FRC, ISSB, NGX RegCo pioneer IFRS S1, IFRS S2 standards in Nigeria
In a bid to empower investors to make better investment decisions as well as encourage corporates to adopt sustainability at the core of their financial reporting, the Financial Reporting Council (FRC) of Nigeria, International Sustainability Standards Board (ISSB) and NGX Regulation Limited (NGX RegCo) on Monday, 26 June 2023, launched the first two IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2 Standards).
The launch which held at Nigerian Exchange Group House in Lagos makes Nigeria the first African country to adopt the standards, just as they were also launched in six major global financial centers including; New York, London, Frankfurt, Singapore, Santiago and Montreal.
Speaking at the launch, the Executive Secretary, FRC, Ambassador Shuaibu Adamu, noted that it marks a historic milestone for Nigeria and is a testament to the country’s unwavering commitment to responsible and sustainable business practices. He also said that as Nigeria adopts the standards, it is setting a powerful example for other nations and reaffirming its position as one of the global leaders in sustainability reporting.
“Today, there is a growing global, environmental, social and governance investor base of over $2 trillion in global institutional investor funds under management. No country or institution can attract or accept these private investment capital if you are not seen to be committed to climate and sustainable development. Nigeria must therefore compete with the rest of the world for this private capital.
“Obviously, in Nigeria, NGX provides a veritable platform to attract this capital. Comprehensive, comparable and transparent information about sustainability and climate related risks and opportunities will play an essential role in appropriately pricing these risk and opportunities and unlock the needed private capital flows,” Adamu said.
Also speaking, the Chief Executive Officer, NGX RegCo, Ms Tinuade Awe, said that the launch is tremendous for the growth of the capital market as companies in Nigeria will now have a global baseline that it can use. Awe, while calling for focus on the forthcoming standards stated, “NGX RegCo remains committed to promoting a fair, transparent and orderly market that thrives on full and timely information needed for the protection of investors in the Nigerian capital market.”
Board Member, ISSB, Ndidi Nnoli-Edozien, said that ISSB was born at COP 26 as a sister entity to the International Accounting Standard Board (IASB) while noting that its intention to launch the standards was to see how Nigerian firms process sustainability, climate related risks and opportunities and embed them in their reporting to help guide capital flows.
“There are close to 300 different standards and what we have done is create a single global baseline that is interoperable with standards such as GRI and reduce the cost of reporting burden,” she said.
In a goodwill message, the Director-General, Securities and Exchange Commission (SEC), Lamido Yuguda who was represented by the Executive Commissioner, Operations, Dayo Obisan, said the launch of the ISSB Standards in Nigeria signals the country’s readiness to embrace sustainability as a core value in financial reporting practices. “This sends a strong message to the global community that Nigeria is committed to transparent and responsible business practices that prioritize environmental stewardship, social well-being as well as good governance,” he added.
Commending the NGX RegCo and FRC, Chair, ISSB, Emmanuel Faber, said that the lack of comparability and ambiguity about the many available standards and frameworks have limited the effectiveness of reporting and the efficiency of capital markets.
Faber further stated that the standards are cost effective for reporters and useful for investors and added that organizations that use IFRS 1 and 2 as a tool to communicate to investors will win a financing competitive advantage.
