Sri Lanka

Project title Sector SCP practice
EEPEx Utilities sector Environmental Management Systems, Waste Management
Food & Beverages Food and beverage Eco-labels
Greening Sri Lankan Hotels Service industry Cleaner Production
Lead Elimination Project Chemical sector Cleaner Production
METABUILD Fabricated metals industry, Building materials industry Sustainable Supply Chain Management
Sri Lanka Renewable Energy Utilities sector Cleaner Production

Focal point

Mr. Udaya Seneviratne

Secretary

Ministry of Mahaweli Development and Environment (MoMDE)

Project Focal Point: Ms Deepa Liyange

Director (Environmental Planning & Economics)

Ministry of Mahaweli Development and Environment

SWITCH-Asia RPSC

Background

Commenced in January 2015, SWITCH-Asia Sustainable Consumption and Production National Policy Support Component for Sri Lanka (SCP NPSC) is a 4-year European Union funded project awarded upon a request of the Ministry of Mahaweli Development and Environment (MoMDE) (former Ministry of Environment and Renewable Energy) as a ‘technical assistance programme’ to support the strengthening of the overall government policy and institutional framework for implementation of SCP. 

Sri Lanka is the fifth country in the Asian region and the very first country in the South Asian sub-region to receive national policy support assistance under the SWITCH-Asia Policy Support Component interventions.  

SWITCH-Asia Sustainable Consumption and Production National Policy Support Component for Sri Lanka (SCP NPSC)

The period of operation of the SWITCH-Asia SCP NPSC is from 15 January 2015 to 15 January 2019. Upon completion of this project, six key results / deliverables are expected to be achieved by implementing 24 main activities (with many sub-activities) under 4 distinct project components, all inter-linked to each other. 

Link to the Sri Lanka’s NPSC webpage: http://www.environmentmin.gov.lk/web/index.php?option=com_content&view=article&id=982%3Athe-switch-asia-sustainable-consumption-and-production-national-policy-support-component-&catid=24%3Asustainable-development-division&Itemid=368&lang=en

Overall Objective of SPC NPSC

The overall objective of this project is to support the Sri Lankan Government in selecting, adapting and implementing suitable economic and regulatory policy instruments to promote sustainable consumption and production, thereby enhancing the long-term sustainability of consumption and production patterns. 

Specific Objective of SPC NPSC

The specific objective of this project is to strengthen the policy and institutional framework ensuring a joint and effective Sustainable Consumption and Production effort in Sri Lanka. 

Components of SPC NPSC

Upon completion of the project, six key results / deliverables are expected to be realized under the following 4 components:

  • Component 1: National Sustainable Consumption and Production Policy and Organization 
  • Component 2: Sustainable Production Framework for selected sector(s) 
  • Component 3: Sustainable Consumption Framework, Green Procurement Policy & Eco-labeling framework 
  • Component 4: Sustainable Consumption and Production Knowledge awareness raising & knowledge development

 Activities are currently being led by the NPSC under each of the following four components: 

Component

Progress of activities

Component 1: National Sustainable Consumption and Production Policy and Organization 

For this component, 80 policies with potential implications on the overarching national SCP framework in Sri Lanka were reviewed for compatibilities and contradictions. From this review process, 50 of the 80 policies were identified as having direct relevance to SCP and would be targeted for in-depth analysis. The results of this analysis showed many gaps and contradictions between SCP-related policies. A root cause for this was the policy formulation process which varied from one ministry to another resulting in the adoption of varying and sometimes contradictory policies. In order to address this issue, arrangements were made to organize a high level workshop targeting the participation of 80 state sector officials, representing nearly all the ministries and key agencies of Sri Lanka. This workshop aimed to develop a standardized policy adoption process to provide policymakers with a template, protocol and screening process for policies. The new standardized system developed has already gone through a level of validation with stakeholders and will undergo a second review by the Secretaries of the Ministry of Mahaweli Development & Environment and the Ministry of National Policies & Economic Affairs (the central ministry for national policies) along with high officials of the Department of National Planning. The Ministry of National Policies and Economic Affairs has agreed to endorse the new guidelines and promote their use among other ministries. 

