THE INDUSTRY GUIDING PRINCIPLES
The Sri Lankan Sustainable Banking Principles (SBP) have been developed under the leadership of the Sri Lankan Bankers Association in 2015 and were signed by 18 Sri Lankan banks on November 5, 2015. The Principles are fully in line with the commitment of the Sri Lankan banking sector to contribute to sustainable economic growth. Banks can foster positive development impacts whilst protecting the communities and environments in which they operate.
The Principles are based on leading international sustainable finance standards, and tailored to the Sri Lankan context and development needs. Pro-active concepts have been included to promote positive development impacts, recognizing that the benefits to society can also drive business opportunities for Banks. The Principles and related implications shall be interpreted and applied by each Bank in line with its core values, business model, and enterprise risk management framework.
Principle 1 - Our Business Activities : Environmental and Social Risk Management
 |
We will integrate environmental and social considerations into decision-making processes relating to our Business Activities to avoid, minimize or offset negative impacts. |
Banks will among others need to:
-
Develop an appropriate E&S policy in line with financial products and services offered and with priority sectors; at minimum a strict review and potential decline of clients or engagements that do not comply with local E&S laws and regulations.
-
Outline appropriate E&S procedures as a formal part of its client engagement and approval process to implement its E&S policy.
-
E&S procedures among others include risk screening, risk categorization into high , medium , low risks and determining required due diligence procedures, related governance provisions and risk monitoring.
Principle 2 - Our Business Operations : Environmental and Social Footprint
 |
We will avoid, minimize or offset the negative impacts of our Business Operations on the environment and local communities in which we operate and, where possible, promote positive impacts. |
Banks will among others need to:
-
Develop an “Environmental Management Programme”, including water efficiency, waste water management, environmentally friendly construction etc.
-
Ensure compliance with relevant labour and social standards consistent with international good practice standards
-
Implement “Community Investment Programmes” (CSR), aiming at the development of the communities in which its business operations are located
Principle 3 - Rights of the respective stakeholders
 |
We will respect relevant human rights principles in our Business Operations and Business Activities. |
Banks will among others need to:
-
Develop and implement a “Human Rights Policy” (optionally as a part of a Sustainable Banking Policy), upholding Human Rights in both the Bank’s operations as well as by its clients in line with relevant Sri Lankan and international provisions and treaties
-
Integrate Human Rights due diligence into E&S procedures (in limited high risk circumstances and as relevant to the particular business)
-
Train Bank’s staff on Human Rights
Principle 4 - Financial Inclusion
 |
We will promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector. |
Banks will among others need to:
-
Provide commercially viable support to SME, small-scale entrepreneurs and start-ups (or as permitted within the scope of the mission and objectives of the institution)
-
Provide services that remove educational, gender and other barriers to financial access
-
Improve access to Bank’s facilities and services
Principle 5 - E&S Governance
 |
We will implement robust and transparent E&S governance practices in our respective institutions and assess the E&S governance practices of our clients. |
Banks will among others need to:
-
Establish E&S governance responsibility, including clear lines of responsibility and accountability
-
Develop institutional E&S governance practices, including governance structure, limits of authority, standards and codes of conduct to support implementation of its E&S policy
-
Actively support key industry initiatives aiming at addressing E&S governance issues with clients operating in sensitive sectors
-
Implement compensation and incentives schemes linked to E&S performance
-
Establish E&S audit procedures (internal, and where appropriate external)
-
Increase public disclosure and dialogue
Principle 6 - Promote ethical finance
 |
We will not finance certain “excluded” activities, we will not tolerate unethical or criminal behaviour. |
Banks will among others need to:
-
Develop and implement a policy framework and procedures that require a screening of clients and engagements for prohibited, excluded or significantly controversial activities, as defined in a jointly agreed upon exclusion list.
-
This exclusion list will include activities related to weapons and munitions, involving harmful or exploitive forms of forced or child labour, related to commercial logging in primary tropical moist forest, that impinge on lands owned by Indigenous Peoples without consent of such peoples as well as production or trade in any products deemed illegal under Sri Lankan regulations.
Principle 7 - Promote ‘green economy’ growth
 |
We will promote projects and other activities that contribute to a greener, cleaner economy in Sri Lanka. |
Banks will among others need to:
-
Develop and implement a “Business Strategy” that adequately addresses green economy considerations and includes related financial products / services
-
Educate and support clients to understand the business benefits of “greener” operations
Principle 8 - Capacity Building
 |
We will develop individual institutional and sector capacity necessary to identify, assess and manage the environmental and social risks and opportunities associated with our Business Activities and Business Operations. |
Banks will among others need to:
-
Provide “Sustainable Banking Training Sessions” across management levels and operational functions
-
Create practical E&S training tools and resources
Principle 9 - Collaborative Partnerships
 |
We will respect relevant human rights principles in our Business Operations and Business Activities. |
Banks will among others need to:
-
Collaborate and cooperate with other banks
-
Convene sector-wide workshops and events
-
Commit to international standards and best practice initiatives
-
Participate in Sri Lankan sector level initiatives
Principle 10 - Promote transparency and accountability
 |
We will promote transparency and accountability regularly review and report on our progress in meeting these Principles at the individual institution and sector level. |
Banks will among others need to:
-
Establish a “Sustainable Banking Reporting Template” and agree on the frequency, nature and format of internal and external reporting, preferably on an annual basis (potentially in line with Sustainability Report)
-
Set clear targets and related performance indicators, ensure the required systems are in place to collect reliable data
-
Contribute to sector-level reporting
Principle 11 - No “race to the bottom”
 |
We will not compete with other banks on E&S issues, i.e. undermine our competitor on E&S requirements towards the credit taker. |
Banks will among others need to:
-
Assure that for credits greater than 1 Mio USD and a tenure of greater than 1 year the stricter competitors E&S requirements are not used as a competitive advantage.
