Nigeria is one of the ten most vulnerable countries globally to the negative impacts of climate change. According to the World Bank, temperatures in Nigeria could rise by up to 2.8°C above pre-industrial levels by 2060 and could potentially increase by up to 5.7°C by the end of the century. These changes are expected to be accompanied by an increase in extreme weather events, including heatwaves, droughts, and flooding. Climate change is projected to adversely affect every aspect of the Nigerian economy, including health, agriculture, infrastructure and displace millions of people. It is estimated that climate inaction could cost Nigeria over US$400 billion by 2050.
As countries grapple with the realities of climate change, there has been an increasing global trend towards the use of corporate climate disclosures to hold companies accountable for the climate impacts of their operations and to help investors better identify and quantify climate risks so that capital can be allocated to more resilient business models.
Nigeria has taken notable steps towards aligning its financial reporting system with global standards. In 2023, the Financial Reporting Council of Nigeria (FRC) published its Adoption Readiness Strategy for the International Sustainability Standards Board (ISSB) climate-related disclosure standards, IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures). Under this roadmap, public interest entities, including listed companies, are expected to commence reporting against these standards by 2028.
In March 2025, Nigeria enacted the Investment and Securities Act (ISA) 2025, which introduced several laudable regulatory reforms to the Nigerian capital market. These include new provisions on the independence of the Securities and Exchange Commission (SEC), the recognition of virtual and digital assets, improved market oversight, and measures to address systemic risk. However, the reform process missed a key opportunity to establish a clear legal framework for climate risk disclosure in the Nigerian capital market.
The failure of Nigeria’s ISA 2025 to include specific provisions mandating climate-related disclosures does not align with evolving global standards. In July 2023, the International Organisation of Securities Commissions (IOSCO) endorsed the ISSB sustainability standards for use in both “capital raising” and “trading activities.” In the EU, emerging regulations now require companies to assess and disclose their exposure to climate risks, report their environmental impacts, and adopt climate transition plans. The UK is also actively taking steps to reform its financial markets to ensure climate disclosures are embedded across corporate reporting frameworks.
In 2024, the US Securities and Exchange Commission (US SEC) issued climate-related disclosure rules which required certain listed companies to disclose material climate risks. However, the rules were met with significant legal opposition and, following multiple lawsuits from states and private actors, the US SEC voted in March 2025 to withdraw its defense of the rules. While this development reflects the current political stance on climate in the United States, including its recent withdrawal from the Paris Agreement, the rest of the world is pressing ahead on a trajectory toward decarbonisation.
Nigeria’s financial market currently lacks a coherent and binding framework for climate-related financial disclosures. The Securities and Exchange Commission (SEC)’s Green Bond Rules apply narrowly to green bond issuances and do not extend to broader sustainability and climate-related disclosures. While the SEC’s Sustainable Financial Principles encourage regulated entities to consider ESG factors and publish related reports, either within annual filings or as standalone documents, there is no standardised reporting framework to ensure consistency and comparability. A further gap is that companies are not required to disclose their greenhouse gas (GHG) emissions, provide detailed information on how they are managing climate-related financial risks or disclose any future plans to reduce their environmental impact. This regulatory vagueness weakens investor confidence, increases information asymmetry, and leaves a significant gap in Nigeria’s sustainable finance architecture.
Given Nigeria’s urgent need to attract investment for infrastructure and other development projects, it is imperative that the country’s securities regulatory framework addresses this climate disclosure gap. The absence of a sound climate disclosure framework could limit the flow of foreign capital into Nigerian markets, particularly from investors who increasingly view climate risk assessment as a key part of their investment decision-making. Moreover, without express legislative authority, the SEC may face serious legal challenges if it attempts to mandate climate disclosures, similar to the challenges faced by the US SEC.
Looking ahead, Nigeria has an opportunity to strengthen the regulatory environment for climate-related financial disclosures in the following ways:
• Firstly, the ISA should be amended to provide a clear legal mandate for the disclosure of climate-related financial risks by public companies, including through periodic filings and annual reports.
• Secondly, climate-related disclosures should be explicitly required in offer documents and IPO prospectuses and integrated into exchange listing rules. These documents are critical to investor due diligence and market transparency during capital raising. In addition, companies, especially large, listed, and high-emitting businesses, should be required to prepare and disclose climate transition plans, setting out how they intend to align their operations with Nigeria’s national climate goals.
• Thirdly, regulators such as the SEC and FRC in collaboration with other sectors-specific regulators and the National Council on Climate Change should develop and publish sector-specific guidance on climate-related financial disclosures, particularly for high-emitting sectors such as oil and gas, agriculture, and heavy industries.
• Finally, Nigeria’s corporate governance code should be reformed to ensure that directors of public companies have clear responsibilities for overseeing the preparation and accuracy of climate-related disclosures.
Integrating climate risk into capital markets regulation is now essential to maintaining investor confidence, aligning with global financial standards, and safeguarding Nigeria’s economic future. While the ISA 2025 reform did not take this step, future legal and regulatory action can still close the gap and signal to global markets that Nigeria is serious about financing a climate-resilient and sustainable future.
Omonigho Erigha is the Founder and Policy Director of Climate and Energy Policy Initiative, a non-profit think tank.
