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.
