IFRS hails Nigeria’s progress in sustainability reporting

The International Financial Reporting Standards Foundation has acknowledged the strides made in sustainability reporting in Nigeria.

In its latest report, titled ‘Progress on Corporate Climate-related Disclosures – 2024 Report,’ the IFRS Foundation highlighted the Financial Reporting Council of Nigeria for its significant contributions to sustainability reporting in the country.

Commenting on the report on Friday in a statement on its website, FRC said, “This recognition from the IFRS Foundation underscores Nigeria’s commitment to enhancing sustainability practices and aligns with global efforts to address climate change through improved corporate transparency and accountability.”

According to PwC, sustainability reporting records the impact of a company’s activities on environmental, social, and governance issues. It enables stakeholders to understand more clearly the impacts of a company’s business activities on the environment and society and to assess the risks and opportunities companies face, or which are offered to them. The growing importance of sustainability reports is due to the fact that investors and other stakeholders are calling on companies to disclose more information about their sustainability activities and environmental, social, and governance strategies.

The IFRS report detailed Nigeria’s advancements in climate-related corporate disclosures among Nigerian companies, emphasising the transition from the Task Force on Climate-related Financial Disclosures recommendations to the adoption of International Sustainability Standards Board Standards, specifically IFRS S1 and S2.

Nigeria is recognised as one of 30 jurisdictions, representing 57 per cent of global gross domestic product and contributing over 50 per cent of greenhouse gas emissions that are adopting or planning to implement ISSB standards.

A key highlight of the report is the FRC’s Roadmap Document, which outlines a phased implementation strategy for sustainability reporting.

This approach includes early adoption and voluntary participation from 2024 to 2027, transitioning to mandatory adoption by 2028. The roadmap also integrates the financial reporting process with specific timelines for assurance, starting with limited assurance in the third year of reporting and advancing to reasonable assurance for all sustainability-related matters starting in the sixth year.

The Adoption Readiness Working Group of Nigeria, led by the FRC, unveiled a comprehensive roadmap for the adoption of ISSB Standards in March 2024.

This roadmap highlights four phases of adoption, commencing with voluntary compliance from all groups of Nigerian reporting entities beginning in the fiscal year 2024.

Public interest entities, excluding government and governmental organisations, will be obligated to implement ISSB Standards from the fiscal year 2028, with requirements extending to small and medium-sized enterprises by fiscal year 2030.

Notably, Nigeria was the first country in Africa to declare its intention for the early adoption of the ISSB at COP 27 in Egypt in 2022. Additionally, four Nigerian companies—MTN, Seplat Energy, Access Bank, and Fidelity Bank—have published their inaugural financial reports utilising IFRS S1 and S2 sustainability reporting standards for the 2023 financial year.