Big banks to float green bonds for RE projects

At least two big banks have shown interest in floating the newly introduced green bonds of the Colombo Stock Exchange (CSE), to fund the plethora of renewable energy projects, officials said.

In a pioneering move, the Sri Lankan stock market introduced the listing and trading of Green Bonds 10 months ago, unlocking a new era of financing for sustainable projects in the country. These bonds, which adhere to international green bond standards, are exclusively used to finance or refinance environmentally friendly initiatives that generate climate or environmental benefits.

With a commitment of US$1 billion dedicated to renewable energy projects currently underway, Sri Lanka is making strides towards a greener and more sustainable future, officials said, noting that amongst these projects, the Adani project stands out as the largest, with an investment of $500 million. There are also numerous other projects ranging from $20 million to $30 million, ensuring a diverse portfolio of sustainable initiatives. Officials said that the banks have already begun the preliminary work to float these bonds as soon as the Ministry of Power and Energy launches the projects. Once the bonds are made available, the funds will be allocated to the various projects, contributing to their successful implementation, they said.

Sri Lanka's Green Bond framework not only facilitates sustainable development but also presents an opportunity for the country to restructure existing debt and attract additional capital for climate-related investments. Economists suggest that thematic bonds, like Green Bonds, can be leveraged to support countries that are in debt distress, providing a pathway for both financial stability and environmental progress. The range of green projects eligible for financing through these bonds is extensive, encompassing renewable energy, energy efficiency, sustainable waste management, sustainable land use (such as forestry and agriculture), biodiversity conservation, clean transportation, and clean water initiatives.

Officials are hopeful that as Sri Lanka embraces the potential of Green Bonds, the stage is set for debt relief and environmental progress.