May 26, 2024

 

Oredola Adeola

 

The Nigerian National Petroleum Company (NNPC) Ltd. has signed up as a participant of the United Nations Global Compact, a voluntary UN agreement, thereby subjecting itself to global scrutiny for close monitoring of its climate commitments and disclosure of responsible business practices on Sustainable Development Goals (SDG) every December 31st.

 

 

Mr. Mele Kyari, Group Chief Executive of NNPC Ltd., on Thursday, signed the Letter of Commitment, signifying NNPC Ltd’s participation in the UN Global Compact during a short ceremony on the sidelines of President Bola Tinubu’s session during the Global Africa Business Initiative (GABI) at the ongoing United Nations General Assembly (UNGA) in New York.

 


EnergyDay gathered that the UN Global Compact is a voluntary agreement designed to encourage companies worldwide to develop, implement, and disclose responsible and sustainable corporate policies and practices. It is the world’s largest corporate sustainability and corporate social responsibility initiative, signed by over 13,000 corporate participants and other stakeholders in over 170 countries.

The agreement is non-binding and encourages multinational firms to adopt the UN’s humanitarian framework and make regular public filings concerning their environmental, social, and governance practices.

EnergyDay’s intelligence further showed by its decision to sign up for the Global Compact, the NNPCL has committed itself to the annual Communication on Progress (COP) and will be aligning its operations to ten principles in the areas of human rights, labour, environment, and anti-corruption.

This commitment is part of the NNPC’s efforts to make itself IPO-ready and raise funding independently.

The NNPC’s commitment to the Global Compact and its principles is a written commitment to employ them as an integral part of its organizational culture, thereby putting it in a good position to raise equity capital from an initial public offering (IPO). 

 

 

GCEO in his remark shortly after signing the agreement, said that as a dynamic global energy company with businesses and operations across the entire spectrum of the energy value chain, NNPC Ltd.’s participation in the UN Global Compact is a further testimony to Nigeria’s commitment to work with global partners towards attaining a just Energy Transition.

 

 

The GCEO added that with this development, NNPC Ltd. supports the Ten Principles of the United Nations Global Compact on human rights, labour, environment, and anti-corruption.

 

 

“We are committed to making the UN Global Compact and its principles part of our strategy, culture, and day-to-day operations of our Company, and to engage in collaborative projects which advance the broader development of goals of the United Nations, particularly the Sustainable Development Goals (SDGs),” Kyari added.

 

 

Ms. Naomi Nwokolo, Executive Director, UN Global Compact Network Nigeria, earlier in her remarks shortly after signing on behalf of the UN Global Compact, described NNPC Ltd.’s moves to become a participant of the UN Global Compact as a pivotal step in fostering a culture of ethical business conduct, environmental stewardship, and social responsibility.

 

 

 

The statement from NNPC revealed that with Nigeria being one of the largest producers of crude oil in Africa, a transition from an energy system driven by fossil fuels to one based on renewable energy will have a far-reaching positive impact.

 

 

It said that the transition will serve as a catalyst for sustainability in-country, on the continent, and in the world at large.

 

 

THIS IS NOT THE FIRST TIME

 

While this is not the first time that Nigeria will be committing to sustainable development goals and energy transition, EnergyDay’s check showed that the country is still struggling with its commitment to reducing greenhouse gas (GHG) emissions by at least 47% by 2030.

 

 

Already Nigeria is a signatory to the Paris Agreement, with a commitment to reducing fugitive emissions from oil and gas production by 60% by 2031 is one of the country’s nationally determined contributions (NDCs).

 

 

Further checks showed that while Nigeria’s climate change goals will greatly impact production practices, stakeholders have deplored the country’s lack of sustainable transition pathways and structure in place to closely monitor its climate commitments.

 

 

COUNTRIES SIGNED TO UN GLOBAL COMPACT

 

 

Further checks by EnergyDay showed that the cumulative net number of businesses listed on the global compact was 10,475 and 3,413 non-business participants bring its total participant base to participant base to 13,888, as of 2019.

 

 

A total of 1,442 business participants were delisted, with 67% of them being expelled due to a failure to communicate progress.

 

 

According to the Business and Human Rights Resource Centre, a coalition of investors with $1,800bn (£1,150bn, €1,322bn) under management, scores of listed companies are failing to honour their commitments to be more transparent about their activities.

 

 

Some of the delisted companies are Merck in South Africa and Tata in India Visteon, Global Alumina, Lionbridge Technologies, Spice, Altana, and Aviva Investors, the majority of which are based in the United Kingdom, France, Germany, Brazil, China, India, Latin America, Africa and the Middle East.

 

 

Mexico has the greatest number of delisted companies, followed by the Dominican Republic and Columbia. Many countries, such as Japan (1 company) and Canada (2 companies) have very few companies delisted this round.

 

 

EXPERTS OPINION: THE IMPLICATION

 

The NNPC has been warned by experts against signing an agreement that it may not be able to fulfill.
According to them, failure to submit a Communication on Progress (COP) by December 31st of every year will lead to the NNPC being delisted from the UN Global Compact, with far-reaching consequences.
If the NNPC continues to fail to submit its COP, it will be delisted from the UN Global Compact for “failure to communicate” in January of the following calendar year.

Dr. Boniface Chizea, Chief Executive Officer, BIC Consultancy Services, said that Nigeria needs to do due diligence before making further commitments to transitioning to a low-carbon economy, supporting sustainable development, and reducing greenhouse gas emissions in line with global targets.

 

According to him, Nigeria has a negative image of not fulfilling commitments to signature on Sustainable Development Goals (SDG) and transitioning to a low-carbon economy.

 

He said, “The country is energy handicapped and has not made full use of its energy resources. Therefore, any attempt to make further commitments will amount to boxing Nigeria into a corner when it has antecedents of failure in previous commitments.

 

“With a large population and a high level of poverty, it is unrealistic to make promises that do not reflect the country’s circumstances and do not factor in the well-being of its citizens.

 

Dr. Chizea also warned that signing such documents in a hurry could damage Nigeria’s image further, and investors have a good structure for accessing every company’s risk.
He expressed concern that NASDAQ and other IPOs may not take Nigeria seriously if there are analyses of previous commitments. Therefore, Nigeria needs to be cautious and not make promises that it cannot keep.

 Dr. Chizea warned President Bola Tinubu to ensure that all his cabinet members and heads of agencies and departments do due diligence and factor in Nigeria’s circumstances and the well-being of its citizens before signing international documents to avoid further damage to the image of the nation.

 

“I hope this will not be a setback in our aggressive push for more fossil fuel to drive and reinvigorate our hailing economy?” Dr Ayodele Oni, Partner, Bloomfield Law Practice, while stating his reaction to the decision of NNPC to sign the UN agreement.

 

According to him, “Of course, NNPCL ‘s signing up is an opportunity to show the world Nigeria’s commitment to fighting environmental problems, bribery, corruption, international labour practices, etc.

 

He said, “The signing of NNPCL to the Compact is a good one, and it is proof of Nigeria’s commitment to environmental protection.

 

“Oil exploration in Nigeria has been plagued with environmental related issues such as oil spillages and environmental degradation as a result of non-regulation of decommissioning and abandonment which has led to violent protests, serious health and environmental pollution.

 

“The implication of NNPCL signing to this on exploration is that NNPCL as a corporate entity would invest in methods that will not deplete resources and degrade the environment during exploration.

 

“Further, NNPCL would invest in research and developmentally friendly products to ensure long-term benefits. This will ensure that the exploration of oil and gas is to be done in an environmentally friendly manner,” Oni said.