BOC

Q: Integrating environmental, social and corporate governance (ESG) principles presents a transformative opportunity to improve investor confidence… so how can Sri Lanka capitalise on this approach to investments?

A: The country can attract ESG driven investors by incentivising companies to adopt responsible practices. Government backed initiatives such as tax breaks or listing advantages for ESG compliant firms would encourage adoption and build Sri Lanka as a responsible financial centre.

Regulatory frameworks such as Securities and Exchange Commission (SEC) guidelines on sustainable financial principles for the capital market, and rules regarding green and social bonds, enhance the commitment to ESG investments and improve investor confidence.

From a practical standpoint, publishing regular reports with detailed insights into ESG performance and leveraging digital platforms to disseminate information to investors, stakeholders and the public will enhance visibility and credibility.

Furthermore, participating in ESG focussed investor forums, and engaging with rating agencies to showcase such initiatives, will help gain recognition and validation for these efforts.

Q: How should Sri Lanka position itself as a socially responsible investment destination to make it attractive to investors?

A: A socially responsible investment destination can be established by aligning investment practices with the United Nations’ Sustainable Development Goals (SDGs) and associated targets ranging from alleviation of poverty and promoting wellbeing to combatting climate change.

Developed nations are aligning themselves with SDGs and implementing action plans to achieve targets on short, medium and long-term timelines. As part of the global value chain, Sri Lanka too must adopt SDGs and position itself as a hub for sustainable investment with access to responsible inflows and low-cost credit lines.

Establishing a regulatory task force could streamline regulations in line with global norms while collaborating with foreign investors can boost investor confidence.

 

Q: In what ways does your organisation align its core operations with ESG principles?

A: As Sri Lanka’s largest commercial bank, we are committed to establishing sustainability through the transformation of our banking and investment practices.

We pursue profits while complying with ESG principles, and ensuring responsible and ethical financial operations. The focussed alignment to the Sri Lanka Green Finance Taxonomy and Roadmap issued by the Central Bank of Sri Lanka in 2019 for Sustainable Finance, along with voluntary sustainability disclosures, reflects our commitment towards transparency and responsible banking.

A dedicated division headed by an Assistant General Manager, formulates policies and sustainability initiatives.

Additionally, the sustainability committee chaired by the General Manager/CEO, approves sustainability aspects of financing activities and oversees the bank’s related initiatives.

The sustainability subcommittee chaired by the CFO, ensures timely approval of environmental and social due diligence (ESDD) for high-risk credit facilities.

Furthermore, an environmental and social management system (ESMS) policy is in place for the ESDD of credit facilities with annual reviews for necessary adjustments. A dedicated ESMS Officer oversees the ESDD element of granting credit facilities, covering both the branch network and corporate segments.

A project implementation unit has been established for management of foreign funding borrowed for lending purposes. It currently manages a fund of US$ 90 million borrowed from the Asian Infrastructure Investment Bank (AIIB) in China.

We have also entered into strategic partnerships with merchants to promote household solarisation and with environmental institutions to support sustainable activities.

Q: What are the challenges faced by banks in the context of adopting ESG principles?

A: Organisations across all sectors face challenges and banks are no exception. A primary concern is achieving congruence between ESG objectives and business goals while also agreeing on a framework for activities, identifying relevant ESG measures, establishing attainable objectives and incorporating ESG criteria into the business plan.

Implementing ESG initiatives requires synchronised efforts from multiple departments and allocating adequate resources to support these projects is a major challenge.

Collecting precise and reliable data to assess and monitor ESG performance is also difficult. Furthermore, aligning with ESG principles while balancing the diverse interests of stakeholders including investors, donor agencies, customers, employees and communities,  adds complexity.

Finally, securing low-cost funding for environmentally-friendly initiatives and obtaining expertise in clients’ businesses at concessionary rates to reduce ESG adoption costs remains a challenge.

 

Q: What are your organisation’s future plans?

A: Our goal is to become a leader in sustainability and an exemplary corporate citizen in the country.

We are formulating an ESG framework that aligns with sustainable business practices, positively impacts the environment and society, and supports the bank’s business plan and strategies.

Our objective is to position the bank to manage sustainability risks effectively and seize new opportunities.

We aim to focus on all 17 SDGs and their related targets with projects to address national priorities and align with the country’s expectations.

As the largest state bank with the broadest reach across the island, we are committed to promoting rural development through the BOC Gammana project, supporting entrepreneurship through our SME and Export Circles, and forming BOC Mithuru groups to inculcate saving habits and improve financial literacy.

These initiatives will ensure access to finance for all segments of the community and facilitate entry into the sustainable finance market.

“Our objective is to position the bank to effectively manage sustainability risks and seize new opportunities”

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Telephone 2204444  |  Email boc@boc.lk  |  Website www.boc.lk