#7 Governance That Drives Success: ESG Best Practices for Nigerian Companies
Strong corporate governance is the backbone of sustainable success and stakeholder trust. For Nigerian companies, robust governance is vital for navigating local and global economic landscapes. This article, part of our ESG series, explores corporate governance best practices tailored for Nigeria, highlighting their role as the critical ‘G’ in ESG.
Effective governance ensures accountability, fairness, and transparency, fostering trust among investors, customers, and employees. In Nigeria, approximately 75% of listed firms are adopting governance practices, a shift linked to improved financial results and investor relations. Strong governance frameworks have even been associated with a significant rise in shareholder value for some Nigerian companies.
The ESG Imperative: Why Governance Matters
The ‘Governance’ aspect of ESG focuses on ethical practices, transparent decision-making, and robust internal controls. For Nigerian businesses, prioritizing strong corporate governance is crucial for attracting investment, mitigating risks like mismanagement and corruption, and building a resilient brand. Effective ESG implementation helps address governance factors that could impact a company’s operations and reputation.
Key Corporate Governance Best Practices for Nigerian Companies
Frameworks like The Companies and Allied Matters Act (CAMA) 2020 and the Nigerian Code of Corporate Governance (NCCG) 2018 guide best practices, including:
- Effective Board Composition: Aim for a balanced board with diverse skills and objective judgment. The NCCG 2018 emphasizes the board’s responsibility for strategic leadership and oversight.
- Board Committees: Establish audit, remuneration, and nomination committees for focused oversight.
- Transparency and Disclosure: Clearly disclose financial and non-financial information to build stakeholder confidence.
- Internal Controls and Risk Management: Develop strong frameworks to identify, assess, and mitigate corporate risks.
- Stakeholder Engagement: Balance the interests of all stakeholders, including employees, customers, and communities.
- Ethical Conduct: Uphold ethical practices at all levels to foster trust and a positive reputation.
The Nigerian Landscape: Progress and Impact
Nigeria has seen positive trends in governance adoption. Earlier studies showed an average compliance of 72.15% with prevailing codes, growing at 5.83%. More recently, about 75% of listed firms adopt governance practices, with strong frameworks linked to a 30% rise in shareholder value in some instances.
While challenges like implementation costs exist, the benefits of enhanced reputation, improved access to capital, and long-term sustainability are compelling.
Drive Your Success with Teasoo Consulting
Integrating strong governance with your ESG strategy positions your company for enhanced performance and resilience.
Ready to strengthen your company’s governance? Contact Teasoo Consulting today to learn how our expertise can help your Nigerian business thrive. Visit our website at www.teasooconsulting.com
