March 23, 2024

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.

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.

Nigeria last June said it would adopt rules of the International Financial Reporting Standards 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, 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.

Emmanuel Faber, head of International Sustainability Standards Board, which sets sustainability standards globally, said on Friday he had secured a commitment from President Bola Tinubu that Nigeria will ensure compliance with the rules.