Sri Lanka is embarking on a transformative journey towards a sustainable, resilient economy, bolstered by a strategic partnership between key stakeholders. In pursuit of ambitious climate goals and the effective management of environmental, social, and governance (ESG) risks, the nation is setting the stage for a paradigm shift in sustainable finance mobilization. The roadmap for this transformation includes a Roadmap for Sustainable Finance in Sri Lanka, the Green Finance Taxonomy introduced in May 2022, and further emphasizes the development of local guidelines, operational tools, and the adoption of global standards for thematic bonds.
As Sri Lanka works diligently with the International Monetary Fund (IMF) and other stakeholders to restore macroeconomic and debt sustainability, the government’s focus remains on economic reforms. This pivotal moment also presents a unique opportunity to harness innovative sustainable finance mechanisms, particularly by mobilizing the private sector towards innovative financial instruments to finance the Nationally Determinant Contributions (NDC) and the Sustainable Development Goals (SDG).
Recognizing the private sector’s pivotal role in facilitating NDC and SDG investments, a targeted capacity-building workshop was conducted to equip key stakeholders with the knowledge and tools fundamental to mobilizing sustainable finance.
The Accelerating Sustainable Finance Through Private Sector Participation workshop, jointly organized by the Central Bank of Sri Lanka, the Sustainable Development Council, the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) and the Global Green Growth Institute (GGGI), builds on the momentum of previous sustainable finance knowledge sessions held in Sri Lanka. The training program, conducted in partnership with the Luxembourg Green Exchange (LGX) and LGX Academy, aimed to enhance capacity and understanding in several critical areas for financial institutions:
- Sustainable Bond Issuance: Participants gained insights into sustainable bond issuance, ESG financing products, compliance with international best practices, and mainstreaming ESG instruments and risk management.
- Diversification of Financial Products: The knowledge sharing on sustainable finance instruments like thematic bonds, allowing participants to explore this distinct market segment, diversify financial products, and attract a broader range of investors.
- Best Practices and Taxonomies: Attendees learnt best practices, green labeling, external reviews, and reporting guidelines, as well as the use of taxonomies in ESG products.
- Risk Management and Disclosures: A focus on ESG products, risk management, and disclosures, with practical examples and case studies to develop reporting, compliance, and ESG-related disclosure capacities.
The training program was designed to empower private sector stakeholders considering future thematic bond issuance and those seeking a deeper understanding of sustainable finance instruments, including ESG lending. The highly interactive training sessions featured group work, presentations, and ESG application considerations. Participants are equipped to apply their newfound knowledge practically within their respective organizations, driving forward Sri Lanka’s sustainable finance agenda. The program also served as a unique platform that generated crucial data for regulators through engagement with the key actors of the financial ecosystem in Sri Lanka on the topics of Sustainable Finance.
Source: Economic and Social Comission for Asia and the Pacific