SRI LANKA: CSE Enables Issue of Green Bonds

Wednesday April 26 2023

On 25^th April 2023, the Colombo Stock Exchange (CSE) announced the introduction of listing and trading of Green Bonds for the first time in the Sri Lankan stock market. 

Under the Green Bonds concept, proceeds are invested exclusively in green projects that generate climate or other environmental benefits, for example in renewable energy, energy efficiency, sustainable waste management, sustainable land use (forestry and agriculture), biodiversity, clean transportation, and clean water. 

The objective of enabling regulations for the issue of green bonds in the Sri Lankan stock market is to facilitate Sri Lankan corporates to raise capital that will be used for green projects and to foster greater transparency and accountability in the use of proceeds from the Green Bond, and to ensure reporting of the impact of the green projects for which the proceeds of the bond was used.  

The use of proceeds from the Green Bond should be aligned with the Green Bond Principles, which are accepted by the CSE. The accepted Green Bond Principles of the CSE are the Green Bond Principles by the International Capital Markets Association (ICMA), the European Green Bond Standards (EUGBS), and the Climate Bonds Initiative Standards (CBI Standards). 

Corporate Debentures and Green Bonds: 

The Green Bonds will have the same features of a Corporate Debenture and will be listed on the Debt Market segment of the CSE. 

The main difference between a Corporate Debenture and a Green Bond is the usage of the proceeds. In a Green Bond, the proceeds have to be exclusively used for financing or re-financing in part or in full, new or existing eligible green projects which are aligned with at least one international Green Bond standard set out above. 

The Green Bonds will be traded on the Automated Trading System (ATS), similar to Corporate Debentures. The trading parameters currently applicable to Corporate Debentures will also apply to Green Bonds as well. 

The potential issuers of Green Bonds are any public company incorporated under the Companies Act and any statutory body established/incorporated under a statute. 

Click on the above link for further information