ONYINYECHI NWAIGBA 
For years, ESG was often treated as a sustainability conversation. Increasingly, it is becoming a financial one and Nigerian banks are beginning to factor environmental and social risks into decisions about where capital goes.
A company seeking financing may traditionally have been assessed largely on its financial statements, cash flow, collateral and ability to repay.
But that calculation is changing.
Environmental liabilities, climate exposure, labour practices, community relations and other sustainability risks can eventually affect the financial health of a business. For lenders, that means ESG risks are no longer necessarily separate from credit risk.
A recent disclosure by FirstBank Nigeria offers a glimpse into how this shift is taking place.
The bank screened 505 corporate transactions valued at more than ₦10 trillion for Environmental, Social and Governance (ESG) risks in 2025, more than twice the number of transactions it screened the previous year. In 2024, FirstBank screened 237 corporate transactions valued at ₦3.04 trillion for ESG risks, according to FirstHoldCo’s 2024 Sustainability Report.
The increase is significant, but the bigger story is not simply the amount of money screened.
It is what the screening represents: the gradual movement of ESG from the corporate responsibility department into the credit room.
When sustainability becomes a lending decision
FirstBank’s latest disclosure came during the inaugural Annual Sustainability Conference of the Sustainability Professionals Institute of Nigeria in Lagos, where the bank outlined how sustainability considerations are becoming more integrated into its credit and risk-management processes.
The bank said its ESG assessment covers customers across sectors including construction, oil and gas, agriculture, manufacturing and services.
This matters because businesses in these sectors can face environmental and social risks that may have direct financial consequences.
For example, an industrial project that fails to manage environmental obligations could face regulatory action, clean-up costs or reputational damage. A company with serious labour or community-related problems could experience disruptions that affect operations. An energy-intensive business could also face increasing costs as climate policies and the transition to lower-carbon operations gather pace.
From a lender’s perspective, these are not simply sustainability concerns.
They can become repayment concerns.
FirstBank’s Executive Director, Risk Management, Adebiyi Olagbami, said ESG risks were increasingly becoming core credit risks because a borrower’s exposure to climate transition, environmental liabilities and social risks could affect its ability to repay a facility over its tenor.
That is an important shift in thinking.
If a sustainability risk can weaken a borrower’s business, then identifying that risk before approving financing becomes part of responsible lending.
The numbers show how quickly the practice is expanding
FirstBank’s ESG screening activity increased considerably between 2024 and 2025.
In 2024, 237 corporate transactions worth ₦3.04 trillion were screened. In 2025, that rose to 505 transactions worth more than ₦10 trillion.
That is more than a doubling in the number of transactions assessed.
It also represents a substantial increase in the value of transactions passing through an ESG risk lens.
The development suggests that ESG screening is becoming increasingly embedded in the bank’s lending infrastructure rather than being an occasional assessment attached to selected projects.
FirstBank has previously described its Environmental, Social and Governance Management System as a framework designed to ensure that transactions being considered for funding take into account measures to prevent, control and mitigate negative impacts on the environment and communities.
Its 2023 Sustainability Report also showed that the bank had already been using technology to screen corporate credit transactions for ESG risks, with 243 transactions worth about ₦3.29 trillion screened that year.
Taken together, the figures point to a progression rather than a sudden change.
The bank has been building the infrastructure for ESG-integrated lending over several years, while the scale of transactions being screened has continued to grow.
But ESG screening is not just about saying no
There is an important distinction between screening a transaction for risk and simply rejecting businesses that have environmental or social challenges.
FirstBank says its approach includes categorising customers according to their ESG risk levels and developing Environmental and Social Action Plans where gaps are identified.
That approach potentially creates room for businesses to identify weaknesses and improve their practices rather than simply being excluded from finance.
For Nigerian businesses, this could become increasingly important.
As sustainability expectations grow, companies may need to demonstrate not only that they are profitable, but that they understand the environmental and social risks attached to their operations and have credible measures for managing them.
This could gradually change what businesses prepare before approaching lenders.
Financial statements may no longer tell the whole story.
A company may also need to understand its environmental footprint, energy exposure, workforce practices, community relationships, regulatory risks and climate vulnerabilities.
The other side of the equation: financing the transition
There is another reason this development matters.
Banks do not only decide which risks to avoid. They also decide which opportunities to finance.
FirstBank says it is expanding its climate-finance offerings through products including Alternative Energy Finance, solar financing for SMEs and a green-energy addendum to its vehicle finance offering.
This places the bank on both sides of the sustainability equation.
On one side, it is assessing the ESG risks associated with businesses seeking finance.
On the other, it is developing products intended to help individuals and businesses invest in cleaner energy and mobility.
That distinction is important for Nigeria, where the transition to more sustainable infrastructure requires significant capital.
A business may want to install solar power, improve energy efficiency or adopt cleaner technologies, but the upfront cost can be a major barrier.
Financial institutions therefore have a role that extends beyond risk control. They can help determine whether sustainable solutions remain ideas on paper or become investments that businesses can actually afford to implement.
What this means for Nigerian businesses
The growing integration of ESG into lending could eventually change the relationship between banks and their corporate customers.
Businesses that have historically viewed ESG reporting as something primarily relevant to investors, regulators or multinational partners may increasingly find that sustainability information matters when they need financing.
This does not necessarily mean every small business will suddenly need a sophisticated ESG department.
It does mean businesses may need to become more deliberate about identifying and managing the risks associated with how they operate.
For larger companies, particularly those operating in sectors with significant environmental footprints, the expectations could be even greater.
Companies in oil and gas, construction, agriculture, manufacturing and power, for example, may face questions around environmental impacts, emissions, worker safety, community relations and climate resilience.
The ability to demonstrate that these risks are being managed could become increasingly relevant to access to capital.
Is ESG becoming a gatekeeper for capital?
That may be the bigger question emerging from FirstBank‘s latest disclosure.
The bank’s screening of more than ₦10 trillion in corporate transactions does not mean ESG considerations have suddenly become a universal requirement across Nigeria’s financial sector.
But it does show how sustainability considerations can move from corporate messaging into actual financial decision making.
FirstBank’s approach is also consistent with a broader direction in responsible finance, where environmental and social risks are increasingly considered alongside traditional financial risks.
The bank says its Green Product Credit Policy has been aligned with its Climate Policy, Environmental and Social Management System, International Finance Corporation Performance Standards, and IFRS S1 and S2. It also plans to publish its first Sustainability Report prepared in line with IFRS S1 and S2.
The implication is straightforward: sustainability is increasingly being connected to how financial institutions understand risk, disclose information and allocate capital.
The bigger ESG lesson
The most important lesson may be that ESG is moving away from being viewed simply as a corporate reputation exercise.
For a bank, sustainability can influence the risks sitting inside its loan book.
For a business, poor environmental or social practices can eventually translate into operational, regulatory, reputational or financial problems.
And for investors and other stakeholders, the question is increasingly not just whether an organisation has an ESG policy, but whether that policy influences actual decisions.
FirstBank’s ₦10 trillion screening milestone therefore tells a bigger story than the headline suggests.
It points to a financial system where the question is gradually changing from “Does this company have an ESG policy?” to “What ESG risks are attached to this business, and what could they mean for the money being invested in it?”
That is where ESG becomes more than corporate responsibility.
It becomes a question of risk, resilience and capital allocation.
And as Nigerian banks deepen this approach, businesses may have to prepare for a future where sustainability is not simply something they report.
It could increasingly determine how they are assessed, how they manage risk and potentially, how easily they access capital.
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