Onome Amuge
The Securities and Exchange Commission (SEC) is betting that aligning with the International Sustainability Standards Board (ISSB) could reshape the country’s capital markets, drawing in long-term foreign investment and lowering financing costs for corporates battered by years of high borrowing rates and investor caution.
Speaking after a panel on IFRS S1 and S2 standards, Emomotimi Agama , SEC director-general framed the reform not simply as a compliance exercise, but as a chance to rebrand Nigeria as a credible destination for responsible capital at a time when global asset managers are sharpening their focus on climate and sustainability disclosures.
“Nigeria cannot afford to be left behind. These standards are not about box-ticking; they are about transparency, resilience and competitiveness. The more investors can see, the more they can trust,” Agama said.
The move places Nigeria among a small group of emerging markets attempting to align directly with the ISSB’s global baseline, which is expected to become the default for institutional investors seeking comparability across jurisdictions. For Nigeria, the stakes are high. This is even as foreign participation in its capital markets has fallen sharply over the past decade, weighed down by macroeconomic instability, foreign exchange controls and patchy corporate governance.
Under Nigeria’s proposed roadmap, large public interest entities will be encouraged to begin voluntary reporting as early as next year, before phased mandatory adoption begins in 2027. Smaller public companies and eventually medium-sized enterprises will follow suit by 2030.
The SEC argues that embedding sustainability metrics into financial disclosure will help lower information asymmetry, a longstanding deterrent for international investors who often cite opacity and governance concerns as reasons for avoiding Nigerian assets.
Agama acknowledged that building the ecosystem around the standards is as critical as mandating compliance. The regulator stated that it is working with the Financial Reporting Council of Nigeria on a phased approach to third-party assurance, to prevent excessive costs while companies and auditors scale up their capacity.
In parallel, the Nigerian Exchange (NGX) is piloting digital reporting tools designed to make disclosures machine-readable, enabling investors to easily compare Nigerian issuers with peers abroad. Pension funds, asset managers and development finance institutions are also being engaged to harmonise their environmental, social and governance (ESG) reporting requests with ISSB metrics, in a bid to reduce the reporting burden on issuers.
“We don’t want fragmentation. We want a single language of disclosure,” Agama said.
Yet analysts caution that Nigeria’s adoption journey is unlikely to be straightforward. Weak enforcement capacity, limited technical expertise, and the risk of greenwashing by issuers are seen as immediate concerns.
The SEC has signalled it will initially pursue a “comply or explain” approach before transitioning to full enforcement once preparer and assurance capacity has matured. Critics argue that could allow poor-quality reporting to persist in the crucial early years.
Proponents say the reforms could catalyse Nigeria’s underdeveloped sustainable finance market. Agama highlighted the potential for green bonds, sustainability-linked bonds and even transition sukuk to broaden the country’s capital market offerings and attract new categories of investors. Nigeria has previously experimented with sovereign green bonds but corporate issuance has lagged, reflecting limited investor demand and issuer preparedness.
Another long-term prize is inclusion in global sustainability indices, which guide asset allocation for large institutional investors. Nigeria has often been excluded from such benchmarks due to inadequate data. SEC officials believe that aligning with ISSB could eventually improve Nigeria’s eligibility, bringing in passive flows and broadening the investor base.
For corporates, the benefits go beyond cheaper funding. Improved disclosure could help Nigerian exporters maintain access to supply chains increasingly governed by sustainability requirements. For small and medium enterprises, integration into global value chains may depend on demonstrating compliance with recognised sustainability frameworks.
The SEC’s initiative comes as Nigeria faces mounting fiscal pressures and a desperate need to mobilise private capital for infrastructure and energy transition. With foreign direct investment at multi-decade lows, policymakers are under pressure to create conditions that reassure investors.
Agama is betting that credibility will translate into capital. Whether Nigeria can follow through on the promises of ISSB alignment may determine how far its capital markets can regain the trust of international investors.
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