Component 2: Sustainable Production Framework for selected sector(s) 

 

The Food and Beverage sector was identified as a pilot sector for improving sustainable production in the country. The NPSC organized stakeholder workshops where they identified 3 industries in which they could conduct more in depth analyses of the production. The three sub sectors selected for deeper project interventions are: tea manufacturing, rice processing and dairy processing. The selection was based on a screening process which included the assessment of sustainability factors and country priorities. Stakeholder consultations were also used to develop surveys and indicators. Surveys are to be conducted in 100 Rice Processing factories, 100 Tea manufacturing factories and 30 Dairy processing factories in order to set baseline conditions before various SCP interventions are implemented.

Component 3: Sustainable Consumption Framework, Green Procurement Policy & Eco-labeling framework 

 

Activities under component 3 have not yet begun, but will entail the elaboration of a baseline survey to understand the wants and needs of consumers, their behavior and how they select various products and services. The NPSC aims to sample 500 consumers during their survey.

Component 4: Sustainable Consumption and Production Knowledge awareness raising & knowledge development

 

Under this component, various programmes are being conducted to promote the SCP concept among the Sri Lankan community at various levels. This includes, seminars, workshops, study and exposure tours, educational programmes, etc.  Plans are underway to introduce the SCP concept to the Sri Lankan educational system including the school education, university education, vocational education as well as professional education.

Stakeholder Consultation

Sri Lanka is a country with an abundance of progressive policy instruments. However, the implementation of existing policy instruments is considered to be not up to the required level, which could be attributed to insufficient stakeholder involvement in the policy formulation process. Therefore, it is of uttermost importance to identify all stakeholders under different categories to be engaged in wide consultative process to facilitate policy formulation. Initial identification reveals that there are over 200 stakeholders to be consulted as SCP cuts across many other disciplines and subject areas. 

Policy Review & SCP Policy Formulation

Sri Lanka is a country with an array of progressive policy instruments. Among many, the most recent and important policy instrument is the 2009-2016 National Action Plan (NAP) known as “Haritha Lanka Programme” (HLP). The implementation of the HPL however is somewhat suboptimal due to lack of coordination between the line ministries that have been made responsible for its implementation. Currently, MoMDE is in the process of updating the HLP. 

SCP policy framework that will be developed under this project will provide the basis to support implementation of the HLP and will catalyze the process of its alignment with the Sustainable Development Goals (SDGs) of which Goal 12 is devoted to SCP. In addition, Sri Lanka endorsed the Rio+20 Outcome “The Future we want”, including the 10 Year Framework of Programmes (10YFP) on SCP and actively participated in the process of the development of the Sustainable Development Goals (SDGs). The MoMDE was appointed as the focal point for the 10YFP on SCP and is one of the key national agencies involved in the SDGs agenda. In September 2015, the SDGs were adopted as the follow up mechanisms for the post-2015 development agenda.

Status of SCP policy framework

In 2015, the New Democratic Front party of Sri Lanka won Presidential elections. The newly elected President, the Honourable Maithripala Sirisena, who jointly occupies the post of Minister of Mahaweli Development and Environment as well as Minister of Defense in the State Cabinet, identified environmental protection and the development of rural economies as key policy priorities[1]. One of the key changes he implemented was a reform of the Cabinet in which he merged the Ministry of Health, Ministry of Nutrition and Ministry of Indigenous Medicine into one entity. 

Ministry of Health, Nutrition and Indigenous Medicine

One of keystone projects supported by the Ministry of Health, Nutrition and Indigenous Medicine is the creation of a new Ayurveda Wellness Eco-Village and Research Centre in Kalutara distict. This new facility would combine eco-tourism, health-tourism and agro-tourism and be enriched with the combination of Ayurvedha practices from Noth India, Siddha practices from South India, Unnani practices from Persia and Traditional Medicine from Sri Lanka. It will adopt a holistic perspective to health and will include yoga, meditation, Panchaka as well as other well-being practices. This new facility would fuel the economy by engaging local farmers to cultivate traditional rice varieties and medicines using organic production methods. It would also serve to improve indigenous medicine through research and development by making it more user friendly and more accessible to Sri Lankans and foreigners alike. The research will particularly look into solving some of the countries more pressing health issues including dengue, cancer, cardiovascular diseases, diabetes and chronic kidney diseases by using traditional medicine composed of all-natural products sourced from plants, animals and minerals. Production and distribution for these medicinal products is anticipated to occur through private partners. Finally, the Centre aims to engage youth in traditional practices and involve them in the protection of Sri Lanka’s cultural heritage by collaborating with Universities such as Sri Jayewardenepura and Colombo University to promote the learning of indigenous medicine practices.

