When we are asked to look at a sustainability report before it is published, we do not start with the sustainability report; we start with the impairment model. The reason is practical rather than clever.

The sustainability disclosures will contain a view about the future: about prices, demand, energy costs, the exchange rate, and how long the assets will keep earning. The impairment model contains a view about the same things, prepared by different people, months earlier, for a different purpose, and already audited.

If those two views agree, most of the report will hold together. If they do not, no amount of drafting will save it, and the work that is needed is not drafting work at all.

This is the part of the new standards that we think is least well understood in this market, and it is the part that will determine which Nigerian companies come through the first mandatory cycle without difficulty.

Why the impairment model, and not the report

Because impairment is where a view about the future stops being a view and becomes a number.

A sustainability report can describe a risk in general terms and remain internally coherent. An impairment model cannot. It requires management to state what it expects a barrel, a tonne, a subscriber or a dollar to be worth, over a defined period, and then to accept the consequence in the carrying value of the assets. The assumptions are forced into figures, reviewed, and audited.

So, the impairment model is the most reliable available record of what a company believes about its own future. Every other statement about the future in the strategy section, in the climate disclosures, in the transition plan can be read against it.

The test is simple. If the two documents describe the same future, the report is likely to hold together under examination. If they do not, the drafting is not the problem.

An illustration, using assumed figures rather than any company’s.

A group prepares its climate scenario analysis on an exchange rate of ₦1,500 to the dollar. Its impairment model, run three months earlier, used ₦1,800. The budget the board approved for the same period assumed ₦2,100.

Each is defensible in isolation. Together they mean the group carries its assets on one view of the naira, plans its spending on a second, and describes its resilience to investors on a third.

Which of the three flatters the company depends on whether it is a net earner or a net payer of dollars and that is the point. Nobody worked out the direction, because nobody put the three numbers side by side. The disclosures are not wrong. They are unexamined, and the difference between those two things is what an assurance provider is paid to find.

That is why the sequence of a review matters. Read the report first and it appears competent. Read the impairment model first and the report has a question to answer.

It also makes plain what we are really asking. The question is not whether the disclosures are well drafted. It is whether the company holds one view of its own future, or several.

Why this is a management question, not a drafting one

The standards require the two documents to hold together. A risk named in the sustainability section must be traceable into the metrics that measure it, the targets that commit to it, the assumptions that carry it, and the effects that appear in the accounts.

Stated that way it sounds like an instruction to whoever writes the report. In practice it is a question about how the organisation reaches its numbers.

The assumptions in question were not created for the report. They were set months earlier, inside models that drove real decisions which projects were approved, what the assets are carried at, how much was provided for, what the company told its lenders. The report does not invent them. It gathers them.

Which means that where the report shows those views disagreeing, the report has not created a problem. It had surfaced one that was already there.

Why competent organisations still fail this

We want to be clear about something, because the point is often made unfairly. Divergent assumptions are not evidence of a weak finance function. They arise in organisations where each function is doing its job carefully, and the standards anticipate as much as IFRS S1 asks for consistency between the disclosures and the financial statements precisely because it cannot be assumed.

Treasury takes a view suited to a hedging horizon. Finance takes a view suited to a five-year impairment forecast. The sustainability team applies a published transition pathway, which is what the standard contemplates. Each is defensible. Each is reviewed by people who understand the purpose it serves.

The gap opens because nothing in the reporting calendar ever required the views to be compared with one another. They are produced on separate cycles, for separate approvals, and reviewed by people with no reason to look sideways. In most organisations no individual has ever seen all four together.

The annual report is the first document that forces the comparison. It does so in public.

Three failures the Nigerian context makes likely

The naira is the clearest case, but the same divergence appears in three other places, and reading the standards against local conditions makes each of them predictable. Everyone is a comparison that nobody was required to make.

