Sri Lanka has taken an important step in strengthening its sustainable finance framework through the operationalisation of the Green Finance Taxonomy, supported by the European Union. Over 200 stakeholders from the Central Bank of Sri Lanka, licensed financial institutions, corporate sector entities, accreditation and certification bodies, and public sector institutions participated in capacity-building sessions in May 2026 focused on the practical application of the taxonomy, including reporting requirements, financial product development guidelines, and a screening tool.
The Green Finance Taxonomy, developed by the Central Bank of Sri Lanka (CBSL) and published in May 2022, provides a structured framework for identifying and classifying environmentally sustainable economic activities across both public and private sectors. It is intended to guide financial flows towards green, climate-resilient investments.
Following a request by the Governor of the Central Bank of Sri Lanka to the European Union-funded Green Recovery Facility Project, Expertise France, in collaboration with the Macroprudential Surveillance Department of the Central Bank of Sri Lanka, launched an initiative to support the rollout of the green taxonomy. This support is ultimately designed to improve access to sustainable finance, promote the development of green financial products, and strengthen the identification of environmentally sustainable investments.
The implementation was carried out in two phases. The first phase focused on identifying priority areas and assessing capacity needs among stakeholders. The second phase focused on developing practical tools, including reporting guidelines, sector-specific guidance, and a screening tool to support application of the taxonomy. Following the validation of these reporting guidelines, a series of capacity-building and awareness sessions was conducted in May 2026.
With the CBSL Board’s approval and plans to make all materials publicly available, the implementation of the Green Finance Taxonomy marks an important milestone in strengthening transparency, institutional capacity, and Sri Lanka’s transition towards a sustainable financial system.
Impact on stakeholders: The taxonomy provides clear criteria for financial institutions to identify green investments, potentially unlocking EU and international green finance flows. For Sri Lankan banks and corporates, it reduces uncertainty in classifying sustainable activities but may require additional compliance costs for reporting and screening. Public sector institutions benefit from enhanced capacity to monitor green finance, while accreditation bodies gain a standardised framework. The initiative does not impose mandatory requirements but offers voluntary guidance, limiting immediate regulatory burden.