2009-2016 National Action Plan (NAP) known as “Haritha Lanka Programme” (HLP)

Sri Lanka developed its Haritha Lanka Action Plan and SCP policy framework to provide the necessary impetus for advancing the sustainability agenda. This Action Plan was developed in pursuance of a decision taken at a meeting convened by the Presidential Secretariat on 16th October 2008. In preparing the Plan, short-, medium-, and long-term solutions to meet current and emerging economic and environmental challenges were meticulously explored. A preliminary draft was initially developed by the Ministry of Environment and Natural Resources taking into consideration the five-year national environmental action plan entitled Caring for Environment 2009 – 2013, and the National Strategy for Sustainable Development, both of which were developed through extensive deliberations with the relevant ministries and other related key stakeholder institutions. Using the draft prepared by the Ministry of Environment and Natural Resources and incorporating the outcome of deliberations and conclusions reached during four meetings of secretaries of the relevant ministries, the final draft of the Action Plan for the Haritha Lanka Programme was prepared.

A National Council for Sustainable Development (NCSD) was established by the government under the Haritha Lanka Programme to function as a national platform to launch and promote the process of achieving sustainable development. The NCSD is chaired by H.E. the President. NCSD, while making policy integration, would oversee and guide the implementation of the Haritha Lanka Programme. The ten broad missions/thrust areas covered by the programme are: Clean Air - Everywhere, Saving the Fauna, Flora and Ecosystems, Meeting the Challenges of Climate Change, Wise Use of the Coastal Belt and the Sea Around, Responsible Use of the Land Resources, Doing Away with the Dumps, Water for All and Always, Green Cities for Health and Prosperity, Greening the Industries, Knowledge for Right Choices. The programme includes short-, medium- and long- term targets spanning the period 2009 – 2016 and performance indicators. The progress of implementation of this action plan will be monitored by the Ministry of Plan Implementation. The secretariat facilities for the NCSD will be provided by the Ministry of Environment and Natural Resources.

The National Action Plan for Haritha Lanka Programme was adopted by the National Council for Sustainable Development in January 2009. In 2015, the Ministry of Environment and Natural Resources was replaced by the Ministry of Mahaweli Development and Environment whose Sustainable Development Division now functions as the Secretariat for the National Council for Sustainable Development.

Link to the Programme: http://www.environmentmin.gov.lk/web/pdf/Harita_Lanka_Book_small.pdf

Link to the Ministry of Mahaweli Development and Environment’s Action Plan for 2016: http://www.environmentmin.gov.lk/web/images/pdf/new%20action%20plan%202016.pdf

Sri Lanka’s Blue Green Development Strategy (Sri Lanka NEXT)

Sri Lanka is a signatory to the United Nations Framework Convention on Climate Change and attended the 21st Session of the Conference of the Parties held in Paris from 30th November to 11 December 2015. As a signatory, Sri Lanka has to adopt appropriate measures to curb the rise of global warming especially in view of the fact that it is a development Island Nation, highly vulnerable to the adverse effects of climate change that affect all social, economic and development activities.

Intended Nationally Determined Contributions (INDCs) of Sri Lanka. Being a party to the United Nations Framework Convention on Climate Change (UNFCCC), Sri Lanka has developed and submitted Intended Nationally Determined Contributions (INDCs) for the Paris Agreement in the efforts of Greenhouse Gas (GHG) emissions reduction, in line with the objective of keeping global warming well below 20 Celsius. Sri Lanka's INDCs consist of Mitigation, Adaptation, Means of Implementation (finance, technology development and transfer, capacity building) and Loss and Damage. Five major sectors were identified for Sri Lanka’s INDCs: energy, transport, forests, industry and waste.

