Introduction
The impact of the shift from Corporate Social Responsibility (CSR) to Economic Social and Governance policies in boardrooms cannot be overstated. Nigerian companies are increasingly moving from investing in CSR activities, often criticized as "green washing" to more structured ESG initiatives, with growing emphasis on capacity development for Boards and Executives on incorporating sustainability into governance and corporate strategy. This transition signifies a transformation of how businesses define responsibility and value. Evidence indicates that institutional ownership positively and significantly influences sustainability disclosures in listed firms.1 This underscores that board-level governance and investor pressures are critical to the shift. Although CSR provided the foundation for corporate goodwill, ESG mandates accountability, measurable performance and long-term resilience. ESG principles are the benchmark for achieving the Sustainable Development Goals in the corporate ecosystem. Thus, it is imperative that companies prioritise ESG reporting to ensure that they not only meet investor expectations, but also contribute meaningfully to Nigeria's positioning as the leader in Africa's corporate transformation.
CSR V ESG: Understanding the difference
Historically, CSR has been the most prominent model of corporate accountability in Nigeria. Rooted in philanthropy and regulatory compliance, CSR often encourages visible contribution to society through initiatives like scholarships, community health clinics, donations to disaster relief, road construction, etc. An example is the formalization of CSR in the Nigerian Oil and Gas industry through statutory requirements like the Niger Delta Development Commission (NDDC) and host community agreements which mandates companies to undertake community development projects. Critics argue that although these initiatives have provided tangible benefits, CSR in Nigeria is mostly reputation driven and disconnected from broader business strategy. In some cases, CSR has been said to serve as a "license to operate," allowing firms to maintain goodwill without addressing deeper governance, environmental, or ethical issues.2
ESG by contrast focuses not on charitable projects but rather on how companies manage their environmental footprint, uphold governance standards and stakeholder engagements. Put simply, ESG frameworks represent a more rigorous and integrated approach to corporate responsibility. For example, Environmental considerations include measuring and investing in renewable energy or reducing carbon emissions; while Governance demands transparency, ethical leadership and board accountability. While CSR asks, "what can we give back?', ESG poses the bigger question: "how can we operate sustainably and responsibly in all aspects of our operations?". ESG is measurable and standardized through global frameworks like Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), and the new IFRS Sustainability Standards.
The Shift from CSR to ESG
The transition from CSR to ESG in Nigerian boardrooms is significantly influenced by a mix of global and local forces. At the international level, investors are demanding hard data on sustainability performance as narrative accounts of community and other donations no longer suffice. Notably, international global asset managers such as BlackRock3 and other sovereign wealth funds have made ESG compliance a condition precedent for investment, while development finance institutions like the IFC4 and AfDB require ESG adherence as a precondition for funding. Thus, Nigerian companies seeking international funding must align with ESG frameworks.
At the local level, the Nigerian Exchange (NGX)5 has issued sustainability disclosure guidelines on a "comply or explain" basis, encouraging listed companies to integrate ESG metrics into their annual reporting. The Financial Reporting Council of Nigeria (FRC) has gone further, outlining a roadmap that will make ESG reporting mandatory by 20286. In addition, the Central Bank of Nigeria's Sustainable Banking Principles require Banks to incorporate environmental and social risks into their lending practices. These reforms are transforming ESG from a voluntary, image-enhancing exercise into an essential governance requirement.
The shift from CSR to ESG is fundamentally a governance issue. Hence, Boards no longer delegate sustainability to PR or CSR departments. Rather ESG matters are incorporated in Board Committee Terms of Reference with some Board constituting ESG Committees. More attention is also being given to , ESG training for Directors to enable a better understanding of climate risks, reporting standards, and stakeholder expectations resilience. Disclosure has also become a strategic tool not only to attract potential investors but also to build long-term resilience.
CSR, while valuable, is no longer enough in a world where investors and regulators demand accountability, transparency, and measurable sustainability. ESG provides a framework that embeds responsibility into governance and corporate strategy.
If Nigerian boardrooms embrace ESG fully with sincerity, transparency, and accountability they will not only meet investor demands but also position themselves as champions of sustainable development across Africa.
Footnotes
1. Yahaya, O. A. (2024). The Effect of Institutional Ownership on Sustainability Disclosure in Emerging Markets, Nigeria in Perspective — SSRN
2. Onyeka, V. N., & Adeyemi, O. S. (2022). Impact of CSR practices on firms' goodwill: An empirical investigation. ResearchGate. https://www.researchgate.net/publication/366244709_Impact_of_CSR_Practices_on_Firms%27_Goodwill_An_Empirical_Investigation
3. BlackRock. (2020). Larry Fink's
2020 letter to CEOs: A fundamental reshaping of finance.
BlackRock.
https://www.blackrock.com/corporate/investor-relations/2020-larry-fink-ceo-letter
4. International Finance Corporation
(IFC). (2019). IFC ESG guidebook. World Bank Group.
https://www.ifc.org/content/dam/ifc/doc/mgrt/ifc-esg-guidebook.pdf
5. Nigerian Exchange Group. (2016).
Sustainability Disclosure Guidelines. Nigerian Stock
Exchange.
https://ngxgroup.com/wp-content/uploads/2020/12/Sustainability-Reporting-Seminar-NSE-Disclosure-Guidelines.pdf
6. Financial Reporting Council of Nigeria
(FRC). (2024, December 20). Progress on corporate climate-related
disclosures: 2024 report.
https://frcnigeria.gov.ng/2024/12/20/progress-on-corporate-climate-related-disclosures-2024-report
Originally published 2025-09-24
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