Introduction
In response to the growing importance of sustainability in business practices globally and nationally, the Financial Reporting Council of Nigeria (FRCN) issued a Public Notice on October 9, 2023, outlining the requirements for reporting entities to become early adopters of the International Financial Reporting Standards (IFRS) S1 and S2 Sustainability Disclosure Standards.
Background and Importance of Sustainability Reporting
Sustainability has emerged as a crucial concept, with governments and regulatory bodies emphasizing responsible business practices. The International Sustainability Standards Board (ISSB) developed the IFRS S1 and S2 Standards to provide high-quality sustainability-related financial disclosures, addressing governance, strategy, risk management, metrics, targets, and climate-related information.
Nigeria’s Early Adoption Commitment
Nigeria expressed its intention to be an early adopter of these standards at the Conference of Parties (COP) 27 in November 2022. The FRCN, as a Federal Government agency, plays a pivotal role in developing and publishing accounting standards, including sustainability reporting standards.
Requirements for Early Adopters
To qualify as an early adopter, reporting entities must have published reasonable sustainability reports for the past two years and be willing to participate in the early adopter category. The FRCN requires specific documents for readiness assessment, including a board resolution approving early adoption, a GAP Analysis Report, and an Implementation Plan for adopting the standards
Submission Process and Deadline
Entities electing to be early adopters must have submitted their documents to the FRCN’s designated email and head office by October 31, 2023. The FRCN reserves the right to request additional information to determine readiness.
Implications and Recommendations
Becoming an early adopter of the IFRS Sustainability Disclosure Standards aligns with Nigeria’s ambition to lead in sustainability reporting. Organizations that leveraged this opportunity would have enhanced their sustainability measures and should continue to work closely with consultants to ensure compliance with the IFRS Standards.
Conclusion
The FRCN’s Public Notice for early adopters of IFRS S1 and S2 Sustainability Disclosure Standards reflects Nigeria’s commitment to sustainability and responsible reporting practices. It encourages reporting entities to embrace sustainability reporting within a global framework, fostering transparency, accountability, and environmental responsibility in business operations.
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