Climate risk is increasingly material for Nigerian institutions — both as a physical exposure to coastal erosion, flooding, and desertification, and as a transition exposure to the global shift away from fossil fuels.
Three risk channels
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Physical — direct damage from extreme weather, sea-level rise, and changing temperature/precipitation patterns. Concentrated in coastal cities, agricultural belts, and exposed power infrastructure.
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Transition — the financial consequences of policy, technology, and market shifts as the economy decarbonises. Most acute for institutions with concentrated exposure to oil-and-gas, downstream logistics, and high-emission manufacturing.
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Liability — claims arising from failure to mitigate or to disclose climate-related risks. Still emerging in Nigeria but the global trend is clear.
What the Board should ask
- Have we stress-tested our material exposures against at least two climate scenarios — orderly transition and disorderly transition?
- Do our lending and underwriting policies reflect climate risk explicitly, or implicitly?
- Are we disclosing material climate exposures in our annual reporting?
CRMI position
The Institute's working group recommends every Nigerian financial institution adopt the TCFD reporting framework at minimum within 24 months, and that CRM training programmes embed climate risk as a standalone module — work that is already in progress for the 2027 curriculum revision.
By CRMI Climate Risk Working Group. The views expressed are the author's own and do not necessarily reflect the official position of the CRMI Governing Council.
