ECONOMYNEXT – The Sustainable Finance Roadmap 2.0 revealed by Sri Lanka’s central financial institution, with the Worldwide Finance Cooperation and the European Union, discovered that monetary establishments’ contribution to the nation’s sustainability targets stays small.
“There’s, due to this fact, an pressing have to assist the monetary ecosystem to raised align its funding with not solely environmental challenges however social challenges confronted by Sri Lanka and to scale up its contribution to the sustainable growth aims of the nation,” the report stated.
Monetary establishments should assist deal with Sri Lanka’s environmental and social challenges by tailored monetary merchandise, sufficient accounting of social and environmental dangers in funding selections and improved market transparency and confidence, it stated.
They have to foster inclusiveness by assist to MSMEs and weak teams (corresponding to youth, aged, ladies).
“By channelling assets to any of those areas, the monetary sector will immediately contribute to deal with a number of the most urgent social and environmental challenges confronted by Sri Lanka.
“These new or improved funding areas additionally present additional diversification alternatives to traders, nationwide or worldwide, desperate to assist tasks pushed by social or environmental impression.”
Sustainable finance devices embrace:
i) Sustainable loans (inexperienced loans), deposits and leasing
ii) Labelled bonds (Inexperienced bonds, social bonds, and sustainable bonds represent the three principal households of labelled bonds, additionally sometimes called sustainable bonds.
iii) Debt-for-nature swaps
iv) De-risking devices
v) Sustainable insurance coverage
The Roadmap focuses on the actions which might be below the mandate of the important thing monetary sector regulators, CBSL stated, acknowledging that scaling the contribution of the monetary sector to the nation’s sustainable growth requires a broad multi-stakeholder and multi-sectoral strategy.
Sri Lanka is extremely weak to local weather change and faces a number of different environmental and social challenges, the Roadmap stated, including that “Addressing these challenges includes appreciable investments, which requires a scaling up of the contribution of the industrial monetary sector in addition to demand-side measures.
The primary Roadmap in 2019 sought to deal with the necessity for incorporating environmental sustainability into the monetary system to mitigate the opposed impacts of local weather change by selling coverage cohesiveness throughout the monetary sector regulators.
After this, initiatives corresponding to Sri Lanka Inexperienced Finance Taxonomy and the Instructions/Pointers for banking and NBFI sectors, which lined inexperienced financing actions, have been issued by CBSL.
Addressing local weather associated dangers would assist obtain the financial authority’s twin objectives of worth stability and monetary system stability, CBSL stated. (Colombo/May5/2025)
