CLIMATE CHANGE EFFECTS IN THE NIGERIAN BANKING INDUSTRY AND THE IMPERATIVENESS OF SOCIO-LEGAL GUARDRAILS

Abstract

Climate change impacts have significant risks to the global financial system, yet the linkages of climate vulnerability and banking stability remain underexplored in the developing economies. This article examines the effects of climate change on the Nigerian banking industry, with particular focus on legal frameworks, regulatory responses, and emerging liabilities. Nigeria, as Africa’s largest economy and the country which is highly susceptible to climate‑induced hazards like flooding, desertification, and oil‑related environmental degradation, posts need for compelling case study of climate change impact in the banking industry. The article synthesises legal authorities, including the Climate Change Act 2021, the Central Bank of Nigeria’s Sustainable Banking Guidelines, and landmark judicial decisions to assess how climate risks translate into credit, market, operational, and liability risks for banks. It further explores the growing relevance of transnational climate litigation and its potential to extend liability to financial institutions. The analysis reveals significant gaps in prudential regulation, enforcement, and judicial preparedness, which impede the banking sector’s capacity to manage climate‑related financial risks. The article concludes with actionable recommendations for strengthening legal and regulatory frameworks, mandating climate‑related financial disclosures, and embedding climate risk into the core of banking supervision. By situating Nigeria within the global discourse on sustainable finance, this study contributes to the evolving scholarship on climate law, banking regulation, and sustainable development in the emerging markets.