This study investigates the challenges of reporting environmental assets and liabilities among Nigerian listed firms using data from the Nigerian Exchange (NGX) and the National Bureau of Statistics (NBS). The study aimed at evaluating how the level and extent of environmental assets and liabilities disclosures affect financial reporting quality, firm performance, cost of capital, and regulatory compliance. The population comprised 125 listed firms, out of which 10 were purposively selected for consistently publishing environmental data in their annual or sustainability reports. The extent of environmental assets/liabilities disclosure (EADiscl) was measured through content analysis, assigning scores between 0 (no disclosure) and 1 (comprehensive quantitative disclosure). Financial reporting quality was assessed using the modified Jones model, firm performance was proxied by return on assets (ROA), and cost of capital was computed as the ratio of interest expense to total assets. Results from multiple regression analyses revealed that environmental disclosure significantly improved financial reporting quality (R² = 0.48, p < 0.01) and firm performance (R² = 0.59, p < 0.01). Recognition of environmental liabilities had a strong positive influence on earnings per share (R² = 0.71, p < 0.01), while disclosure reduced cost of capital (R² = 0.42, p < 0.01). Furthermore, regulatory enforcement significantly enhanced environmental disclosure practices (R² = 0.63, p < 0.01). The study concluded that transparent environmental accounting strengthens financial credibility and corporate sustainability in Nigeria, while institutional weakness critically undermined disclosure quality; hence stricter enforcement and standardised reporting frameworks is highly recommended.