ESG (acronym for Environmental, social, and Governance is an approach to evaluating the extent to which a corporation works on behalf of social goals that go beyond the role of a corporation to maximize profits on behalf of the corporation’s shareholders. Typically, the social goals advocated within an ESG perspective include working to achieve a certain set of environmental goals, as well as a set of goals having to do with supporting certain social movements, and a third set of goals having to do with whether the corporation is governed in a way that is consistent with the goals of diversity, equity, and inclusion movement.
Admittedly, ESG is still a novel concept in the Nigerian business ecosystem – though that state of affairs is changing by the day. It is increasingly becoming an accepted fact that ESG will have a significant impact on the Nigerian business environment in the near future.
What form that impact will take was the subject of a panel discourse at the ongoing SBL Conference in Abuja.
NEWSWIRE Law and Events Magazine’s correspondent in in the federal capital reports that the panel, moderated by Adeolu Idowu, who heads the Governance Risk and Compliance practice of the law firm of Aluko & Oyebode, comprised of Tinuade Awe, Tinuade Awe, the Chief Executive Officer of NGX Regulation, a subsidiary of Nigerian Exchange Group Plc; Rukaiya el-Rufai, a Partner at PriceWaterhouseCoopers (PWC); Evelyne Mbula-Nzuki, who is the founder and Principal Attorney at the Kenyan law firm of MN Legal, as well as a seasoned commercial lawyer and practitioner in international commercial arbitration; Jeroen Ouwehand, Global Senior Partner at the law firm of Clifford Chance, a London-based ‘magic law firm’; and Mike Chukwu, CEO at Assetwise Capital Ltd.
ESG, according to el-Rufai in her opener, arose as a result of the growing realisation that the capitalist economic model was, for the most part, not serving society’s best interests, and that there was the need to balance the quest for profits (which is every business’s raison d’etre) with the imperative to achieve sustainable growth that serves communities as well as protects the natural environment – as encapsulated in the 3 Pillars of ESG, namely, People, Planet and Prosperity.
Also speaking, Awe gave an overview of her company’s ESG profile, with a special focus on the G in ESG, i.e. having to do with corporate governance.
On why businesses should incorporate ESG into their business models, Ouwehand asserted that as a result of investor pressure, as well as a plethora of regulations, especially in Europe – and his home country, The Netherlands in particular, corporations are recognising the reality of climate change and changing social attitudes and expectations integrating ESG as a boardroom topic. He spoke on the need to balance Africa’s need to secure access to energy and to develop her infrastructure, on one hand, with the need to do more in support of climate ESG. As the least contributor to global greenhouse emissions (at only 3%), Africa, he said, must take advantage of the ‘just transition’ to cleaner energy sources.
On his part, Chukwu, listed a number of provisions in CAMA 2020 as having had a positive impact on the quest for a sustainable ESG profile. He argued, however, that the main challenge of ESG actualisation lay in the management of 3 key governance risks, namely, Diversity, which he identified as a social issue; Reporting and Disclosure, and Performance Management (ie how to measure and track ESG metrics).
In trying to manage the social governance risks Mr. Chukwu spoke about, the Kenyan lawyer, Mbula Nzuki, said the issues around gender should be a good place to start – especially when seeking equity and wage parity, among other human rights factors.
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