Link to Sri Lanka’s Intended Nationally Determined Contributions: http://www.srilankanext.lk/pdf/indcs-of-sri-lanka.pdf

Link to a Blue-Green Era – Statement by President Sirisena: http://www.srilankanext.lk/pdf/a-blue-green-era_english.pdf

Programme to Develop 10,000 Blue Green Beautiful Lanka Villages

Within the scope of the project, NPSC is also helping the Ministry of Mahaweli Development and Environment through one of its ambitious programmes to take the SCP concepts to the grass root levels. Under this 5-year program, which extends from 2016 to 2020, government is aiming at transforming 10,000 villages (out of around 30,000 villages in the country) into environment-friendly villages . The program will be conducted in collaboration with “Sanasa” (a micro finance cooperative establishment), “Sarvodaya” (a well established NGO in Sri Lanka) and “Divi Neguma” (a state sector organization dedicated for rural development). The project, which began in 2016, is currently at the stage of training mid-level officers from Sanasa for a pilot project targeting 100 villages. These officers are being trained to propagate SCP concept to village level mobilizers. Once trained, these officers will, in turn, train 100 mobilizers at village level, each selected from a different village. These village level mobilizers will bring the message back to their respective villages following a Training of Trainers (ToT) approach and select 10 other individuals to become change agents for the village. These change agents will be tasked with mainstreaming various themes into daily activities and economic livelihoods. These themes include many cross cutting disciplines of SCP such as agriculture, livestock, fishery, energy, water, health and nutrition, sanitation, climate and disaster resilience, biodiversity etc.

Link to concept note (in Sinhala): http://www.environmentmin.gov.lk/web/index.php?option=com_content&view=article&id=1004&Itemid=140&lang=en 

The National Policy Support Component - Standardization of Policy Formulation Process

In the past, Sri Lanka has benefitted from SWITCH-Asia grant funding with projects addressing interventions at the enterprise level in the sectors of food and beverages, tourism, export oriented industries and bio-gas, which benefited over 500 small and medium scale enterprises directly by way of optimized resource utilization, efficient use of energy and water, and minimizing waste generation. 

The Sri Lankan projects, similarly to other projects targeting SMEs in the region, during its implementation period identified the need for strengthening the overall SCP policy and institutional framework in the country to effectively support the uptake of such green and SCP processes by the SMEs. Some initial steps in this regard, were undertaken in Sri Lanka with the launching of a voluntary ‘Green Reporting’ system catalyzed through one of the above mentioned grant projects, and also enhanced dialogue with stakeholders on Green Public Procurement. 

It was realized that Sri Lanka does not have a standardized policy formulation process and hence different policy proponents follow different procedures. It was found that there are no proper guidelines for concept note development to justify the need for particular policies, no proper policy protocol, no standardized policy format and no policy-screening tool. This resulted in policy formulation taking a much longer time than really required due to the absence of essential information. Deficiency of the process results in suboptimal policies and eventually weaker implementation.

Therefore, it is important that Sri Lanka adopts a standardized process for policy formulation and make it mandatory so that policy proponents follow a unified system. 

Sri Lanka’s NPSC has already commenced this work and drafted a policy format, policy protocol and policy screening tool with the participation of over 80 high level state sector officials representing almost all the Ministries and key agencies of Sri Lanka. First level validation has also been done with the participation of those who were involved in the drafting process. Two more levels of validations will be done with the involvement of Ministry Secretaries before seeking the Cabinet’s approval. The NPSC gratefully acknowledges the lessons learned from the Gross National Happiness initiative of Kingdom of Bhutan in this endeavor. 

Resource consumption and production

Main Resource Consumption and Resource Efficiency Indicators (2010)

Population (thousands)21045 (2011)
GDP (million USD)59175 (2011)
GDP is in USD exchange rate based on year 2005 and deflated.
Source: UNSD database.
Subject Area Total Per person Per USD$ of GDP
Domestic Material Consumption, DMC
(tonnes, tonnes per capita, kgr per 1USD$)
74,635,040.00 3.60 0.001
GHG emissions
(kilotonnes,tonnes per capita, kgr per 1USD$)
29,131.29 1.40 0.49
Total Primary Energy Supply, TPES
(Petajoules, Gigajoules per capita, Megajoules per 1USD$)
406.21 19.67 6.86
Water Use
(Trillion litres, Kilolitres per capita, Litres per 1USD$)
12.95 623.83 2.19
Subject Area Indicator
Population density 2015 (UNESA 2012 revision), population per sq.km 329
GDP per capita (USD), 2013 WB) 3,279.90
HDI Rank (2013) UNDP 0.75
Arable land (hectares per person) WB 2012 0.06
Forest cover in % (2010), UNSTATS 29
Material intensity (2010)UNEP 2.24
Per-capita energy use (kg of oil equivalent per capita) 2011, WB 499
Energy intensity (total primary energy consumption per USD of GDP) 2011, EIA 7,509.28
GHG intensity (2010) UNEP 0.88
CO2 emissions (metric tonne per capita), 2010, WB 0.6
Number of Middle Class consumers % (2010), ADB 59
Number of people with income < 2USD/day (PPP, USD, %), 2010, ADB 40

