Sri Lanka’s Central Bank launches Green Finance Taxonomy
The Morning: The Central Bank of Sri Lanka (CBSL) has launched the Sri Lanka Green Finance Taxonomy (SLGFT), a classification system that defines and categorises economic activities that are environmentally sustainable, which is a key action item outlined in the Roadmap for Sustainable Finance of Sri Lanka that was introduced by the CBSL in 2019.
In a statement, the CBSL said that the Taxonomy has been prepared in line with the international best practices, while harmonised to the local context, and it is hence expected to enable financial market participants to raise low-cost funding for green activities through both domestic and foreign markets.
The launch of the SLGFT was held on 6 May at the John Exter International Conference Hall of CBSL. Accordingly, the SLGFT will be applicable to all domestic and foreign market participants offering financial products (such as bank lending, debt instruments, portfolio management, and investment funds), large corporations, as well as national and local government bodies.
“It can also be used as a reference by the industrial planning authorities and served as the basis for local governments to support green industries covering a range of economic activities, such as forest and logging, agriculture, manufacturing, electric power generation, transmission and distribution, gas, steam and air-conditioning supply, water supply, sewerage and waste management, construction, transportation and storage, financial services, and tourism and recreation,” CBSL said.
Delivering the keynote address of the launch, CBSL Governor Dr. Nandalal Weerasinghe highlighted the importance of promoting and developing a holistic strategy to integrate sustainability into the country’s financial system, particularly in the context of the current economic challenges faced by the country and during the recovery in the aftermath of the Covid-19 pandemic.
He also stressed the fact that the SLGFT would be a critical tool to guide financial institutions, investors, corporates, and green-bond issuers to navigate the transition to a low-carbon, climate-resilient, and resource-efficient economy.
The SLGFT has been developed with the technical and financial assistance of the International Finance Corporation (IFC), while the process was facilitated through the Sustainable Banking and Finance Network (SBFN) and the IFC Green Bond Technical Assistance Programme (GBTAP).
A panel of international technical experts with the help of local experts – namely Dr. Thusitha Sugathapala of the University of Moratuwa and Dr. Madurika Nanayakkara of the University of Kelaniya – and Central Bank officials also contributed to devising the Taxonomy.
Sri Lanka is focused on following the concepts of a blue and green economy in order to develop an environmentally sustainable economy. The country is looking at following environmentally friendly solutions even in its development programme through several programmes. The government of Sri Lanka has also adopted a policy of increasing Sri Lanka’s renewable energy generation capacity to 70% by 2030. Also, authorities are also looking at promoting organic agriculture. Given the expansion in Sri Lanka’s economy and economic sectors along with environmentally friendly development concepts, foreign businesses/investors interested in investing in Sri Lanka could also look at the growing opportunities in the country’s green and blue economy.
|Article Code :||VBS/AT/25052022/Z_5|