The Securities and Exchange Commission (SEC) has reiterated the need to facilitate the issuance of green and sustainable instruments in the Nigerian capital market to assist in financing solar energy and other environmentally friendly infrastructure.
Director-General of the SEC, Lamido Yuguda stated this during the Environmental, Social and Governance Roundtable organised by the CFA Society Nigeria at the weekend.
Yuguda, while speaking on the theme: ‘Unlocking value through environmental, social and governance (ESG) investing’, said beyond the Federal Government and corporate issuers, sub-nationals can also take advantage of the growing appetite to issue bonds and finance relevant environment-friendly projects, especially those that are revenue generating and with reasonable social impact.
ESG is a method of analysing and reporting on how a company serves all stakeholders, including workers, communities, customers, vendors, shareholders and the environment.
He said companies will also need to continuously disclose relevant information on their adoption of ESG principles, stating that such information will be critical for the investing public to make informed decisions about available investment choices and guide their asset allocation.
According to him, another important step in the journey of promoting sustainable investment principles is the development of robust sustainability ratings and indices to track companies’ ESG performance.
This, he said, would further assist ESG conscious investors in making their investment choices, as well as simplify the process of analysing information disclosed by issuers on sustainable finance for investors and other stakeholders.
The SEC boss said given the global interest in ESG and the quantum of finance available to corporates and countries adopting the relevant principles, Nigerian issuers, governments and corporates, regulators, exchanges and other key stakeholders need to collaborate more to develop and issue necessary instruments to attract additional foreign capital into the country.
“With the enhanced focus on ESG considerations, much effort is now geared towards preservation of biodiversity, climate change mitigation and adaptation, inclusiveness, reduced inequality, human capital and communities’ development, among others.
“Sustainable finance has become a global brand as the world stands strongly together to promote the transition to a low-carbon, more resource efficient economy and to build a financial system that spurs sustainable growth across nations.
He noted that finance has an enormous influence on sustainability; with players in the financial sector acting as catalysts for redefining the natural and business environments.
“Given the important position of the financial sector in the economy, one can understand why these issues are accorded high priority in the sector and why the sector has begun to consider sustainability in its practices.”
President of the CFA Society Nigeria, Ibikun Oyedeji urged investment managers to ensure that they design products and services that would contribute to the sustainable development of the environment.
Oyedeji said ESG factors have become increasingly important to institutional investors, stressing the need for professionals; regulators and other stakeholders to build an ESG focused investment, which will remain relevant on a long-term basis.