The Role of ESG in Driving Business Growth in Nigeria

• Over 70% of Nigerian middle-class consumers prioritize brands committed to sustainability
• By 2030, ESG-aligned Nigerian businesses could unlock $10 billion annually in sustainable investments
• Start with one ESG pillar—environmental, social, or governance—to build credibility and attract funding.

Introduction

In 2024, the Financial Reporting Council of Nigeria reported that companies with strong ESG frameworks generally perform better than peers. Yet, fewer than 20% of Nigerian SMEs have integrated ESG into their strategies. As global investors shift trillions into sustainable ventures, Nigerian businesses face a critical choice: adapt to ESG-driven markets or risk being left behind.

This urgency is amplified by Nigeria’s updated Sustainability Disclosure Guidelines, set to take effect in 2026, and the African Development Bank’s $2.5 billion climate finance pledge. For forward-thinking businesses, ESG is a proven growth engine.

What ESG Involves

ESG (Environmental, Social, Governance) evaluates how businesses impact the planet, people, and internal operations. In Nigeria, this translates to:

• Environmental: Reducing carbon emissions, adopting renewable energy, and managing waste.
• Social: Empowering local communities through job creation and fair labor practices.
• Governance: Ensuring transparency, fighting corruption, and protecting shareholder rights.

Dangote has realized significant benefits from its ESG strategy, as evidenced by measurable improvements across environmental, social, and economic dimensions. In 2023, Dangote Cement achieved an 184% increase in co-processed waste used as alternative fuel and reduced its Scope 1 carbon emissions by up to 13 kg CO₂ per tonne of cement produced, while also recording a 4.8% reduction in water consumption and recycling 1.89 million tonnes of waste through its DangCircular initiative. Economically, the company saw a 60% increase in local content procurement and created 12,051 direct jobs across Africa, with profit after tax rising by 19.2% from ₦382.3 billion in 2022 to ₦455.6 billion in 2023. Socially, Dangote’s ESG initiatives generated 59 direct jobs and 417,700 indirect job opportunities in the alternative fuel value chain, increased its female workforce by 5.2%, and led to a 22% reduction in lost time injuries. These achievements contributed to improved external recognition, such as a ‘B’ score in both climate change and water security from the 2024 CDP ratings, reflecting Dangote’s enhanced transparency and commitment to sustainability.

Benefits of ESG for Nigerian Business Growth

Nigerian businesses adopting ESG practices report transformative outcomes:

• Access to Global Capital: Over 60% of foreign investors now require ESG compliance before funding ventures. For example, UltraTechCement secured a $500 million sustainability-linked loan after committing to reduce emissions by 27% .
• Customer Loyalty: Kenyan Flower Industry adopted sustainable practices (reduced chemical use, water efficiency, fair labor), enhancing competitiveness in EU markets where customers prioritize ethical sourcing.
• Cost Savings: By adopting SunCulture’s off-grid solar irrigation pumps, farmers in Kenya have reported up to a fivefold increase in crop yields and an 80% reduction in water usage..

“ESG is a strategic catalyst for growth and long-term value creation, and it unlocks opportunities that traditional models could overlook while at the same time addressing global challenges in the world we live in today.” says Ivie Ivana Osagie, CEO of PWR Advisory.

How to Get Started with ESG in Nigeria

Begin by conducting an audit using free tools like Teasoo Consulting’s Nigerian ESG Scorecard. Focus on one priority area:

• Environmental: Partner with companies like Teasoo Consulting to get knowledge of available grants for renewable energy projects.
• Social: Collaborate with local governments to train youths in high-demand skills, addressing unemployment while building talent pipelines.
• Governance: Implement whistleblower policies and third-party audits to combat corruption, a key concern for investors.

Avoid common pitfalls like treating ESG as a PR campaign. Authenticity matters. Stakeholders quickly spot greenwashing. Start small, deliver tangible results, and scale thoughtfully.

Takeaway

ESG is reshaping Nigeria’s business landscape, turning ethical practices into competitive advantages. By aligning with local needs and global standards, companies can attract funding, build loyalty, and future-proof operations.

Ready to harness ESG for growth? Schedule a consultation with Teasoo’s experts to craft a strategy tailored to Nigeria’s unique opportunities.