Nigeria: IFRS Applauds Nigeria’s Progress in Sustainability Reporting

The International Financial Reporting Standards (IFRS) Foundation has commended Nigeria for its significant strides in sustainability reporting, highlighting the country’s efforts to align corporate transparency with global climate-related disclosure standards.

In its recently published report, Progress on Corporate Climate-related Disclosures – 2024 Report, the IFRS Foundation acknowledged the Financial Reporting Council of Nigeria (FRC) for its pivotal role in advancing sustainability reporting within the nation.

The FRC, responding to the recognition in a statement, noted, “This acknowledgment from the IFRS Foundation underscores Nigeria’s dedication to enhancing sustainability practices, fostering corporate transparency, and supporting global efforts to address climate change.”

Sustainability reporting, as defined by PwC, evaluates the impact of a company’s activities on environmental, social, and governance (ESG) factors. It provides stakeholders with clear insights into these impacts while enabling businesses to identify associated risks and opportunities. The increasing demand for sustainability disclosures reflects growing investor and stakeholder interest in understanding companies’ ESG strategies and performance.

The IFRS report detailed Nigeria’s transition from the Task Force on Climate-related Financial Disclosures (TCFD) framework to adopting International Sustainability Standards Board (ISSB) Standards, specifically IFRS S1 and S2. These advancements place Nigeria among 30 jurisdictions, accounting for 57% of global GDP and more than 50% of greenhouse gas emissions, that are adopting or planning to implement ISSB Standards.

Central to these achievements is the FRC’s phased implementation strategy for sustainability reporting, as outlined in its comprehensive Roadmap Document. This roadmap introduces voluntary compliance from 2024 to 2027, transitioning to mandatory adoption by 2028. Key milestones include:

• Limited assurance: Starting in the third year of reporting, ensuring initial verification of sustainability-related disclosures.
• Reasonable assurance: Comprehensive assurance of all sustainability matters, beginning in the sixth year of reporting.

The roadmap, unveiled in March 2024 by Nigeria’s Adoption Readiness Working Group (ARWG) led by the FRC, details a four-phase adoption strategy:

1. Voluntary compliance by all reporting entities starting from the fiscal year 2024.
2. Mandatory adoption by public interest entities, excluding government bodies, from 2028.
3. Gradual extension of ISSB Standards implementation to small and medium-sized enterprises (SMEs) by 2030.

This structured approach ensures that Nigerian companies are well-prepared for the global shift towards sustainability-focused corporate governance. By integrating ISSB Standards into financial reporting, Nigeria strengthens its position as a leader in climate-related corporate transparency across Africa and beyond.