The CBN commits to implementing sustainable banking practices.

The Central Bank of Nigeria (CBN) has reaffirmed its commitment to advancing sustainable banking practices by adopting International Financial Reporting Standards (IFRS). This initiative is part of a broader strategy aimed at attracting foreign investment and promoting economic growth, aligning with the federal government’s goal of achieving a $1 trillion Gross Domestic Product by 2031.

CBN Governor Olayemi Cardoso, speaking at the Regulatory Roundtable on the Implementation of the International Sustainability Standards Board (ISSB) Sustainability Reporting Standards in Nigeria, emphasized the importance of sustainability reporting in today’s global economy. Represented by Musa Jimoh, Deputy Director of Payments System Policy and Oversight, Cardoso highlighted the increasing focus on sustainability by stakeholders and companies seeking to reduce their carbon footprint.

“The world is evolving, and we cannot afford to be left behind. Our entities must operate on the global stage, and the President has set a target of reaching a $1 trillion GDP in six years,” he said.

Cardoso noted that the CBN has worked closely with banks, discount houses, and other financial institutions to ensure a smooth transition to IFRS within the banking sector. He pointed out that the adoption of IFRS, which began in 2012 following the Financial Reporting Council of Nigeria’s 2010 roadmap, has significantly transformed Nigeria’s financial reporting landscape.

Despite the challenges of implementing IFRS, Cardoso stated that the CBN successfully managed the transition, leading to substantial growth in the Nigerian banking sector. The country’s banking system now operates over 55 subsidiaries, three branches, and four representative offices across 30 countries, reflecting its global reach. This expansion has been accompanied by a steady increase in foreign investments and credit facilities, demonstrating growing confidence in Nigeria’s financial system.

Looking ahead, the CBN is focused on implementing newer IFRS standards, including IFRS S1 and IFRS S2, to enhance transparency and financial integrity. Cardoso emphasized that the bank’s commitment to transparency aligns with global best practices and fosters trust among regulators, investors, and the public.

In addition to financial reporting, the CBN is promoting sustainability within the banking sector. Through collaboration with the Bankers’ Committee, the CBN introduced sustainable banking practices in 2020, focusing on environmental and social risk management, economic stability, and financial inclusion for underserved populations. These principles require banks to disclose their sustainability efforts in their audited financial statements.

The impact of these sustainability initiatives is evident, with more bank branches and ATMs powered by renewable energy and improved waste management practices across the sector. To encourage compliance, the CBN has established the Sustainability Banking Awards, recognizing banks that excel in integrating environmental and social considerations into their operations.

Cardoso acknowledged the challenges ahead as Nigeria continues its journey towards implementing new global standards, particularly those related to climate-sensitive financial disclosures. He stressed the need for capacity building among stakeholders to ensure successful implementation.

Financial Reporting Council Executive Secretary Rabiu Olowo praised Nigeria’s leadership in adopting the ISSB’s standards, setting an example for other African nations. Since declaring early adoption at COP27 in 2022, the FRC has played a pivotal role in guiding businesses toward a more sustainable future. Olowo highlighted early successes with companies like Access Bank, Fidelity Bank, Seplat Energy, and MTN, demonstrating leadership in disclosing sustainability-related risks and opportunities.

With a voluntary phase of adoption in place until 2027, Olowo assured that the FRC would continue to provide support and resources to businesses as they prepare for mandatory reporting in 2028. He called on regulators across industries to collaborate in fostering a culture of sustainability reporting and contributing to a greener future.

By prioritizing transparency, accountability, and environmental stewardship, Olowo said Nigeria is positioning itself as a leader in sustainable business practices.