Guidelines on Sustainable Financial Principles for the Nigerian Capital Market

INTRODUCTION

The Nigerian Capital Market plays a major role in the industrialization and economic development of Nigeria. The Nigerian Capital Market plays a major role in the industrialization and economic development of Nigeria. However, the pursuance of these key objectives involves activities that give rise to a range of challenges including air and water pollution, climate change, water and natural resource scarcity, environmental degradation, growing population density and poverty. However, the pursuance of these key objectives involves activities that give rise to a range of challenges including air and water pollution, climate change, water and natural resource scarcity, environmental degradation, growing population density and poverty. These externalities and other social impacts affect not only businesses but also the communities where they operate. These externalities and other social impacts affect not only businesses but also the communities where they operate. Sustainable finance principles are guidelines developed to help address the impact of these externalities, ensure long term economic growth while safeguarding the environment and society. Sustainable finance principles are guidelines developed to help address the impact of these externalities, ensure long term economic growth while safeguarding the environment and society. The primary objective is to achieve a balance in the pursuit of economic prosperity while ensuring environmental protection and social development. The primary objective is to achieve a balance in the pursuit of economic prosperity while ensuring environmental protection and social development. To this end, the principles help create an economic, environmental and social organization that ensures and improves economic efficiency, prosperity, and sustained economic competitiveness while contributing to protecting and restoring ecological systems, enhancing cultural diversity and social well-being. To this end, the principles help create an economic, environmental and social organization that ensures and improves economic efficiency, prosperity, and sustained economic competitiveness while contributing to protecting and restoring ecological systems, enhancing cultural diversity and social well-being. In the financial services industry, there is an increasing realization that sustainable practices have a potential to save costs, grow revenues, reduce reputational and legal risks, as well as drive the development of human capital and improve access to finance. In the financial services industry, there is an increasing realization that sustainable practices have a potential to save costs, grow revenues, reduce reputational and legal risks, as well as drive the development of human capital and improve access to finance. Consequently, the adoption of financial sustainability principles and its reporting are vital steps towards achieving a sustainable global economy. Consequently, the adoption of financial sustainability principles and its reporting are vital steps towards achieving a sustainable global economy. The Securities and Exchange Commission has adopted the Nigerian Sustainable Finance Principles (NSFP) as developed by the Financial Services Regulation Coordinating Committee (FSRCC). The Securities and Exchange Commission has adopted the Nigerian Sustainable Finance Principles (NSFP) as developed by the Financial Services Regulation Coordinating Committee (FSRCC). The objectives of the SEC guidelines on NSFP are to: The objectives of the SEC guidelines on NSFP are to:

1. Stimulate a resilient, competitive and sustainable capital market that promotes economic development and improves the quality of life for all;
2. Stimulate a resilient, competitive and sustainable capital market that promotes economic development and improves the quality of life for all;
3. Improve corporate governance practices to ensure that the participants in the capital market operate in a transparent and sustainable manner;
4. Improve corporate governance practices to ensure that the participants in the capital market operate in a transparent and sustainable manner;
5. Nurture an environment that facilitates job creation and diversity, women empowerment, human rights protection, access to affordable capital market products by the economically less privileged.
6. Nurture an environment that facilitates job creation and diversity, women empowerment, human rights protection, access to affordable capital market products by the economically less privileged.
7. Contribute to efforts aimed at reducing global warming and other environmental footprints resulting from our activities and those of our stakeholders.
8. Contribute to efforts aimed at reducing global warming and other environmental footprints resulting from our activities and those of our stakeholders.

The SEC guidelines and approach are principles based and therefore do not prescribe specific implementation requirements. The SEC guidelines and approach are principles based and therefore do not prescribe specific implementation requirements. However, these principles should be applied by each regulated entity in a manner that fits individual mandates, core values, and enterprise risk management framework. However, these principles should be applied by each regulated entity in a manner that fits individual mandates, core values, and enterprise risk management framework. Reporting enhances companies' accountability for the effects of their social impacts which in turn fosters social responsibility in organizations and therefore enhances trust, while facilitating shared values on which to build a more cohesive society. Reporting enhances companies' accountability for the effects of their social impacts which in turn fosters social responsibility in organizations and therefore enhances trust, while facilitating shared values on which to build a more cohesive society. Consequently, regulated entities must report regularly on the extent to which they apply these principles. Consequently, regulated entities must report regularly on the extent to which they apply these principles.

