Banks, insurers urged to adopt ESG for operational efficiency

Independent Project Monitoring Company (IPMC) has called on banks and insurance firms to integrate environmental, social and governance (ESG) practices to drive business operations efficiency in the country.

IPMC stated this in the new ESG Ratings Report launched in Lagos, saying that the report will also help financial institutions in the sustainable investment decision-making process.

According to the firm, ESG Ratings performs comprehensive analyses of environmental impact, social responsibility and corporate governance practices to provide a holistic assessment of a company’s sustainability performance.

The ratings, it said, are also tailored to meet the unique needs of each client, whether they require individual company assessments or industry comparisons while utilising transparent methodologies that incorporate industry best practices, regulatory frameworks and stakeholder engagement.

“To this end, organisations integrating ESG into their operations will also help benchmark business performance as well,” it stated. Speaking on the significance of ESG, the Chief Executive Officer of IPMC, Robert Ade-Odiachi, said in the realm of modern corporate practices, organisations have embraced the concept of ESG with increasing awareness.

He explained that as the world grapples with pressing issues related to sustainability, businesses are intently joining the conversation, aiming to make a positive impact.

“However, it is crucial to critically evaluate commitment to these principles and distinguish genuine efforts from superficial gestures,” he noted.
According to him, by examining sustainable practices, firms can contribute to a more responsible and sustainable future of businesses and the world at large. He said embracing ESG practices helps organisations identify and mitigate various risks.

He noted: “For instance, addressing environmental risks can safeguard against regulatory fines, supply chain disruptions and reputational damage.”

Also speaking about the importance of ESG in the financial sector and the role of sustainability in long-term investment strategies, the keynote speaker and Special Adviser to the President of the National Economic Council (NEC) and Climate Change, Office of the Vice President, Rukaiyah EI-Rufai, said ESG performance metrics and data play a crucial role in steering businesses towards a more sustainable and responsible future.

According to her, investors, consumers and regulators increasingly prioritise ESG considerations while companies that embrace and excel in the metrics are better positioned for enduring success in a world where sustainability is no longer a choice but a necessity.

Speaking on the detailed findings of the report methodology and data sources, ESG Consultant, Agatha Afemikhe, explained that the assessment was prepared in response to the growing awareness of the importance of ESG practices in the financial sector, with banks and insurance companies looking to integrate ESG consideration into their operations, risk management and reporting to stay adaptive to changing regulations and expectations.