In a bid to promote transparency in corporate governance and end corruption in the private sector, Nigeria has adopted the International Sustainability Standards Board (ISSB). The country is reportedly the first in Africa to do so. The board was formed on November 3, 2021 at the United Nations global summit COP26 in Glasgow by the Trustees of the International Financial Reporting Standards (IFRS) Foundation. This was following the strong market demand for its establishment. The ISSB standards build significantly from existing reporting frameworks and standards.
It is developing in the interest of the public standards that will result in a high-quality, comprehensive global baseline of sustainability disclosures focused on the needs of investors and the financial markets. According to the foundation, sustainability factors are becoming a mainstream part of investment decision-making, and there are increasing calls for companies to provide high-quality, globally comparable information on sustainability-related risks and opportunities, as indicated by feedback from many consultations with market participants. There is also a strong desire to address a fragmented landscape of voluntary, sustainability-related standards and requirements that add cost, complexity and risk to both companies and investors.
ISSB has support from international organisations.
With its four main objectives, the ISSB has international support with its work to develop sustainability disclosure standards backed by the G7, the G20, the International Organization of Securities Commissions (IOSCO), the Financial Stability Board, African Finance Ministers and Finance Ministers and Central Bank Governors from more than 40 jurisdictions. Its objectives include to develop standards for a global baseline of sustainability disclosures; to meet the information needs of investors; to enable companies to provide comprehensive sustainability information to global capital markets; and to facilitate interoperability with disclosures that are jurisdiction-specific and/or aimed at broader stakeholder groups.
Furthermore, the ISSB builds on the work of market-led investor-focused reporting initiatives, including the Climate Disclosure Standards Board (CDSB), the Task Force for Climate-related Financial Disclosures (TCFD), the Value Reporting Foundation’s Integrated Reporting Framework and industry-based SASB Standards, as well as the World Economic Forum’s Stakeholder Capitalism Metrics. At their core, the ISSB standards will enable investors and other capital market participants to make informed investment decisions by providing information about companies’ sustainability-related risks and opportunities.
Emergence of ESG has made corporate governance more serious.
Meanwhile, all of these were disclosed by the Executive Secretary/Chief Executive Officer of the Financial Reporting Council of Nigeria (FRC) Ambassador Shuaibu Ahmed at the 2023 Annual Corporate Governance Conference. Speaking as a guest speaker under the theme, “ESG and Corporate Governance: Aligning Strategies for Sustainable Success,” Ahmed said that the world of corporate governance has undergone tremendous change due to the emergence of Environmental, Social and Governance (ESG). He stressed that with the ESG, the corporate governance world has taken a more serious look at issues of the environment, labour and social responsibility.
Also, he noted that a roadmap for the implementation of ESG in the Nigerian public sector will soon be launched. The keynote speaker, Dr. Jackie Chimhanzi, noted that human rights, labour, environment, and corruption are problems associated with corporate governance, which ESG addresses. The president of the Society for Corporate Governance Nigeria, Mr. Muhammed Ahmad, stated that issues around environmental responsibility are no longer a thing of choice for corporate organisations because they affect them. Discussants at the event included Mark Hoffman, Mrs. Chioma Afe, Ngozi Edozien, as well as Adebayo Amzat.
The standards are designed with efficiency in mind.
Present at the event as well were the Director General/ Chief Executive Officer of the Institute of Directors, Tijjani Borodo; Alhaji Garba Abubakar, Mr. Ibrahim Dasok Arabi, amongst others. Overall, the IFRS Foundation maintains that the standards are developed with efficiency in mind, helping companies to report what is needed globally to investors across markets globally; and to provide the right information, in the right way, to support investor decision-making and facilitate international comparability to attract capital.
IFRS Foundation: Website