FRC Boss: Sustainability Reporting Will Mitigate Risks, Spur Opportunities in Insurance Sector, Others

James Emejo in Abuja

The Executive Secretary/Chief Executive, Financial Reporting Council (FRC) of Nigeria, Dr. Rabiu Olowo, yesterday said the adoption of sustainability reporting was crucial for demonstrating the commitment of insurance companies and other financial institutions to responsible business practices, sustainable principles, risks and opportunities.

Sustainability reporting is the practice of organisations disclosing their Environmental, Social, and Governance (ESG) performance and impacts caused by their everyday activities.

Speaking at the opening of the industry-specific workshop on the implementation of ISSB’s IFRS S1 & S2 for insurance companies and Other Financial Institutions in Nigeria, Olowo said, its adoption could also enhance the companies’ reputation and brand value.

Represented by the FRC Coordinating Director, Accounting Standards and Sustainability Reporting, Dr. Iheanyi Anyahara, he stressed that by integrating ESG considerations into their decision-making processes and reporting, insurance and financial institutions can play a critical role in promoting sustainable development and mitigating the impacts of climate change.

Olowo, however, expressed worry as a regulator, that none of the insurance and other non-banking institutions was yet to be part of the adoption roadmap for sustainability reporting in the country.

The voluntary phase of adoption runs between 2024 to 2027 to prepare entities for the mandatory period by 2028.

He said, “The impending negative effect of climate change requires everyone to act, and it is therefore not a business decision or a nice to have. 

“It is a compliance issue, which every company is expected to comply by default through cultural behaviour.

“Sustainability is thus at the centrepiece of human existence and as such key issues in sustainability reporting for insurance and other financial institutions include climate change and environmental risk management; social responsibility and community development; governance and ethics;

human rights and labour practices; customer privacy and data protection; and financial inclusion and economic development.”

Olowo emphasised that sustainability reporting was an essential aspect of responsible insurance and allied companies’ prescriptive best practices.

He urged participants to embrace the new reporting guide, and get early into the implementation through voluntary adoption for their learning curves before the mandatory period.

He said, “Let us take advantage of this opportunity to shape the future of sustainability reporting and create long-term value for our organisations, stakeholders, and the environment.”

He pointed out that the workshop, which was packaged in partnership with the Nigeria Integrated Reporting Committee (NIRC) was in furtherance of FRC’s resolve to ensure that insurance and other financial institutions, “know their onions when it comes to sustainability reporting before the mandatory period.”

Olowo pointed out that the FRC was proactive to be involved in the standard-setting process of ISSB’s sustainability reporting from the beginning, by not only declaring its intention to do early adoption but also by following through to have a technical think tank established by the council.

The Adoption Readiness Working Group for Sustainability Reporting in Nigeria, (ARWG) midwifed the adoption roadmap for Nigeria sustainability reporting.

In the roadmap document, ARWG also gives regulatory discretionary reliefs with phased implementation plans of sustainability standard from 2023 through 2030 for reporting and assurance instead of ISSB’s effective date of 2024.

He said FRC expected best practices in sustainability reporting in accurate sustainability reports linking both financial performance reporting and sustainable practices performance; and materiality assessment, focusing on significant ESG issues.

Others are stakeholder engagement, involving customers, employees, and communities; performance metrics and targets, tracking progress as well as assurance and verification, ensuring report accuracy.

He said, “Given this background, we cannot reiterate enough the benefits entities will derive from sustainability reporting.”

Also, the Chairman/Chief Executive, NIRC, Dr. Innocent Okwuosa, told THISDAY that the insurance industry had a vital role to play as they underwrite the risks in the country.

He said, “And what we’ve been talking about is sustainability risks and opportunity. And they have a very huge role to play because in all activities like climate change issues, clean energy, finance, and all that, insurance company underwrite such a project.”

He explained that the workshop was to build sector-specific expertise that could enable them to implement IFRS S1 and S2.

“So, it is industry specific knowledge that we want to impart on them,” he added.