Inclusive and Sustainable Finance for SDGs

Inclusive and Sustainable Finance for SDGs

The European Chamber of Commerce of Sri Lanka (ECCSL), in collaboration with the Strengthening Social Cohesion and Peace in Sri Lanka (SCOPE) programme supported by GIZ hosted its fourth industry-focused event on Inclusive and Sustainable Finance on 30th April, bringing together policy makers, private financial institutions -banks and non-bank financial institutions - business platforms, think-tanks to exchange experiences, practical insights and strategies on embedding inclusivity and sustainability into business operations of financial institutions.

Sustainable long-term investment focused on impact is thriving. Research studies have shown that the global impact investment market was more than USD 1.1 trillion in 2022. In a survey conducted in 2004, 93% of investors said that climate issues will impact the performance of investments over the next two to five years. Globally, the rise of green bonds has spurred the creation of a variety of impact and sustainable fixed-income tools, such as labelled bonds - blue, sustainable, social bonds etc. However, the impact investment market in Sri Lanka is relatively small. Risk aversion to impact/ equity investment among business leaders, limited knowledge of and challenges associated with sustainable fiancé market instruments, particularly among small and medium sized enterprises (SMEs), the complexities, scale and costs associated with reporting requirements of impact investments are often cited as challenges by enterprises.

The event provided a platform for stakeholders to share knowledge, learn and network with like-minded businesses for practical implementation of inclusive and sustainable practices in the finance industry.

Ms. Chamindry Saparamadu, Director General of the Sustainable Development Council (SDC) briefed the participants on SDCs approach to supporting businesses to create social and environmental impact through the Inclusive and Sustainable Business (ISB) Strategy. She highlighted that limited access to finance is one of the greatest barriers for businesses to scale and maximize their social and environmental impact and as such, intermediary actors can play an important role to help overcome the challenges in the Sri Lankan investment landscape for Inclusive and Sustainable Businesses (ISBs), impact investors and green/sustainable financiers through awareness raising and technical training of ISBs on impact investment and sustainable finance instruments while connecting them with funding / financing opportunities and sourcing investment opportunities for impact investors and green financiers.

Speaking at the event, Mr. Romani de Silva, Deputy Chairman & Managing Director of Alliance Finance PLC (AFC) briefly outlined AFCs sustainability journey as one of the first financial institutions in Sri Lanka to have formally adopted a triple bottom line business philosophy with a strong focus on generating real impact as opposed to mere disclosure and reporting. He highlighted how securing certification under the Sustainable Finance Certification Initiative (SFCI) as the first finance company in South Asia , AFC was able to integrate holistic sustainability into the business operations with positive and measurable outcomes.

Ms. Ishani Palliyaguru, Vice President (Wholesale Banking) of NDB presented inclusive and sustainable business practices at NDB that are both internally and externally focused. NDBs approach to inclusive financial services and female focused initiatives such as ‘Banking for Women’ Initiative, the ‘Vanithabhimana’ programme that provide financial advisory services, capacity building for financial literacy and partnerships for women entrepreneurs and SMEs were explained in detail.

Mr. Chandula Abeywickrema, Founder & Chairman of Lanka Impact Investing Network emphasized the importance of enhancing access to private equity through a well-developed capital market for SMEs as an important aspect towards SME and entrepreneurship development in the country as bank loans cannot address the challenges around mid-to-long term commercial viability, scalability and sustainability related challenges faced by entrepreneurs.

Ms. Medhini Igoor, Researcher from Centre for a Smart Future presenting the findings from several recent research studies noted that under highly turbulent and uncertain global regulatory landscape, global ESG funds are seeing record outflows and outcome driven impact investment is thriving. Against this backdrop, it is important that Sri Lankan corporates focus on impact as opposed to mere compliance-driven reporting and that Sri Lanka’s financial sector accelerate environmental integration and address current gaps.

The presentations were followed by a discussion where the participants had the opportunity to share their own knowledge and experiences reflecting on the challenges and opportunitiesencountered in their sustainability journeys. The importance of enhancing financial literacy and inclusion of women, youth and differently abled persons and the need to introduce risk-mitigation measures to mobilize private investments towards sustainable development priorities were highlighted by participants. The discussions were facilitated by William Baxter, Project Lead of ECCSL's Inclusive Business Practices Project.

The event underscored the importance of collaborative partnerships and dialogue among policy makers, regulators, financial institutions, businesses, business support organizations and think tanks to overcome challenges and build a cohesive ecosystem for inclusive and sustainable finance in the country.