Truth Comes to Market: Sustainable Finance on the Rise in Nigeria

"We will not continue to take savings and deposits from Nigerians and then lend to companies that will use the funds to destroy the environment." -- Mallam Sanusi Lamido Sanusi, Nigerian central bank governor

Last week, the United Nations Environment Programme Finance Initiative (UNEP FI) hosted the first Nigeria Sustainable Finance Week in Lagos, a series of meetings with international development finance institutions. Over the three-day conference, bankers, environment ministers, risk managers, agricultural researchers, investment analysts and UN advisors gathered to discuss the trends, opportunities, challenges and best practices in the fields of finance and sustainability, with a particular focus on the social and environmental issues in Nigeria.

In his keynote address, UNEP FI head Paul Clements-Hunt said that sustainable finance is at a tipping point, asserting that the market drivers of the coming decades would be focused on the green economy. Indeed, to achieve a sustainable future, financial markets must exert their influence on security in regards to energy and international strategic supply chains, low-carbon economies (LCEs), low-fossil-fuel economies (LFFEs) and resource efficiency.


The ground-breaking summit covered such hot topics as leveraging financial flows through public-private partnerships, renewable energy, sustainable agribusiness financing, environmental and social risk analysis, innovative funding mechanisms, carbon credit offset investments and the challenges of the global food crisis and anthropogenic climate change, the latter of which most scientists agree has been caused primarily by the rich world, but will primarily affect the poor world.

"Financial institutions should see investments in renewable energy resources and the environment as a necessity," said Nigerian economist and environmentalist Lekan Fadina, speaking to the attendees. "It is erroneous to say it is not viable; it is in fact a very profitable venture that can create jobs for millions of Nigeria."


But the high-water mark of the event actually happened on the sidelines: the signing of the Nigerian Lending Principles by eight of the nation's leading banks. Signatories of this joint statement -- Access Bank Plc, Citibank Nigeria Limited, Diamond Bank Plc, First Bank of Nigeria Plc, GTBank Plc, Stanbic IBTC Bank Plc, Standard Chartered Bank Limited and Zenith Bank Plc -- agreed to commit to sustainable financing and signed the agreement in the presence of Nigeria's central bank governor Mallam Sanusi Lamido Sanusi.

"If the banking industry agrees not to lend to any company that does not meet certain environmental standards, they will be helping themselves, not just to make money, but also reproduce and recreate the environment, in which they can continue to have long-term profitability," said Sanusi, who was recently recognized by Time magazine as one of the 100 most influential people of 2011. "We need to understand that as an industry, we will not continue to take savings and deposits from Nigerians and then lend to companies that will use the funds to destroy the environment. The long term survival of the system depends on the protection of the ecosystem."


"For us as financial institutions, we tend to have a very narrow interaction with our society because financial institutions interact on the basis of money," said Aigboje Aig-Imoukhuede, CEO of Access Bank, one of the signatories of the new sustainable finance agreement. "Capital is the oxygen for any business and the way and manner we use the money entrusted with us can have a powerful effect on the environment within which we operate."

There is an old proverb of the Yoruba, one of Nigeria's main ethnic groups: "Truth came to market but could not be sold; however, we buy lies with ready cash." As Nigeria's bankers forge a new path of sustainable finance, perhaps the raw truths about such urgent matters as the global food crisis and climate change will gain more currency when responsibly addressed by market forces.


Ibid., 1.

image: A young cacao fruit (Theobroma cacao). Funded by the United States Agency for International Development (USAID), the World Cocoa Foundation and the Nigerian Federal Ministry of Agriculture and Water Resources/Sustainable Cocoa Development Committee, the Sustainable Tree Crops Program in Nigeria has developed innovative approaches to improving the productivity of cocoa farms in an environmentally friendly and socially responsible manner. (credit: Claus Bunks, Wikimedia Commons)