Report: Nigeria risks losing $34.3bn annual export revenue over carbon emission

A new study by Standard Chartered, a financial services company, says Nigeria risks losing $34.3 billion in annual export revenue over carbon emissions.

The study, titled ‘Carbon Dated’, assesses the risks and opportunities for suppliers in emerging and fast-growing markets as large corporates transition to net zero.

It said the nation’s earnings may be affected if it does not reduce carbon emissions in line with the net-zero plans of the biggest multinational companies (MNCs) operating within its territory.

In recent times, there has been rising global demand for reduction of carbon emissions in line with climate change actions.

The study surveyed 400 sustainability and supply chain experts at MNCs across the globe.

It said 78 percent of MNCs will remove suppliers that endanger their carbon transition plan by 2025.

The study noted that Nigeria is one of the countries at risk of reduced annual export earnings if it does not cut carbon and transition with its MNC partners.

Top countries on the list include China, with the biggest potential loss of $512.3bn; India ($273.7bn) and Hong Kong ($205.5bn).

Other countries with higher potential loss than Nigeria are Singapore ($146.6bn); South Korea ($142.5bn); The UAE ($119.6bn); and Malaysia ($65.3bn).

On the list, Nigeria is followed by South Africa ($33.7bn); Indonesia ($25.6bn); Bangladesh ($18.7bn); and Kenya ($3.9bn).

The study said MNCs expect to exclude 35 per cent of their current suppliers as they transition away from carbon.

It said the current approach taken by MNCs could create a $1.6 trillion opportunity for the net-zero club, which are the businesses reducing emissions in line with MNC net-zero plans.

According to the study, MNCs are exploring other ways to help their suppliers’ transition to net zero.

It said some 47 per cent are offering preferred supplier status – a sales advantage – to sustainable suppliers, and 30 per cent are offering preferential pricing.

The study added that some MNCs are going further, offering grants or loans to their suppliers to invest in reducing emissions (18 per cent) or data collection (13 per cent).

In his remarks, Bill Winters, group chief executive of Standard Chartered, said MNCs need to grant incentives to their suppliers as they cannot do it alone.

Winters added that government and financial sector need to improve infrastructure to enhance the transition.

“It’s no surprise that as multinational companies transition to net zero, they will have to ask to their suppliers to evidence their own transitions. However, suppliers – especially those in emerging and fast-growing markets – cannot go it alone,” he said.

“MNCs need to incentivise their suppliers to help them kick start their transition journey, but governments and the financial sector have a role to play too by creating the right infrastructure and offering the necessary funding.

“Decarbonisation is vital for the survival of the planet, but a vibrant trade ecosystem is essential for maintaining an interconnected global economy. We must work together to ensure the supply chain is decarbonised in a way that delivers shared prosperity across the world.”