BoI: funding, skills gap hinder ESG adoption by MSMEs

Bank of Industry (BoI) has identified limited access to finance and lack of technical capacity as the biggest challenges preventing Nigerian Micro, Small and Medium Enterprises (MSMEs) from adopting Environmental, Social and Governance (ESG) practices — a global standard increasingly shaping investment and sustainability trends.

This was revealed in the bank’s new report titled: “Environmental, Social and Governance (ESG) Adoption by Nigerian MSMEs”, launched yesterday in Lagos at the BoI’s inaugural ESG Conference which had: “Advancing ESG Adoption” as theme.

According to the report, 78 per cent of MSMEs surveyed cited financial constraints as the major barrier to ESG adoption, while 65 per cent

The nationwide survey captured over 300 valid responses from MSMEs across the six geopolitical zones, covering key sectors such as agro-processing, ICT, manufacturing, creative industries, hospitality, healthcare, construction and financial services.

Speaking at the event, BoI’s Managing Director and Chief Executive Officer, Dr. Olasupo Olusi, said MSMEs remain critical to the economy, accounting for over 80 per cent of businesses, contributing nearly half of the GDP, and employing millions of people.“Many still face barriers in understanding what ESG means in practice and how to embed the principles in their daily operations. These barriers make enterprises more vulnerable, less competitive, and less future-ready,” Olusi said.

He explained that BoI is working to bridge these gaps by equipping MSMEs with the tools and financing needed to operate sustainably and competitively in a changing global economy.

“Our goal is to help MSMEs grow, compete and prosper sustainably and profitably. ESG principles will help us align our industrial ambitions with national and global climate goals, while enabling us to attract green capital, spur innovation and build industries that can compete globally,” he added.

Olusi noted that the report aligns with Nigeria’s international commitments under the Paris Agreement, 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.

He said that embracing ESG practices would enhance MSMEs’ access to finance, as global investors and development finance institutions (DFIs) increasingly prioritise sustainability-linked projects.

“ESG adoption will improve access to finance, help businesses manage risks, reduce costs, attract talent, and comply with emerging global standards,” Olusi said.The report recommended targeted financing instruments, capacity-building programmes, and gender-focused ESG credit schemes to close adoption gaps. It also called for the development of ESG-compliant loan products, regional hubs for technical training, and blended finance models to expand access to sustainable capital.

Delivering the keynote, Director-General, National Council on Climate Change (NCCC), Dr. Tenioye Majekodunmi, said climate realities and changing investor expectations are reshaping global business environments.

“The transition to a low-carbon future will profoundly affect how businesses compete, attract finance and build resilience. Global investors are redirecting trillions of dollars towards sustainable assets, while consumers now demand transparency and ethical sourcing,” she said.

Majekodunmi stressed that for MSMEs in the country, adopting ESG principles is no longer optional but strategic.

“Enterprises that adapt early by embedding ESG principles into their operations will become the preferred partners for global trade and finance,” she noted, describing BOI’s ESG framework as “a blueprint for directing finance towards inclusive and responsible industrial growth.”

Deputy Country Director of Agence Française de Développement (AFD), Mahamadou Diarra, commended BoI’s leadership in promoting responsible and sustainable financing within Nigeria’s financial ecosystem.

“BoI’s proactive steps will position it as a trusted partner for international financiers,” Global development partners, including the World Bank and Asian Development Bank, are harmonising ESG frameworks and due diligence standards,” Diarra said.

He reaffirmed AFD’s commitment to supporting the BoI in strengthening its ESG management systems and promoting climate-linked investments nationwide.

“As a key development partner, AFD places great emphasis on ensuring that institutions it supports maintain the same level of environmental and social diligence required in its own operations,” he added.

With the launch of the ESG report, stakeholders say BoI has positioned itself at the centre of the nation’s sustainable industrialisation drive. Those at the event agreed that integrating ESG principles into MSME operations will not only boost competitiveness but also ensure Nigerian businesses remain viable in an economy increasingly defined by sustainability, accountability, and global market alignment.

 highlighted lack of technical expertise. Other challenges include limited policy-linked incentives (65 per cent), inadequate knowledge (45 per cent), and low customer demand (20 per cent).

BoI: funding, skills gap hinder ESG adoption by MSMEs - The Nation Newspaper