Highlights

• Nigeria’s SEC to embrace ISSB standards from 2027, which aims to attract foreign investment and cut borrowing costs for businesses.
• Phased reporting roadmap to start with large public companies and subsequently to SMEs by 2030 under a “comply or explain” system.
• Reforms could expand sustainable finance products, including green bonds, and help Nigeria qualify for global sustainability indices.

The Securities and Exchange Commission (SEC) of Nigeria is jumping through hoops to align the country’s corporate reporting system with the International Sustainability Standards Board (ISSB).

Regulators are confident that this step could lower the cost of raising funds for businesses and attract more foreign investment, especially from long-term institutional players that now place more importance on climate and sustainability disclosures.

Speaking after a panel discussion on the IFRS S1 and S2 standards, SEC Director-General Emomotimi Agama explained that adopting the global framework is not just about compliance.

Read More: ISSB vs CSRD: Who Sets the ESG Rules of Tomorrow?

He said it is a chance to present Nigeria as a credible destination for responsible capital at a time when global investors are demanding transparency and consistency in corporate information.

Nigeria is joining a small group of emerging markets that are moving towards full alignment with the ISSB standards. This comes at a critical juncture, as foreign participation in Nigeria’s capital markets has dropped in the past decade owing to economic instability, foreign exchange restrictions, and weak governance structures.

Under the proposed plan, large public companies will begin voluntary reporting next year, with mandatory adoption starting in 2027. By 2030, the framework will extend to smaller public companies and medium-sized enterprises.

The SEC says that increased transparency in sustainability reporting will reduce information gaps, which have discouraged many international investors from Nigerian assets.

Also Read: EU and ISSB reporting standards: key features, differences, and interoperability

At the same time, regulators are aware of the challenges. Nigeria still faces limited expertise, weak enforcement capacity, and the danger of greenwashing by some issuers. To address this, the SEC intends to follow a phased approach. Companies will first operate under a “comply or explain” rule before enforcement becomes stricter once the reporting ecosystem matures.

The Nigerian Exchange (NGX) is also introducing digital tools to make corporate disclosures machine-readable. This will let investors compare Nigerian companies more easily with peers abroad.

Discussions are also underway with pension funds, asset managers, and development finance institutions to harmonise their requests so that issuers are not burdened with multiple reporting formats.

Proponents of the reform believe it could spark growth in Nigeria’s sustainable finance market and create opportunities for instruments like green bonds, sustainability-linked bonds, and transition sukuk.

Successful adoption could also clear hurdles for Nigeria to be included in global sustainability indices, which guide investment allocations by large funds.

For Nigerian businesses, the benefits go beyond cheaper capital. Exporters could maintain access to international supply chains, where sustainability standards are increasingly required. Small and medium enterprises could also use recognised sustainability frameworks to become part of global value chains.

Also Read: ESG Risk Management Becomes Essential in Asset Management

With foreign direct investment at record lows and mounting fiscal pressures, policymakers see ISSB alignment as a potential game-changer.

As Agama suggested, the test for Nigeria lies in building credibility and following through with implementation, which may decide whether the country can rebuild investor confidence in its capital markets.

Ends/

Are you looking for sustainability experts to guide your business? Explore our ESG Marketplace, featuring a multiplicity of ESG providers and services to support diverse sustainability needs.

Follow KnowESG's Social and Governance News for regular news and views.

Also, check out our latest ESG Events updates.