Transit to green economy – SEC DG urges capital market operators

Dr Emomotimi Agama, Director-General Securities and Exchange Commission (SEC)Nigeria, says transitioning to a green economy is crucial for the sustainable development of the country.

Agama stated this at a capacity-building workshop for capital markets operators on green finance organised by SEC in partnership with the African Development Bank (AfDB) in Lagos.

He was represented by Mr Bola Ajomale, Executive Commissioner, Operations, SEC.

The managing director quoted the United Nations Environment Programme (UNEP) to have defined a green economy as a low-carbon, resource-efficient efficient and socially inclusive economy.

According to him, a green economy is where growth in employment and income are driven by public and private investment into such economic activities.

Agama also mentioned that infrastructure and assets allow reduced carbon emissions and pollution, enhanced energy resource efficiency, and prevention of loss of biodiversity and ecosystem services.

He said: “Climate change, as we all know, is one of the major risks threatening the well-being of mankind.

“Since the Paris Agreement was reached in December 2015, international efforts in combating climate change have gathered enormous momentum.

“According to the IMF, in the past four decades, we have witnessed the warmest years on record and the number of natural disasters more than doubled in that same time frame.

According to him, embracing green finance remains a critical approach to addressing these challenges, as the nation has a significant opportunity to drive positive change by promoting green finance.

Agama reaffirmed the commitment of SEC to champion sustainable finance initiatives in the country.

He noted that the commission’s rules on green bonds have already facilitated a couple of sovereign issues and multiple corporate issues.

The director-general added that the Federal Government through the Debt Management Office (DMO) had led the way in Africa in this regard by issuing the first sovereign green bond in December 2017.

He hinted that the government had since followed up with another N15 billion issuance in June 2019 specifically to fund renewable energy, afforestation and transportation.

Agama said the commission also approved two green bond issues by North South Power Services Ltd., and Access Bank Plc worth N8.56 billion and N15 billion, respectively.

This is to finance various infrastructural projects in the power, water and agriculture sectors of the Nigerian economy.

“The onus therefore lies with all of us to continue to expand these issuances by locating a need and fashioning appropriate sustainable financing products to meet them.

“As stakeholders, intermediaries, issuers, investors, and regulators, we all play a pivotal role in facilitating the transition of our economy towards sustainable and low-carbon growth.

“We can support this transition through our business activities by directing financial flows towards more sustainable and climate-friendly solutions.

“Also, divesting from unsustainable practices, setting standards and frameworks, and integrating green finance into investment decisions and practices,” he said.

According to him, the primary objective of the workshop is to provide capacity building for capital market operators and stakeholders to enhance knowledge and understanding of green finance.

The director general assured that SEC would continue to strongly support and champion efforts to deliver coordinated and coherent policy advice, capacity building and regulatory support.

Agama said this would help to leverage actions across a broad spectrum of sectors to build the momentum for a green economy which could bring socially inclusive and environmentally sound economic transformation.

In his presentation, Mr Olumide Lala, Executive Director, Climate Transition Ltd., said that the biggest problem of green finance was not the physical risks, but transitioning.

Lala charged capital market operators to promote investment in sustainable projects, such as green bonds and exchange-traded funds to help channel large-scale capital into projects that address environmental challenges.