Economy
Yuguda Proposes Robust Sustainability Ratings to Attract Investors
By Aduragbemi Omiyale
The Director-General of the Securities and Exchange Commission (SEC), Mr Lamido Yuguda, has proposed the development of robust sustainability ratings and indices to track the performance of companies in the area of Environmental, Social and Governance (ESG) so as to attract investors in the green sector.
He said with the design of the sustainability ratings and indices, conscious investors would have available materials and information to help their investment choices.
Mr Yuguda also reiterated the need to facilitate the issuance of green and sustainable instruments in the Nigerian capital market, saying it will go a long way to assist in financing solar energy and other environmentally friendly infrastructure.
“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 will further assist ESG conscious investors in making their investment choices. It will also simplify for investors and other stakeholders the process of analyzing information disclosed by issuers on sustainable finance,” the SEC DG said at an ESG roundtable themed Unlocking Value Through ESG Investing organised by the CFA Society Nigeria last Thursday.
He also tasked state governments to take advantage of the growing appetite to issue bonds to finance relevant environment-friendly projects, especially those that are revenue-generating and with reasonable social impact.
In Nigeria, only the federal government and a few corporate organisations have issued green bonds. The market is still largely untapped.
“Companies will also need to continuously disclose relevant information on their adoption of ESG principles. Such information will be critical for the investing public to make informed decisions about available investment choices and guide their asset allocation,” Mr Yuguda said.
According to the SEC Boss, 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 the preservation of biodiversity, climate change mitigation and adaptation, inclusiveness, reduced inequality, human capital and communities’ development, among others.
“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.
“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.
“As we are all aware, finance has an enormous influence on sustainability; with players in the financial sector acting as catalysts for redefining the natural and business environments. They help support the transition from exploiting nature to restoring and maximizing nature’s valued gifts. Investing in sustainable instruments, therefore, has far-reaching benefits, further justifying why ESG advocacy and practices are gaining more popularity,” he stated.
The SEC chief said that as securities regulators, whose core mandate is to ensure investor protection, by maintaining fair, efficient and transparent markets and reducing systemic risks, his agency believes this role can further be harnessed through sustainable finance; and pledged to continue to strongly support the adoption of ESG principles and collaborate with relevant stakeholders to drive sustainable finance initiatives.
“I am really pleased and encouraged by the interest shown in ESG by the CFA Society Nigeria. I am also glad to inform you that the commission will be willing to collaborate further with the society on ESG and other relevant issues.
“With the quality of the membership of the society and the resources available to it, I am confident that such collaboration will result in positive outcomes for the Nigerian capital market and the economy as a whole.
“I have no doubt that collectively we will chart a common course for sustainable finance in the country that will be beneficial to the economy and the Nigerian people,” he added.
In her address, President of the CFA Society Nigeria, Ms Ibikun Oyedeji, explained that the webinar was organised in continuation of the association’s mandate of promoting global best practices for the investment industry, and to serve as a stimulus to advocate and promote awareness in Nigeria and Africa as a whole for the incorporation environmental, social and governance factors in business decisions and product development.
Ms Oyedeji stated that the webinar also provides an opportunity to accelerate the progress and demonstrate the purpose through responsible investing and aimed at equipping the practitioners and other stakeholders within our community with the right tools to navigate this evolving terrain.
She said, “The theme of the round table unlocking value through ESG investing implies that an untapped opportunity exists in business beyond profitability.
“Our clarion call today to the investment management industry is to put measures in place to ensure that product and services contribute to the sustainable development of our environment, employee working conditions, labour right, diversity discussions become our forefront while transparency and openness provide long term benefit for shareholders and our stakeholders are widely impressed.
“ESG factors have become increasingly important to institutional investors and there is a rising need for us invested professionals, regulators and other stakeholders to build a capacity in ESG focus investing which will remain relevant. This round table serves as a foundation for building the sustained effort in developing our local capacity in ESG investing.”
Ms Oyedeji said the CFA institute through the principle of responsible investing has created a best practice report and regions specific report that focuses on the Nigerian region to help investors understand how they can better integrate ESG factors into their equity, corporate funds and even the sovereign debt portfolio.
By Adedapo Adesanya
The NASD Over-the-Counter (OTC) Securities Exchange recorded a 0.16 per cent decline on Tuesday, January 21, extending its loss this week to two.
This further depleted the market capitalisation of the alternative stock exchange by N1.65 billion at the close of transactions to N1.071 trillion from the N1.073 trillion it closed in the preceding session.
In the same vein, the NASD Unlisted Security Index (NSI) slid by 4.79 points to wrap the session at 3,100.33 points compared with 3,105.12 points recorded in the previous session.
The bourse ended with two price losers yesterday led by Geo Fluids Plc, which gave up 32 Kobo to trade at N4.38 per share versus Monday’s closing price of N4.70 per share and FrieslandCampina Wamco Nigeria Plc, which depreciated by 15 Kobo to close at N39.50 per unit compared with the previous day’s N39.65 per unit.
