Putting ESG at the heart of sustainable investment

Kirsty Scott

4 August 2023

This is an article from the CSC Development Theme: Promoting innovation and entrepreneurship

The concept of environment, social, and governance (ESG) is rooted in the overall conceptual framework of sustainability. My Commonwealth Scholarship really paved the way for me to build an extensive career within the industry.

Abbas Agbaje

Environmental, social and governance (ESG) is a set of principles used to assess a company’s environmental and social impact and provides an important framework to support companies in making ethical and sustainable decisions while promoting a long-term, sustainable approach to conducting business.

Commonwealth Alumnus Abbas Agbaje is Managing Consultant at ImpactCrest Consulting, a firm he established in 2023 to provide ESG advisory services and impact assessments to public and private sector clients in Africa. Through his work at ImpactCrest, he is leading the development of an Environmental and Social Management System (ESMS) for a financial service group with subsidiaries in asset management, securities, investment banking and trustee services.

Alongside this work, Abbas is an Environmental and Social Safeguards Consultant with the African Development Bank, supporting its Safeguards and Compliance Team to integrate ESG considerations in sovereign and non-sovereign operations across Nigeria.

“I consider environment, social, and governance practice as a living proof of my purpose in life.”

Strengthening the sustainability knowledge base

Prior to his studies, Abbas worked in environmental consulting, where he focused on leading ecological aspects of environmental impact assessments. He attributes his Master’s in Sustainable Environmental Management at the University of Greenwich funded by the CSC in enabling him to transition into ESG roles and grow professionally.

“My programme at the University of Greenwich really widened the scope and depth of my knowledge around sustainability, climate change, biodiversity, ecology, geographical information systems, remote sensing, even around environmental legislation.”

Through his Master’s study, Abbas broadened his knowledge on sustainable development with a particular focus on three important pillars of the sustainability agenda: environment, social and governance.

“The idea around environment, social and governance is that businesses need to operate in a sustainable way, in a manner that does not degrade the environment, pollute the environment. In a way that respects the rights and privileges of people. In a way that respects the culture and the individual uniqueness of people. In a way that embeds gender considerations in how projects are delivered.”

Following his return home to Nigeria in 2016, Abbas pursued ESG roles to consolidate his learning and expertise as an ESG practitioner, and strengthen his career profile. He acknowledges that adapting his mindset and developing confidence in his skills and knowledge of ESG was a significant step in succeeding in this career transition.

“My mantra changed from worrying about years of work experience to focusing on the experience in the years. The quality of my competence is no longer determined by how long I’ve worked in the field, but how well I have immersed myself to take the best out of the experiences and the exposures that I have.”

Becoming an ESG practitioner

As an ESG practitioner, Abbas supports businesses in making decisions that achieve a positive impact and are not detrimental to the environment, people, or communities. He also works with businesses to develop and abide by good governance practices which affect employees as well as end users and stakeholders.

One of his first roles was with EBS Advisory (now EY-Parthenon), working with clients in the financial industry including banks and private equity firms, advising on ESG practice and impact modelling. While at EBS, Abbas oversaw the implementation of projects across West Africa and was responsible for conducting due diligence and impact assessments to ensure ethical and sustainable practices.

Connecting rural communities

Following his work with EBS Advisory, Abbas was keen to take on a new challenge that would enhance his skills and knowledge.

He joined InfraCredit in November 2020 as an ESG and Development Impact Manager where he had a unique opportunity to work on pioneering activities on sustainable finance for infrastructure projects within the Nigerian financial market.

Developing the country’s first certified green infrastructure bonds to support a solar mini-grid project for rural communities in Nigeria is one of the activities that Abbas is particularly proud to have delivered.

Despite the low set-up costs, renewable energy companies are often reluctant to invest in developing electricity grid access for people in rural communities. This can be because low income households and small businesses do not have the funds to pay for electricity and may not have the utilities which require electricity. In these communities, there are often limited commercial activities which require sustained electricity access to conduct business and many people are either unwilling or do not see the need to invest in electrical devices. Given these conditions, many energy companies are not prepared to provide electricity access in rural areas because of the fear that they will not achieve a return on investment or long-term sustainability.

