Investments: SEC adopts sustainable finance principles for Nigerian capital market

*The Securities and Exchange Commission urges stakeholders and investors in the country’s capital market to apply the Nigerian Sustainable Finance Principles in a manner that fits individual mandates, core values, and enterprise risk management framework

Isola Moses | ConsumerConnect

Determined to stimulate a resilient, competitive and sustainable equity market that promotes development and improves the quality of life for investors, the Securities and Exchange Commission (SEC) has adopted the Nigerian Sustainable Finance Principles (NSFP) developed by the Financial Services Regulation Coordinating Committee (FSRCC) for the capital market in the country.

The capital market regulator in a statement said that the objectives of its guidelines on NSFP are to stimulate a resilient, competitive and sustainable market that promotes development and improves the quality of life for all.

Trading floor of the Nigerian Stock Exchange

SEC noted that the NSFP document would also boost corporate governance practices to ensure that the participants in the market operate in a transparent and sustainable manner.

The Commission stated: “The guidelines will also nurture an environment that facilitates job creation and diversity, women empowerment, human rights protection, access to affordable capital market products by the economically less-privileged and contribute to efforts aimed at reducing global warming and other environmental footprints resulting from our activities and those of our stakeholders.”

According to SEC, the guidelines and approach are principles based and, therefore, do not prescribe specific implementation requirements.

It, however, said that these principles should be applied by each regulated entity in a manner that fits individual mandates, core values, and enterprise risk management framework.

SEC noted that reporting enhances companies’ accountability for the effects of their social impacts which in turn fosters social responsibility in organisations, and therefore, enhances trust, facilitating shared values on which to build a more cohesive society.

The Commission also said: “Consequently, regulated entities must report regularly on the extent to which they apply these principles.

“The adoption of financial sustainability principles and its reporting are vital steps towards achieving a sustainable global economy.

“The capital market plays a major role in the industrialisation and economic development of Nigeria.”

SEC stated: “However, the pursuance of these key objectives involves activities that give rise to a range of challenges, including air and water pollution, climate change, water and natural resource scarcity, environmental degradation, growing population density and poverty.

“Sustainable finance principles are guidelines developed to help address the impact of these externalities, ensure long term economic growth while safeguarding the environment and society.”

It added:

“The primary objective is to achieve a balance in the pursuit of economic prosperity while ensuring environmental protection and social development.

“To this end, the principles help create an economic, environmental and social organisation that ensures and improves economic efficiency, prosperity, and sustained economic competitiveness while contributing to protecting and restoring ecological systems, enhancing cultural diversity and social well-being.”