Sustainability forms a core part of the Bank’s strategy, with a commitment to driving long-term value creation through economic, social and environmental stewardship. Our Sustainability Framework, outlined in Figure 15, follows a holistic approach with three foundational pillars – Sustainable Banking, Responsible Organisation and Community Engagement – anchoring our efforts to deliver meaningful and measurable outcomes for all stakeholders.

Purpose-driven sustainability

Our sustainability efforts are driven by our clearly defined purpose through which we aim to create shared value while ensuring minimal adverse impact on the environment.

The three pillars of our Sustainability Framework encompass the following key focus areas:

Sustainable banking

This pillar emphasises responsible financing, financial inclusion and the development of sustainable products and services that meet both current and emerging stakeholder needs.

Responsible organisation

As a responsible institution, we focus on creating a green and safe workplace, conducive workplace culture and promoting a sustainable supply chain.

Community engagement

We strengthen our social license to operate by actively engaging in environmental initiatives, supporting social enterprises and contributing to community development.

Our framework aligns with globally recognised sustainability standards, including the UN Sustainable Development Goals (SDGs), with a specific focus on eight SDGs most relevant to our business operations.

A pioneering identity in sustainability

On January 1, 2024, we launched our evolved logo, integrating a green element to symbolise our unwavering commitment to sustainability. As the first corporate in Sri Lanka to incorporate such an element into its corporate identity, we have strengthened our position as a leader in ESG initiatives.

This refreshed identity reflects our dedication to fostering diversity, inclusivity, good governance, transparency and eco-friendly financial solutions. Through this visual transformation, we have reinforced our long-standing commitment to sustainability, underscoring our efforts to integrate ESG principles into every facet of our operations.

ESG and organisational oversight

A robust governance structure underpins our sustainability initiatives, ensuring alignment with regulatory standards, stakeholder expectations and best practices. Our Executive Sustainability Committee, which convenes quarterly, oversees the Bank’s sustainability strategy, monitors its implementation across the organisation, and reports to the BIRMC. This committee is supported by the Sustainability Working Committee (SWC), tasked with evaluating proposed sustainability initiatives, assessing their impact and ensuring alignment with the Bank’s broader ESG goals.

In 2024, we further strengthened our sustainability related policy framework by introducing the Board-approved Diversity, Equity and Inclusion (DE&I) Policy and further enhanced our internal reporting processes to ensure transparent disclosure of our sustainability performance.

Through internal engagement platforms like intranet and ComPulse, we continue to educate our staff on sustainable practices, fostering a culture of environmental responsibility.

Connecting sustainability to our business model

Our Sustainability Framework is intricately linked with the Bank’s Business Model, which revolves around financial intermediation and maturity transformation. As a financial intermediary, we play a crucial role in converting deposits into loans and investments, thereby driving economic growth. Our Statement of Capital Position (refer pages 76 and 77) highlights how we draw on six forms of capital – Financial, Manufactured, Intellectual, Human, Social & Relationship and Natural – to create sustainable value.

By integrating sustainability into our Business Model, we ensure:

Prudent financial intermediation: Responsible allocation of financial resources that balances profitability with long-term societal impact.

Resilience through maturity transformation: Conversion of short-term funds into long-term lending, underpinned by robust risk management practices.

Stakeholder-centric value creation: A continuous process of leveraging inputs from various capitals to generate outputs and outcomes that benefit our stakeholders.

Statement of capital position and stakeholder returns

The Statement of Capital Position offers a snapshot of how we manage and transform our six capitals for value creation. In 2024, we recorded notable growth in both our deposit base and lending portfolio, demonstrating effective financial intermediation. Our ability to consistently generate net interest income and fee-based income underscores the strength of our business model.

As part of our commitment to stakeholder value creation, we seek to diversify our revenue streams through strategic partnerships and regional expansion. Notably, our partnership with IFC to build a supply chain financing strategy exemplifies our approach to leveraging strategic collaborations for mutual growth, while aligning with our sustainability principles.

Gearing and risk mitigation

Gearing is a key differentiator in our Business Model, enabling us to mobilise deposits and expand our loan book. However, given the inherent risks of high leverage, our risk management framework ensures that we maintain an optimal balance between growth and stability. By continuously monitoring our capital adequacy and risk-weighted assets, we safeguard the Bank’s financial health and long-term viability.

The gearing strategy forms a critical component of our financial operations, allowing us to amplify our capacity for lending and investment. This strategy, while essential for scaling our business, is complemented by a comprehensive risk management framework to mitigate potential risks associated with high leverage.

Our integrated approach to sustainability and business strategy positions the Bank as a resilient and forward-thinking financial institution. By aligning our operations with global sustainability standards and embedding ESG principles into our core Business Model, we are well-equipped to create lasting value for all stakeholders.