By Modupe Gbadeyanka

The Securities and Exchange Commission (SEC) has approved the Sustainability Disclosure Guidelines of the Nigerian Stock Exchange (NSE).

The sustainability guidelines are in fulfilment of the local exchange’s desire to champion sustainable capital market practices in Africa.

The Nigerian bourse said it recognises that the promotion of Environmental, Social and Governance (ESG) principles can facilitate more meaningful engagement between investors and listed companies on ESG risks and opportunities. This, in turn, is expected to further deepen the role played by market operators and regulators in leading sustainability policies and regulations.

The guidelines primarily provide the value proposition for sustainability in the Nigerian context and also articulate a step by step approach to integrating sustainability into organisations, indicators that should be considered when providing annual disclosure to the NSE and timelines for such disclosures.

Whilst developing the guidelines, the NSE noted that issuers may be at varying levels of understanding sustainability disclosure requirements and capacity to comply with the requirements, encouraging all issuers to adopt the practice of sustainability reporting.

The NSE said the guidelines are available in electronic form on its website, www.nse.com.ng and will be distributed to issuers listed on all its boards, adding that the guidelines will become effective on January 1, 2019. 

They will be mandatory for companies listed on the Premium Board of the exchange, noting that companies having their year ending December 31, 2019 will have on or before March 30, 2020 to file their accounts.

Also, companies having their year ending February 28, 2020 will have on or before May 30, 2020 to file their accounts, while companies having their year ending May 31, 2020 will have on or before August 29, 2020 to file their accounts, and those ending their year on June 20, 2020, will have till on or before September 28, 2020 to file their accounts.

Whilst describing the objectives of the Sustainability Disclosure Guidelines, Chief Executive Officer of NSE, Mr Oscar Onyema, explained that, “We are supporting the global agenda of green and sustainable finance, which is so critical for Africa.

“As the first exchange to list a sovereign green bond in Africa, our issuance of these guidelines is to further enable investors to ascertain their exposure to ESG risks whilst providing our issuers with a platform to disclose them along common themes for comparability. We encourage peer exchanges on the continent to continue to enhance information disclosure in their markets as this will help build trust.”

On his part, Head of Corporate Communications at the NSE, Mr Olumide Orojimi, was of the view that, “With continued global participation in our market, a shared framework of ESG principles with multi-stakeholder approach and metrics is imperative.

“The guidelines set out recommendations for good practice in thirteen thematic areas under four core principles in ESG reporting. With the launch of these guidelines, investors can look forward to a consistent approach to ESG reporting from issuers listed on the NSE.”

As a member of the United Nations Sustainable Stock Exchanges (SSE) initiative, and the World Federation of Exchanges (WFE), NSE said it was committed to providing its listed companies with guidance on sustainability reporting and has taken steps to demonstrate its commitment through a number of pre-implementation activities.

The first major step was the hosting of the inaugural Nigerian Capital Market Sustainability Conference (NCMSC) in November 2015, which served as a stakeholder engagement session to discuss the business value of sustainable investment, enhancing corporate transparency and ultimately performance on Environmental, Social and Governance (ESG) issues.

Outcomes from the conference and results from relevant assessments aided in the production of the draft Sustainability Disclosure Guidelines (SDG), the stock exchange said.

Also, the NSE held a Sustainability Reporting Seminar on June 8, 2016, to intimate stakeholders with the guidelines, the reporting format and template, and the real value proposition of reporting. The draft guidelines were subsequently taken through The Exchange’s rule-making process, exposed for stakeholders’ comments, and submitted to SEC for approval.