The corporate governance landscape is continually evolving, driven by the dynamic nature of regulatory frameworks, which are designed to address shifting business needs and circumstances. Similar to previous years, the 2025 corporate governance outlook will be influenced by several key trends, challenges, and regulatory changes, in response to the evolving expectations of stakeholders, including shareholders, employees, customers, and regulators.

Outlined below are some anticipated focal points for the Nigerian corporate governance landscape in 2025:

A. Increased Focus on Environmental, Social, Governance (“ESG”)

i. Sustainability Integration: Following Nigeria’s adoption of the International Financial Reporting Standards SI and S2 sustainability disclosure standards in 2024, ESG disclosure and reporting requirements will continue to gain momentum as corporate entities strive to implement strategies that drive sustainability in order to attract new investment opportunities, and boost investor confidence in compliance and available data.

In 2025, investors, regulators, and consumers will hold companies accountable for sustainable business practices, with increasing demands for companies to show how their operations contribute to positive social and environmental outcomes. In addition, it is expected that there will be notable sustainability disclosure frameworks that will champion this trend such as the Nigerian Stock Exchange’s Sustainability Disclosure Guidelines, the Nigerian Sustainable Banking Principles, the International Financial Reporting Standards, Rule 7 of the Financial Reporting Council of Nigeria’s Rules amongst others. To address ESG-related obligations, corporate entities will be required to implement ESG initiatives and to develop a strategy for effectively reporting ESG related matters.

ii. Regulatory Pressure: Government agencies and International bodies will be inclined to implement stringent ESG-related regulations to promote transparency and accountability in sustainability reporting. One of such ESG-related regulations is the Lagos State Government’s recent ban on single use plastics. This ban is set to change business practices and perhaps business continuity in the affected sector.

iii. Social Governance: Beyond environmental issues, social factors like diversity, equity, inclusion, employee well-being, and community impact will remain a key focus for corporate entities. In practice, corporate boards should consider insecurity, inflation, constant disruptions in electricity supply as key boardroom discussions. These matters should form part of the agenda items at board meetings due to their likelihood to adversely affect an organisation’s business operations.

B. Board Diversity and Inclusion

It is envisaged that there will be an increasing emphasis on diversity in the boardroom, not just in terms of gender but also on the basis of race, ethnicity, and professional expertise in specialised fields such as data protection, artificial intelligence (“AI”) and sustainability amongst others. Due to this increase, more boards may be inclined to appoint directors whose skills are best suited to the demands of the digital economy.

Beyond new appointments, existing directors will be required to commit to continuous development on industry trends and technological advancements to ensure that their decisions are informed, data-driven and capable of providing required strategic direction to organisations. Diverse boards are seen as better equipped to manage risks, enhance decision-making, and reflect the values of a global, multi-dimensional market. The demand for diversity on corporate boards will require corporate entities to balance this metric with a culture of providing access to equal opportunities for employees irrespective of gender, race and ethnicity.

C. Corporate Activism

i. Increased Activism: Shareholders will continue to play an active role in shaping policies and practices in corporate entities through shareholder activism. Shareholders will be actively involved in shaping an organisation’s culture particularly on matters related to sustainability, diversity in board composition and other ancillary matters.

ii. Collaborative Activism: Companies will be required to prioritise stakeholder engagement in response to the increasing demand for transparency and accountability in business operations. We reasonably expect to see a trend of collaboration between institutional investors and smaller activist groups to demand for sustainable environmental, governance and accounting practices from corporate entities.

D. Technology and Digital Transformation

i. Cybersecurity and Data Privacy: As digital transformation accelerates, the need for robust cybersecurity governance will increase. Companies will be required to have clear frameworks for data privacy and data protection to foster compliance with regulations like the Nigerian Data Protection Act, 2023, Cybercrimes (Prohibition and Prevention) Act, 2015 and other global standards and best practices. In addition, board of directors will be required to demand adequate reporting from management on processes adopted for the detection of data breaches and ensure data protection compliance. In addition, the increasing reliance on technology to streamline business operations will require corporate entities to develop a robust risk management framework to monitor cybersecurity risks and mitigate the possibility of undue exposure to cybercrime.¹ In the performance of its risk management function, the board of directors should strive to understand a company's risk profile, including how its short, medium, and long-term risks are managed.² Board of directors will focus more on risk resilience, both in terms of financial stability and operational continuity.

