Sustainable financing on song as finance leaders urge corporate trustees raise bar 

L-R: Adekunle Awojobi, chairman 2024 ACT business luncheon committee; Olatunde Kamali, director,office of the director general, Securities and Exchange Commision; Patience Oniha, director general, Debt Management Office; Omolola Iyinolakan,president,ACT; Felicia Sonubi, managing director, Emerging Africa Trustees Limited; and Jimi Ogbobine, associate director and head of consulting, Agusto Consulting Limited, during the 2024 ACT business luncheon in Lagos, recently

Onome Amuge

Sustainable finance is no longer an obscure notion in global finance. It has become a fast-growing movement sweeping the financial world, challenging old paradigms and spurring Nigeria to adapt.

Studies indicate that the ripples of sustainable finance, with its emphasis on environmental, social, and governance (ESG) investing, is set to have a significant impact on Nigeria’s economic growth, environmental stability, and societal welfare.

Infact, a report by Agusto & Co, showed that the global green bond market has blossomed at a remarkable speed, with cumulative issuance catapulting from under $40 billion a decade ago to $2.7 trillion by 2023.

As custodians of trust assets and agreements, corporate trustees in Nigeria are  considered significant players in opening the gates of opportunity for sustainable finance, where investments generate both financial returns and environmental, social, and governance benefits.

To this end, experts and stakeholders from Nigeria’s financial sector have called upon corporate trustees to develop their expertise in serving investors interested in financing climate change initiatives. With investors eager to fund climate-focused initiatives, industry insiders believe that corporate trustees can play a pivotal role in harnessing capital to drive environmental progress.

Lagos became the stage for a lively discussion on the future of sustainable finance, as the  Forum of Trust Providers Ltd/Gte, also known as the Association of Corporate Trustees (ACT) hosted its business luncheon with the theme, ‘‘Sustainable finance: The role of corporate trustees’’. During the event, experts and stakeholders weighed in on the potential of corporate trustees to lead the way in facilitating the transition to greener and more socially responsible investment practices.

Emomotimi Agama, the director-general of Securities and Exchange Commission (SEC), and  guest of honour at the event, laid out a compelling argument for sustainable finance. Decrying the threats posed by global challenges such as value chain disruption, resource scarcity, social inequality, and economic instability, Agama urged corporate trustees to view their role as an opportunity to drive transformative change and lead efforts towards a more sustainable future.

Agama, who was represented by Tunde Kamali, the director, market development of SEC, urged the Association of Corporate Trustee to take the lead enforcement expertise in sustainable finance and foster an investment environment that is both knowledgeable and accountable.

“This era of mankind has without doubt been robustly characterised by the inescapable importance of environmental stewardship, social equity and economic resilience. As guidance of financial integrity, we now also have a responsibility to ensure environmental integrity which means adjusting to ensuring the infusion of sustainability considerations into our reports, decisions and activities.

“This is a responsibility that has become paramount as our contribution to providing the nourishment required by nature which would in turn support the standard and quality life we all desire now and in the future.

“Sustainable finance, guided by environmental, social and governance principles (ESG) is a key to that prosperous future,” he stated.

Agama highlighted the tremendous opportunities in the world of sustainable finance, urging corporate trustees to take centre stage. The SEC DG  acknowledged the key role played by corporate trustees as the bridge between investors and other stakeholders, and the need for them to become the driving force behind sustainable financing. He also stressed the importance of trustees not only overseeing assets and ensuring compliance but also playing an active role in promoting sustainable finance practices.

Agama advocated for trustees to leverage Environmental, Social, and Governance (ESG) criteria, strategically directing capital towards sustainable projects and initiatives. He explained that in doing so, trustees can protect investor portfolios from ESG-related risks and strengthen the financial viability of investments over the long term, thus safeguarding the planet’s future.

He identified the $2.6 trillion promise of sustainable finance, challenging Nigeria’s corporate trustees to unlock this potential. He  also underscored the economic and environmental benefits this shift could bring, while cautioning that there is still much work to be done in realising the full potential of the rapidly growing market.

The SEC DG identified an untapped opportunity concerning the unmet need for sustainable investment advice. He urged financial intermediaries to leverage this opening and fill the gaps. According to him, the growing demand for sustainable investments presents an opportunity for corporate trustees to unlock a lucrative market.

Agama encouraged corporate trustees to reinvent themselves as leaders in sustainable investment. He also urged them to transcend their traditional role of intermediaries, championing the integration of environmental and social impact in their investment strategies.

“The Association of Corporate Trustees should take the lead in fostering expertise in sustainable finance, fostering  an investment environment that is both knowledgeable and accountable,” he stated.

Agama also reaffirmed SEC’s commitment to champion sustainable financing in Nigeria, noting that the commission stands firm in its commitment in championing sustainable financing in Nigeria. He also noted that the commission has developed comprehensible sustainable  climate guidelines into its disclosure requirements for capital market operators, aligning them with sustainable finance procedures.

Patience Oniha, director-general of the Debt Management Office (DMO), in her keynote speech, noted that corporate trustees occupy a crucial position in the financial ecosystem, shielding investors from potential risks and ensuring that their investments remain solid and secure.

Oniha outlined Nigeria’s strategy for sustainable finance, highlighting the nation’s commitment to combating climate change and protecting the environment.

As the arm of government responsible for borrowing, Oniha acknowledged that sustainable finance is a significant means of implementing international agreements that have been signed by Nigeria. She also noted that there has been an increase in fundings and securities relating to sustainable finance.

“As we expect these securities to come in large scale, not just from the government but from the private sector, we expect that the trustees should be able to provide the required services so that investors can be comfortable about them,” she stated.

The DMO DG  also urged  corporate trustees to build their capacity and expertise in sustainable finance to keep pace with a rapidly expanding securities market.

Addressing newsmen, Omolola Iyinolakan, president of the Association of Corporate Trustees (ACT), spoke on the choice of the sustainable finance theme, saying,“we have been looking at the financial services sector, and see what is on the front burner, and try to address them from our own side as corporate trustees.”

Iyinolakan expressed her insight in the rising significance of sustainability in the financial sector, underscoring that ESG considerations are no longer optional but essential for policy making. This intersection of finance and sustainability, she explained, is an opportunity for the sector to strike a balance between economic growth and environmental protection, while promoting social fairness.

The ACT president also highlighted the critical role of corporate trustees in protecting investors’ interests. She noted that by their nature, investments involve a variety of stakeholders with varying motivations, and it’s not always possible for investors to fully understand the complex financial instruments they engage in. This, she noted,  is where corporate trustees come in, safeguarding the interests of all investors and ensuring that their investments are secure and their returns fair.