FG Prepares Ground for Implementation of Sustainability Reporting for Private Sector By 2024

•Compliance will boost investors’ confidence, says FRCN boss

James Emejo in Abuja

The federal government yesterday inaugurated the Adoption Readiness Working Group (ARWG) for the implementation of Sustainability Reporting Standards which is to be issued by the International Sustainability Standards Board (ISSB).

The implementation would begin with the General Requirements for Disclosures of Sustainability-Related Financial Information (IFRS S1) and subsequently, the Climate-Related Disclosures (IFRS S2).

Both standards are expected to be launched globally on June 26, 2023, while implementation would commence on January 1, 2024. Nigeria would be the first to adopt the reporting benchmarks in Africa and one of the earliest adopters in the world.

Speaking at the inauguration of the working group, the Permanent Secretary, Federal Ministry of Industry, Trade and Investment, Dr. Evelyn Ngige, commended the leadership of the Financial Reporting Council of Nigeria (FRCN) as the country takes another bold and significant initiative by setting up the ARWG to mainstream the sustainability reporting standards.

Nigeria took the audacious move of being one of the first countries to declare intent to early adopt the IFRS S1 and S2 at COP27 last November in Egypt.

She specifically lauded the Executive Secretary/Chief Executive of FRCN, Mr. Shuaibu Ahmed, for taking the giant step towards ensuring that Nigeria remained visible at the international standard setters and regulators.

Ngige said, “Your initiatives have earned Nigeria the much-desired recognition and respect. I, therefore, urge you to ensure that Nigeria maintains this enviable position.”

Represented by the Ministry’s Director, Policy, Planning, Research and Statistics (PPRS), Alhaji Baba Gana Alkali, the permanent secretary noted that when finally issued on June 26, 2023, these two standards would be implemented by Nigerian private sector entities that apply the International Financial Reporting Standards (IFRS), adding that they were expected to adopt it with the various commencement dates in the standards.

She said, “There is a global understanding that the implementation of IFRS S1 and S2 will enhance corporate reporting and unlock capital specially to emerging markets like Nigeria. Therefore, I implore all of you to work tirelessly to ensure that these standards are appropriately implemented.”

Ahmed, however, noted that the proposed adoption of the standards came at an auspicious time when the primary users of general-purpose financial statements including investors, lenders, creditors, and other stakeholders globally are calling for more transparent, comparable, and verifiable sustainability-related financial information to help them assess an entity’s enterprise value.

He told THISDAY, “We are now in a world where reliable sustainability information is becoming as important as financial information. Yesterday’s focus on FSS is giving way to an integrated approach to financial information, ESG or sustainability information, and broader non-financial information.”

He pointed out that an entity’s ability to remain resilient is dependent on a wide range of resources and relationships including workforce, and any specialized knowledge it has developed as well as its relationship with local communities and natural resources.

Specifically, he noted that investors, lenders, and other creditors, therefore, seek information about the significant sustainability-related risks and opportunities facing an entity to inform their decision about providing resources to the entity.

He added that such information supplements and compliments the information contained in the entity’s general-purpose financial statements for informed decision-making.

The FRCN boss said the ARWG was constituted to map out strategies in readiness for the smooth and early implementation of the sustainability standards to be issued by the ISSB, following the country’s commitment to be an early adopter of the standards.

Ahmed said, “Nigeria’s early adoption status of ISSB sustainability standards has been widely acknowledged at international fora.

“Firstly, during the CoP 27 Climate Change Conference at Sharm el-Sheikh in Egypt in November 2022, and recently reaffirmed at Net Zero Delivery Summit in London last month, May 2023.

“It has earned global recognition which has also put FRC on the global map. This underscores the Financial Reporting Council of Nigeria’s drive for Nigeria to retain the fundamentals as the largest economy in Africa, and the hub for investments destination, in the ongoing sustainability-related developments”.