ii. AI and Automation: The rise of AI and automation will prompt companies to re-examine their ethical frameworks particularly their codes of conduct and related policies to ensure that it addresses the ethical implications arising from the use of AI by staff members and associated third parties. It would become pertinent for the board of directors to ensure that employees, senior management and board of directors are trained on how to detect risk and monitor compliance trends and regulations developed on the use of AI to position corporate entities to navigate technological trends.

iii. Blockchain and Transparency: Companies may explore blockchain technology to enhance governance transparency, particularly in tracking shareholder voting, executive compensation, and corporate records.

iv. Digital Tools for Governance: The adoption of advanced tools for board and shareholder engagement, decision-making, and risk assessment will continue to rise. These digital platforms can enable better real-time communication and oversight, improving the overall governance structure.

E. Regulatory Evolution

As corporate governance practices are increasingly shaped by international standards and local laws and regulations, businesses will need to navigate different regulatory frameworks in order to remain compliant. For instance, emerging rules from the Corporate Affairs Commission, The Financial Reporting Council of Nigeria, the Nigerian Stock Exchange , or other regulatory bodies might create a need for implementing corporate governance practices. Case in point is the introduction of the Guidelines on Corporate Governance for the communications sector introduced by the Nigerian Communications Commission in 2023. These Guidelines have created a standardized process for monitoring transparency and stakeholder engagement within the telecommunications sector. The board of directors will play a critical role in ensuring that management has effective processes in place to monitor compliance with both local and global standards of corporate governance and update the board of directors with information on this, as the need arises.

F. Stakeholder Capitalism

In 2025, it is expected that there will be a shift from the traditional focus on shareholder value maximization to broader stakeholder capitalism. Companies will be expected to consider the interests of employees, customers, suppliers, and the communities in which they operate, rather than concentration on just the bottom line, which has traditionally been the case.

G. Corporate Culture and Employee Engagement

Corporate culture will be closely linked to governance frameworks. Companies will prioritize fostering a strong organizational culture that aligns with ethical values, innovation, and employee engagement. The board of directors will be chiefly responsible for overseeing the implementation of a positive corporate culture to ensure that acceptable conduct is maintained and promoted across various levels within an organisation.

H. Risk Management and Crisis Preparedness

In line with ESG considerations, companies will increasingly be required to assess and disclose their exposure to climate-related risks, and to develop internal policies that mitigate the risk that climate changes pose to business operations.³ Corporate entities with business operations in flood prone regions may be required to devise schemes to mitigate the impact of change in adverse climate conditions on their operations.

I. Performance Evaluation

The demand for board evaluations will increase as corporate entities strive to demonstrate their ability to adapt to rapid change in the business environment and technological disruptions. The performance of directors will be assessed on their basis to devote sufficient time and attention to board responsibilities.⁴

Conclusion

Corporate governance in 2025 will be characterized by greater emphasis on transparency, accountability, and sustainability. Companies will need to balance profit with broader social responsibilities, adapting to new regulatory frameworks and responding to a more activist and informed investor base. Governance structures will need to evolve to integrate technological advancements, address new risks, and prioritize the well-being of all stakeholders.

At Adcax Corporate Services Limited, we pride ourselves in supporting our clients' business in navigating the intricate landscape of corporate governance. From navigating regulations to establishing sound structures ensuring seamless compliance, our expert team is here to guide you every step of the way. Let us ensure your business operates with transparency, accountability, and long-term success in mind. Reach out to us today via email at adcaxnominees.nigeria@dentons.com to learn how we can assist with your corporate governance compliance issue.

1. Thoughts for Boards: Key Issues in Corporate Governance for 2025, Martin Lipton, Wachtell, Lipton, Rosen & Katz, 31^st January 2025.
2. Risk management and the Board of Directors, Wachtell, Lipton, Rosen & Katz, September 2023.
3. Trends shaping Corporate Governance in 2025, Ray Garcia, 6 January 2025
4. Top 10 Governance and Leadership Trends for 2025, Michael Peregrine, 30 December 2024.