1. Intensity ratios that improve on their own: Emissions intensity is generally measured against revenue. Where naira revenue rises sharply without additional output, the ratio falls without anything having been done. Reported alongside absolute emissions, this is transparent. Reported alone, it credits the company with the work the currency did.
2. Generators that appear in the accounts and not in the narrative: For many companies here, diesel is among the larger cost lines and the largest single source of direct emissions. It is common to find it discussed carefully in financial review and absent from the climate section entirely. That is not a disclosure oversight; it means two parts of one organisation described the same asset differently.
3. Emissions reported on a different population from the accounts: For greenhouse gas purposes a group may consolidate on an equity share basis or on a control basis, and these produce genuinely different totals. All are legitimate. What is not sustainable is reporting one population in the emissions inventory and another in the financial statements without explaining how the two relate.

None of these is a failure of effort. Each is a failure of comparison, and each becomes far easier to see once the audited assumptions are treated as the baseline against which the report is read, which is why we start there.

2028 is not the date that matters

Which leaves less time than most boards assume. Mandatory adoption applies to accounting periods beginning on or after 1 January 2028 for public interest entities: a definition that, in Nigeria, reaches any company with turnover of ₦30,000,000,000 and above, whether it is listed or otherwise regulated. Several companies that have not considered this to be their concern are inside that perimeter.

But the Council requires readiness submissions before that period begins: three months before, for the first of three stages. A December year-end therefore files in the third quarter of 2027: an adoption resolution, a completed gap analysis, and a costed implementation plan the Council reviews.

Which means the assumption register, the reporting boundary and the data pipeline must exist during 2027, not in the drafting season that follows.

Assurance follows, under ISSA 5000, which takes effect on 15 December 2026, and escalates to reasonable assurance by the seventh year of reporting. Where assumptions have not been reconciled internally, each must be evidenced separately and every difference explained to somebody whose role is to ask. That work is chargeable, and the charge falls on the company.

What we would suggest a board asks

All of which is reduced to a short agenda. These are not technical questions, and none requires familiarity with the standards. Each has a factual answer, and the answers are usually available within a week.

• Do we maintain one register of the assumptions we use about the future, recording where each one is used?
• Did the climate scenario analysis use the same figures as the impairment model and the approved budget? Where they differ, has the reason been written down?
• Does our sustainability reporting cover the same entities as our consolidated accounts, and if not, which are excluded and on what basis?
• Every commitment made in last year’s report: where is each reported this year, including those not met?
• Who in this organisation can answer the first four questions without consulting four different teams?

The last question is the one that usually settles the matter. Where the answer is nobody, the work required is organisational rather than editorial, and it is better to begin early.

Our view

Nobody is asking Nigerian companies for certainty about the future. Certainty is not available, and a company that states plainly what it does not know is trusted more, not less.

What is being asked is narrower, and it is answerable. Most of the work is a single register of assumptions, maintained through the year rather than assembled at the end of it, recording what the company believes about prices, demand, inflation, the exchange rate and the life of its assets — and where each of those beliefs is applied.

Companies that build it during 2027 will find the first mandatory report largely a matter of assembly. Companies that do not will find it a matter of reconciliation, conducted under deadline, in front of an assurance provider.

Where a board wants to test this before the next reporting cycle, the exercise is short. Put the assumption sets from the scenario analysis, the impairment model and the approved budget on one page and see whether they agree.
We are happy to discuss what that exercise usually involves, and what to do where they do not.

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Regulatory statements above are taken from the Roadmap Report for the Adoption of IFRS Sustainability Disclosure Standards in Nigeria (Amended 2026) and Sustainability Reporting Guideline 1 (SRG 1) in Nigeria (2026), as published by the Financial Reporting Council of Nigeria and checked against those texts on 22 July 2026. The roadmap’s narrative and its assurance table do not agree on whether assurance is required from the third year of reporting; entities approaching that point should seek written clarification. Positions in this area change quickly.

Stransact is a part of RSM International. This article is general commentary and is not advice for any particular entity.