Corporate Governance Codes in Nigeria

Introduction  

Climate change and nature loss pose significant material, systemic and financial risks to companies and financial institutions. Managing and mitigating these risks, while working towards the net zero transition, also presents opportunities for businesses to increase resilience, drive value and ensure they are future-fit.

This brief provides an overview of the principles and provisions in the Nigerian Code that support climate and nature-related action in the board room.

This brief is part of the Corporate Climate Governance Navigator that shares best practice, standards and guidelines in climate corporate governance for board directors across the world, including mandated requirements at jurisdictional level. The actions proposed draw on international frameworks including the OECD’s Principles on Corporate Governance and Climate Change and Corporate Governance Report, the IFC’s Climate Governance Approach, and the Principles for Effective Climate Governance developed by the World Economic Forum, and the foundation of the Climate Governance Initiative’s (CGI) work.  

About the Nigerian Corporate Governance Code  

Nigerian has a number of corporate governance codes applicable to publicly listed companies and for sector-specific companies such as the Code of Corporate Governance for Public Companies in Nigeria, Corporate Governance Guidelines for Commercial, Merchant, Non-Interest And Payment Service Banks In Nigeria and Corporate Governance Guidelines for Insurance And Reinsurance Companies 2021, among others. Of particular import in this regard is the Nigeria Code of Corporate Governance 2018 (the Nigerian Code). The Nigerian Code was published by the Financial Reporting Council of Nigeria on 15 January 2019 and seeks to promote public awareness of essential corporate values and ethical practices by recommending practices and principles that affected companies are to adhere to. The Nigerian Code generally applies to all public companies as well as regulated private companies1, and to private companies that are the holding companies of public companies. According to the regulations the following entities shall adopt and comply with Nigerian Code of Corporate Governance 2018: (a) all public companies (whether a listed company or not); (b) all private companies that are holding companies of public companies or other regulated entities; (c) all concessioned or privatised companies; and (d) all regulated private companies being private companies that file returns to any regulatory authority other than the Federal Inland Revenue Service (FIRS) and the Corporate Affairs Commission (CAC).

Principles and provisions in the Nigerian Code that support climate and nature action  

The table below highlights relevant board-level action including questions to ask in the boardroom relating to the climate and nature provisions of the Nigerian Code. These are grouped to align with IFC’s Climate Governance Approach and the Principles for Effective Climate Governance published by the World Economic Forum.

The above table highlights provisions in the Nigerian Code that allow boards to take practical steps to advance climate and nature-related engagement and action. The proposed steps and questions can be used as a starting point to gradually strengthen the board’s engagement in these areas. The tone set at the top of the organisation is of great importance to the culture of the whole organisation, and boards are uniquely positioned to drive positive action on climate change and nature loss through the lens of corporate purpose and strategy.

For easy reference please find here the Nigerian Code of Corporate Governance 2018. 

Best practice examples of international frameworks for corporate governance on climate and nature

• The OECD Principles on Corporate Governance (2023) support policy makers to evaluate and improve the legal, regulatory, and institutional framework for corporate governance. They also provide guidance for stock exchanges, investors, corporations, and others that have a role in the process of developing good corporate governance. The Climate Change and Corporate Governance Report provides an overview of main trends and issues related to the implications of climate change for corporate action. 
• International Finance Corporation has developed the IFC’s Climate Governance Approach: The IFC Climate Governance tip sheet: Equipping Corporate Boards to Mitigate Climate Risks and Seize Climate Opportunities presents the business case for climate governance and offers guidance to assist  Board directors in identifying and overseeing climate-related risks and opportunities. The tip sheet provides advice on incorporating climate into strategy deliberations and identifying, monitoring, and responding to climate-related issues. The IFC Climate Governance Progression Matrix helps test and assess your boards’ maturity when it comes to Climate Governance and support board directors in identifying and overseeing climate-related risks and opportunities. It provides practical and progressive climate-related actions for each of the six parameters of the IFC Corporate Governance Approach: Commitment, Board Structure and Function, Control Environment, Disclosure and Transparency, Minority Shareholder Treatment and Governance of Stakeholder Engagement. 
• The Principles for Effective Climate Governance published by the World Economic Forum (2023) help you, as a board director, to holistically address climate opportunities and risks, and align global climate goals with the organisation’s purpose, values and long-term prosperity. It provides an overview of global climate policy, science and economics, an overview of trends related to regulation and disclosure, and points at implications for corporate boards. It provides 8 guiding principles for effective climate governance on corporate boards.
• The Directors’ Duties Navigator: Climate Risk and Sustainability Disclosure issued by the Climate Governance Initiative (2024) supports directors to make informed decisions and understand their legal duties regarding how to manage that risk and understand the broader climate-related regulatory landscape in which they operate. The Navigator provides information on over 30 jurisdictions on the following topics: Government and regulatory approaches to climate change, Sustainability and climate-related disclosure requirements, Liability risks for companies and directors and practical tips for directors.