Sri Lankan Banks Unite for Sustainability : Sri Lankan Sustainable Banking Initiative - Phase II

Date: 14, Mar, 2018

The ‘Sri Lankan Sustainable Banking Initiative – Phase ll’ was kicked off in style at the Auditorium of theHatton National Bank PLC on the 15th of August 2017.

Sri Lanka Banks’ Association (SLBA) Partnered in 2015 for the ‘Sri Lankan Sustainable Banking Initiative’with four European Development Financial Institutions (DFIs) led by DEG of Germany (DeutscheInvestitions- und Entwicklungsgesellschaft mbH) while, FMO of the Netherlands (NederlandseFinancierings-Maatschappij Voor Ontwikkelingslanden N.V.), OeEB of Austria (OesterreichischeEntwicklungsbank AG), and Proparco of France (Societe De Promotion Et Participation Pour LaCooperation Economique) were the other DFI’s.

The ‘kick-off’ meeting was sponsored by Sri Lanka Banks‘ Association together with Hatton NationalBank, Pan Asia Bank and Rainbow Institute of Communication and English.

Gathering of Decision Makers

Event participants included SLBA representatives, senior members of DEG representing the partnerDFI’s, CEOs and senior management of the SLBA member banks, the Director of Bank Supervisionrepresenting the Central Bank of Sri Lanka, heads of NGOs concerned with developing sustainablefinancing principles, the Ministry of Sustainable Development and Wildlife, IUCN, and the IFC, as well asother stakeholders.

Sustainable Banking Initiative – a Multi Stakeholder Engagement

“Transition to a green economy cannot be done by one bank or organization alone. It must be a multi-stakeholder engagement and this is where the Sustainable Banking Initiative seeks to add value” stated

Ms. Renuka Fernando, Chairperson SLBA and CEO of Nations Trust Bank PLC in her opening remarks."As banks and corporates that exist to create value over the long term for our investors, customers,employees and other stakeholders, we would need to manage the short-term pressures and at the sametime strive to enhance their quality of life. Therefore, we will need to play a positive role in helping thecountry address the vulnerabilities and engage proactively to find solutions" Ms. Fernando stated.The event was thereafter addressed by Ms. Manuela Marques, Senior Director DEG; and then facilitatedMs. Melissa Makwarimba, Sustainable Finance Advisor of Innovativkonzept Ltd. and Khokhela Consult,the organizations that were selected to provide the technical support, spearheading the initiative.International success stories were showcased and the urgency to take joint action was reiterated.

“Our experience shows that banks know their internal procedures best and therefore designing anEnvironmental & Social Risk Management approach in a pro-active manner is the most efficient” Ms.Marques said.

Support Extended by the Central Bank towards Success of the Initiative

The Director Bank Supervision, Central Bank of Sri Lanka - Mr. A. A. M. Thassim stressed on the urgentneed to take action in this regard.“The Central Bank of Sri Lanka would focus on sustainable banking practices to help banks to effectivelymanage environmental and social risks in the projects and promote sustainable banking” Mr. Thassimexplained.

Follow up to the Success of Phase I

The event signified the start of Phase II, a follow up to Phase I of the Sri Lankan Sustainable BankingInitiative.The initiative was signed by 18 banks in November 2015, ratifying 11 Sustainable Banking Principles forSri Lanka which were developed by a committee comprising members of these banks. The signatorieswere 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, SriLanka Savings Bank and Union Bank.

Focus of Phase II

Phase II will commence in August 2017 and will last 18 months. The second phase of the SLBA-SBIInitiative will focus on providing all the necessary input and capacity building for implementing the 11principles in terms of guidance documents, trainings, coachings, E-learning and case studies.It is noted that sustainability presents significant business risks and opportunities in the 21st Century.Management of these is vital for business success. It was brought to light that sustainability includesEconomic, Environmental, Governance and Social aspects of doing business.Good practices in the banking sector include responsible lending as well as minimizing yourenvironmental footprint, resource efficiency improvements, corporate social responsibility, andsustainability reporting.

Leading financial institutions and associations are setting the agenda for local peers and regulators tocreate industry-wide level playing fields. In line with local regulatory requirements, more financialinstitutions in Sri Lanka show a track record in implementing environmental and social management

systems frameworks. The experience from other countries shows that adopting and adhering to suchSustainable Finance Principles provide benefits to banks, clients, the communities and the environment.

Sri Lankan Sustainable Banking Initiative Aims

The aims of the initiative include creating a platform where banks can work together on sustainabilityissues. This platform will thereafter be used to facilitate decision-making and coordinate efforts in orderto increase efficiency and effectiveness while ensuring of a level playing field.Furthermore, the platform will also facilitate suggesting and jointly agreeing on minimal standards forintegrating environmental and social considerations into core operations and to level the playing fieldthrough joint principles or standards.

Benefits to the participating Banks

By being a signatory to the initiative, the banks will receive all the necessary inputs to implement thesigned principles. They will also gain access to tailor-made E-Learning and E-coaching platform. Jointactivities such as trainings, case studies and capacity building will also be accessible.Other benefits include being in a position to shape the Central Bank’s approach and expectations, beinginvolved in the latest discussion on relevant issues, improving overall risk management, betterunderstanding of the business case of proper E&S management, and receiving the knowledge to marketthe information to clients and stakeholders.

The main benefit however will be the ability to contribute to sustainable development for a beautiful,clean and green SriLanka.