Sustainable Financing Activities of the Central Bank
Central Bank of Sri Lanka joined the Sustainable Banking and Finance Network (SBFN) supported by the International Finance Co-operation (IFC) in 2016 which consists of central banks, banking regulators and banking associations from 66 countries committed to improve environmental, social and governance risk (ESG) management in emerging markets including climate change mitigation and adaptation. As a SBFN Member, CBSL launched the Roadmap for Sustainable Finance in Sri Lanka in 2019 with the technical assistance of the IFC and financial assistance of the United Nations Development Programme (UNDP).
Two internal committees namely: Steering Committee, and Technical Committee are established for the implementation of the sustainable finance roadmap while a Stakeholder Committee comprised of financial sector stakeholders meet regularly to discuss the progress of the roadmap implementation.
In 2022, the Central Bank released Sri Lanka Green Finance Taxonomy which is a classification system for identifying economic activities that can be considered environmentally sustainable. Development of the taxonomy was technically and financially assisted by the IFC with the engagement of a multitude of stakeholders from the financial sector to academia.
In line with the Sustainable Finance Roadmap, Central Bank issued a Direction to the licensed banks for reporting the sustainable financing activities and a similar guideline was issued for the non-bank financial institutions regulated by the central bank.
In 2023, Sri Lanka became the 20th member of the International Platform for sustainable Finance (IPSF) which is a forum established by the European Union for dialogue between policymakers with the overall aim of increasing the amount of private capital invested in sustainable investments.
Macroprudential Surveillance Department of the Central Bank acts as the Secretariat for the implementation of the Sustainable Finance Roadmap in Sri Lanka which is engaged in building capacity of the financial sector on sustainable financing as well as coordinating with the international agencies and other stakeholders for popularizing sustainable financing in the country. Central Bank also formed an external panel of experts specifically for addressing queries related to the green finance taxonomy raised by the financial institutions adhering to the taxonomy.