CSF-BSL Report: Green Finance Maturity Assessment 2024

NOVEMBER 25, 2024 | Nature, Climate, and the Economy

Green finance is getting greater attention in Sri Lanka, as banks and finance companies see it as a new area for lending, and the number of potential projects that need finance keep growing. CSF collaborated with Biodiversity Sri Lanka to better understand what this space is like right now. We surveyed 20 financial institutions to understand multiple aspects of their engagement with green finance. Encouragingly, the survey showed that there is strong strategic recognition at Board and senior management level, with many financial institutions having a Board-approved policy or other form of internal guideline. Majority of financial institutions say that over the next 10 years they anticipate up to 25% of their lending portfolio will be projects that utilize green finance.

However, this agenda is a work in progress. Most of the green finance activities are in green lending, with much less on green deposit mobilization. The majority of green lending is still limited to mitigation activities. ‘Installation of renewable energy like solar (residential, office, industrial)’ was the top purpose for customers borrowing green facilities. Financial institutions reported that their SME customers have limited understanding on green products and potential of green finance, and so more awareness is needed. The ‘lack of credit department’s knowledge on environmental issues’ was cited as a top challenge by FIs in assessing green credit proposals. While majority of FIs report they engage with environmental organisations to better understand risks and risk mitigation, very few engage with them to inform their green lending products.

Click here to read the report ‘Green Finance Maturity Assessment of Financial Institutions 2024’.

CSF

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