GRI 201-2

CDB was recognised as South Asia’s first ISO 14064-1 carbon-verified financial institution by Sri Lanka Carbon Fund. Aligned with the Companywide ethos of reducing its carbon footprint, CDB has continued its environmental efforts towards becoming a Net Zero entity by 2030.

The Company drives environmental sustainability through its core business by incorporating environmentally friendly practices and initiatives. It promotes green financing and environmentally friendly projects. Additionally, the Company encourages responsible and sustainable business practices among its clients and stakeholders. By aligning its operations with environmental goals, CDB contributes to the preservation of the environment and the transition towards a greener economy.

Extending sustainability to customers’ value chain

CDB practices sustainable financing by supporting projects committed to sustainable development and environmental impact, such as renewable energy and sustainable mobility. Accordingly, the Company conducts thorough evaluations of borrowers’ financial capacity and creditworthiness while also assessing the environmental, social, and governance (ESG) factors associated with the financed projects or activities. This process emphasises the importance of responsible environmental practices, labour practices, human rights, and good corporate governance. By integrating these considerations into the evaluation process, the Company promotes sustainable and ethical practices among its stakeholders and encourages a commitment to upholding societal and environmental well-being alongside financial viability.

Some of the key practices adopted by CDB in promoting responsible finance are given below:

1. Developing a comprehensive portfolio of sustainable financial products and loans for renewable energy projects, energy-efficient initiatives, and sustainable businesses.
2. Collaborating with industry stakeholders, including government agencies, development organisations, and private sector partners, to foster a supportive ecosystem for sustainable financing and promote industry-wide best practices.
3. Developing and enforcing responsible lending policies and guidelines within the Company to ensure adherence to ethical lending practices.
4. Strengthening its risk assessment capabilities to effectively evaluate and manage environmental and social risks associated with sustainable projects.
5. Enhancing transparency and reporting by disclosing the environmental and social impact of its sustainable financing activities, instilling confidence in stakeholders, and attracting more investors to support sustainable initiatives.
6. Providing clear and accurate information about loan terms, conditions, and associated risks, and, more broadly, promoting financial literacy and education, enabling customers to make more informed decisions.

The Company’s Environment and Social Management System (ESMS) ensures that environmental, Social and Governance (ESG) considerations are embedded into its credit and risk assessment processes for its lending activities. All credit files are inspected through the ESMS system, and reviewed annually by a committee comprising representatives from Sustainability, Risk Management, Credit Operation and Evaluations, Finance, and Corporate Finance.

The CDB team maintains a close collaboration with customers, offering comprehensive support in securing funding for their transition to a low-carbon operation. The credit evaluation officers are trained to assess the compliance of all credit facilities with the exclusion list, project categorisation, and risk management criteria. This also includes increasing customer awareness and engaging with them to minimise the adverse environmental impact of their business operations.

• Percentage of credit facilities complied with exclusion list - 100%.
• Percentage of credit facilities complied with project categorisation and risk assessment of ESMS - 100%.
• All financing facilities were categorised as low-risk.

In terms of its supplier ecosystem, CDB has established a Sustainable Purchasing Policy to minimise its environmental impact and deliver community benefits through the responsible selection of products and services. The suppliers are encouraged to adopt sustainable practices that minimise environmental impact and deliver community benefits. This policy is envisaged to foster innovation in its supply markets to enhance the effectiveness of sustainable behaviour in the procurement process.

Sustainable lifestyle through renewable energy

CDB promotes roof solar energy to support renewable energy adoption, reduce carbon emissions, and provide cost savings to customers. It enhances energy resilience, enables quick return on investment, and allows selling excess energy to the grid. CDB partners with leading corporations to rejuvenate the renewable energy sector, particularly solar energy. The Company seeks further collaborations to provide customers with cost-efficient and competitive solutions in this field.

In terms of its Key Performance Indicators (KPIs) for renewable energy, last year CDB set a target of 1,500 kW
during its launch. However, due to economic conditions and import restrictions, this target could not be achieved. Nevertheless, once the market turns positive CDB is optimistic about setting a target of 6,000 kW within next FY. The Company remains committed to expanding its renewable energy capacity and contributing to
a sustainable energy future.

Accelerate household renewable energy solutions

As part of its commitment to sustainable financing and investment options in the Green Financing sector, CDB introduced the CDB Advance Roof Solar product. This initiative aims to empower customers to embrace a smart and self-sufficient lifestyle by facilitating their transition to a renewable energy source, allowing them to generate additional income and reduce electricity bills. CDB offers a comprehensive package that includes the latest solar technology, reliable after-sales service, and a competitive financing facility with an expert technical and convenient installation. CDB has set a target of installing roof solar facilities in the upcoming year, with a collective capacity of approximately 6,000 kW.

• 105 CDB Advance Roof Solar facilities
• Approximately 633 kW capacity was was released to the grid
• Partnered with two suppliers registered with Sri Lanka Sustainable Energy Authority, and CDB remains open to obtaining the services of reliable solar equipment suppliers going forward.

Accelerate sustainable mobility solutions

CDB actively promotes sustainable mobility solutions to create a greener and more sustainable future. These initiatives effectively reduce carbon emissions, improve air quality, and enhance the overall efficiency and accessibility of transportation systems.

The following initiatives were implemented by CDB to promote sustainable mobility.

1. Financing: Offering financial support and loans to companies, organisations, and projects that develop and implement sustainable mobility solutions, including funding for electric/hybrid vehicles, public transportation infrastructure projects, and renewable energy projects.
2. Education and Awareness: Promoting awareness and educating the public and internal stakeholders about the benefits of sustainable mobility options, encouraging behaviour change, and fostering a culture of sustainable transportation.
3. Internal Sustainability Initiatives: Implementing sustainable mobility practices within the Company, such as adopting electric/hybrid vehicles for our fleet, promoting employee transportation alternatives like carpooling or bike-to-work, and work-from-home initiatives to reduce our carbon footprint. Furthermore, to encourage EV usage among its team members, the Company has expanded its EV charging infrastructure at the head office from three to five charging points. This enables the team members to conveniently charge their EVs and plug-in hybrid vehicles at the workplace, promoting a sustainable transportation culture within the Organisation.

CDB targets to increase its energy-efficient vehicle portfolio to 50% of the total vehicle lending portfolio by 2025 from 20% as of 31 March 2023. The Company encourages its customers to adopt environmentally conscious practices by promoting environmentally friendly products and encouraging them to reduce their carbon footprint.

The Haritha project, aimed at promoting electric vehicles (EV) and solar energy solutions, is currently on hold pending feedback from the Government. However, CDB has undertaken significant initiatives to advance the green economy by promoting a comprehensive ecosystem for EVs. To educate the general public, the Company has established an EV Concept Center, providing valuable information and insights. Additionally, CDB has been actively enhancing the EV charging infrastructure within the Western province to facilitate convenient charging options for EV users. Furthermore, in collaboration with a reputable technical partner, CDB has commenced infrastructure development to facilitate three-wheeler EV conversions. These initiatives highlight CDB’s commitment to fostering a greener future through the promotion and adoption of EV technologies. CDB is actively enhancing the charging network by financing the installation of additional chargers in and around Colombo. This will strengthen the existing network of charging points nationwide. Construction has already begun on the Concept Centre, which will feature four charging points. These efforts will empower individuals to make informed decisions about investing in EVs.