ADB urges strengthened local sustainable finance framework to boost investment

• ADB South Asia Department Director General Takeo Konishi calls for strengthened sustainable financing 
• Claims stable financial ecosystem will boost investor confidence and economic development
• Praises CSE, SEC for green bond regulations and knowledge sharing among stakeholders
• ADB Country Director for Sri Lanka Takafumi Kadono calls for enhanced regulations such as those on reporting standards, proper disclosure, and focus on specific bonds
• Adds impactful sustainable financing must remain a key objective of the Govt.
• Says this can be achieved via adherence to ESG principles and efforts at market adaptability
• Highlights sustainable bond issuances are to reach $ 1 trillion in 2025 

By Janani Kandaramage

ADB South Asia Department Director General Takeo Konishi recently reaffirmed the Asian Development Bank’s (ADB) commitment to accelerating the adoption of sustainable financing frameworks aimed at attracting foreign investment, ensuring economic resilience.

He underscored the need for a robust sustainable finance system with global standards, reducing financial risks by lessening dependence on traditional banking channels.

“It can drive economic prosperity and improve quality of life by reducing waste, lowering costs and enhancing the environment. Therefore, it is crucial to promote sustainable finance by strengthening the capacity of institutions and developing innovative financing instruments,” he told the Serendipity Knowledge Program on Sustainable Finance, organised by the ADB in Colombo. 

Speaking about the existing efforts undertaken in the country, he praised the Securities and Exchange Commission (SEC) of Sri Lanka and Colombo Stock Exchange (CSE) for their initiatives in implementing green bond regulations and raising awareness among the issuers and investors.

He noted that these efforts have led to successful green bond issuances, with DFCC Bank launching its first in September 2024, followed by Alliance Finance PLC in February 2025, both fully subscribed primarily by institutional investors.

Konishi added that leveraging capital markets to introduce instruments that raise funds for sustainable projects is key, stressing that the “next phase should focus on taking the sustainable finance ecosystem to the next level.”

ADB Country Director for Sri Lanka Takafumi Kadono justified Konishi’s assertion, stressing the ADB’s role in developing regulatory mechanisms aimed at improving investor confidence.

Elaborating on the regulatory frameworks, he said: “Sri Lanka has strong potential in sustainable finance to attract both foreign and local funds, which in turn will benefit the capital market through product diversification and the issuance of innovative instruments,” adding, “the regulatory frameworks would focus on thematic bonds, improving disclosure and reporting standards and collaborating with the credit and auditing agencies to boost investor trust.”

Additionally, the Country Director also spoke of the need for countries to adopt impactful sustainable financing frameworks that would address both the global and local challenges. 

He advised countries to prioritise sustainable infrastructure investment, embed ESG principles in business strategies, and proactively adapt to the shifting expectations of global supply chains.

“The global sustainable finance market has grown rapidly, valued at approximately $ 5.4 trillion as of the third quarter of 2024. As Sustainable Finance Institute Asia Senior Adviser cited, sustainable bond issuances are expected to reach $ 1 trillion in 2025, while the sustainable loan market, along with its increasing demand for ESG-aligned financing solutions, reached nearly $ 992 billion in 2024. Therefore, Sri Lanka must fast-track its sustainability aspirations,” he remarked. 

Pix by Shehan Gunasekera