ECONOMYNEXT- Sri Lanka’s Central Bank has launched a Sustainable Finance Roadmap with support from the International Finance Corporation (IFC) and the United Nations Development Program (UNDP), an IFC statement said.
The roadmap aims to increase capital flows to activities with a positive impact on the environment, society, and governance (ESG), and also manage the risks associated with these areas.
“Sustainability is one of the key focus areas of Sri Lanka’s economic policy," Central Bank Governor Indrajit Coomaraswamy was quoted as saying.
"The government has attached a great deal of priority to sustainability, realizing that we need to secure a green economy for our future generations," he said.
“As the Central Bank, we have also placed a greater emphasis on sustainability, especially considering it as a principle for the financial sector."
"Being the apex financial institution, we have taken this momentous step to introduce a roadmap for the financial sector to ensure that sustainability is considered in financial decisions."
"While this provides broad guidance to all key stakeholders of the financial system, we hope that all key players would adjust their plans and policies to accommodate the need for sustainable finance practices."
The roadmap said that public and private financing should be mobilized to implement the Paris Agreement on climate change, and sustainable development goals of the United Nations.
While the roadmap focuses mainly on the banking and non-banking financial institutions, it also reflects commitments for capital markets and insurance industries.
Although Sri Lanka accounts for less than 1 percent of global greenhouse gas emissions, the country is highly vulnerable to climatic fluctuations, IFC said.
It said recurrent weather-related disasters, particularly over the past three years, have affected thousands of people and hampered the country’s economic growth.
The Central Bank, quoting the World Bank and UNDP, said that Sri Lanka may lose 1.2 percent of annual gross domestic product by 2050 if climate change is not addressed, and the country needs 30 billion rupees in investments within the next five years to achieve national biodiversity targets.
The roadmap includes financing the Vision 2030 ESG goals through green loans, green bonds and green leasing, which support sustainable development.
The roadmap also aims to improve ESG disclosures and reporting of financial firms, and increase publicly available environmental data from government agencies, international organizations, and non-governmental organizations.
IFC, a member of the World Bank Group, serves as the Secretariat and technical advisor for the Roadmap, while the UNDP provides funding support through the Biodiversity Finance Initiative. (Colombo/Apr11/2019-SB)