Nigeria announced that it will require companies to disclose their eco-friendly practices and how they manage the effects of climate change in their financial reporting by 2027 or face penalties, as reported by Reuters on March 22. Previously, in June 2023, Nigeria pledged to adopt the reporting rules on environment-related financial information (S1) and climate-related disclosures (S2) under the International Financial Reporting Standards (IFRS). A working group comprising government regulators, company representatives, and capital market operators has now released a four-year roadmap for implementing those standards. Enterprises are expected to voluntarily comply with the rules between 2024 and 2027, while small businesses need to meet these requirements by 2030.

As Africa’s largest economy and biggest oil exporter, Nigeria has struggled to attract foreign investments, partly due to its poor environmental practices such as unregulated gas flaring and waste management. Last year’s adoption of IFRS S1 and S2 standards made Nigeria the first African country to embrace the stringent rules. By aligning with international standards, Nigeria aims to unlock capital investments, transform into green business models, and protect the nation’s environment. The roadmap, crafted by the Financial Reporting Council of Nigeria (FRC) and the International Sustainability Standards Board (ISSB), intends to guide businesses towards comprehensive sustainability reporting standards. Nigerian President Bola Tinubu stated that the government would work with ISSB to effectively harness national resources through reformed and reinforced financial management systems. He also pledged that the country will drastically reduce the volume of gas flaring.

Sources:

https://www.reuters.com/world/africa/nigeria-gives-businesses-four-years-adopt-eco-friendly-reporting-standards-2024-03-22/

https://statehouse.gov.ng/news/president-tinubu-backs-sustainability-reporting-initiative-for-investment-promotion-and-economic-development/

https://businessday.ng/news/article/nigeria-becomes-first-african-country-to-adopt-ifrs-s1-ifrs-s2-standards/