The Extractives & Energy sector is one that is extremely critical to the development of the Nigerian Economy. This sector impacts the environment far more than any other sector. Environment, Social and Governance index has led Extractive & Energy companies to pledge net zero targets, divest from fossil fuel assets and consider factors like diversity and community concerns in their business models. Investors are increasingly concerned by how companies perform when it comes to ESG and want to invest based on companies’ performance in these three areas.

The need to be mindful of their sustainability impact is more than ever, now especially important to Extractive & Energy. There are several instances of companies losing significant amounts of funds as a result of them not taking into consideration their ESG impact. One of such instances is the case of Shell in the Niger Delta, which has caused the company millions of dollars which could be prevented if they considered their community as primary stakeholders and considered their livelihoods whilst operating in these communities. Although some companies have sustainability departments, more needs to be done by the extractives & energy community to ensure that they are considering the impact of their operations daily.

Sector’s Key Regulations & Principles

The principal laws governing this sector include the Nigerian Constitution as well as the Petroleum Act. The Petroleum industry Bill (PIB) pending before the National Assembly aims to harmonize all the legislations and significantly restructure the industry, particularly the functions of the various regulatory agencies, in order to eliminate overlaps. Some other Acts regulating the Extractives & Energy sector include the Petroleum Profits Act, the Deep Offshore and Inland Basin Production Sharing Contracts Act, the Nigerian National Petroleum Corporation Act, the Environmental Impact Assessment Act, the Federal Inland Revenue Service Establishment Act 2007, the Education Tax Act, the Niger Delta Development Commission Act, the Nigerian Oil & Gas Industry Content Development Act 2010, the Nigerian Extractives Industries Transparency Initiative Act 2007, National Oil Spill Detection Response Agency Act and the Oil Pipelines Act.