Nigeria’s proactive stance on sustainability reporting has earned international recognition, signifying its commitment to environmental responsibility and transparent corporate practices. The International Financial Reporting Standards (IFRS) Foundation, in its 2024 report on corporate climate-related disclosures, commended the Financial Reporting Council of Nigeria (FRC) for its substantial contributions to advancing sustainability reporting within the country. This recognition highlights Nigeria’s dedication to aligning with global efforts to combat climate change by fostering greater corporate accountability and transparency. Nigeria’s progress reflects a growing global awareness of the crucial role of businesses in addressing environmental challenges and the increasing demand for standardized reporting on environmental, social, and governance (ESG) performance.
Sustainability reporting, as defined by PwC, involves documenting a company’s impact on environmental, social, and governance aspects. It provides stakeholders with a clearer understanding of a company’s operational impact on the environment and society, allowing them to assess the associated risks and opportunities. The demand for comprehensive sustainability reports is driven by investors and other stakeholders who seek greater transparency and accountability from companies regarding their sustainability practices and ESG strategies. This increased demand underscores the shift towards incorporating ESG factors into investment decisions and the growing recognition of their long-term implications for business value and societal well-being.
The IFRS report specifically acknowledges Nigeria’s progress in transitioning from the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) to the adoption of the International Sustainability Standards Board (ISSB) Standards, namely IFRS S1 and S2. This transition represents a significant step towards harmonizing sustainability reporting practices globally and ensuring comparability of data across different companies and jurisdictions. Nigeria’s inclusion among the 30 jurisdictions adopting or planning to implement ISSB standards – collectively representing 57% of global GDP and over 50% of greenhouse gas emissions – underscores the country’s significant role in the global movement towards standardized sustainability reporting.
The FRC’s phased implementation strategy, outlined in its Roadmap Document, is a crucial element of Nigeria’s approach to integrating sustainability reporting into corporate practices. The roadmap outlines a gradual transition, starting with early adoption and voluntary participation from 2024 to 2027, followed by mandatory adoption in 2028. This phased approach allows companies time to adapt to the new reporting requirements and develop the necessary internal systems and processes. The integration of specific timelines for assurance, progressing from limited assurance in the third year to reasonable assurance in the sixth year, further strengthens the credibility and reliability of the reported information.
The Adoption Readiness Working Group of Nigeria, spearheaded by the FRC, unveiled a detailed roadmap for ISSB Standards adoption in March 2024. This roadmap outlines four phases, commencing with voluntary compliance for all Nigerian reporting entities in the 2024 fiscal year. The phased approach caters to different types of entities, with public interest entities (excluding government and governmental organizations) required to implement ISSB Standards from the 2028 fiscal year, while small and medium-sized enterprises (SMEs) have until the 2030 fiscal year. This tiered approach recognizes the varying capacities and resources of different businesses and allows smaller entities more time to prepare for the new reporting requirements.
Nigeria’s commitment to early adoption was evident at COP 27 in Egypt in 2022, where it became the first African nation to declare its intention to embrace the ISSB standards. This proactive stance solidified Nigeria’s leadership position in Africa regarding sustainability reporting. Furthermore, the early adoption by prominent Nigerian companies, such as MTN, Seplat Energy, Access Bank, and Fidelity Bank, who published their inaugural financial reports using IFRS S1 and S2 for the 2023 financial year, demonstrates the practical implementation of the new standards and provides valuable examples for other companies to follow. These pioneering efforts contribute to building a robust ecosystem for sustainability reporting in Nigeria and pave the way for wider adoption across the African continent.
