The International Finance Corporation (IFC) has emphasized the need for stronger enforcement of Environmental Social Governance (ESG) frameworks in the real estate sector. This call came from Ms. Temilola Sonola, the Lead for Green and Resilient Built Environment at IFC, during a conference hosted by the Lagos Chamber of Commerce and Industry (LCCI). The event took place over the weekend and focused on the theme, “Mainstreaming ESG Compliance in Nigeria’s Engineering, Construction and Real Estate Sectors.”
Key Findings on ESG Enforcement
During the panel discussion titled “ESD Compliance, Regulatory Framework and Environmental Sustainability in the Built Environment,” Sonola highlighted several crucial points regarding ESG compliance. She noted that businesses often view ESG principles as optional due to the lack of government accountability for environmental sustainability costs.
Call for Regulation
- Sonola stressed the importance of internalizing ESG costs for developers.
- She noted that if a developer builds in a flood zone and faces losses, the government usually bears the financial burden.
- Stronger regulations could incentivize developers to consider the implications of their building locations.
“We need to enforce building laws more rigorously,” Sonola stated. She advocated for regulations that would force developers to take environmental risks into account when planning their projects.
Financial Support for Sustainable Development
Sonola mentioned potential funding opportunities for developers from governments of the United Kingdom and Switzerland, along with financial institutions like the IFC. This funding could help offset the costs associated with sustainable building practices.
Impacts on Nigeria’s Economic Future
In his opening remarks, LCCI President Mr. Leye Kupoluyi pointed out that Nigeria’s economic trajectory depends on how infrastructure and urban systems are managed. He stated, “The built environment is one of the most resource-intensive sectors, significantly contributing to global energy-related carbon emissions.”
- The social aspect of ESG is especially critical in Nigeria due to a housing deficit surpassing 17 million units.
- The governance aspect is vital for increasing investor confidence amid challenges such as land administration issues.
Sustainability as a Capital Investment
Dr. M.K.O. Balogun, CEO of Global Property and Facilities International, emphasized that by 2026, sustainability would be viewed not just as an environmental issue but as a crucial capital investment decision. He argued that ESG data increasingly influences finance, regulations, and project evaluations.
Importance of ESG Standards
- Balogun noted that strong ESG practices reduce investment risks and enhance operational efficiency.
- Maintaining valuable and resilient infrastructure is essential for Nigeria’s long-term economic competitiveness.
Dr. Michael Oladiji, Chairman of the Real Estate Group at LCCI, echoed these sentiments, asserting that adherence to ESG principles is imperative for creating long-term value in project delivery.
As the discourse continues, the integration of ESG frameworks into Nigeria’s construction and real estate sectors appears not only essential for environmental sustainability but also for economic resilience.
