A robust legal and regulatory premise for ESG, in addition to businesses taking the initiative more seriously, is fast evolving, explain Ajibola Asolo and Adeolu Idowu from Aluko & Oyebode | ALN Nigeria.

Asolo says there are a number of regulations which apply to companies in Nigeria. “The principal legislation that applies to corporates in Nigeria, the Companies and Allied Matters Act, imposes a duty on directors to ensure that they act in the best interest of companies, and that companies have due regard to the environment and communities in which the operations are based.”

In addition, Asolo notes that there are guidelines issued by the Securities and Exchange Commission in Nigeria that set out broad principles and recommendations pertaining to sustainable finance. These guidelines essentially mandate all of the Commission’s regulatees to report on the progress relating to the implementation of ESG principles in their annual reports, among other things.

Asolo also points out that the Petroleum Industry Act, which covers companies in the energy space, sets out regulatory imperatives designed to ensure that companies operating in this space meet the requisite health, safety, and environmental standards. 

Dominic Rebelo, partner at Anjarwalla & Khanna | ALN Kenya, shares his insights on the regulatory environment in the East African region. He says Kenya should be one of the leaders on the continent – and potentially globally – in terms of environmental protection. 

“We had a new Constitution in 2010 which was one of its kind in that it entrenched environmental protection in its preamble, where it states specifically that the people of Kenya are determined to sustain the environment for future generations. And then in the body of the Constitution itself, it gives as a fundamental right, the right to a clean and healthy environment for every person in Kenya. So that's a huge right to be given under the Constitution. It applies to everybody living in Kenya and then obligates the government to put in place the protections required to ensure that their right is met,” says Rebelo.

Rebelo adds that legislation like the Climate Change Act and the Energy Act has pushed the country to generate power from more green resources.  

Idowu reckons that there is a global focus on renewable energy, and whether in the environmental, social or governance space, it's just good business to have strong ESG practices and to create a structure that embeds as many of the principles as possible. With Nigeria having the highest volume of M&A in the finance, energy and petroleum sector, particularly in mining and utilities, she explains why major oil and gas companies are divesting of their onshore assets. 

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