Sustainability in Business: Environmental Levies Introduced by the Finance Act 2020.

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Sustainability has become a central concern in today’s global business landscape. Companies worldwide are recognizing the importance of adopting environmentally responsible practices to minimize their ecological footprint. Nigeria, in alignment with global trends, has taken steps to incentivize sustainability through the Finance Act 2020, which introduced environmental levies aimed at promoting environmentally friendly business practices. In this article, we will explore the environmental levies introduced by the Finance Act 2020 and their implications for businesses committed to sustainability.

Understanding Environmental Levies:

Environmental levies often referred to as “green taxes” or “eco-taxes,” are fiscal measures introduced by governments to influence business and consumer behavior toward more sustainable and environmentally responsible practices. These levies are designed to discourage harmful activities, reduce pollution and encourage the conservation of natural resources.

Key Environmental Levies Introduced by the Finance Act 2020:

  1. Plastic Bags Levy: The Finance Act 2020 imposes a levy on plastic bags with a thickness of less than 0.035 millimeters. This levy is aimed at reducing the use of single-use plastic bags, which have a significant adverse impact on the environment.
  2. Air Pollution Levy: An air pollution levy is introduced on specified goods that are likely to cause air pollution. This levy is designed to encourage businesses to adopt cleaner production processes and reduce emissions.
  3. Automobile Levy: The act imposes an automobile levy on vehicles with engine capacities exceeding 3.0 liters for petrol-powered engines and 2.5 liters for diesel-powered engines. This levy encourages the use of more fuel-efficient and environmentally friendly vehicles.

Implications for Sustainable Businesses:

  1. Cost Considerations: Sustainable businesses that have already adopted environmentally responsible practices may have a competitive advantage, as they are less likely to be affected by these levies.
  2. Innovation and Efficiency: The introduction of environmental levies encourages businesses to innovate and adopt more sustainable and energy-efficient processes, which can lead to long-term cost savings.
  3. Consumer Awareness: Businesses that proactively promote their sustainability efforts and eco-friendly products may attract environmentally conscious consumers, potentially expanding their market share.
  4. Compliance and Reporting: Sustainable businesses should ensure accurate reporting and compliance with the new levies to avoid penalties and legal issues.
  5. Investment in Green Technologies: Companies may consider investing in green technologies and practices to reduce their environmental impact and minimize their exposure to environmental levies.

Benefits of Embracing Sustainability:

  1. Positive Brand Image: Embracing sustainability enhances a company’s brand image, fostering trust and loyalty among customers and stakeholders.
  2. Cost Savings: Sustainable practices often lead to reduced resource consumption and lower operating costs, contributing to enhanced profitability.
  3. Competitive Advantage: Sustainability can provide a competitive edge in the marketplace, attracting environmentally conscious consumers and investors.
  4. Environmental Impact: Sustainable businesses play a vital role in reducing the environmental impact of industrial activities, contributing to a healthier planet.


The Finance Act 2020’s introduction of environmental levies underscores the Nigerian government’s commitment to promoting sustainability and environmentally responsible practices in the business community. Businesses that embrace sustainability not only contribute to a healthier environment but also stand to benefit from enhanced brand image, cost savings and a competitive edge.

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