Trends in Resource Consumption and Resource Efficiency Indicators (1970-2010)

DE: Domestic Extraction;
MI: Material Intensity of the economy;
MF: Material Footprint.
All other abbreviations explained in the table above

Panel a) shows Sri Lanka’s GDP growing fastest, increasing by a factor of six. DMC and TPES increased at less than half this rate, with population and GHGs less than doubling. In panel b), DE per capita has not grown in proportion to DMC, implying an increasing reliance on imports (or at least diminished capacity to export). While DE per capita did not keep pace with DMC, much less GDP, in gross terms, the non-metallic minerals component of it did, growing six fold. Comparing DE to the MF per capita in panel c) indicates that Sri Lanka more than meets its material requirements from DE, in gross terms, but is heavily reliant on imports (direct or embodied) for fossil fuels and metal ores. Panels d), e) and f) show per capita consumption has increased on all measures, and that all conventional intensity measures have decreased, indicating relative decoupling, while materials and energy footprint based measures indicate that no relative decoupling has taken place. Conventional measures overestimate Sri Lanka’s requirements for materials and energy relative to foot printing.

(Source: UNEP CSIRO Indicators for a Resource Efficient and Green Asia and the Pacific, 2015)

Key references relevant to SCP


In Sri Lanka, natural forests rich in biodiversity make up 30 per cent of the country's total land area.

  • Promoting Sustainable Biomass Energy Production and Modern Bio Energy Technologies
    This project, which was commenced in August 2010, comes under the climate change project implemented by UNDP and FAO with the funding of Global Environment Fund (GEF). Approximately 90 percent of Sri Lanka’s industrial small- and medium-scale enterprises (SMEs) use wood to produce thermal energy and to meet energy requirements. Furthermore, the rise in oil prices in 2008 resulted in an increased demand for firewood as an energy fuel and, therefore, additional pressure on forests (both natural and planted). The plan of the Sustainable Energy Authority (SEA) is to replace 10 percent of the energy requirements of the industrial SMEs with biomass from other sources, including plantation fuel wood and waste biomass. The project will use established agricultural and industrial entities to source other biomass. This project will save 400,000 metric tons of oil over a five-year period by addressing major barriers that have prevented sustainable biomass production in fuel wood plantations through four major components: a) policy support for effective coordination and implementation, b) barrier removal for sustainable fuel wood production and supply, c) enabling the investment environment for fuel wood suppliers and Dendro power producers, and d) Dendro power technology development.
  • Waste2Resource
    Three integrated resource recovery centres (IRRCs) operate in Matale, a medium-sized urban centre in central Sri Lanka known for its spice gardens. The IRRCs are managed by the Matale Enriched Compost a sister company affiliated with the NGO Sevanatha. The first centre was initiated through an ESCAP project in 2006, and the second centre was set up with funds from the Government of Sri Lanka through the national Pilisaru (waste management) programme in 2010. The 2006 project was ground-breaking because the Municipal Council granted permission to collect fees from households for the service. Now ESCAP is looking to break even more ground through its regional project, Pro-Poor and Sustainable Solid Waste Management in Secondary Cities and Small Towns. Through the project, Sevanatha, the Matale Enriched Compost project and the Matale Municipal Council, with help from Waste Concern, are planning to scale up the IRRC approach to treat most of the waste generated in Matale. The IRRCs in Matale have successfully shown the importance of community participation and have proven that it is possible to achieve a high degree of separation of waste at the household level. After training and awareness raising, people are now separating their waste in the area covered that the IRRC services. Sevanatha has worked with the community through committee meetings and door-to-door training to promote waste separation at the source. The project also has demonstrated that the community is willing to pay collection fees when they receive a good service for their money. The three IRRCs are located within the neighbourhood they service, which keeps transportation costs low and allows fruit and vegetable vendors to take their waste directly to the plant. The central location also has helped to better publicize the project and the merits of an IRRC – an important factor in motivating households to separate their waste.

