Investor-ready? Start with simple ESG moves

Nigeria’s financial landscape is undergoing a significant transformation. In June 2023, the Federal Government became the first in Africa to adopt the IFRS Sustainability Disclosure Standards (S1 and S2). The roadmap is clear: large companies began voluntary reporting in 2024, with enforcement starting in 2027, and SMEs are expected to comply by 2030.

This transition is not just about ticking compliance boxes; it is about attracting capital. In a market where both local and international investors are demanding credible disclosures, Nigerian businesses that act early will not only avoid regulatory sanctions but also position themselves as investor-ready.

Nigeria’s funding gap and the window of opportunity

Nigeria requires an estimated $29.7 billion annually in climate finance to meet its adaptation and mitigation goals. Yet in 2021/22, only $2.5 billion flowed into the country, according to the Climate Policy Initiative. Although this represented a 32 percent increase from 2019/20, the figure still falls well short of the nation’s climate financing needs.

Most of this funding came from development partners and Development Finance Institutions (DFIs), often as concessional loans. Private sector investment in renewable energy and other climate-focused projects accounted for only a fraction of total inflows.

This gap is not due to a shortage of funds globally. International and regional investors are actively seeking credible, ESG-compliant projects across Africa. The challenge lies in trust and disclosure. Funders are asking critical questions: Does this company manage ESG risks responsibly? Are its disclosures reliable? Will it withstand rigorous due diligence? Nigerian companies that can confidently answer these questions are already gaining an edge in the race for capital.

What Nigerian lenders already require

Many Nigerian companies mistakenly assume ESG requirements apply only to large multinationals. In reality, ESG expectations are already deeply embedded within the local financial system.

Commercial banks follow the CBN’s Nigerian Sustainable Banking Principles (NSBP), which mandate environmental and social risk assessments before corporate loan approvals. Similarly, the Development Bank of Nigeria (DBN) and the Bank of Industry (BOI) require borrowers to establish Environmental and Social Management Systems (ESMS), covering risk categorisation, mitigation plans, and monitoring in line with IFC Performance Standards.

The African Development Bank (AfDB) also insists on strict compliance with its Integrated Safeguards System (ISS) before disbursing funds.

Capital markets have moved in the same direction. The Nigerian Exchange (NGX) introduced Sustainability Disclosure Guidelines in 2020, while the Securities and Exchange Commission (SEC) launched its Sustainable Finance Principles and ESG reporting template in 2021.

In other words, investors and lenders are already screening Nigerian businesses for ESG practices, well ahead of IFRS S1/S2 enforcement. Fortunately, these frameworks are publicly accessible and free, meaning companies can begin aligning without incurring major costs.

Five proven, low-cost ESG moves

Here are five practical, low-cost ESG actions that Nigerian companies can take today, drawn from real corporate successes:

Board oversight: Assign ESG responsibility at the board level. Access Bank did this before issuing Nigeria’s first corporate green bond in 2019, signalling serious intent to investors.

Simple ESG policy: Draft and publish a concise ESG or sustainability policy. Seplat Energy began with brief ESG statements, which helped build investor confidence before moving to detailed reports.

Early disclosure: Even minimal climate-risk disclosures can attract attention. Dangote Cement’s early sustainability reporting supported its ability to raise sustainability-linked loans and bonds internationally.

Use recognised labels: Link financing to credible certifications. Access Bank’s ₦15 billion green bond, certified by the Climate Bonds Initiative (CBI), was oversubscribed and cross-listed in Luxembourg.

Leverage platforms: List eligible instruments on the FMDQ Green Exchange, boosting visibility and attracting ESG-focused investors.

These steps are more about intent than expense but can dramatically improve a company’s bankability.

Where the capital is flowing

Substantial ESG-linked financing opportunities are already accessible to Nigerian firms:

Development Bank of Nigeria (DBN): As an accredited Green Climate Fund (GCF) partner, DBN can channel up to $250 million into climate-related projects. MSMEs banking with DBN’s partner institutions that are “ESMS-ready” can tap into climate-linked financing.

African Development Bank (AfDB): The AfDB’s 2025–2029 Country Strategy Paper for Nigeria earmarks nearly $3 billion in financing (excluding co-financing), contingent on safeguard compliance.

Corporate bond market: Nigeria’s debt market has proven investor appetite for ESG instruments. Access Bank’s green bond was oversubscribed, and the Federal Government’s sovereign green bonds (2017, 2019) drew strong domestic and foreign interest.

The evidence is clear: credible ESG labelling attracts capital.

Why ESG pays off in Nigeria

Beyond regulatory compliance, ESG practices offer measurable financial benefits. Global research shows mandatory ESG disclosures improve transparency and lower equity costs. In Africa, studies of over 100 ESG-labelled bonds (2010–2023) reveal certified bonds tend to enjoy lower spreads, less volatility, and greater investor confidence.

Nigeria’s own examples echo this trend. Access Bank’s oversubscribed green bond and Dangote Cement’s sustainability-linked financing highlight how strong ESG frameworks reduce borrowing costs and boost market trust.

The lesson is simple: ESG is not a burden; it is collateral. Businesses that embrace ESG early can secure competitive financing, build investor trust, and future-proof their operations.

As Nigeria moves toward full climate disclosure enforcement, companies should not wait until 2027 or 2030 to act. The financing landscape has already shifted in favour of ESG transparency. Starting small, publishing a simple ESG policy, assigning board-level oversight, and adopting free reporting templates, can significantly improve funding prospects.

In today’s capital-constrained economy, these deliberate steps could unlock the growth opportunities Nigerian businesses urgently need.

Sarah Esangbedo Ajose-Adeogun is the Founder and Managing Partner at Teasoo Consulting. She is a former Community Content Manager at Shell Petroleum Development Company and served as the Special Adviser on Strategy, Policy, Projects and Performance Management to the Government of Edo State. She is also the host of the #SarahSpeaks podcast on YouTube @WinningBigWithSarah, where she shares insights on leadership, strategy, and sustainable growth.