Environmental, Social and Governance Considerations in corporate governance.
Companies throughout the world are under growing pressure from both internal and external stakeholders to demonstrate their ability to contribute to the resolution of environmental, social, and governance (ESG) issues in Africa, particularly those related to climate change.
The Nigerian government has taken aggressive measures to execute important climate change policies, such as passing laws relating to climate change. The Nigerian government pledged to attain net-zero emissions by 2060. In accordance with this commitment, the Climate Change Act serves as a foundation for identifying actions targeted at ensuring that the national emissions profile is compatible with the carbon budget targets, as well as creating national goals, objectives, and priorities for climate change adaptation.
The Nigerian government has also undertaken the establishment of the National Council on Climate Change, membership in the African Carbon Markets Initiative, and the launch of Nigeria’s Energy Transition Plan 2022, to achieve carbon neutrality and net-zero emissions in terms of the country’s energy consumption.
Nigerian companies have also started to take action on climate and social risk issues, such as investing in renewable energy, reducing emissions, and implementing sustainable business practices, empowering corporate boards with oversight of sustainability strategy and progress. Some companies have also established corporate social responsibility programmes to support local communities and address societal challenges, such as poverty and inequality.
Despite these valuable efforts, it is clear that more needs to be done to address Nigeria’s growing climate and societal challenges. Stakeholders are increasingly expecting companies to demonstrate a clear commitment to attaining significant environmental, social, and governance goals, as well as to use their societal power to make meaningful contributions. Companies that prioritise a purpose-driven approach to people, planet, and profit are better positioned for long-term success that is both sustainable and socially responsible.
Furthermore, the growing emphasis on the role of sustainability fosters an environment of accountability and trust among businesses and stakeholders. In this setting, Nigerian firms are pushed to incorporate strong ESG-related information in their annual sustainability or integrated reports. These companies must create internal capacity to collect, evaluate, and authenticate ESG-related data across all business activities, as well as ensure that their boards are ESG-fluent and that an effective sustainability governance and management structure is in place. By adopting a more comprehensive and inclusive approach to ESG considerations and improving their communication and reporting practices, companies can foster greater transparency for stakeholders, and create impact-withstanding strategies, while enhancing trust and loyalty from their customers and stakeholders.
Ultimately, policy and regulation must be accompanied by collaboration and partnerships to achieve sustainable development in Nigeria.