NGX Regulation, FRCN launch IFRS S1 & S2

The NGX Regulation in partnership with the Financial Reporting Council of Nigeria has made a significant move in the financial reporting landscape by launching the International Sustainability Standards Board’s first two standards known as IFRS S1 and IFRS S2. The Chief Executive Officer of NGX Regulation, Tinuade Awe, shared insights on the impact and importance of these new standards during an interview with CNBC Africa. This launch signifies a pivotal moment for Nigeria as it takes a significant step towards enhancing sustainability reporting practices within the country. The adoption of IFRS S1 and S2 is set to have far-reaching implications not only for corporate entities but also for investors and other stakeholders involved in the financial ecosystem. One of the key themes highlighted during the interview was the growing demand from capital providers for companies to demonstrate their sustainability efforts. Investors are increasingly interested in understanding the long-term viability and resilience of companies in the face of evolving environmental and social challenges. Tinuade Awe emphasized the need for companies to align their reporting with international sustainability standards to meet the expectations of capital providers. The introduction of IFRS S1, focusing on general sustainability requirements, and IFRS S2, specifically addressing climate reporting, sets a clear framework for companies to disclose relevant information and mitigate risks. Key Points: 1. Importance of Sustainable Reporting: Tinuade Awe underscored the significance of sustainable reporting in today's business environment, where companies are expected to be transparent about their sustainability practices. With the adoption of IFRS S1 and S2, companies will be compelled to provide detailed insights into their sustainability strategies, including risk management related to environmental factors. 2. Preparedness for Adoption: The introduction of these new standards requires proactive measures from businesses to ensure compliance and seamless integration into their reporting processes. Tinuade Awe recommended that companies initiate gap analyses and engage sustainability professionals to navigate the complexities of sustainability reporting. Boards are encouraged to take a leadership role by incorporating sustainability considerations into their governance structures. 3. Focus on Climate Responsibility: In addition to assessing the longevity of businesses, there is a growing emphasis on the environmental impact of corporate activities. Tinuade Awe highlighted the necessity for businesses to prioritize climate-related issues and align their practices with global sustainability goals. Education and capacity building were identified as crucial steps for companies to equip themselves with the necessary knowledge and skills to address climate risks. A quote from the interview encapsulates the essence of the discussion, 'You can't do business on a planet that is ruined.' This statement reflects the urgent need for businesses to address sustainability challenges and operate in a manner that safeguards the planet for future generations. The launch of IFRS S1 and S2 not only sets a new standard for reporting in Nigeria but also signals a shift towards a more sustainable and responsible business environment.