Introduction
In recent years, Environmental, Social, and Governance (ESG) has emerged as a crucial method for assessing the sustainability and ethical practices of companies and projects across various industries. Although ESG is not a very novel concept in the sense of what is represents, however the crystallization of the term ESG is more recent and has gained popularity. Essentially, ESG evaluates a company's performance in key areas, such as environmental impact, social responsibility, and corporate governance, serving as benchmarks that measure the performance of companies based on their adherence to sustainable and responsible business practices.
This article seeks to explore the role of ESG considerations for businesses within the Nigerian landscape and across the globe, specifically focusing on the sectors of energy, finance, and infrastructural development.
UNDERSTANDING ESG IN THE NIGERIAN CONTEXT
Nigeria is one of the largest economies in Africa and attracts many foreign businesses and investors. However, Nigeria has over the years experienced series of social, environmental, and economical challenges which has put it in a state of gradual disarray. Finding a way out of these challenges would require Nigeria to adopt an approach/initiative that embraces wholesome sustainable development. One way to do this is integrating ESG principles into our everyday business and corporate interactions.
Globally, initiatives like the Sustainability Accounting Standards Board (SASB), the Global Reporting Initiative (GRI), and the Task Force on Climate-related Financial Disclosures (TCFD), amongst others are defining standards for incorporating ESG metrics into the investment process. In global energy deals, financiers are increasingly requesting ESG and climate-related disclosures. In the US, the SEC is mulling mandatory climate disclosures for all public companies due to high investor demand for the same. to greater opportunities.
Embracing ESG consideration within organizations and globally has the potential to unlock the much-needed foreign direct investment (FDI) and open Nigerian businessesto greater opportunities.
In recent times, ESG considerations have gained prominence in Nigeria, which reflects a move with the global trend towards sustainable and ethical business practices. With the growing evidence of the correlation between a culture of sustainability and long term business success, there is mounting pressure by investors on Boards of Directors to ensure their organization addresses their environmental and social impacts. Investors and Shareholders have become more particular about the sustainability and viability of a business and projects beyond the interest of the company in itself but to the planet and the community. Thus, there is a booming requirement for transparency in ESG principle adoption and reporting. According to the Centers for Diseases Control (CDC) analysts, Nigeria's market has in recent times shown great potential for rapid industrialization, making the shift in approach to ESG considerations increasingly critical. Integrating ESG practices into our core business sectors offers numerous benefits, including improved productivity, business performance, adaptability to evolving technology or regulations, enhanced financial indicators, and the promotion of environmental sustainability.
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