Opinion: Bridging finance and sustainability in Bangladesh – Commercial Bank of Ceylon

When I think about the future of sustainable finance in Bangladesh’s banking sector, I see both remarkable progress and pressing challenges ahead.

Bangladesh Bank’s Sustainable Finance Policy (2020) and earlier green banking guidelines have already created a strong regulatory base. These frameworks mandate dedicated sustainability units, ESG risk management, and regular reporting, while quarterly reviews and performance ratings are driving sector-wide engagement.

This regulatory momentum, coupled with concessional funding from institutions such as ADB and IFC, is pushing sustainable finance forward in ways unimaginable a decade ago.

Opportunities lie in strengthening ESRM frameworks, expanding green product portfolios, and embracing mandatory disclosures to improve transparency. Yet challenges remain: limited project appraisal capacity, uneven ESRM implementation, bankability of renewable energy and climate projects, and the absence of a unified green taxonomy. Data gaps further complicate decision-making.

Still, in the next three to seven years, green lending should scale steadily, largely driven by top-tier banks, blended finance, and the growing issuance of green bonds and sukuk. Policy reforms, paired with risk-mitigation tools, could unlock much larger pools of private capital, particularly for renewable energy, resilient agriculture, and green SMEs.

To sustain growth, banks must strengthen technical capacity, pilot standardised green MSME products, and integrate climate risk tools into decision-making. Regulators, meanwhile, must fast-track a national green taxonomy, expand refinancing lines, and offer credit guarantees. Development partners have a vital role too—providing blended finance and technical assistance to create pipelines of bankable projects. Bangladesh is on the right track. We already have strong regulations and growing institutional commitment, but scaling up impact will depend on closing capacity gaps, de-risking investments, and standardising disclosures.

Our bank’s journey in sustainable finance

At Commercial Bank of Ceylon PLC, sustainability is embedded in our DNA. Guided by three pillars—Sustainable Banking, Responsible Organisation, and Community Engagement—we have achieved carbon neutrality across operations and steadily grown our green finance portfolio. By 2024, this stood at $128.33 million: 57% in renewable energy, 24% in climate-smart agriculture, and the rest in green buildings, water conservation, and eco-transport.

Our framework is built on three pillars: Sustainable Banking, Responsible Organisation, and Community Engagement. These are not slogans—they guide how we operate, how we lend, and how we give back. We have achieved carbon neutrality across all operations, an achievement I am personally proud of, and we have steadily grown our green finance portfolio.

Our efforts have been recognised internationally. We won two IFC CAFI awards in 2020, partnered with IFC and the EU in 2024 to expand green and blue finance, and have been consistently named the “Most Sustainable Bank in Bangladesh.” Locally, we launched tailored green finance products, accessed Bangladesh Bank refinancing, and strengthened ESG integration across operations.

Between 2021 and 2024, our sustainable finance disbursements in Bangladesh rose from Tk2.36 billion (3.23% of total disbursements) to Tk28.37 billion (18.51%). By 2024, our total sustainable finance portfolio stood at Tk58.30 billion, benefiting 573 borrowers. We strategically allocated funds: 30% to education, 30% to health, 20% to climate and environment, and 20% to other social sectors.

Looking ahead: Future plans

In 2024 alone, we disbursed $112.40 million in green finance across 2,100 facilities, reducing nearly 292,331 tonnes of CO₂ equivalent. Building on this, we plan to launch Green, Sustainable, and Gender Bonds, as well as Impact Investing Funds, to channel capital into renewable energy, sustainable agriculture, climate-resilient infrastructure, and low-carbon technologies. Our roadmap aligns with SDG 7, SDG 12, and SDG 13.

We are also preparing for Bangladesh’s adoption of IFRS 9 sustainability-related reporting standards by 2027 by upgrading governance and technology platforms. Partnerships remain central: collaborations with GGGI, IFC, and the EU are helping us develop thematic bond frameworks, expand blue economy financing, and design climate transition strategies.

New products in the pipeline

Product innovation drives our growth. We are developing Green, Sustainable, and Gender Bonds, as well as Impact Funds, while continuing to finance solar, wind, energy-efficient machinery, rooftop solar, and electric vehicles. With GGGI, we are preparing a thematic bond framework, and with IFC and the EU under ACSIIS, shaping a climate transition strategy.

In Bangladesh, we are focused on green loans for renewable energy and climate-resilient agriculture. ESG criteria are embedded in lending, while our CSR, Sustainability, and Women Banking department has introduced micro-loans and SME products for women entrepreneurs, alongside a Climate Fund allocating 10% of CSR budgets to eco-projects.

The hurdles we must overcome

Challenges persist—borrower awareness is low, SMEs perceive green investments as costly, and the lack of a unified taxonomy complicates reporting. Data gaps, weak ESG reporting, limited refinancing, and uncompetitive loan rates also constrain growth. At the capital market level, scarce green bonds and weak secondary markets restrict long-term financing.

The role of regulators

For scale, regulators must set sub-targets, expand refinancing, introduce credit guarantees, and standardise reporting. Centralised tagging systems, ESG training, and third-party assurance can build credibility. Reforming capital markets—via liquid Treasury bonds, securitisation, and public asset management frameworks—would enable banks to access long-term funds.

The journey towards sustainable finance in Bangladesh is still unfolding. With strong regulations, institutional commitment, and urgent climate needs, the foundations are in place. At Commercial Bank of Ceylon PLC, we are committed to leading from the front—building capacity, innovating products, and aligning finance with a sustainable future for both Bangladesh and Sri Lanka.