Globally, growth is placing an unprecedented demand on finite resources. For Sri Lanka, an island that is increasingly vulnerable to increasing temperatures and rising carbon dioxide levels, the impacts can, and will impact key economic sectors like agriculture, tourism, energy, water, and infrastructure. It’s estimated that Sri Lanka faces an estimated 1.2 percent loss of annual GDP by 2050 if measures are not taken to address climate change.
Sustainable growth – through more responsible and inclusive business practices– is therefore critical. To succeed, a country’s financial sector must be a core part of this journey. A new IFC initiative in the island is aiming to help its’ financial sector become more sustainable.
Sustainable Finance has become a critical component of the international development agenda to ensure a sustainable future for generations to come and meet our ever-expanding human needs.
A STEP FORWARD
In an address to a gathering of Sri Lanka’s financial sector leads, the country’s President, H.E. Maithripala Sirisena said, “I believe that we need a responsible and inclusive financial system to reach our sustainable development goals. The banking sector is an important partner for tackling crucial development challenges, including climate change, poverty, and equity.”
The President’s remarks were made at the first Sri Lanka Sustainable Finance Workshop, hosted by the Central Bank of Sri Lanka, IFC, and the IFC-supported Sustainable Banking Network. The workshop brought together the government, the financial sector, and international organizations to share information, propose ideas, and build a consensus on Sri Lanka’s sustainable finance journey and develop a sustainable finance roadmap.
A HEAD START
Sri Lanka is already well placed on its journey towards sustainable finance. The island has a unique head-start, with 18 banks already adopting 11 voluntary principles to operationalize the sustainable finance commitment, under the leadership of the Sri Lanka Banks’ Association.
“We want to help banks effectively manage environmental and social risks associated with the projects they finance and increase support to businesses that are greener, climate friendly, and socially inclusive,” said Dr. Indrajit Coomaraswamy, Governor, Central Bank of Sri Lanka.
The workshop also provided an opportunity to learn from the sustainable finance work of other regulators globally.
“Governments and businesses around the world are taking important steps towards a fundamental transformation of the global economy to build a more sustainable future,” said Amena Arif, IFC Country Manager for Sri Lanka and Maldives.
IFC helps create markets for sustainable finance through the voluntary Sustainable Banking Network. Established in 2012 by IFC and 10 founding countries, SBN is the leading global knowledge and capacity building platform for financial sector regulators and banking associations, now representing 31 emerging markets. Through the Network, IFC supports members to develop national policies and principles to grow sustainable finance practices and opportunities, including innovative new green products such as green bonds and green credit lines.