even before the S1 and S2 standards, but sustainability reporting was fragmented and lacked standardisation,’ she says. ‘The new standards are putting them together in a tighter manner.’
Adebisi expects the advent of comprehensive and integrated reporting standards to inspire more businesses to adopt. ‘The wonderful thing about sustainability is that the moment you understand why it is such a big deal, it becomes easy for you,’ she says. ’It’s about connecting financial numbers with our actions and measuring how these are impacting our environment.’
In preparing for and adopting ISSB standards, AXA Nigeria has leveraged its ties with its global France-based parent. ’We’d been measuring our carbon footprint, managing office emissions, encouraging solar systems for employees through loans, and launching hybrids to reduce footprints of our employees,’ Adebisi says. ’We have built on this experience in creating a holistic sustainability-focused approach.’
‘Sustainability reporting will keep greenwashing in check’
Getting going
She admits that ‘it’s not an easy process’ and businesses need advice, as buying digital tools and applications for sustainability data gathering and reporting is a tough ask, especially for companies outside Nigeria’s oil and gas sector, which has already amassed considerable experience. She is calling on Nigerian regulatory agencies to create data tracking methodologies for corporations so they can produce comparative data to aid benchmarking.
For Adebisi, collaboration has been key in bridging knowledge gaps. ‘Workshops and conferences organised by ACCA and the FRCN, and engagement with regulators, have helped enormously, as has the opportunity to learn from early adopters, such as Nigeria’s Access Bank and mobile telephony operator MTN.’
Compliance load
Given the considerable burden sustainability reporting poses for companies, there is a danger that false or exaggerated claims may be made about environmental credentials. Ameh Michael Apeh, a development finance specialist who heads the Nigeria unit for German development agency GIZ, says checks on fraudulent sustainability claims are crucial. ‘The entire green economy is very recent in Nigeria, and we have seen a rise in greenwashing,’ he says. ‘Sustainability reporting will keep greenwashing in check.’
Apeh points out that the burden also has to be shouldered by finance professionals as individuals to ensure they are informed and skill up accordingly. ‘Professionals who want to be relevant will obviously have to acquire relevant knowledge and undergo training to be prepared for the journey ahead.’
‘It will take time because it’s about a change in behaviour’
Yet the burden is one that can ultimately be turned into a platform for growth for businesses as much as for professionals. Adebisi points out that the provision of sustainability reporting information will help companies liaise and recruit young talent. ‘People don’t want to work for companies that are destroying their community and environment,’ she says, but for those that take action to protect the environment as well as deliver value.
She adds: ‘It will take time because it’s about a change in behaviour. But I think it will be a competitive advantage for companies.’
Nigeria is not aiming to create a carbon copy of the ISSB framework, but if its programme fulfils its early promise, the country should be able to build investor confidence, lower capital costs and make Nigerian securities more attractive to global institutional investors and development finance institutions.
Driver of adoption
ACCA has been collaborating with institutions in Nigeria on driving adoption of sustainability reporting in the country and across Africa. A study of the experiences and preparedness of Nigerian businesses by the Sustainability Working Group Africa (set up by ACCA with the Pan African Federation of Accountants), for example, resulted in recommendations to six stakeholder groups as guidance for developing the wider sustainability reporting ecosystem.
Joint ACCA research case studies have also showcased the current practices of three of Nigeria’s four early adopters. Insights from the research have been included in the training and advocacy content of platforms in Nigeria and beyond, including the IFRS Foundation, the African Forum for Independent Accounting and Auditing Regulators (AFIAAR) and PAFA’s Centre of Excellence (CoE) for Sustainability, as well as FRC Nigeria’s own regulators and preparers’ forums.
ACCA will continue to lead the SWGA in alignment with PAFA’s CoE and present SWGA recommendations for consideration by PAFA’s Forum for Advancing Sustainability and Integrated Reporting.
