Sri Lanka aims to raise over $11 billion for climate projects

Sri Lanka intends to raise $11.26 billion through Sovereign Green and Blue Bonds by the year 2030 to fund climate-related projects and support its goal of achieving net-zero carbon emissions by 2050.

The ambitious plan, which outlines a framework for sustainable finance, is detailed in the new National Climate Finance Strategy 2025-2030, or NCFS.

The funds are earmarked for investment in renewable energy, biodiversity conservation, and other environmental initiatives.

The NCFS states that the Finance Ministry has already developed a Sovereign Green and Blue Bond Framework and is seeking an independent, second-party opinion from an international rating agency to guarantee compliance with global standards.

The strategy, which was released last Friday, was created with assistance from the UK Government and the United Nations Development Programme (UNDP).

Sri Lanka’s interest in ‘nature-linked’ Green Bonds was highlighted at the World Bank’s Biodiversity Financing Forum, underscoring its potential to attract capital for sustainable projects.

The NCFS notes that strong domestic investor demand and oversubscription of recent Green Bond issues suggest growing awareness among the local private sector and retail participants.

Building on this momentum, the Ministry plans to align future bond issuances with the Green Bond Principles of the International Finance Corporation (IFC) and to develop a comprehensive Sustainable Bond Framework.

It is also exploring a Sustainability-Linked Bond Framework to enhance investor trust.

The strategy emphasises the need for transparent reporting on fund allocation and environmental outcomes to meet investor expectations.

The National Climate Finance Strategy 2025-2030 outlines a structured implementation plan, including capacity building, project pipeline development, and risk mitigation.

Successful execution of the plan is expected to position Sri Lanka as a regional leader in sustainable finance, improve its sovereign credit rating, and attract international investment for key projects in areas such as waste management, renewable energy expansion, and biodiversity protection.

The strategy, which adopts international best practices, focuses on crucial sectors including energy, water, and agriculture, and outlines specific financial tools.

In addition to Green and Blue Bonds, these core instruments include green loans, public-private partnerships for climate action, disaster risk insurance, and subsidies for good agricultural practices.

The plan also prioritises integrating natural capital accounting into national accounts and exploring a carbon market to monetise emission reductions.