The Bank of Industry (BOI) has launched its “Environmental, Social and Governance (ESG) Adoption by Nigerian Micro, Small and Medium Enterprises (MSMEs)” Report, identifying limited funding and lack of technical capacity as the biggest barriers hindering the adoption by businesses in the country.

Other challenges that hinder adoption, according to the report, launched yesterday in Lagos at the BOI’s inaugural ESG Conference tagged: “Advancing ESG adoption,” include inadequate policy-linked incentives, limited knowledge and low customer demand.

The bank noted that by embracing ESG adoption, many businesses will have better access to finance, especially as global investors and development finance institutions (DFIs) prioritise projects that align with sustainability principles.

The survey conducted across the country’s six geopolitical zones captured over 300 valid responses from a diverse pool of MSMEs spanning agro-processing, ICT, manufacturing, creative, hospitality, healthcare, engineering & construction and financial services.

According to the survey, 78 per cent of enterprises lamented financial limitations, 65 per cent complained about a lack of technical expertise, underscoring the need for targeted financing and capacity-building support for MSMEs.

The report also showed that 65 per cent cited inadequate ESG-oriented incentives to enable growth, while 20 per cent of MSMEs stated a lack of customer demand, with further findings showing that 45 per cent lack knowledge, concluding that market forces alone are insufficient to drive ESG adoption.

Key insights and improvement areas in the report included ESG-compliant products with targeted loan features, targeted capacity building, inclusive leverage for broader reach for older entrepreneurs and introducing women-focused ESG-compliant credit windows to narrow the gender adoption gap.

Other areas are leveraging blended financing to improve access to ESG-linked capital and technical upskilling via regional hubs.Speaking at the event, with the theme: “Building Resilient and Responsible Enterprises: ESG as a Strategic Imperative for Nigerian SMES,” the Managing Director/Chief Executive Officer of BOI, Dr Olasupo Olusi, said MSMEs account for over 80 per cent of Nigerian businesses, contribute nearly half of the country’s Gross Domestic Product (GDP) and employ millions of Nigerians.

He said that many still face barriers in understanding what ESG means in practice and how to embed the principles in their daily operations. Olusi stated that these barriers make many enterprises more vulnerable, less competitive and future-ready, noting that the BOI aims to bridge this net gap by equipping MSMEs to grow, compete and prosper sustainably and profitably in the evolving landscape of the global economy.

Olusi said the report aligns with Nigeria’s commitments under the Paris Agreement, the Nationally Determined Contributions (NDCs), and the Energy Transition Plan (ETP), particularly in achieving the country’s 47 per cent conditional emission reduction target by 2030.

Olusi added that it will also help businesses manage risks, reduce costs, attract talent and comply with emerging international standards. Giving the keynote address, the Director-General, National Council on Climate Change (NCCC), Tenioye Majekodunmi, said climate realities, shifting investors’ expectations and rapid technological changes are reshaping global economies.

According to her, the transition to a low-carbon future will profoundly affect how businesses compete, attract finance and build resilience.
Majekodunmi argued that global investors are redirecting trillions of dollars towards sustainable assets, with consumers demanding transparency and ethical sourcing, while sustainable supply chains are also being restructured around carbon footprints.

She said for Nigerian SMEs, this transition presents both risks and opportunities, adding that enterprises that adapt early by embedding ESG principles into their operations will be the preferred partners for global trade and finance.

Majekodunmi described the BOI’s ESG framework for MSMEs as a blueprint of how finance can be directed to drive inclusive finance laws and responsible industrial growth.

Also speaking, the Deputy Country Director, Agence Française De Développement (AFD) Nigeria, Mahamadou Diarra, commended BOI’s proactive steps in advancing responsible financing and environmental sustainability within Nigeria’s financial system.

Diarra emphasised that BOI’s efforts will position it as a trusted partner for international financiers, citing ongoing global efforts to harmonise ESG frameworks and due diligence standards among development partners such as the World Bank and the Asian Development Bank.