The Nigerian Exchange Limited (NGX) has stressed the importance of Environmental, Social, and Governance (ESG) compliance and the democratization of data in attracting investments and enhancing stock liquidity in the Nigerian capital market.
The Divisional Head, of Capital Markets at Nigerian Exchange Limited (NGX), Jude Chiemeka stated this during a panel session titled “ESG and Sustainable Finance; The Future of Investments,” which was jointly organized by the Securities and Exchange Commission (SEC) and the Financial Centre for Sustainability in Lagos.
ESG Compliance and Corporate Performance
Whilst noting that NGX is a member of the Sustainable Stock Exchanges Initiative, Chiemeka emphasized the Exchange’s focus on technology, which facilitates investor access to essential data.
According to him, seamless access to various products in the capital market is crucial, especially for retail investors.
Furthermore, Chiemeka advised investors to consider companies that are ESG-compliant and provide transparent and high-quality disclosures.
He stressed the significant correlation between ESG disclosures and corporate performance.
- “Companies on the Exchange that demonstrate strong ESG compliance often gain access to more capital, attract a broader investor base, and can even raise capital from foreign markets.
- The NGX Premium Board features companies that adhere to international best practices on corporate governance and meet NGX’s highest standards of capitalization and liquidity.
- Compliance is not only a matter of prestige but also an indicator of sustainable growth, making these companies more appealing to both international and domestic investors,” he said.
Chiemeka also commended the SEC for its efforts in establishing a sustainable finance framework, especially regarding green bonds.
- “Nigeria’s issuance of a green bond solidified its position as the first sovereign country in Africa to do so, and we applaud the SEC’s role in making this possible”, he said.
Nigeria’s Commitment to Sustainable Finance
The Director General of the SEC, Mr. Lamido Yuguda stated that Nigeria has the opportunity to drive positive changes through the focused promotion of Environmental, social, and governance (ESG) and sustainable finance in financial markets while protecting the environment, reducing inequality, promoting security and fostering national economic prosperity.
Yuguda expressed the determination of the Commission to stand firm in its commitment to champion the promotion of sustainable financing through formulating the necessary rules and regulations; working together with stakeholders to promote advocacy and encourage dialogue, to create the required enabling environment for assessing the progress achieved and overcoming the challenges that remain.
- According to him, “Amongst others, our Rules on green bonds have already facilitated three issuances, thereby providing the essential funding for green projects in sectors such as power, water and agriculture, and building the foundation for more to come in the nearest future.
- In addition, we have also developed comprehensive sustainable finance guidelines and disclosure requirements for capital market operators, aligning them with the wider Nigerian Sustainable Finance Principles.
- “Looking ahead, we anticipate continued growth in the sustainable finance environment and, within the Nigerian bond market. This will present a significant opportunity for the Nigerian capital market to expand its product offerings and provide more long-term financing for businesses”.
He stated that the world has found itself at a critical juncture where all must urgently consider the devastating impact of climate change, inequality, conflict, and insecurity vis-à-vis the need for responsible corporate behaviour to reshape our thoughts and actions around the future of our investment practices, and ensure that they align with Environmental, Social, and Governance (ESG) considerations.
Yuguda said that all stakeholders, desirous of a better future for themselves, their businesses, and their communities, should fully support every effort to build an economy that encourages sustainable business practices.
