Lagos- Impact investors have emphasized the importance of engaging a broader audience, particularly SMEs, to ensure the successful and impactful implementation of the International Sustainability Standards Board (ISSB) standards in Nigeria.

The stakeholders stressed this at the Impact Transparency workshop, organised by the Impact Investors Foundation (IIF) over the weekend in Lagos.

The News Agency of Nigeria (NAN) reports that the workshop was done in collaboration with the Global Steering Group for impact investment, funded by the Foreign, Commonwealth and Development Office, with the support of International Financial Reporting Standards Foundation (IFRS) and the Financial Reporting Council (FRC).

The ISSB standards in Nigeria are aimed to achieve a comprehensive approach to sustainability reporting, leading to increased transparency, improved environmental and social outcomes, enhanced competitiveness, and potential regulatory compliance.

The stakeholders noted that many SMEs and big companies currently did not understand or participate in sustainability reporting.

According to the stakeholders, without SME involvement, the impact of adopting the standards may be limited.

The Head, Directorate of Public Sector, Dr Iheanyi Anyahara, said there was a need for SMEs to understand the importance of sustainability reporting and its potential impact on their businesses.

“We are engaging in what I will call narrative change; not only the SMEs but even the big companies have not seen why they should join. So the advocacy we are doing is to tell the stories.

“For instance we have been informed that our cocoa as of December will no longer be sold outside Nigeria. Is it not SMEs that are involved in this process? if they don’t realise that their business is coming to an end, they will not see the need.

“If they are enlightened to know what is coming; and that’s why we have identified about five big companies and we are talking to them, how do you assist in developing the skills, the SMEs who form part of their value chain to understand why they should do it and how they can gather what they call scope three emission data,’’ he said.

However, he noted that the FRC had emphasized a proactive and collaborative approach instead of simply imposing regulations.

He said that building consensus and working together with all affected parties was crucial to making sustainability reporting effective as the goal was to empower and support stakeholders, particularly SMEs, to understand and adapt to the standards.

The Board Member ISSB, Mrs Ndidi Edoziem, emphasised the multi-stakeholder approach and extensive benefits of adopting the ISSB standards in Nigeria.

This, she said, had gone beyond mere compliance and aimed to integrate sustainability into core business practices for the overall well-being of the country.

“So right from the beginning, the policy makers, the Ministry of Finance and the Ministry of Industry Trade and Investment were very engaged; also we are making sure they gave the necessary backing to the financial reporting council of Nigeria to amend legislatively what was required from the FRC.

“And that oversees accounting standards to now also oversee the IIF’s foundation sustainability standards because the idea is for the sustainability related financial disclosures which includes climate and also in the future include social and much more water, biodiversity, human capital, human rights, among others.

Mr Sebastian Welisiejko, Chief Policy Officer at the GSG for Impact Investment commended Nigeria’s engagement with global sustainability initiatives and for being one of the early adopters of financial standards.

He said that the adoption of sustainability standards could affect the informal economy even when there was growing recognition of the informal sector’s role and impact.

According to him, in spite of the informal sector’s role and impact, its voice remains underrepresented in discussions.

Welisiejko emphasised the need for the “global south” to actively participate in shaping these standards adding that sustainability reporting regulations could shed light on the environmental and social impact of informal activities.

He also said that it could encourage formalisation of some informal businesses, improving access to financing and markets.

Earlier, the Chief Executive Officer of IIF, Mrs Etemore Glover, said that the workshop was designed to increase the feedback from emerging markets and developed economies into the ISSB standard disclosure, the two standards that were released last year by the IFRS board.

She said, “So this is just to get stakeholders and get our voices heard and also to tell the market that something is coming; for now, it’s just an awareness creation and people who want to adopt it, it is voluntary now but it will get to a time when it will be compulsory and mandatory for businesses to take it serious.

“So we want to encourage business not only for the fact that it seems nice to do but it’s important for long term value creation for businesses.