Nigerian firms criticized by SEC for inadequate environmental disclosure practices

The Securities and Exchange Commission has expressed concerns over the lackluster sustainability reporting among Nigerian companies, cautioning that inadequate disclosure practices may limit their ability to access international capital.

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At the launch of the Nigerian Corporate Sustainability Report by Norrenberger Research in Abuja on Tuesday, the SEC Director-General, Emomotimi Agama, emphasized the need for improved sustainability reporting practices among listed companies.

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Agama noted that many listed companies still fail to provide structured and verifiable sustainability disclosures, a trend that poses a significant challenge to the market as a whole.

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He stated that a substantial number of listed companies lack coherent sustainability disclosures or provide disclosures that are neither structured nor verifiable, a challenge that must be collectively addressed.

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According to Agama, sustainability reporting has become a crucial factor in global investment decisions, with international investors increasingly prioritizing environmental, social, and governance performance.

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He emphasized that companies seeking access to long-term capital must meet stringent disclosure requirements, highlighting the importance of credible and verifiable disclosure in accessing global capital.

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Agama underscored that Nigerian companies seeking to access international capital must understand the importance of disclosure, citing it as the primary requirement for accessing patient, long-term capital.

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He noted that environmental, social, and governance considerations are now primary drivers of investment decisions, rather than secondary factors, and are increasingly influencing capital allocation decisions.

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Agama added that the SEC will strengthen regulatory guidance on sustainability reporting, deepen engagement with listed companies, and create incentives for early adopters of robust sustainability frameworks.

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The SEC Director-General also referenced the Investment and Securities Act 2025, which expands the commission's powers to enforce global best practices in the capital market.

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Agama stressed that improved sustainability reporting is essential for attracting investment needed for infrastructure and economic growth, highlighting the significant growth of Nigeria's capital market to over N140tn in market capitalization.

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Minister of State for Industry, John Enoh, noted that Nigeria still faces a significant gap in reliable environmental, social, and governance data, calling for greater transparency to guide investment and policy decisions.

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Enoh emphasized that global investors are increasingly favoring markets with strong sustainability credentials, underscoring the need for improved transparency and disclosure practices.

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Group Managing Director of Norrenberger Group, Tony Edeh, noted that environmental, social, and governance compliance is strongly linked to financial performance, with compliant companies outperforming their peers by 28-30 per cent.

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Edeh expressed optimism that more companies will comply with environmental, social, and governance standards ahead of the 2028 regulatory timelines, despite only a small number of firms currently meeting these standards.

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Presenting the report, Chief Research Officer at Norrenberger Group, Samuel Oyekanmi, noted that the study assessed 160 listed companies and found that only 21 met the environmental, social, and governance criteria.

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Oyekanmi added that these companies accounted for approximately 67 per cent of market value and had consistently outperformed the broader market over the past five years.

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The report's findings highlighted gaps in governance, gender representation, and environmental reporting, stressing the need for improved corporate disclosure standards across the market.