SEC approves social bonds in Sri Lanka
The Social Bond Framework was approved on Tuesday by the SEC Commission, paving the way for more such bonds to enter the market, top officials said.
Social bonds, a type of fixed-income instrument issued to finance projects with a direct and measurable social impact on the capital markets were given clearance by the regulator after bonds. Senior Prof. Hareendra Dissabandara, Chairman of the Securities and Exchange Commission (SEC) told The Sunday Times Business on Wednesday that with regulatory clearances for sustainable bonds, financial institutions have shown increasing interest in launching Green Bonds.
Two Green Bonds have already been issued, and a third, Commercial Bank – raising Rs. 15 billion; Basel III, Tier II capital—is in the pipeline, he added.
“It is crucial to issue Green Bonds in a meaningful manner rather than as a mere formality. This should not be reduced to ceremonial exercise,” he emphasised.
Stressing the importance of awareness and education on sustainable bond products, he highlighted that a well-developed debt market with robust sustainable finance instruments will enhance the market vibrancy and long-term financial stability.
He further stated that, “in some instances, companies in certain countries have issued Green Bonds but misused the funds for general purposes rather than the intended environmental projects. Ethically, this is inappropriate and raises concerns about greenwashing”.
At a recent event on this topic, ADB South Asia Department Director General Takeo Konishi commended the SEC and Colombo Stock Exchange for their initiatives in implementing green bond regulations and raising awareness among issuers and investors. The efforts have resulted in successful green bond issuances, including DFCC Bank’s first green bond issuance in September 2024 and Alliance Finance PLC’s in February 2025, both of which were fully subscribed by institutional investors, he said.
ADB Country Director for Sri Lanka Takafumi Kadono reaffirmed the ADB’s commitment to supporting Sri Lanka in developing regulatory frameworks to improve investor confidence. Sustainable Finance Institute Asia Senior Adviser Datuk Zainal Izlan Zainal Abidin highlighted the growing importance of sustainable finance and the need for countries to adopt impactful financing frameworks to address global and local challenges. He recommended countries invest in sustainable infrastructure, integrate ESG principles into business strategies, and take proactive steps to align with global supply chain expectations.
In response to a query about the SEC’s plans, Prof. Dissabandara further stated: “Sustainable Finance remains a key priority for the SEC in advancing capital market development. “However, we recognize that true progress requires a deep understanding of the aspirations of future generations and a commitment to staying on par with global advancements.”
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