FRC Calls for Mandatory Sustainability Reporting to Boost Competitiveness

Nigeria makes sustainability reporting mandatory from 2028

The Financial Reporting Council of Nigeria has confirmed that sustainability reporting will become compulsory for public interest entities from January 2028. The decision positions Nigeria as the first African country to mandate the IFRS Sustainability Disclosure Standards, fundamentally changing how companies report environmental, social, and governance performance.

For UK businesses operating in Nigeria or working with Nigerian partners, this matters. The country is adopting the same IFRS S1 and IFRS S2 standards that form the basis of UK sustainability reporting requirements. Therefore, alignment is becoming unavoidable across multiple markets.

Speaking at the recent Nigerian Employers’ Consultative Association summit, the FRC made clear that transparency in ESG performance is no longer optional. Companies seeking finance or competing internationally will need verified sustainability data. Moreover, the Council warned that board directors will be personally liable for the accuracy of their disclosures once the mandate takes effect.

The regulatory change arrives with detailed implementation guidance. Consequently, businesses have until 2028 to prepare their systems, governance structures, and reporting capabilities.

This announcement extends beyond regulatory compliance. It signals a fundamental shift in how Nigerian businesses must operate and report their activities to stakeholders.

Phased implementation runs from 2024 to 2030

The FRC has published an amended roadmap alongside Sustainability Reporting Guideline 1 to structure the rollout. The implementation follows four distinct phases, each targeting different entity types and timelines.

Phase one began in January 2024 for voluntary early adopters. These entities must pass a formal readiness test and report for periods ending by December 2023. Participation remains voluntary, but adopters gain valuable preparation time before the mandate arrives.

Phase two runs from January 2024 through December 2027. During this period, companies can adopt the standards voluntarily while building internal capacity. All voluntary reporters must complete the FRC readiness assessment before they can file sustainability disclosures.

Mandatory reporting starts in phase three from January 2028. Public interest entities, including all listed companies, must comply from this date. Small and medium enterprises follow two years later in 2030. The phased approach recognizes that larger organizations typically have more resources to dedicate to new reporting systems.

Phase four covers government and public sector bodies. However, this stage depends on the International Public Sector Accounting Standards Board releasing relevant standards. The FRC has not yet confirmed a timeline for public sector implementation.

The standards themselves are IFRS S1 and IFRS S2. IFRS S1 sets out general sustainability requirements, while IFRS S2 focuses specifically on climate-related disclosures. These are the same standards developed by the International Sustainability Standards Board that underpin reporting frameworks in multiple jurisdictions.

Nigeria announced its intention to adopt these standards at COP 27 in Sharm El-Sheikh during November 2022. This made the country the first in Africa to commit publicly to early adoption. The move demonstrated regulatory ambition that has now translated into binding requirements.

Entities preparing to report must integrate sustainability disclosures into their annual reports. The FRC requires these disclosures to appear at the same time as financial statements. Furthermore, they must be positioned after the directors’ report but before the financial statements themselves.

Directors face personal liability for disclosure accuracy

The FRC has confirmed that board directors will be liable for the accuracy of sustainability and climate reporting from 2028. This liability applies to reports covering the 2027 financial year onwards. Consequently, governance responsibilities now extend explicitly to ESG data quality and verification.

This requirement targets what the Council calls whitewashing. The term refers to false or exaggerated sustainability claims that mislead investors and stakeholders. By imposing director liability, the FRC aims to eliminate superficial ESG reporting and ensure senior leadership takes ownership of disclosed information.

Assurance requirements escalate over time. Years three and four of reporting require limited assurance for all disclosures except Scope 3 emissions. Limited assurance provides moderate confidence that information contains no material misstatements.

In year five, companies must obtain limited assurance for Scope 3 emissions, transition plans, and scenario analysis. All other disclosures require reasonable assurance, which provides high confidence in the accuracy of reported data. From year six onwards, reasonable assurance applies to all sustainability-related disclosures.

These assurance levels mirror the approach taken in other jurisdictions adopting IFRS sustainability standards. The gradual escalation allows companies to develop robust data collection and verification systems before facing the highest scrutiny.