On the second trading day of the week, the number of deal carried out slightly went up by 8.3 per cent to 13 deals from the 12 deals executed at the previous trading session.
Also, the value of transactions increased by 97.2 per cent to N4.5 million from the N2.5 million recorded a day earlier, while the volume of securities traded in the session declined by 71.6 per cent to 183,780 units from the 767,610 units recorded on Monday.
FrieslandCampina Wamco Nigeria Plc remained the most traded equity by value (year-to-date) with 4.1 million units worth N162.9 million, followed by Geo-Fluids Plc with 9.1 million units valued at N44.0 million, and 11 Plc with 55,358 sold for N14.5 million.
Also, Industrial and General Insurance (IGI) Plc closed the day as the most active stock by volume (year-to-date) with 25.3 million units worth N5.9 million, trailed by Geo-Fluids Plc with 9.1 million units sold for N44.0 million, and FrieslandCampina Wamco Nigeria Plc with 4.1 million units valued at N162.9 million.
By Adedapo Adesanya
Pressure further mounted on the Nigerian Naira in the different segments of the foreign exchange market on Tuesday, making its value to shrink against the United States Dollar at the close of business.
In the Nigerian Autonomous Foreign Exchange Market (NAFEM), the domestic currency crashed against its American counterpart during the session by 0.18 per cent or N2.73 to settle at N1,552.78/$1, in contrast to Monday’s closing price of N1,550.05/1.
But against the Pound Sterling and the Euro, the local currency traded flat in the official market yesterday at N1,906.98/£1 and N1,613.48/€1, respectively.
As for the black market segment, the Naira weakened against the Dollar on Tuesday by N5 to sell for N1,670/$1 compared with the preceding day’s value of N1,665/$1.
Meanwhile, the cryptocurrency market heaved a sigh of relief during the session as President Donald Trump created a crypto task force dedicated to “developing a comprehensive and clear regulatory framework for crypto assets.”
The task force will be led by Commissioner Hester Peirce, a long-time advocate for the crypto industry, and will work closely with the crypto industry to develop regulations. This is after Mr Gary Gensler, an opponent of crypto, officially stepped down as chairman of the US Securities and Exchange Commission (SEC) after Mr Trump’s term started.
The task force will also work with Congress, providing “technical assistance” as it crafts crypto regulations.
Solana (SOL) recorded a 9.2 per cent growth to sell at $257.09, Dogecoin (DOGE) rose by 7.6 per cent to $0.36789, Ripple (XRP) added 4.0 per cent to finish at $3.18, and Bitcoin (BTC) increased by 3.7 per cent to $105,515.03.
Further, Binance Coin (BNB) appreciated by 2.8 per cent to close at $699.01, Cardano jumped by 2.1 per cent to trade at $0.9972, Ethereum (ETH) soared by 2.0 per cent to settle at $3,308.21, and Litecoin (LTC) went up by 1.5 per cent to end at $116.72, while the US Dollar Tether (USDT) and the US Dollar Coin (USDC) closed flat at $1.00 each.
By Adedapo Adesanya
The price of the Brent crude oil grade went below the $80 mark on Tuesday after it shed 86 cents or 1.1 per cent to trade at $79.29 per barrel after the US President, Mr Donald Trump, signaled the possibility of his country boosting its oil production.
This move raised concerns of higher US output in a market widely expected to be oversupplied this year, with the US West Texas Intermediate (WTI) crude futures falling by $1.99 or 2.6 per cent during the session to $75.89 per barrel.
On his first day in office, the US President signed an executive order to unleash America’s energy by easing the barriers to oil and gas extraction and production and revoking a series of climate orders by former President Joe Biden.
As pledged in the campaign, the executive order follows the declaration of a national energy emergency.
The declaration includes measures to expedite energy infrastructure delivery, and emergency approvals by agencies “to facilitate the identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources, including, but not limited to, on Federal lands.”
This will likely confirm expectations that the oil market will be oversupplied this year after weak economic activity and energy transition efforts weighed heavily on demand in top-consuming nations the US and China.
President Trump also said he was considering imposing 25 per cent tariffs on imports from Canada and Mexico from February 1, rather than on his first day in office as promised.
The delay helped ease concerns of an immediate tightening of the market among US refiners, many of which are geared to process the type of crude oil supplied by these countries.
The US Energy Information Administration (EIA) reiterated on Tuesday its expectations for oil prices to decline both this year and next.
On its part, the Organisation of the Petroleum Exporting Countries (OPEC) projects robust demand growth in the world both this year and next.
In 2025, OPEC says demand is set to grow by 1.4 million barrels per day leaving its projection unchanged from the December report.
However, losses were also limited after the US president said his administration would “probably” stop buying oil from Venezuela. The U.S. is the second-biggest buyer of Venezuelan oil after China.
Also weighing on prices on Tuesday was the potential end to the shipping disruption in the Red Sea.
Yemen’s Houthis said on Monday they will limit their attacks on commercial vessels to Israel-linked ships provided the Gaza ceasefire is fully implemented.
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