By Chukwuma Umeorah
The Federal Government has called on companies and corporations to prioritize the integration of Environmental, Social, and Governance (ESG) principles as a strategic measure to attract increased foreign direct investments (FDIs).
The appeal was made during the launch of the ESG Ratings Report by the Independent Project Monitoring Company (IPMC) in Lagos on Thursday. The report assesses the performance of Nigerian financial services companies in adhering to ESG standards and serves as a critical tool for businesses and investors alike, both domestic and foreign, providing valuable insights into how companies are performing on ESG criteria.
Special Adviser to the President of the National Economic Council on Climate Change, Rukaiya El-Rufai, highlighted the importance of integrating ESG considerations into core business practices. She stressed that strong ESG performance enhances a country’s attractiveness to foreign investors, stating its attendant contribution to the development of the economy.
According to her, “We need companies to be ESG fit because it is a major source of attracting foreign direct investment into Nigeria. ESG factors are no longer peripheral concerns; they are central to the resilience and long-term success of businesses. Companies that prioritize ESG are not only contributing to a more sustainable and equitable world but are also positioning themselves for value creation that not only ensures greater financial performance but embeds value levers that will sustain the performance.”
El-Rufai lauded IPMC for their initiative in publishing the ESG Ratings Report, noting its importance in raising awareness and stimulating competition among financial institutions. “This is very commendable as it would help raise awareness, stimulate competition among our players, and ensure that they are also operating in a globally competitive way,” she stated.
A major highlight from the report presentation was the identified data gap in Nigeria, particularly concerning ESG metrics. El-Rufai noted the government’s efforts to address this issue through initiatives such as the early adoption of international financial reporting standards and the Climate Change Act, which mandates the implementation of a carbon budget. “Data is vital for tracking progress and providing information to stakeholders and investors. Even amidst data challenges, it’s crucial to start the journey,” she noted.
The CEO of IPMC, Robert Ade-Odiachi, underscored the importance of the ESG Ratings Report, emphasizing the need for companies to adopt a conscientious approach in their treatment of people, governance and the environment while pursuing financial objectives. He noted that this inaugural edition of the report marks the beginning of a broader scope for future ESG ratings. “We have completed data collation for the oil and gas sector; we are currently analyzing and cleaning this data, with plans to publish in August. Additionally, we are working on the telecoms industry, manufacturing sector, and other companies listed on the stock exchange. We urge other corporates who have not yet participated to do so, to avoid being left out. This initiative aims to enhance business ethics in Nigeria,” said Ade-Odiachi.
IPMC’s ESG Consultant, Agatha Afemikhe, during the report presentation, highlighted that the sample size for data collation included 29 commercial and merchant banks and 34 insurance companies licensed by the Central Bank of Nigeria (CBN) and the National Insurance Commission (NAICOM). She noted, “The findings of the report indicated that the banking industry demonstrated greater compliance with ESG principles, while the insurance industry was somewhat lagging.”
Zenith Bank emerged as the top ESG-rated company in the banking sector, followed by Access Bank, Stanbic IBTC, Fidelity, and Sterling Bank. In the insurance sector, Axa Mansard led the ratings, followed by Allianz Nigeria Insurance Ltd, Custodian Insurance, Regency Alliance Insurance Plc, and Coronation Life Assurance.
The event convened key stakeholders and industry experts who deliberated on the report’s findings and their implications for the financial industry.