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The Securities and Exchange Commission (SEC) has directed all public companies and significant public-interest capital market operators to submit implementation plans for adopting the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards by October 15, 2026.
The directive forms part of the Commission’s preparations for mandatory sustainability-related financial reporting, which will begin for affected entities from January 1, 2028.
SEC outlines IFRS sustainability reporting requirements
The standards comprise IFRS S1, which establishes general requirements for disclosing sustainability-related financial information, and IFRS S2, which focuses specifically on climate-related disclosures.
Nigeria adopted the standards as part of efforts to strengthen sustainability reporting and improve the transparency, comparability and usefulness of corporate disclosures for investors and other stakeholders.
In a circular issued on Wednesday, the SEC directed affected entities to begin preparations in line with the implementation timelines established under the Financial Reporting Council of Nigeria (FRCN) roadmap.
The roadmap, developed by the FRCN in collaboration with relevant stakeholders, including the SEC, provides for a phased approach to implementing the standards.
Under the framework, entities were encouraged to voluntarily adopt the standards for accounting periods ending on or before December 31, 2023, during the early-adoption phase.
The voluntary adoption period subsequently covers entities not yet subject to mandatory reporting, with accounting periods beginning on or after January 1, 2024, and ending on or before December 31, 2027.
Mandatory adoption begins in 2028
Mandatory adoption will begin with public-interest entities, including all public companies and significant public-interest capital market operators, for accounting periods commencing on or after January 1, 2028.
Small and medium-sized entities will be brought under mandatory adoption from accounting periods beginning on or after January 1, 2030.
The phased approach is intended to give affected entities time to establish the governance, reporting systems and internal processes required to meet the new sustainability disclosure requirements.
SEC requires implementation plans from regulated entities
To assess the readiness of regulated entities and support a smoother transition to mandatory reporting, the SEC said every affected public company and capital market operator must submit an implementation plan to the Commission on or before October 15, 2026.
The plans must also identify the challenges each entity expects to encounter in implementing the IFRS Sustainability Disclosure Standards.
According to the SEC, implementation plans must outline governance arrangements for sustainability reporting, including board-level oversight, as well as a gap assessment against the requirements of IFRS S1 and IFRS S2.
The Commission also clarified that significant public-interest capital market operators include entities responsible for facilitating clearing, settlement, trading or data-related functions within Nigeria’s capital market.
The October deadline therefore marks an important compliance milestone for affected entities as the Nigerian capital market moves towards mandatory sustainability-related financial disclosures from 2028.
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