CSR, ESG Laws Need Strengthening

Undoubtedly, Corporate Social Responsibility and ESG frameworks in Nigeria have been aspirational, yet their enforcement remains frustratingly elusive.

We talk about CSR in glossy annual reports, and ESG on panels and summits, but meaningful legal backing is too often missing. If we believe that businesses must contribute to more than profit, the law must hold them accountable and right now, it does not.

That gap is not for lack of awareness. Nigeria has made piecemeal progress. The 2023 CSR Bill, quietly progressing through the National Assembly, proposes mandatory CSR contributions of between 2 and 5 percent of net profits, requires companies to establish CSR committees and report to the Corporate Affairs Commission, even attaching penalties such as fines or imprisonment for non-compliance. Meanwhile, regulators like NGX RegCo have called for a unified ESG regulatory body to shore up transparency and create consistent enforcement across sectors.

Yet the spike of activity in draft legislation and calls to action is at odds with reality. The CSR Bill, whose origins stretch back to a 2008 proposal and resurfaced in 2016 and now 2023, remains dormant. That original bill was ambitious, it envisioned a permanent CSR Commission and mandated a 3.5 percent annual commitment to community development. But businesses and lobbying groups balked at the idea of compulsory philanthropy. They warned it would harm the fragile ease of doing business. The dream of a law that elevated CSR into corporate duty remains in legislative limbo.

In the meantime, piecemeal tools exist but fail to align into a comprehensive framework. The Petroleum Industry Act requires oil companies to set aside 3 percent of operating expenses for host communities. The Climate Change Act has spawned action plans and budgets. NESREA enforces environmental standards, especially on issues like e-waste and illegal site development. But outside oil-rich sectors or isolated environmental infractions, CSR remains voluntary, optional at best, window-dressing.

And our principal corporate law, CAMA 2020, leaves CSR as a non-binding, shareholder-centered notion. It allows directors to pay lip service to communities, but does not mandate any ethical obligation to them. In practice, this means a company can assert commitment to social and environmental concerns but then revert to bare-minimum profit-driven governance.

The result is familiar. Companies pick the easy wins paint a classroom, distribute water, host an event to fill CSR pages, but rarely invest in the hard infrastructure or interventions that reshape communities. That is not because the resources are absent; it is because laws allow avoidance.

Contrast this with countries where CSR regulation has taken root effectively. In India, the Companies Act requires large firms to dedicate 2 percent of profit to CSR projects and report on their use; in South Africa, the B-BBEE framework embeds social investment into business licensing and contracting. These models show that well-crafted CSR laws can build social investments into the business DNA not through goodwill, but through duty.

Nigeria could chart a similarly purposeful path. Revisit the 2023 CSR Bill revise and harmonize it to avoid double regulation for oil companies already subject to the PIA. Build a consolidated ESG authority, perhaps as NGX RegCo and FITC leaders propose, to oversee implementation, reporting, and compliance across sectors. Ground CSR law in partnerships, ensuring companies exceed payment into projects, not just paperwork. Make transparency mandatory, companies must publicly report CSR spend tied to community outcomes.

And crucially, allow lawmakers to focus on this. In the National Assembly, environment, finance, and commerce committees need to elevate CSR and ESG from yearly PR budget discussions to critical legislation. Let the Senate Environment Committee pivot beyond oversight of oil spills to codifying responsibility across sectors, linking policy to sustainable development targets.

We are not starved of frameworks or ideas. We have the PIA, the Climate Change Act, even a stalled bill awaiting revival. What we lack is coherence and courage. CSR and ESG cannot be voluntary when communities are degraded, rivers are polluted, workers are neglected, or climate shocks strike with zero resilience.

Businesses need predictability. Investors need clarity. Citizens deserve sustainable progress, not promises. Stronger laws, appropriately enforced, would not hamper business, they would anchor it to society.

Nigeria needs corporate citizenship that isn’t optional. CSR and ESG must be sewn into the legal fabric, not left in the morality section. Our lawmakers must stop treating CSR as fringe. It is foundational to a just, sustainable economy.

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