NIGERIA Trends and Developments Contributed by: Yeye Nwidaa, Mariam Olayinka Akinyemi, Toluwalase Oliver-Jude and Adedoyin Odekilekun, Jackson, Etti & Edu
Rise of sustainable investing The rise of sustainable investing and Socially Responsible Investment (SRI) funds signalled a significant shift in investor preferences. Insti - tutional investors, asset managers and pension funds increasingly considered ESG criteria in their investment decisions, driving demand for ESG-aligned companies and putting pressure on corporations to improve their ESG performance. Integration into governance frameworks ESG factors gradually came to be recognised as material considerations for corporate govern - ance. Boards of directors began to incorporate ESG oversight into their responsibilities, recog - nising the importance of identifying and man - aging ESG risks and opportunities. Corporate governance codes and guidelines started to explicitly reference the need for boards to con - sider ESG issues in their decision-making pro - cesses. Mainstream acceptance and integration In recent years, ESG integration has moved from the fringes to the mainstream of corporate gov - ernance practices. Companies across industries and geographies have embraced ESG principles as integral components of their governance frameworks. ESG metrics are now routinely included in corporate reporting, annual meetings and board discussions, reflecting a fundamental shift in how organisations approach sustainabil - ity and responsible business conduct. In Nigeria, the FRC has taken active steps to pro - mote the adoption of sustainability disclosures in line with the IFRS Sustainability Disclosure Standards. In March 2024, the FRC released a Sustainability Reporting Roadmap, which out - lines a phased approach. Under this roadmap, Public Interest Entities are expected to manda - torily adopt the IFRS Sustainability Disclosure
Standards by 2028, while Small and Medium Enterprises (SMEs) are expected to comply by 2030. This development signals a growing regu - latory expectation for companies to embed sus - tainability and transparency into their long-term strategic planning and reporting obligations. Continued evolution and challenges The evolution of ESG in corporate governance is an ongoing process, marked by continued refinement of practices and standards. While significant progress has been made, challenges remain, including the need for standardised ESG reporting frameworks, robust data collection and verification mechanisms, and greater board diversity and expertise in sustainability matters. Addressing these challenges will be crucial for further advancing the integration of ESG prin - ciples into corporate governance and ensuring that businesses continue to uphold their com - mitment to sustainability and long-term value creation. In summary, the evolution of ESG in corporate governance represents a fundamental shift towards a more inclusive, responsible and sus - tainable approach to business management and decision-making. From its roots in sustain - ability discourse to its mainstream acceptance today, the journey of ESG integration reflects a growing recognition of the importance of con - sidering ESG factors in corporate governance frameworks. Drivers of ESG integration Several factors have contributed to the increas - ing integration of ESG principles into corporate governance, as follows. • Stakeholder expectations ‒ these are one of the key drivers of ESG in corporate gov - ernance. Investors, consumers, employees
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