FRC Expresses Concern over Non-participation of Industrial, Consumer Goods Companies in Adopting Sustainability Reporting Roadmap

Dike Onwuamaeze

The Executive Secretary/Chief Executive Officer of the Financial Reporting Council of Nigeria (FRC), Dr. Rabiu Olowo, has expressed concern that no company in the Nigerian industrial and consumer goods sector has shown interest in adopting the roadmap for sustainability reporting.

Olowo, expressed his concern yesterday, in a keynote address at the “Industry Specific Workshop on the Implementation of ISSB’S IFRS S1 & S2 for Industrial and Consumer Goods Companies in Nigeria,” which was held in Lagos.

He said: “As a regulator, we are concerned that none of the industrial and consumer goods companies in the sub-sector of the economy is yet to be part of the adoption roadmap in Nigeria for sustainability reporting.

“We encourage you to join the voluntary phase, which is running between 2024 and 2027 to prepare your entities for the mandatory period of 2028.”

Olowo, who was represented by the former Coordinating Director, Directorate of Accounting Standards Sustainability Reporting, FRC, Dr. Iheanyi Anyahara, recalled that the FRC has been  proactive in its involvement in the standard setting process of ISSB’s sustainability reporting from the beginning, by not only declaring its intention to do early adoption but also by constituting a technical think tank known as the Adoption Readiness Working Group for Sustainability Reporting in Nigeria, (ARWG), which midwifed the adoption roadmap for Nigeria sustainability reporting.

He explained that the roadmap provided regulatory discretionary reliefs with phased implementation of sustainability standard from 2023 to 2030 for reporting and assurance instead of the ISSB’s effective date of 2024.

“This workshop, which is packaged in partnership with Nigeria Integrated Reporting Committee (NIRC), is in furtherance of our resolve to ensure that industrial and consumer goods companies know their onions when it comes to sustainability reporting before the mandatory period.  

“Given this background, we cannot reiterate enough the benefits of entities will derive from sustainability reporting,” he said.

Olowo pointed out that the benefits sustainability reporting offers to organisations include regulatory compliance, enhanced reputation, better decision making, and improved stakeholder trust as “transparency on social, environmental, and governance (ESG) performance builds trust with investors, customers, and employees.”

They also include, “cost-saving from energy transition on long run, from non-renewable energy to renewable energy through expense reduction” as well as “tax saving from qualifying capital expenditure of PPE through capital allowance reliefs,” amongst others.

He said: “Sustainability reporting is an essential aspect of responsible industrial and allied companies’ prescriptive best practices.

“I urge you to use this workshop to embrace sustainability reporting, get early into the adoption through voluntary adoption for your learning curves before mandatory period.

“Let us take advantage of this this opportunity to shape the future of sustainability reporting and create long-term value for our organisations, stakeholders, and the environment.”

Speaking during the workshop, the Chairman of Nigeria Integrated Reporting Committee (NIRC), Dr. Innocent Okwuosa, said no company in the industrial and consumer goods sector was among the four Nigerian companies that made it during the early adoption stage of the sustainability reporting.

Okwuosa explained that the FRC was partnering with the NIRC for capacity building in providing guidance and leadership that would help companies to avoid mistakes that could not be corrected in the journey toward the adoption of these standards.

He said: “The journey started last year. The first sector that was covered was the financial sector that included banking and insurance. It was followed up by the oil and gas and the telecom firms. That same journey is what we are now on.

“The sustainability disclosures have specific requirements for some industries because due to the nature of some industries certain information is needed. That is why we are having sector specific workshop.

“I want to re-echo what has been said about this sector’s absence in the journey so far. I hope that we can get four or five companies from your sector that can come forward that they want to be counted among the voluntary adopters. 

“In the voluntary stage, the FRC has promised that there will be no sanction. This enables you to make mistakes and learn from them. So it is important that your sector should join and be counted.” 

In his goodwill message that was delivered virtually, the Chief Executive Officer of NGX Regulations Limited, Mr. Olufemi Shobanjo, said that the implementation of the ISSB 1 and 2 is a pivotal step toward enhancing transparency and sustainability in the industries.

Shobanjo charged leaders in the industrial and consumer goods to lead the way in incorporating sustainability into their businesses. 

He said: “It is journey that we have to partner and collaborate as everyone has a key role to play. This sector being a major manufacturing hub is very critical.”

He added that adhering to the ISSB 1&2 would help companies to unlock capital and funds from investors in the capital market where investors are looking to invest in companies that adopt sustainability standards.