Sri Lanka has the potential to serve as a Sustainable Finance Hub for South Asia

Sri Lanka Banks’ Association’s Sustainable Banking Initiative and the International Network of Financial Centres for Sustainability (FC4S ) jointly hosted a webinar on 31st July 2020 on Sri Lanka’s potential to serve as a Sustainable Finance Hub for South Asia. The event featured a panel discussion with Dr. Nandalal Weerasinghe from Central Bank of Sri Lanka, Mr. Dimantha Seneviratne from Sri Lanka Banks’ Association, Mr. Nishantha Hewavithana from Colombo Stock Exchange and Mr. Manjula De Silva from the Ceylon Chamber of Commerce, who each shared insights on the actions taken and future outlook on sustainable finance in money market, capital market, insurance and business sectors.

The event was attended by representatives of the Government including the Sustainable Development Council and representatives from financial sector, business, academia, UN and other international organizations and Civil Society Organizations. Representatives from international organizations and financial institutions from Asia Pacific and Europe also connected to the webinar in addition to representatives from South Asia.

With Colombo International Financial Centre in the making, the discussions revolved around the importance of a regional approach to augment sustainable finance flows to the SAARC region. Mr. Nolan, Managing Director of FC4S identified some key issues that financial centres must plan for to attract and scale sustainable finance. He spoke to the importance of access to a pool of talent with sustainable finance experience as a key element of success for fledging financial centres. Mr. Nolan also identified support for innovation and new product development as areas that need to be strengthened as financial centres grow.

On an international scale, he also spoke about the complexity created by the different global policy and national regulatory frameworks currently in development as major issues that all financial centres must deal with as they grow from local to gobal players in the field of sustainable finance. Mr. Nolan also recommended a managed pathway, which defines strategy, products and services, while simultaneously carrying out scenario analysis and culture change programs as the best way foreword for nascent financial centres.

Dr. Weerasinghe, Senior Deputy Governor of Central Bank of Sri Lanka (CBSL), at the outset acknowledged importance of addressing risks stemming from climate change to the economy such as effects on price stability and financial system stability. He then elaborated on the Sustainable Finance Roadmap for Sri Lanka and on the key pillars (Financing Vision 2030, ESG Integration into Financial Markets, Financial Inclusion, Capacity Building, International Cooperation and Measurement and Reporting), which forms CBSL’s priority action in this domain. Dr. Weerasinghe noted that measurement and reporting has been one of the more difficult aspects to implement and informed that a committee under his purview is working on developing a sustainable finance taxanomy for Sri Lanka. Dr. Weerasinghe noted that Central Bank has the mandate to integrate action on sustainable finance with financial sector participants, but informed that interlink with the real economy on sustainable development would need to be driven by the Sustainable Development Council and underscored the need for Government support to fast track this process. Dr. Weerasinghe also stressed the importance of innovation in green products beyond the banking sector.

Mr. Nishantha Hewavithana, Head of Research and Strategy of Colombo Stock Exchange, elaborated on efforts to improve company disclosures on sustainability through training programs that CSE organizes together with Global Reporting Initiative (GRI) – South Asia chapter. He noted that this drive to improve reporting quality is with a longterm view to introduce Sustainable Index to the stock market.

Mr. Dimantha Seneviratne, as Chairperson of Sri Lanka Banks’ Association, elaborated the progress made by SLBA Sustainable Banking Initiative in deploying industry wide minimum standards on sustainable banking including environmental and social risk management when lending and on managing banks’ own footprint. SLBA SBI reiterated support to implement the Sustainable Finance Roadmap for Sri Lanka and called for collaboration with all actors to bring out innovative financing solutions to the market.

Mr. Manjula de Silva, Secretary General/CEO of Ceylon Chamber of Commerce highlighted the potential for sustainable finance to Sri Lanka’s business sector and the economy. He highlighted opportunities in financing businesses in sustainable apparel, plantations, circular economy and other promising areas of the economy. Mr. de Silva also spoke on sustainable insurance in Sri Lanka and underscored the importance of fast tracking the implementation of technical assistance program for National Natural Disaster Insurance Scheme (NNDIS) from the InsuResilience Solutions Fund. He noted Ceylon Chamber of Commerce, UNEP-DTU and Sanasa Insurance Group are exploring a joint initiative to structure “Affordable Resilience Insurance for MSMEs in Sri Lanka”. Mr. de Silva also recommended for Sri Lanka to explore Covid Bond to raise financing for SME sector green recovery. The event concluded with broad consensus that Sri Lanka could play a defining role in the region with collaboration of all sectors and integration nationally and through international cooperation. Sri Lanka Banks’ Association’s Sustainable Banking Initiative expressed its desire to facilitate such stakeholder engagements in the future to promote sustainable finance in Sri Lanka and the region.

(Media Release)