Understanding listed sustainability bonds and how Bank of Ceylon positions itself for a changing capital market

SUSTAINABILITY is reshaping global finance, tremendously. Over the past, sustainable bonds have become a defining feature of responsible investment, bridging the gap between capital markets and long-term environmental and social goals. Now, as Sri Lanka prepares to deepen its green finance ecosystem, the conversation around sustainable debt instruments is moving from policy to practice.

- 

Bank of Ceylon Deputy General Manager - International, Treasury and Investment G. A. Jayashantha

Unlike traditional bonds that raise funds for general corporate or government purposes, sustainable bonds are designed to channel capital toward projects that deliver measurable positive social or environmental benefits. Green, social, and sustainability bonds fall within this rapidly expanding asset class, guided by frameworks such as the International Capital Market Association (ICMA) Sustainability Guidelines and aligned with the United Nations Sustainable Development Goals (UN SDGs). Globally, such issuances surpassed $ 1.1 trillion in cumulative value by 2024, according to the World Bank, and this indicates investor appetite for instruments that merge profit with purpose.

In essence, a sustainable bond allows issuers to raise funds for new and existing projects that advance both environmental and social outcomes, from green projects in sectors such as renewable energy, energy-efficient construction, waste management and clean transportation to financial inclusion, women empowerment, MSME development, and access to essential services such as healthcare, and education. Green bonds, social bonds and sustainability bonds constitute the three main sustainable bond types where green and social bonds aim to raise capital to fund projects with environmental or social benefits respectively, while sustainability bonds finance projects with both positive social and environmental outcomes. What differentiates these instruments from standard corporate or government bonds is their strict requirement for transparency, use-of-proceeds monitoring, and impact reporting. Investors are purchasing returns and also accountability, often verified by independent evaluators.