UNEP's relevant activities

International donor supported relevant activities 

  • Eco-innovation Project

    The UNEP eco-innovation project was initiated in 2014 aiming to develop local resources and capacities for eco-innovation in developing and emerging economies. It specifically targets small and medium sized enterprises (SMEs) of Agri-food sector.

    To reach the SMEs, the UNEP eco-innovation project co-operates with National governments and National Cleaner Production Centres as service providers. National Cleaner Production Centre Sri Lanka (NCPCSL) is the implementing partner for the project in Sri Lanka. NCPCSL is entrusted to initiate the 1st pilot project on Eco-innovation under Agri-food sector.

    Initially, twenty (20) enterprises were selected to conduct a feasibility study by identifying the potential to apply eco-innovation approach with desire of the industry. Finally, eight (8) enterprises are being provided technical assistance together with comprehensive training by international experts for the implementation of eco-innovation. The success stories of those companies will be publicized internationally.

    The industries will be enabled to handle their sustainability issues in a holistic way and position as a sustainability thought leader.

    Contact: Ms. Sachira/ Ms. Upendra/ Ms Uthpala (011-2822272/3)
    Email: vsachira@gmail.com, sankalpaniu@gmail.com, arjeewaniupendra@gmail.com
  • Life Cycle Assessment & Design for Sustainability Network (LCADesNet)

    LCADeSnet is one of the initiatives envisaged under the National Cleaner Production Centre (NCPC), Sri Lanka to bring the life cycle & D4S researchers and corporates on to a single platform. The primary objective of the Network is to assist state & corporate sector organizations, Life Cycle Analysts and Eco-designers to share the knowledge and experience to support sustainable development in each and every sector. The Network aims to link the industry & businesses with those engaged in formal scientific and policy responses. The present membership of LCA&D4S Network consisted of academics, scientists, corporate sector leaders, NGO partners, consultants, government officers who work on LCA & eco design and other environmental impact relevant fields in Sri Lanka.
  • Global Partnership for Waste Management Sri Lanka

    Sri Lanka (National Cleaner Production Centre)’s responses to the needs assessment survey show that waste management needs to be improved mainly at the local level. Nationally, waste management policies exist, while international cooperation has successfully implemented projects, notably the “Pilisaru” Programme. In local communities and governments, however, public and political interest for waste management needs to be built, and specific plans should be made. The country should develop a paradigm shift from waste management to resource management to encourage the participation of the private sector; businesses are in a better position to provide technical capacity in this area.
  • Stimulating the demand and supply of sustainable product through Sustainable Public Procurement and Eco Labeling (SPPEL) 

    This project which will be operative for a period of 2 years is still under negotiation to finalize the agreement between UNEP and the Ministry of Mahaweli Development & Environment which is the executing agency. The proposed activities are:

     

    • Establish a baseline for monitoring progress and reporting
    • Analyze the existing legal framework and recommend changes to facilitate SPP implementation
    • Carry out the preliminary prioritization of sustainable products and services
    • Conduct a market study, engage the market and develop sustainability criteria for the three prioritized products and services groups
    • Preparation of a National SPP Action Plan
    • Establish the institutional framework for the implementation of the SPP Action Plan
    • Develop sustainable public procurement tools  
    • Prepare, launch and award pilot tenders
    • Capacity building for trainers and public procurers
    • Implement other activities foreseen in the adopted SPP Action Plan

     

The information in the country profiles herein have been obtained through research with firsthand and secondhand sources. The information presented herein cannot be considered as official policy of governments or other official bodies. The SWITCH-Asia Programme cannot be held responsible for the content of the sites to which it provides links or for the availability of servers or links. Information is being continuously updated in order to maintain an up to date country profile. If you would like to contribute information for this profile or have any further comments, please send an email to: SWITCH-PSC@unep.org

Status

For many years, the banking and financial sector in de­veloping economies like Sri Lanka remained unaffected by talks of green development, SCP or climate change mitigation, specifically in relation to the "greening of in­dustry". Being in the "non-polluting" service sector in contrast to the traditional "smokestack" industries, banks and financial institutions appeared unconcerned with the challenge of environmental responsibility, caring only for the cleanliness and hygiene of their immediate surround­ings.

However, this situation has changed dramatically over the last two decades. With legal and stakeholder concerns like lender liability on environmental "miscues" as well as increasing awareness over climate change, environmen­tal degradation, and sustainable development, the bank­ing and finance sector responded positively towards the principles and practices of environmental risk manage­ment and due diligence.

