Environmental Levies and the Finance Act 2020: Aligning with Sustainability Goals for Nigerian SMEs.

Sustainable Development Goals l Umicore


Sustainability and environmental consciousness are no longer just buzzwords; they have become crucial considerations for businesses worldwide. The Finance Act 2020 in Nigeria recognizes this shift and introduces provisions related to environmental levies. In this article, we will explore the implications of the Finance Act 2020 on Nigerian Small and Medium-sized Enterprises (SMEs) and how aligning with sustainability goals can benefit both the environment and their businesses.

Understanding Environmental Levies:

The Finance Act 2020 introduces environmental levies as a means to generate revenue for environmental protection and conservation. These levies apply to specific products and services deemed to have environmental impacts.

Implications for SMEs:

  1. Increased Costs: SMEs involved in the production, import, or sale of products or services subject to environmental levies may face increased operational costs.
  2. Compliance Requirements: SMEs must navigate the compliance requirements related to the collection, remittance, and reporting of environmental levies.
  3. Sustainability Alignment: SMEs should consider how aligning with sustainability goals can not only mitigate the costs and challenges posed by environmental levies but also drive growth and competitiveness.

Aligning with Sustainability Goals:

  1. Green Product Innovation: SMEs can explore eco-friendly product innovations that reduce or eliminate the need for environmental levies. These products may appeal to environmentally conscious consumers.
  2. Sustainable Practices: Implementing sustainable practices within business operations, such as waste reduction, energy efficiency, and responsible sourcing, can lead to cost savings and environmental benefits.
  3. Eco-labeling and Certification: Seek eco-labeling and certification for products and services to demonstrate commitment to sustainability, potentially attracting a broader customer base.
  4. Environmental Management Systems (EMS): Establish EMS to track and improve environmental performance, aligning with global sustainability standards.
  5. Community Engagement: Engage with local communities on environmental initiatives to build trust and goodwill, which can positively impact brand reputation.
  6. Collaboration and Partnerships: Collaborate with organizations and government agencies focused on sustainability to access resources and support for eco-friendly initiatives.

Benefits of Sustainability Alignment:

  1. Cost Savings: Sustainable practices often lead to cost reductions through energy and resource efficiency, waste reduction, and improved supply chain management.
  2. Market Competitiveness: Demonstrating a commitment to sustainability can enhance market competitiveness by appealing to a growing base of eco-conscious consumers.
  3. Regulatory Compliance: Aligning with sustainability goals can help SMEs proactively meet regulatory requirements, reducing the risk of non-compliance and associated penalties.
  4. Risk Mitigation: Sustainable practices can mitigate business risks related to resource scarcity, supply chain disruptions, and reputational damage.


The Finance Act 2020 introduces environmental levies as part of Nigeria’s commitment to environmental protection and conservation. While these levies may pose challenges for SMEs, aligning with sustainability goals offers a pathway to not only address these challenges but also drive growth, reduce costs, enhance competitiveness, and contribute to a greener future. By adopting sustainable practices, innovating eco-friendly products, and engaging with their communities, Nigerian SMEs can align with both the Finance Act 2020 and global sustainability goals, paving the way for a more sustainable, profitable, and environmentally responsible future.

For professional advice on Accountancy, Transfer Pricing, Tax, Assurance, Outsourcing, online accounting support, Company Registration, and CAC matters, please contact Sunmola David & CO (Chartered Accountants & Tax Practitioners) at Lagos, Ogun state Nigeria offices, www.sunmoladavid.com. You can also reach us via WhatsApp at +2348038460036.