ABOUT THE PRINCIPLES

In implementing these principles, regulated entities are expected to: In implementing these principles, regulated entities are expected to:

1. Establish the standards for their organization and be committed to it:
2. Establish the standards for their organization and be committed to it: Regulated entities should set the pace for the integration of the Principles into their organizational culture, such that the Board and Management are committed to sustainable finance and ensuring successful implementation. Regulated entities should set the pace for the integration of the Principles into their organizational culture, such that the Board and Management are committed to sustainable finance and ensuring successful implementation. The entity’s commitment to the Principles should be demonstrated through policies and decisions and also ensure their supervised organizations do the same. The entity’s commitment to the Principles should be demonstrated through policies and decisions and also ensure their supervised organizations do the same.
3. Establish sustainable operations approach: A regulated entity should have a set of procedures that detail how ESG and related issues are managed and aligned with existing internal decision-making processes.
4. Establish sustainable operations approach: A regulated entity should have a set of procedures that detail how ESG and related issues are managed and aligned with existing internal decision-making processes.
5. Ensure proper reporting: Regulated entities should ensure that appropriate reports are prepared detailing their progress and performance regarding their commitment to ESG guidelines.
6. Ensure proper reporting: Regulated entities should ensure that appropriate reports are prepared detailing their progress and performance regarding their commitment to ESG guidelines.

THE PRINCIPLES

The following principles were developed taking into cognizance the need for economic prosperity, environmental protection and social development. The following principles were developed taking into cognizance the need for economic prosperity, environmental protection and social development.

Principle 1: Environmental, Social and Governance (ESG) Considerations

Regulated entities will embed Environmental, Social and Governance (ESG) considerations into their operations and decision making processes to avoid, minimize or offset negative impacts. Regulated entities will embed Environmental, Social and Governance (ESG) considerations into their operations and decision making processes to avoid, minimize or offset negative impacts. Regulated entities should put in place effective governance structures and consider the impact of their operations and activities on the environment and society. Regulated entities should put in place effective governance structures and consider the impact of their operations and activities on the environment and society. The entities should innovate and implement measures that promote the good of the communities and the natural environment in which they operate. The entities should innovate and implement measures that promote the good of the communities and the natural environment in which they operate. Factors to be considered include: Factors to be considered include:

• Efficient use of resources, such as energy and water;
• Efficient use of resources, such as energy and water;
• Effective waste management;
• Effective waste management;
• Compliance with applicable labour and social standards; and
• Compliance with applicable labour and social standards; and
• Alignment of their community development programmes with Nigeria’s overall goal for sustainable economic and social development.
• Alignment of their community development programmes with Nigeria’s overall goal for sustainable economic and social development.

In order to implement principle 1, regulated entities should do the following: In order to implement principle 1, regulated entities should do the following:

• Development of appropriate ESG policies and procedures
• Development of appropriate ESG policies and procedures
• Development of environmental management programmes
• Development of environmental management programmes
• Compliance with relevant labour and social standards
• Compliance with relevant labour and social standards
• Implementation of Corporate Social Responsibility Programme
• Implementation of Corporate Social Responsibility Programme
• Application of ESG standards to relevant third parties
• Application of ESG standards to relevant third parties
• Establish internal and external ESG audit procedures
• Establish internal and external ESG audit procedures

Principle 2: Collaborative Partnership and Capacity Building

Regulated entities should collaborate with stakeholders to raise awareness on ESG issues, build capacity, manage risks, develop innovative solutions and promote widespread action across the Nigerian financial system. Regulated entities should collaborate with stakeholders to raise awareness on ESG issues, build capacity, manage risks, develop innovative solutions and promote widespread action across the Nigerian financial system.

Principle 3: Financing of priority sectors of the economy

Regulated entities should promote financing of priority sectors of the economy, while ensuring balance with ESG considerations. Regulated entities should promote financing of priority sectors of the economy, while ensuring balance with ESG considerations.

Principle 4: Human rights, women’s economic empowerment, job creation and financial inclusion

Regulated entities will respect human rights, promote women’s economic empowerment, support job creation and enhance financial inclusion. Regulated entities will respect human rights, promote women’s economic empowerment, support job creation and enhance financial inclusion.

Principle 5: Reporting and Disclosures

Regulated entities are mandated to report their progress in implementing ESG principles and require organisations they supervise and/or finance to make appropriate disclosures on their ESG issues. Regulated entities are mandated to report their progress in implementing ESG principles and require organisations they supervise and/or finance to make appropriate disclosures on their ESG issues.

SUSTAINABLE FINANCE AND PUBLIC COMPANIES

Part E, Principle 26 of the National Code of Corporate Governance (NCCG) specifically addresses sustainability issues which public companies are expected to consider in their operations and covers some of the key elements in the FSRCC Sustainability project. Part E, Principle 26 of the National Code of Corporate Governance (NCCG) specifically addresses sustainability issues which public companies are expected to consider in their operations and covers some of the key elements in the FSRCC Sustainability project.

CONCLUSION

The SEC guidelines on sustainable financial principles set out broad principles and recommendations for better practice in sustainable finance. The SEC guidelines on sustainable financial principles set out broad principles and recommendations for better practice in sustainable finance.