Sri Lanka Unveils Sustainable Finance Roadmap 2.0

As an important move to tackle climate risks and social injustices, the Central Bank of Sri Lanka (CBSL) introduced the Sustainable Finance Roadmap 2.0. The project was inaugurated on May 5, 2025, by Governor Dr. P. Nandalal Weerasinghe in Colombo, marking a milestone in the country's policy transition to sustainable finance. Whereas its earlier version emphasized the environment, this new roadmap is broader-based in order to include social sustainability, financial inclusion, and gender empowerment at its core.

The timing of this new strategy coincides with escalating climate threats both internationally and locally. Sri Lanka's Nationally Determined Contributions (NDCs) indicate that the nation needs USD 10.85 billion by 2030 to achieve its climate goals. CBSL's roadmap seeks to mobilise financial sector reforms and investments in helping the country make this shift. It reflects a broader trend in global financial regulation, where climate change is coming to be seen not only as an environmental issue but as a threat in itself to financial and economic stability.

Governor Weerasinghe, in the release of the revised framework, said, "Sustainable finance is no longer optional. It is an economic, social, and environmental imperative." This reflects the urgency in preventing near-term and long-term climate change threats and in safeguarding an inclusive and resilient financial system.

The plan is also the CBSL response to stark global statistics. The Network for Greening the Financial System (NGFS) approximates global climate-at-risk financial assets at USD 4.2 trillion. The World Bank has further cautioned that more than 130 million people around the world might be driven into poverty if severe action is not undertaken to counter climate change. Climate change effects in Sri Lanka are already experienced—expressed through damaged agriculture, deteriorated energy infrastructure, and eroded public assets. CBSL has cautioned that such stresses risk both financial stability and price stability, highlighting high inflation and a ballooning of non-performing loans as possible endpoints of unmitigated climate uncertainty.

Roadmap 2.0 is an improved iteration over CBSL's initial sustainable finance strategy made public in 2019. The new one, however, has been crafted with adherence to the revised CBSL Act, requiring more emphasis on social and financial inclusion. Looking at the bigger picture, the roadmap not only encourages green finance but also values inclusive growth with emphases on micro, small, and medium-sized enterprises (MSMEs), gender, and low-income communities. The new structure takes these aspects as integral components of a future-proof financial system, not add-ons.

The key to the strategy is to implement Phase II of the National Financial Inclusion Strategy (NFIS) that includes Inclusive Green Finance (IGF) initiatives. These are to be used in a perspective to infuse climatic and sustainability factors into mainstream financial products and services so that climatic resilience is attained in an equitable and inclusive manner. Internal risk management procedures will be enhanced in all financial institutions so that economic shocks resulting from climate are better absorbed. By implementing these defenses, CBSL is hoping to change the whole financial system from vulnerability to resilience.

However, there remain challenges to bridge. Coordination among stakeholders and effective application of blended finance instruments are seen as in dire need of irradication. Blended finance—mixing public, private, and philanthropic capital—is storming the globe as a de-risking instrument for green investment. In Sri Lanka, its application is in its infancy stage and needs strong policy structures and collaborative engagement of stakeholders to get scaled up successfully.

Governor Weerasinghe highlighted that climate risk today is necessarily a financial stability concern. "Our policies need to catch up with that reality," he said, indicating a sea change in regulators' and financial institutions' attitude towards environmental and social concerns.

To sustain momentum in the long term, CBSL has urged increased active involvement of public and private stakeholders. New working groups are established to enable collaboration, provide inputs, and guide the implementation of the roadmap across various sectors. The initiative seeks to maintain Sri Lanka's "advancing" status in the 2024 Sustainable Banking and Finance Network (SBFN) Global Brief, positioning the country ahead as a regional leader in sustainable finance.

This new chapter in Sri Lankan financial regulation is greater than regulatory change. It is a national pledge to build a future in which finance is an agent of climate resilience, economic justice, and sustainable development. As the world struggles with the emerging climate challenges, Sri Lanka's Sustainable Finance Roadmap 2.0 is a call to action—a vision that is bold, equitable, and urgent.