By the Witness Radio team.

A new policy assessment has raised serious questions about the environmental and social conduct of Nigeria’s banking sector, revealing that major financial institutions are significantly underperforming on global sustainability standards while continuing to finance high-risk industries with limited transparency. 

The report, produced by Fair Finance Nigeria (FFNG) Coalition, comprising BudgIT, Oxfam, Policy Alert, Civil Society Legislative Advocacy Centre (CISLAC), Connected Development (CODE), and Sustainable Transformation and Empowerment Programme (STEPS) assessed four Nigerian major banks including Access Bank, UBA, Zenith Bank, and Standard Chartered Bank against international Environmental, Social and Governance (ESG) benchmarks. 

Environmental, Social, and Governance (ESG) is a framework for understanding how a company behaves, not just in terms of profit, but also in terms of its impact on people and the planet. 

The environmental side looks at how responsibly a company treats the natural world. This includes how it uses resources, manages waste, reduces pollution, and responds to climate change. The social side focuses on how a company relates to people. That means how it treats its employees, works with suppliers, serves customers, and engages with the communities where it operates, while the governance side is about how the company is run and ensures accountability. 

The assessment was based on the updated 2025 methodology of Fair Finance International, which uses 19 thematic indicators grouped into environmental, social, and governance categories. The evaluation relied solely on publicly available policy documents, sustainability reports, and annual disclosures. 

Acknowledging that Nigerian banks scored an average of 1.7 out of 10 across key sustainability indicators highlights the urgent need for banks and regulators to take responsibility for improving ESG standards, inspiring a sense of duty in stakeholders.

The report identified significant weaknesses in external accountability, particularly in how banks manage the environmental and social risks of the companies they finance, underscoring the need for stronger regulations. 

Despite years of sustainability reporting and regulatory guidance, the report concludes that Nigerian banks remain far from aligning with global ESG expectations.

“It is not only about how banks assess their internal operations—such as limiting discrimination in recruitment or increasing the representation of women in senior leadership positions. They must also examine how these standards are applied across their entire business and supply chains. This includes the companies they invest in, those they lend to, and those they actively finance or support.

Banks should ensure that these companies also comply with international standards. This approach does not only apply to financial institutions themselves; it also plays a critical role in mitigating financial, reputational, and operational risks across their investment portfolios.” Dr. Augustine O’Keary, the lead researcher and research officer of Connected Development, mentioned during the presentation of the research findings.

The report highlights a concerning climate-related disclosure score of 0.9 out of 10, exposing critical gaps in how banks communicate climate risks to stakeholders.

Researchers found limited evidence of credible transition plans aligned with global temperature targets, despite Nigeria’s increasing exposure to climate-related risks. 

By continuing to finance carbon-intensive sectors without publicly disclosing portfolio-level transition strategies, banks risk eroding trust, underscoring the need for greater transparency to civil society and advocacy groups.

“We see continued financing of high-emission sectors without clear commitments to reduce exposure or align with a 1.5°C pathway,” the report noted. 

Environmental analysts warn that this disconnect exposes Nigeria’s financial system to long-term systemic risk as global markets tighten climate regulations.

The Fair Finance Nigeria Coalition is calling for stronger regulatory alignment with global ESG standards, particularly through updates to Nigeria’s sustainability banking principles.

Stakeholders argue that existing frameworks remain outdated and insufficiently aligned with international best practices, especially in climate finance and corporate accountability.

Strong calls for improved engagement between banks, regulators, and civil society organizations aim to foster collaboration, making stakeholders feel involved and motivated to enhance policy frameworks and disclosure standards.

Environmentalists have called on government to strengthen enforcement of environmental laws to curb the continued destruction of wetlands, forests and other natural ecosystems, warning that weak implementation is worsening flooding, land degradation and climate vulnerability in Uganda’s urban and rural areas.

The warning was issued by conservation advocates during a tree-planting and environmental awareness campaign in at Gayaza Junior School in Wakiso District, where stakeholders said ongoing encroachment on protected ecosystems is undermining national conservation efforts.

Enjer Ashraf, Executive Director of the My Tree Initiative, said the rapid loss of wetlands and forest cover is already contributing to environmental disasters, particularly flooding in Kampala and surrounding areas.

“The continuous flooding you see in Kampala and other areas is a result of people degrading natural resources like swamps and forests,” Ashraf said.

He noted that many wetlands and forest reserves are being cleared for settlement, industrial developments and other construction projects, despite existing legal protections meant to safeguard them.

According to Ashraf, while Uganda has environmental protection laws in place, enforcement remains inconsistent, allowing encroachment to continue with limited consequences for violators.

He warned that if the trend is not reversed, the country risks more severe climate-related impacts, including increased flooding, loss of biodiversity and declining agricultural productivity.

The environmentalist made the remarks during a tree-planting exercise at Gaaza Junior School, where more than 500 fruit trees were planted under a broader campaign promoting environmental restoration and climate awareness among young learners.

“As we plant trees to regreen the environment, the spaces where this should happen are being taken over,” he said, calling for tougher action against illegal developments in protected ecosystems.

Push for climate education in schools

Beyond enforcement, the My Tree Initiative also urged government to integrate environmental conservation and climate change education into the national school curriculum, saying early awareness is critical in addressing long-term environmental challenges.

The call was made during the same school-based tree-planting programme, which also saw stakeholders plant mango, avocado and jackfruit trees as part of efforts to establish a sustainable school orchard system.

Organisers said practical environmental education—such as tree planting—should complement classroom learning to help pupils develop long-term conservation habits.

“We believe integrating environmental aspects, including climate change, into the curriculum can help advance awareness among young people,” a representative of the initiative said.

They argued that schools provide a strategic platform for shaping behaviour, noting that children are more likely to adopt environmental practices if exposed to them early.

Private sector joins conservation push

The campaign has also attracted private sector participation, with companies pledging support for nationwide tree-planting initiatives aimed at promoting sustainability and reducing environmental degradation.

Crown Beverages Limited has launched a school-based tree-planting programme targeting more than 2,000 trees across Uganda this year, beginning with 600 fruit trees at Gaaza Junior School.

Pearl Elizabeth Kitimbo, Brand Communications Manager at Crown Beverages Limited, said the initiative is intended to promote environmental responsibility among young people.

“Planting trees is one way of addressing global warming and ensuring future generations have a better environment,” Kitimbo said.

He added that involving children in such programmes increases the likelihood of long-term behavioural change and helps extend conservation practices into households and communities.

Gaaza Junior School officials welcomed the intervention, describing it as a milestone in promoting environmental awareness and nutrition among pupils.

“This is a memorable day because we have never planted such a number of trees before,” said Mrs. Lillian Nyanzi Gwokyalya, Quality Assurance at Gayaza Junior School

She said the fruit trees will provide long-term benefits, including food supply for learners and improved school environmental conditions.

Stakeholders involved in the campaign have urged government, development partners and private sector actors to scale up similar initiatives across the country, arguing that combining enforcement with education and community participation is key to reversing environmental degradation.

They said Uganda’s growing environmental challenges require a coordinated approach that strengthens law enforcement while also promoting awareness and sustainable practices among future generations.

Source: nilepost.co.ug