ANALYSIS: Emerging Regulation of Sustainability Reporting in Nigeria

ANALYSIS: Emerging Regulation of Sustainability Reporting in Nigeria

The integration of sustainability into business models across industries is fast becoming a regulatory and compliance issue globally. And in this direction of play, Nigeria is moving along with the trend.

In an earlier piece, we delved into a definition of the concept of sustainability. In this piece, our focus would cover sustainability reporting and the frameworks that are available across industries and economic sectors. Sustainability reporting frameworks are essential tools that help organisations evaluate, measure and communicate their Environmental, Social, and Governance (ESG) performance to stakeholders, including communities, government, shareholders, and various stakeholders across the supply chain. This helps to promote transparency and accountability in terms of ethical standards and environmental concerns. Today there are more than 600 different sustainability reporting standards, industry initiatives, frameworks, and guidelines around the world, which can make sustainability reporting a complex, research-heavy, cumbersome, and repetitive process.

However, the trend most companies take is to follow sustainability reporting laws and frameworks set out by the government(s) where applicable, and/or voluntarily select the standards they use for reporting- and, to some extent, how they report sustainability performance.

Notable Global Sustainability Reporting Framework

1. Task Force on Climate-related Financial Disclosures (TFCD)

The TCFD was set up to develop recommendations for voluntary climate-related financial disclosures as a tool for investors and other stakeholders to assess risks associated with climate change. The disclosure recommendations are structured around four thematic areas that represent core elements of how companies operate: governance, strategy, risk management, metrics and targets. The four recommendations are interrelated and supported by 11 recommended disclosures that build out the framework with information that should help investors and others understand how reporting organisations think about and assess climate-related risks and opportunities. The task force has since completed its work and the recommendations incorporated into the International Sustainability Standards Board (ISSB) framework.

2. International Petroleum Industry Environmental Conservation Association (IPIECA)

This sustainability reporting guidance for the oil and gas industry is a key tool to aid companies shape the structure and content of their sustainability reporting. Published in conjunction with the American Petroleum Institute (API) and the International Association of Oil & Gas Producers (IOGP), it brings together the collective wealth of technical expertise from the membership of the three associations. The guidance provides direction on the content of a typical industry report by covering 21 sustainability issues and 43 indicator categories. 

3. Sustainability Accounting Standards Board (SASB)

The Sustainability Accounting Standards Board (SASB) framework connects businesses and investors on the financial impacts of sustainability. In order to make it as widely applicable as possible, the SASB framework comprises 77 separate standards covering a broad range of industries. Each set of standards divides topics according to five issue categories:

  • Environment
  • Social capital
  • Human capital
  • Business model and innovation
  • Leadership and governance

These are further broken down into 26 general sustainability categories, such as labour relations, data security, and business ethics. Each of the SASB standards highlights financially material ESG information that’s pertinent to the reporting agency’s specific industry. This allows respondents to identify and report on the most relevant aspects of their sustainability performance.

4. American Exploration & Production Council Framework

The American Exploration and Production Council (AXPC) is a trade association representing the largest independent oil and natural gas exploration and production companies in the United States. To promote transparency and consistency in ESG reporting among U.S. upstream exploration and production companies. AXPC’s ESG Framework focuses primarily on environmental metrics and centres around five key areas that are important to capturing more consistent and transparent reporting across the upstream industry such as greenhouse gas (GHG) emissions, flaring, spills, water use, and safety.

5. Global Reporting Initiative (GRI)

This framework delivers a global best practice for how organisations communicate and demonstrate accountability for their impacts on the environment, economy and people. It covers topics that range from biodiversity to tax, waste to emissions, diversity and equality to health and safety. As such, GRI reporting is an enabler for transparency and dialogue between companies and their stakeholders.

6. World Economic Forum (WEF) ESG Disclosure Framework

This framework was developed by the Big Four accounting firms. The framework includes a universal set of metrics and recommends disclosures intended to lead to a more comprehensive global corporate reporting system. The framework divides disclosures into four pillars — principles of governance, planet, people, and prosperity — that serve as the foundation for ESG reporting standards.

7. Science Based Targets Initiative (SBTi)

The SBTi is a benchmark for corporate commitment to climate change mitigation. Through science-based target-setting, companies can align their strategies with the goals of the Paris Climate Agreement, specifically limiting global warming to 1.5°C above pre-industrial levels. The framework provides sector level guidance and specific guidance for SMEs.

What is Obtainable in Nigeria

Notably, the Financial Reporting Council of Nigeria (FRC) announced its intent to be an early adopter of the International Financial Reporting Standards- IFRS Sustainability Disclosure Standards by the International Sustainability Standards Board (ISSB) during the 27th Conference of Parties (COP 27) held in Sharm El-Sheik, Egypt. The IFRS sustainability disclosure is driven by the need for a global baseline for sustainability reporting.

In June, 2023, the FRC, ISSB and the Nigeria Exchange Group Regulation Limited (NGX Reg Co) launched two ISSB Sustainability Disclosure Standards, IFRS S1 & S2.

Differences between IFRS 1 and IFRS 2






Focuses on disclosing sustainability-related risks and opportunities throughout the entity's value chain, considering interactions with stakeholders, society, the economy, and the environment. The objective is to provide insights to primary users of financial reports for resource allocation decisions.

Specifically targets climate-related risks and opportunities, excluding those that would not reasonably impact the entity's prospects. The objective is to provide information useful for resource allocation decisions related to climate resilience.



Covers a broad range of sustainability-related factors beyond climate change, including social and governance aspects.

Exclusively addresses climate-related risks and opportunities, emphasising the entity's exposure to climate risks and its resilience through scenario analysis.



Requires entities to consider all reasonable and supportable information available at the reporting date to identify sustainability-related risks and opportunities throughout the value chain.

Mandates the use of climate-related scenario analysis tailored to the entity's circumstances, considering exposure to climate risks and available resources for analysis.



It does not specify a particular measurement approach but requires disclosure of entity-specific and external environmental conditions used in assessing sustainability-related factors.

Requires disclosure of the measurement approach in line with the Greenhouse Gas Protocol or other applicable methods, along with emission factors used in the analysis.

In summary, while both standards aim to provide information on sustainability-related factors, IFRS 1 covers a broader scope of sustainability issues, whereas IFRS 2 focuses specifically on climate-related risks and opportunities and mandates scenario analysis tailored to climate resilience.

The Hard Truth….

In Nigeria, there's a knowledge gap in adopting IFRS S1 and S2 due to limited expertise. Increasing awareness and developing sustainability professionals' capacity for implementation is crucial. Clear data collection on climate risks is essential for reliable impact metrics. Collaborating with stakeholders like industries, businesses, regulatory bodies, and educational institutions can enhance understanding and application of these standards. This collaboration promotes sustainability integration into business practices, speeding up the move towards a more sustainable financial reporting landscape.

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