ADB to support pilot issuances of sustainable bonds in Sri Lanka
ADB is ready to mobilise its expertise to support pilot issuances of sustainable bonds in Sri Lanka, in close partnership with the Securities and Exchange Commission (SEC) and Colombo Stock Exchange (CSE) ADB Country Director Takafumi Kadono told the ‘Towards a Greener Economy Forum’ held in Colombo.
He said the sustainable bond market can play a pivotal role in attracting private capital for investing in climate mitigation and adaptation which are critically needed in Sri Lanka and promoting sustainable capital market development was an integral component of the ADB’s work in Sri Lanka to promote sustainable recovery, build resilience and foster inclusive growth.
Developing Asia will require approximately US $ 1.7 trillion annually between 2016 and 2030, to achieve its economic growth targets while tackling climate change challenges, he said.
A new landscape of ESG conscious investor activism is evolving in the world today, inspiring and moving markets towards a greener horizon. Investors are becoming more and more conscious and concerned about impact reporting, climate change mitigation, social equity considerations, transition towardsa circular economy and are driving the demand for innovative green financing and green financial instruments, Faizal Salieh Chairman, SEC said.
A green and sustainable economic environment is now the joint responsibility of Government, Business and Civil Society. Sustainable Bonds, the likes of Green Bonds and Blue Bonds, and other sustainable debt instruments have a common purpose and goal to create a sustainable ecosystem and are becoming an important part of global fixed income markets. According to a report by the Climate Bonds Initiative, green bonds issued reached a record high of USD 1.1 trillion in 2023, driven by strong demand from investors seeking to finance climate-friendly projects.
In the global stock take, nature and biodiversity are key factors for mitigating risks and protecting vulnerable communities in a heating planet, he said.
Nature-based financial solutions are crucial in this regard and the compelling reason for markets to embrace and enable sustainable debt instruments. As we all know, COP 28 has identified the continuing prevalence of a large climate finance gap, an even larger overall environmental finance gap, and a huge UN SDG finance gap.
To close these gaps, countries need to mobilize much more private capital at a much faster pace through the capital markets, and allocate it to projects, products,and processes that have a positive impact on the sustainability agenda. He said that investors are actively seeking to align their investments with ESG principles and contribute to the transition to a climate-friendly low-carbon economy. Green finance instruments are increasingly beingintegrated into mainstream investment portfolios.
Sustainable Bonds fit this purpose. They are structured to finance new and existing projects and activities with positive environmental impact. Salieh said Sustainable Bonds can raise funds for projects in renewable energy, energy efficiency, clean transportation, green buildings, wastewater management and climate change adaptation in accordance with the globally defined and accepted principles, rules and requirements that govern the issuance of Sustainable Bonds.
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