For UK businesses, director liability is already familiar territory. The Companies Act 2006 holds directors responsible for the accuracy of annual reports. Similarly, the FCA Listing Rules impose specific obligations on directors of listed companies. Nigeria’s approach follows comparable principles but extends them explicitly to sustainability data.

The FRC requires entities to establish formal governance structures for sustainability reporting. This includes board-level oversight, clear accountability lines, and documented policies. Companies must also demonstrate that board members and preparers have received training from FRC-approved providers.

Penalties for non-compliance or inaccurate reporting have not been fully detailed. However, the explicit mention of director liability suggests enforcement will follow established corporate governance frameworks. This means potential fines, disqualification, or legal action depending on the severity of breaches.

Companies must pass readiness assessment before reporting

The FRC has set out specific compliance steps that entities must complete before they can file sustainability disclosures. These requirements apply to both voluntary and mandatory reporters. The process ensures that companies have genuine capability to produce reliable data rather than superficial disclosures.

First, boards must pass a formal resolution approving adoption of the IFRS standards. This resolution demonstrates senior leadership commitment and triggers the implementation process.

Second, companies must conduct a gap analysis comparing current practices against IFRS requirements. This analysis feeds into a detailed implementation plan that sets out how the entity will achieve compliance. The plan must be documented and approved at board level.

Third, entities must establish a governance structure specifically for sustainability reporting. This structure should define roles, responsibilities, and oversight mechanisms. It must be embedded into the wider corporate governance framework rather than operating as a standalone function.

Fourth, boards must approve formal policies covering IFRS sustainability standards and ESG risk frameworks. These policies provide the foundation for consistent data collection, validation, and disclosure practices across the organization.

Fifth, the FRC requires evidence that board members and report preparers have completed training from approved providers. This ensures that those responsible for disclosures understand both the technical requirements and their personal obligations.

Sixth, companies must develop scenario analysis models. These models help entities assess how different climate and sustainability scenarios might affect their business. The FRC also requires documented processes for identifying and evaluating risks and opportunities related to sustainability.

UK businesses familiar with Taskforce on Climate-related Financial Disclosures requirements will recognize several of these elements. TCFD recommendations include governance, strategy, risk management, and metrics. The IFRS standards build on this foundation with more detailed technical specifications.

The readiness assessment creates a formal checkpoint before companies can report. Entities cannot simply declare compliance. Instead, they must demonstrate to the FRC that they have systems, knowledge, and governance in place to meet the standards reliably.

This approach differs from some voluntary frameworks where companies can self-assess readiness. The FRC model imposes external validation, raising the bar for entry and reducing the risk of poor-quality disclosures entering the market.

What this means for businesses operating across borders

Nigerian adoption of IFRS sustainability standards creates direct implications for UK companies. First, any UK business with Nigerian operations, subsidiaries, or joint ventures will need to consider how group-level reporting aligns with local requirements. Consolidation becomes more complex when different jurisdictions mandate different reporting timelines or scopes.

Second, UK companies supplying Nigerian customers may face increased due diligence requests. As Nigerian firms prepare their own sustainability disclosures, they will need data from their supply chains. This particularly affects Scope 3 emissions reporting, which requires information about purchased goods, services, and transportation.

Third, businesses tendering for contracts with Nigerian entities should expect sustainability criteria to feature more prominently. Procurement teams increasingly use ESG performance as a qualification criterion. Mandatory reporting strengthens this trend by providing standardized data that can be compared across potential suppliers.

Fourth, investors and lenders operating in both markets will expect consistent reporting approaches. Financial institutions are building ESG assessment capabilities that work across jurisdictions. Companies reporting under different frameworks in different countries create friction in these processes.

The timing also matters. Nigeria’s 2028 mandate for public interest entities precedes some UK requirements. The UK has mandated TCFD-aligned reporting for premium-listed companies and large private companies. However, full IFRS sustainability standards adoption in the UK follows its own timeline. Therefore, some businesses may need to implement systems for Nigeria before UK law requires them.