Principle 1 - Our Business Activities : Environmental and Social Risk Management
|
We will integrate environmental and social considerations into decision-making processes relating to our Business Activities to avoid, minimize or offset negative impacts. |
Banks will among others need to:
-
Develop an appropriate E&S policy in line with financial products and services offered and with priority sectors; at minimum a strict review and potential decline of clients or engagements that do not comply with local E&S laws and regulations.
-
Outline appropriate E&S procedures as a formal part of its client engagement and approval process to implement its E&S policy.
-
E&S procedures among others include risk screening, risk categorization into high , medium , low risks and determining required due diligence procedures, related governance provisions and risk monitoring.
Principle 2 - Our Business Operations : Environmental and Social Footprint
|
We will avoid, minimize or offset the negative impacts of our Business Operations on the environment and local communities in which we operate and, where possible, promote positive impacts. |
Banks will among others need to:
-
Develop an “Environmental Management Programme”, including water efficiency, waste water management, environmentally friendly construction etc.
-
Ensure compliance with relevant labour and social standards consistent with international good practice standards
-
Implement “Community Investment Programmes” (CSR), aiming at the development of the communities in which its business operations are located
Principle 3 - Rights of the respective stakeholders
|
We will respect relevant human rights principles in our Business Operations and Business Activities. |
Banks will among others need to:
-
Develop and implement a “Human Rights Policy” (optionally as a part of a Sustainable Banking Policy), upholding Human Rights in both the Bank’s operations as well as by its clients in line with relevant Sri Lankan and international provisions and treaties
-
Integrate Human Rights due diligence into E&S procedures (in limited high risk circumstances and as relevant to the particular business)
-
Train Bank’s staff on Human Rights
Principle 4 - Financial Inclusion
|
We will promote financial inclusion, seeking to provide financial services to individuals and communities that traditionally have had limited or no access to the formal financial sector. |
Banks will among others need to:
-
Provide commercially viable support to SME, small-scale entrepreneurs and start-ups (or as permitted within the scope of the mission and objectives of the institution)
-
Provide services that remove educational, gender and other barriers to financial access
-
Improve access to Bank’s facilities and services
Principle 5 - E&S Governance
|
We will implement robust and transparent E&S governance practices in our respective institutions and assess the E&S governance practices of our clients. |
Banks will among others need to:
-
Establish E&S governance responsibility, including clear lines of responsibility and accountability
-
Develop institutional E&S governance practices, including governance structure, limits of authority, standards and codes of conduct to support implementation of its E&S policy
-
Actively support key industry initiatives aiming at addressing E&S governance issues with clients operating in sensitive sectors
-
Implement compensation and incentives schemes linked to E&S performance
-
Establish E&S audit procedures (internal, and where appropriate external)
-
Increase public disclosure and dialogue
Principle 6 - Promote ethical finance
|
We will not finance certain “excluded” activities, we will not tolerate unethical or criminal behaviour. |
Banks will among others need to:
-
Develop and implement a policy framework and procedures that require a screening of clients and engagements for prohibited, excluded or significantly controversial activities, as defined in a jointly agreed upon exclusion list.
-
This exclusion list will include activities related to weapons and munitions, involving harmful or exploitive forms of forced or child labour, related to commercial logging in primary tropical moist forest, that impinge on lands owned by Indigenous Peoples without consent of such peoples as well as production or trade in any products deemed illegal under Sri Lankan regulations.
Principle 7 - Promote ‘green economy’ growth
|
We will promote projects and other activities that contribute to a greener, cleaner economy in Sri Lanka. |
Banks will among others need to:
-
Develop and implement a “Business Strategy” that adequately addresses green economy considerations and includes related financial products / services
-
Educate and support clients to understand the business benefits of “greener” operations
Principle 8 - Capacity Building
|
We will develop individual institutional and sector capacity necessary to identify, assess and manage the environmental and social risks and opportunities associated with our Business Activities and Business Operations. |
Banks will among others need to:
-
Provide “Sustainable Banking Training Sessions” across management levels and operational functions
-
Create practical E&S training tools and resources
Principle 9 - Collaborative Partnerships
|
We will respect relevant human rights principles in our Business Operations and Business Activities. |
Banks will among others need to:
-
Collaborate and cooperate with other banks
-
Convene sector-wide workshops and events
-
Commit to international standards and best practice initiatives
-
Participate in Sri Lankan sector level initiatives
Principle 10 - Promote transparency and accountability
|
We will promote transparency and accountability regularly review and report on our progress in meeting these Principles at the individual institution and sector level. |
Banks will among others need to:
-
Establish a “Sustainable Banking Reporting Template” and agree on the frequency, nature and format of internal and external reporting, preferably on an annual basis (potentially in line with Sustainability Report)
-
Set clear targets and related performance indicators, ensure the required systems are in place to collect reliable data
-
Contribute to sector-level reporting
Principle 11 - No “race to the bottom”
|
We will not compete with other banks on E&S issues, i.e. undermine our competitor on E&S requirements towards the credit taker. |
Banks will among others need to:
-
Assure that for credits greater than 1 Mio USD and a tenure of greater than 1 year the stricter competitors E&S requirements are not used as a competitive advantage.
