ESG PRACTICES IN NIGERIA

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According to a UN facts sheet, Africa accounts for only 2-3% of the world’s carbon dioxide emissions. However, the effects of climate change and biodiversity losses are far more impactful in these parts, due to a couple of factors like poor policies and policy implementations schemes, lack of government will and poor priority over climate change and SDG issues. As a mostly developing continent, we are lagging behind on several environmental, social responsibility and business governance metrics and the likelihood to be taken by surprise, by the adverse effect of continuous neglect is very high. Nigeria as the most populous country on the continent has a huge role to play in setting the pace for these conversations.

ESG stands for the Environmental, social and governance pillars used to measure the environmental and social impact of individuals and businesses. There is a recent emphasis on sustainability reporting, induced by global forces as the focus gradually shifts from corporate social responsibility to more holistic sustainability and ESG reporting. There are 17 sustainable development goals (SGDGs) put together by the United Nations, in place to benchmark organizational and national progress on these issues.

Incidences like flooding, hotter temperatures, air and water pollution, multiple failed businesses, rapid deforestation, inequalities etc, are not standalone issues, their impacts are transnational and affect the world as a whole. This concern has led to the increased need for these conversations around human and business interactions to be had urgently.

Environmental Factors: Nigeria faces various environmental challenges, burdened with a rapidly growing population of 200+ million, that is expected to double by the year 2050, a lot of strain is currently being put on the environment in terms of waste, emissions, and other pollutions. These concerns have led to increased interests by government bodies, and the global community on sustainable practices that can help ease the burden of our activities on the environment.

In line with global expectations of a net zero carbon economy by 2050, the Nigerian government has implemented policies, to address these issues, such as the recent institutionalization of the Nigerian Climate change council (NCCC), National Environmental Standards and Regulations Enforcement Agency (NESREA) in collaboration with the Ministry of Environment etc regulate environmental compliance. Other initiatives by NGOs and environmental enthusiasts also play a key role in fostering climate action.

Social factors: Nigeria has a diverse society with various social issues. Some of the key social challenges include poverty (named the poverty capital of the world in 2021, with over 70 million people still living in extreme poverty, the highest in Africa), inequality in the work place across positions of leadership both in the private and public sector, Poor access to healthcare and quality education etc. Several companies in Nigeria have initiated corporate social responsibility (CSR) programs to address some of these issues. They invest in community development projects, support education and healthcare initiatives, and promote inclusivity and diversity in the workplace. Although, there still remains a lot of work to be done, the integration of ESG into sustainability reporting has made companies more proactive in monitoring and reporting their social impact.

Governance Factors: Governance in Nigeria have gradually steered towards board equity, gender representation, risk management, and continuity. A sustainable organization in 2023 looks like a gender balanced board, adequate representation, an inclusive workforce with equal opportunities for people with disabilities and minorities, balanced executive pay and transparency in decision making.

The future of our planet and collective prosperity is largely hinged on our level of awareness of these key issues. Awareness breeds responsibility and responsibility will pre-empt action.

By: Agatha Afemikhe  ACA,MBA