Sri Lankan Banks chart way forward to promote Sustainable Finance and build Industry wide capacity

The Sri Lankan banking industry, through their umbrella body the Sri Lanka Banks Association (SLBA), during a CEO Roundtable meeting held on 4th November 2015 at the conference room of HNB Towers, approved a move forward to create a joint initiative that promotes best practice in sustainable finance. The SLBA Sustainable Finance Initiative (SFI) would explore opportunities for industry alignment while building industry wide capacity in the area of environmental and social risk management.

In line with the country’s long-term development plans as outlined in the Government’s Vision, the SLBA member banks agreed to support efforts towards making Sri Lankan banking industry more globally competitive. Sustainable economic growth, environmental degradation, climate change, and resource scarcity are among the key challenges for Sri Lanka. Therefore the proposed Sustainable Finance Initiative coordinated by SLBA on behalf of its member banks would be tasked with developing recommendations, which will include proposals on capacity building and the creation of Sustainable Finance Guiding Principles that are customised for the Sri Lankan context.

During the CEO Roundtable, SLBA chairman and MD/CEO of HNB, Mr. Jonnathan Alles said: “Today, the world is experiencing various forms of natural disasters including earthquakes on a regular basis. Hundreds of people getting affected by extreme weather patterns such as heat waves, floods, tornados etc is no longer headline news. Above all of these catastrophes, effects of climate change, unsustainable development and deforestation are devastating the earth’s capacity to support life. Further climate change is not only an environmental challenge but has become a fundamental threat to economic development. The longer we wait it will be more costly to arrest these issues. In this light, we feel the importance of managing and re-greening our natural environment more than ever. Sri Lanka being an island nation, rich and diverse in its greenery, I am sure you will all agree that at least some of this heritage should be passed on to our children. In this background the SLBA is proud to organize this historic event today where we as financiers and lenders are getting together to consider non-financial issues that will of course in due course affect all our businesses”.

In a presentation made by Ms Himali Karunaweera, Assistant Director, Environmental Pollution Control of the Central Environmental Authority of Sri Lanka, it was highlighted that the requirements discussed in the Sri Lanka Sustainable Finance Principles were within the legal requirements of the country and customers should comply with them to obtain / renew their Environmental Protection License.

The CEO round table discussion was facilitated by SLBA and co-funded by DEG - Deutsche Investitions- und Entwicklungsgesellschaft, a subsidiary of KfW and one of the largest European development finance institutions for long-term project and company financing. Ms. Manuela Marques, Senior Vice President of DEG, commented on the impressive indicators of development in the country and cautioned on the potential negative effects of unsustainable development and population growth. She further highlighted the benefits of E&S Risk Management for Banks as well as to their customers.

Commitment by the SLBA member banks to set up the Sustainable Finance Initiative is a first step in a process that will make Sri Lanka part of a growing group of emerging countries where banks and governments are creating sustainable-finance frameworks and incentives. Other examples include China’s Green Credit Policy, Nigeria’s Sustainable Banking Principles, and Paraguay’s Roundtable for Sustainable Finance.

Chief Executive Officers from 18 Banks operating in Sri Lanka namely (in alphabetical order) Amana Bank, Bank of Ceylon, Cargills Bank, Commercial Bank of Ceylon, DFCC Bank, Habib Bank, Hatton National Bank, MCB Bank, National Development Bank, Nations Trust Bank, Pan Asia Bank, People’s Bank, Regional Development Bank, Sampath Bank, Sanasa Development Bank, Seylan Bank, Sri Lanka Savings Bank and Union Bank have placed their signatures to a document containing the Sustainable Banking Principles for Sri Lanka, designed by a working committee consisting of members from participating banks.