In 2009, the government of Sri Lanka finally succeeded in containing the more than 26 years of intermittent local insurgency setting the stage for the country's long lasting peace to usher a new era of economic opportunities and rebounding economic growth and sustainable economic development. Sri Lanka's twin engines of its current de­velopment thrusts are building basic infrastructure and developing small and medium scale enterprises. In gener­al, financing comes from internally generated funds and from official development assistance and a lack of funds hampers major undertakings in the country.

The bulk of financing activities are in housing devel­opment projects for the people. In reality, green finance is still far off the grid as far as development financing institutions in Sri Lanka are concerned.

Among the more promising green financing schemes in the country is the Energy Loans of the DFCC funded by the European Investment Bank (EIB) through the Govern­ment of Sri Lanka, for investments in renewable energy (RE) generation and energy efficiency projects. Targeted energy savings are at least 20%. Eligible RE projects are in hydro, wind, solar, bio-mass and geo-thermal energy. Between 2002 and 2007, DFCC also implemented the World Bank assisted Renewable Energy for Rural Eco­nomic Development (RERED) Project for the financing of hydro, solar PV, wind and biomass renewable energy tech­nologies in rural areas.

There is also the financing by private individuals of community-based green projects in remote villages to en­courage farmer communities to turn away from conven­tional types of agriculture and environmentally unfriend­ly livelihood (e.g. cutting down trees for fuel and timber, setting fire to forests, especially in watershed areas for Chena cultivation, and commercial exploitation of land for mass cultivation of food crops leading to soil erosion).

The banking sector in Sri Lanka has also started to ride on the wave of national and sectoral policies on environ­mental protection such as the National Cleaner Produc­tion (CP) Policy and Strategy of 2005, Sectoral CP Policies in accordance for Health, Tourism, Fisheries and Agriculture and the Haritha (Green) Lanka Programme and the Nation­al Action Plan of 2009) to encourage industry and service sectors to go green. They provide support and incentive packages to environment-friendly businesses.

Key challenges for Green Financing in Sri Lanka

Financing institutions in Sri Lanka are engaged in com­paratively "small" environment-friendly actions like purchasing office furniture made from non-timber materials and using 25% thinner paper in photocopy­ing documents that should count as part of a corporate mindset that is preparing to face bigger challenges ahead in climate change mitigation and adaptation.

Notwithstanding, the main per­ceptions with respect barriers that prevent Sri Lanka from implementing green finance are:

- Preparedness of select financing institutions towards green finance;

- Bank aversion to risks in new projects;

- Low level of people's awareness on green finance;

- Low access to expertise in environmental manage­ment and green finance.

Main institutions providing Green Finance

HDFC Bank of Sri Lanka (Housing Development Finance Corporation Bank of Sri Lanka), of which the Government of Sri Lanka holds approximately 51% shares, have their primary business in the provision of housing finance to the people in line with the overall national housing vision of 'a house for each Sri Lankan family. HDFC's main market is the low and mid-income segment, which includes rural and urban poor residents. While it has yet to actively pursue financing of environment friendly homes or buildings as a green banking strategy, HDFC strictly observes environmentally responsible lending by requiring all home and building plans to be designed by qualified planners and approved by relevant local authorities to ensure that community needs are addressed.

DFCC Bank has been appointed as the administrative unit for the SME and Green Energy Credit line of the European Investment Bank (EIB). The bank manages multi-bank credit lines such as those from the World Bank (Interna­tional Development Association - IDA)/ Global Environ­mental Fund (GEF). Minimising adverse impacts on the environment remains a key area of focus in DFCC Bank's sustainable develop­ment strategy. Though the direct impact to the environ­ment through its operations is currently minimal, the bank is committed in managing its resources efficiently. Its commitment to environmental stability is three­fold, namely, managing resource consumption, support­ing environmental initiatives and encouraging responsi­ble investment.

Other institutions providing Green Finance in Indonesia are:

Regional Development Bank

Sanasa Bank

World Bank (IDA)

World Bank 's Global Environmental Facility (GEF)

European Investment Bank (EIB)'s SME and Green Energy Global Loan

Japan Bank for International Cooperation (JICA) through Ministry of Finance and Planning

Asian Development Bank (ADB)