Abbas standing beside a conference banner at the Nigerian Investors Roundtable Discussion

To address energy poverty in rural communities, InfraCredit partnered with the Foreign and Commonwealth Development Office (FCDO) to create the Climate Finance Blended Facility (CFBF), a financial vehicle that provides concessional financing to support pilot projects. As an anchor funder, the CFBF provides a 50% guaranteed investment in project costs, while the remaining costs are gathered from debt capital markets. Through this innovative model, the cost of capital for unlocking investment in the rural energy project was significantly reduced and, with CFBF as an anchor funder, the risk of non-repayment on the investment and subsequent user costs was alleviated, should the financing costs not be met by the community end users.

The project is expected to provide increased energy access to more than 7,000 households and businesses in rural Nigeria and contribute to the decarbonisation of the energy sector.

Abbas was responsible for embedding ESG considerations into the project and ensuring that climate and development impacts were incorporated in the assessment of the project. This included scrutinising all aspects of the supply chain, including the solar PV materials, to make sure they complied with ESG principles. Despite the lack of guidance on how to assess a company’s ESG compliance for solar PV supply chain at the time, Abbas was proactive in creating a robust due diligence protocol.

“I had to do a lot of work on my own to come up with the due diligence protocol for assessing the supply chain for this solar PV material, so that these developers can then prove beyond doubt that they’ve screened their supply chain and they’ve ensured that none of the materials that they are going to use for the development of any project is linked to any form of modern slavery forced labour, child labour, or human rights abuse.”

As part of the project, Abbas also led the development of green financing documents, including a green bond framework, green asset register, and green bond committee charter, as well as the certification process with the external verifier and the Climate Bonds Initiative.

Owing to the success of the project, it was awarded the 2022 EMEA Finance Achievement Awards for Best Sustainability Bond. There are now several other pipeline projects benefitting from the CFBF which will unlock rural economies by providing electricity access in unserved and underserved communities.

“I’m really proud of the achievement, and I’m especially proud that we’re making the lives of people better.”

The importance of ESG

While at InfraCredit, Abbas also expanded his work in green financing and developed InfraCredit’s Green Finance Framework to align with the African Development Bank’s commitments on low-carbon development and mitigation. The framework resulted in InfraCredit securing a $15 million loan from the AfDB to invest in green and climate-smart infrastructure financing in Nigeria. This funding will provide additional financing for scaling infrastructure access that will impact the lives of millions of people in Nigeria across sectors such as power and energy, transport and logistics, telecommunications, and housing.

In developing climate or green financing and bonds, Abbas stresses the importance of ensuring businesses understand the requirements of ESG and green financing, and the extent to which they must assess all aspects of their work and delivery partners.

“Re-labelling an existing fund as ESG impact does not just suddenly turn that fund to be ESG impact fund. You need to build appropriate mechanism that allows you to embed ESG and impact considerations in how you make your investment research, in how you make your investment analysis, in how you do your due diligence on the instrument.”

His experience at InfraCredit has been instrumental in establishing ImpactCrest Consulting and advising private clients on how to transition to green financing and support climate-smart businesses. Through my role as the Adjunct Technical Anchor of the Nigeria Economic Summit Group (NESG) Sustainability Policy Commission, Abbas had the opportunity to support private sector contribution in embedding a sustainability lens in policymaking in Nigeria, especially in relation to Climate Change and Green Economy, Circular Economy and Blue Economy.

Looking back, thinking ahead

Reflecting on his personal and professional experiences, Abbas says he is keen to support others in pursuing postgraduate and scholarship opportunities. He is also looking forward to continuing to provide mentoring and coaching that inspires upcoming ESG professionals. To date, he has provided training to over 2,000 young people on Environmental Responsibility through the flagship programme, IBILE Youth Academy, championed by the Lagos State Ministry of Youth and Social Development, Lagos State, Nigeria.

Since completing his Master’s in 2016, his career has gone from strength to strength, and he is excited and proud of the impact he has achieved through his work.

“I look back and I say, wow, Commonwealth Scholarship has really helped. Lifted my spirit, built my confidence, equipped me with some lifelong skills that I think is adding a lot of value to the lives of people, whether personally or even in my career path.”

Abbas Agbaje is 2015 Commonwealth Shared Scholar from Nigeria. He completed a MSc Sustainable Environmental Management at the Natural Resources Institute, University of Greenwich.