For manufacturing, energy, and extractive industries, the alignment on climate disclosures is particularly significant. IFRS S2 requires detailed reporting on climate risks, opportunities, and transition plans. Companies in carbon-intensive sectors will face scrutiny in both markets on their decarbonization strategies.

Professional services firms supporting Nigerian clients will need updated expertise. Accountants, auditors, and consultants must understand both the technical requirements and the local regulatory context. Similarly, legal advisors will need to interpret director liability provisions and their interaction with existing corporate law.

Five things to understand about Nigeria’s sustainability mandate

• Mandatory reporting starts in January 2028 for public interest entities and extends to small and medium enterprises in 2030, following a phased implementation that allows voluntary early adoption from 2024.
• Board directors will be personally liable for the accuracy of sustainability disclosures from 2028 onwards, mirroring accountability standards that already apply to financial reporting in most jurisdictions.
• Companies must pass a formal readiness assessment before filing disclosures, including gap analysis, governance structures, board training, and scenario analysis capabilities.
• Assurance requirements escalate from limited assurance in years three and four to reasonable assurance on all disclosures by year six, ensuring data quality improves progressively.
• Sustainability reports must be published alongside financial statements and positioned in the annual report after the directors’ report but before the financial statements.

Planning for cross-border sustainability compliance

Businesses operating in multiple markets need coherent approaches to sustainability reporting. Nigeria’s adoption of IFRS standards creates both challenges and opportunities for UK companies. The challenge lies in managing different implementation timelines and local requirements. The opportunity comes from using a common framework that works across jurisdictions.

Companies should start by mapping their current reporting obligations against Nigerian requirements. This includes identifying which group entities fall within scope and when they must comply. For businesses with Nigerian subsidiaries classified as public interest entities, the 2028 deadline is approaching quickly.

Data systems require particular attention. Sustainability reporting depends on reliable data collection across operations, supply chains, and value chains. Companies that have already implemented systems for UK reporting can often extend these to cover Nigerian requirements. However, local data quality and availability may present challenges that need addressing early.

Governance structures must also adapt. If board committees oversee sustainability in the UK, businesses should consider whether these structures can effectively cover Nigerian operations or whether local governance arrangements are needed. Director liability in Nigeria makes this question more than theoretical.

Training and capacity building take time. The FRC requirement for documented training reflects recognition that people need skills and knowledge to produce compliant disclosures. Companies should assess whether their teams understand IFRS S1 and S2 requirements and have the technical capability to apply them correctly.

We work with businesses implementing sustainability reporting across different regulatory environments. Experience shows that common frameworks reduce duplication and improve consistency. However, local variations in timing, scope, and enforcement mean that generic approaches rarely work without adaptation.

The compliance support we provide helps businesses navigate these requirements systematically. This includes gap analysis against IFRS standards, governance design, data system specification, and preparation for assurance processes.

Companies should also consider how Nigerian developments might influence their wider sustainability strategy. Early adoption markets often shape expectations in other jurisdictions. Investors and customers watching Nigerian implementation may apply similar expectations to suppliers and partners operating elsewhere.

Where to find detailed regulatory guidance

The Financial Reporting Council of Nigeria publishes implementation guidance, readiness assessments, and technical updates through its official channels. Companies planning to report should monitor these resources regularly as detailed requirements and interpretations continue to develop.

The IFRS Foundation maintains comprehensive resources on IFRS S1 and IFRS S2, including the full text of standards, illustrative examples, and implementation support materials. These resources apply globally and provide the technical foundation for Nigerian requirements.

For UK businesses, the Financial Reporting Council offers guidance on sustainability reporting developments in the UK market. Understanding how different jurisdictions interpret and implement IFRS standards helps companies identify commonalities and differences.

The Department for Energy Security and Net Zero publishes policy updates on UK climate and sustainability reporting requirements. These developments influence how UK companies approach reporting obligations both domestically and internationally.

Professional bodies including the Institute of Chartered Accountants and the Chartered Institute of Management Accountants provide technical guidance and training on sustainability reporting standards. These resources help finance teams develop the skills needed to implement new requirements effectively.