The Securities and Exchange Commission (SEC) has stated that it will continue to strive to deliver coordinated and coherent policy advice, capacity building and regulatory support to build the momentum for a green economy.
Green finance has been defined as any structured financial activity that has been created to ensure a better environmental outcome.
Director General of the SEC, Mr. Lamido Yuguda who stated this in a goodwill message at the official launching ceremony of the FMDQ Green Exchange, said the Commission remains a strong advocate for the promotion of infrastructural development through sustainable financing as it believes that the huge budget deficit and infrastructural gap in the country can be financed by harnessing resources available from sustainable finance investors and interest groups around the world.
He said: “Without doubt, there are tremendous opportunities in the areas of power generation and transmission, rail transportation, housing, agriculture and water among others, where sustainable financing can be an avenue for the private sector to partner with government in the overall drive for prosperity and economic development.
“The Commission had in December 2018, released the rules on Green Bonds to support the issuance of debt instruments with positive impact on the environment.
“Although the Nigerian capital market has recorded some green bond issuances, there is ample room for additional issuances as stakeholders within the sector can do more in terms of green and sustainable finance; especially considering the available global investment opportunities and our domestic development needs.”
The SEC DG said the launch of the FMDQ Green Exchange as a platform for the collection and dissemination of data and information on green and sustainable securities for transparency purposes is a step in the right direction.
He disclosed that ESG factors form key components in qualitative market research, valuation of equities and fixed income securities, portfolio construction and asset allocation and expressed excitement with the contribution of the FMDQ, which will enhance these aspects of the capital market.
“Effective ESG reporting can fuel strong capital markets, as high standards of disclosure and transparency are a critical part of the requirements in ESG investing. The performance of this platform will be a testing ground for the enormous potentials ahead.
“The United Nations recognizes that green financing plays a major role in delivering a number of its Sustainable Development Goals. The ongoing 2021 United Nations Climate Change Conference underscores the transition to a low-carbon, more resource efficient economy and in building a financial system that stimulates sustainable growth across nations.
“There is enormous capacity for the financial system to fund the transition to a green economy. For this to happen, the right conditions and incentives need to be in place.
“These include incentivizing market participants to be more conscious of long-term risks and opportunities; improving access for retail investors, and supporting institutional investors to direct their capital towards a long-term impact; enhancing trust in green financial products, by giving clear and reliable information to those who invest in them and providing the necessary regulatory and policy support to create an enabling environment for innovative ideas in green finance to thrive,” he added.
Yuguda said FMDQ for some years now has earned for itself a reputation for innovation in the Nigerian capital market with the introduction of new products, platforms, processes and even players adding that sustainable finance has come to stay and the benefits would be visible in the improvements to Nigeria’s physical and economic environment.