More to be done to lure ESG conscious foreign investors: SEC Chief

Sri Lanka has the necessary regulatory framework for green finance instruments since October 2023, but new issues are yet to be seen in the local capital market, Security and Exchange Commission (SEC) said.

The challenge is how quickly can Sri Lanka socialize these bonds and attract ESG conscious foreign investors, whilst being mindful of Sri Lanka’s default sovereign rating hurdle, according to SEC Chairman Faizal Salieh.
While highlighting the need to build an ESG conscious local investor base, he said it is critically important that all stakeholders come together, work together and support one another to kick start issuances. 

“We need to ask objective questions. Is there sufficient commitment and drive at the government policy and strategy level, the administrative level, at the business policy and strategy levels, and at the market operator’s level? Is there sufficient investor awareness? Do we simply wait until the country rating improves to start issuances? 

“Should we not make all the required preparations now, and even explore ways and means of reaching ESG conscious investors circumventing the rating barrier with compelling investment propositions?” he questioned.
Salieh shared his views while addressing the ‘Towards a Greener Economy’ forum in Colombo this week.
He went on to note that by expanding the availability of green finance instruments and fostering collaboration between investors, issuers, and regulators, financial markets will be able to accelerate the transition to a more sustainable and resilient financial system.

According to a report by the Climate Bonds Initiative, green bonds issued reached a record high of US$ 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. Nature-based financial solutions are crucial in this regard and the compelling reason for markets to embrace and enable sustainable debt instruments.

 (NR)