The Petroleum Industry Act (PIA) marks a significant shift in Nigeria’s oil and gas sector, promising greater transparency, accountability, and inclusivity. As businesses and regulatory bodies adjust to this new landscape, one of the most critical tools in ensuring the success of the PIA is sustainability reporting.
During a recent webinar hosted by CSR-in-Action Mr Meka Olowola, a thought leader in Sustainability, emphasised the importance of sustainability reporting: “Sustainability reporting plays a critical role in communicating progress on the PIA by providing accountability in the implementation of the Act.”
What is Sustainability Reporting?
Sustainability reporting is the practice of measuring and disclosing an organisation’s environmental, social, and governance (ESG) performance. It is more than just compliance; it’s about demonstrating transparency in an organisation’s operations. For industries like oil and gas, which have long been scrutinised for their environmental and social impacts, sustainability reporting offers a way to rebuild trust with stakeholders.
In Nigeria, this becomes even more critical. The PIA sets out ambitious goals to restructure the oil and gas industry, introducing measures like the Host Community Development Trust, which requires companies to channel a portion of their operating expenses into improving the communities in which they operate. The success of these initiatives can only be fully realised if they are measured, monitored, and transparently reported.
At the heart of the PIA’s mission is accountability. For decades, Nigeria’s oil and gas sector has been plagued by opacity, mismanagement, and environmental degradation. Communities in the Niger Delta, where much of the nation’s oil is extracted, have often borne the brunt of these issues. Sustainability reporting offers a path to not only mitigate these past wrongs but also ensure they don’t recur.
By regularly releasing detailed reports on how funds are spent, how environmental standards are maintained, and how local communities are engaged, oil companies can provide a clear and quantifiable picture of their operations. These reports serve multiple purposes: they act as a check on corporate activities, a tool for government agencies to assess compliance, and a way for the public to hold businesses accountable for their actions. For instance, the Host Community Development Trust, one of the key provisions of the PIA, mandates that companies contribute a percentage of their expenses to community development projects. Sustainability reports would be essential in showing how these funds are used—whether for infrastructure development, healthcare, education, or environmental restoration. They can also reveal how much of these funds are reaching the intended beneficiaries, especially marginalised groups like women and youth.
Nigeria’s oil-producing regions have long had a fraught relationship with the industry, marked by mistrust and conflict. Years of oil spills, gas flaring, and environmental degradation have left many communities sceptical of promises of reform. However, sustainability reporting can help bridge this gap.
When oil companies transparently report on their environmental and social initiatives, they are not just complying with regulations; they are actively rebuilding trust. By showing, for instance, that they are investing in local communities, protecting natural resources, and creating jobs, companies can foster a sense of ownership and partnership with the people who live in these regions. This is particularly important in the Niger Delta, where the consequences of oil extraction have been most visible. Sustainability reports, when done correctly, can provide detailed accounts of how companies are working to restore damaged ecosystems, compensate affected communities, and prevent future harm.
The benefits of sustainability reporting extend beyond local communities and government oversight. It is also a critical factor for attracting investors, especially in an era where ESG criteria are becoming central to investment decisions. Global investors are increasingly looking for opportunities that align with their sustainability goals, and Nigeria’s oil and gas sector can position itself as a responsible player by embracing transparency through sustainability reporting. Sustainability reports allow companies to track their progress over time, showing stakeholders—whether they are government regulators, investors, or local communities—that they are steadily moving towards full compliance. These reports provide a roadmap for continuous improvement, identifying gaps in performance and areas where additional resources or efforts are needed.
As Nigeria’s oil and gas sector navigates the shift brought on by the PIA, sustainability reporting will be indispensable in ensuring that the act’s ambitious goals are met. It is through transparent and consistent reporting that companies can demonstrate their commitment to accountability, attract investors, and foster trust with local communities. As Meka Olowola highlighted, “sustainability reporting plays a critical role in communicating progress on the PIA”. For the PIA to succeed in transforming Nigeria’s oil and gas industry, businesses must embrace sustainability reporting as a tool for change. It is not just about compliance; it is about building a more responsible, transparent, and inclusive industry—one that benefits not only the companies involved but also the communities and the nation as a whole.