NIGERIA Trends and Developments Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
often viewed as separate from core governance functions (somewhat peripheral to the opera - tions of the company) ‒ relegated to specialised sustainability or Corporate Social Responsibil - ity (CSR) departments ‒ and their impact was under-emphasised. However, as awareness of ESG risks and opportunities has grown, there has been an integration between ESG and cor - porate governance, facilitated by the recognition that ESG factors can have material impacts on business performance, reputation and long-term sustainability. The evolution of ESG factors within the realm of corporate governance represents a transforma - tive journey from traditional governance para - digms towards a more holistic and sustainable approach to decision-making and accountabil - ity. This evolution has been shaped by various catalysts and milestones, reflecting a growing recognition of the interconnectedness between corporate behaviour, societal impacts and long- term value creation. Emergence of sustainability discourse The increased conversation around sustain - able discourse has led to the inevitable growth of ESG in Nigeria. Corporations now have the responsibility of thinking long-term while taking into consideration issues such as the availabil - ity of basic life-sustainable goods, raising the standard of living, and general service offering. The call for broader societal impacts, especially in an oil-producing country such as Nigeria, will enable companies to place priority on innovation that is environmentally friendly and sustainable. Rise of CSR CSR is a self-regulating business model that helps a company be socially accountable to itself, its stakeholders and the public. The con - cept of CSR gained prominence as companies
recognised the importance of not only maxim - ising shareholder value but also considering the interests of various stakeholders, including employees, communities and the environment. Most importantly, CSR concentrates on the voluntary actions made by businesses to solve societal issues with initiative. CSR became a means for companies to demonstrate their com - mitment to ethical practices and sustainability. Improved stakeholder capitalism Stakeholder capitalism proposes that corpora - tions should serve the interests of all their stake- holders and not just shareholders. Stakehold - ers can include investors, owners, employees, vendors, customers and the public at large. A shift from the traditional shareholder-centric model of governance gradually gave way to a more inclusive approach known as stakeholder capitalism. This shift emphasised the impor - tance of balancing the interests of sharehold - ers with those of other stakeholders, such as employees, customers, suppliers and society at large. ESG considerations became central to this redefined understanding of corporate purpose and responsibility. Regulatory framework The NCCG administered by the Financial Report - ing Council of Nigeria (FRC) now makes it a requirement to maintain a policy document that promotes the intra- and interpersonal relation - ships of the company and other stakeholders. This requirement is aimed at enhancing trans - parency and accountability regarding compa - nies’ environmental and social impacts. These regulatory developments provide further impe - tus for organisations to integrate ESG considera - tions into their governance frameworks.
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