LB Finance: Leading Sri Lanka’s ESG Journey

Sustainability is no longer simply a corporate aspiration; it has become a defining measure of resilience, investor confidence and long-term value creation. As Environmental, Social and Governance (ESG) expectations continue to reshape the global financial landscape, financial institutions are increasingly expected to deliver positive environmental and social outcomes alongside strong financial performance.

For LB Finance PLC, sustainability is not a recent addition to its strategy. It is a commitment that has been built steadily over more than a decade, evolving through innovation, responsible finance and internationally recognised ESG leadership.

As one of Sri Lanka’s leading Non-Banking Financial Institutions (NBFIs), LB Finance has woven ESG into the fabric of its corporate strategy, recognising the industry’s responsibility to support sustainable economic growth. Guided by its ESG Pathway, the Company recently introduced ESG Roadmap 2.0, setting ambitious targets through to 2030 across three strategic ESG pillars. More than a roadmap, it provides a clear direction for climate action, responsible finance, social impact and governance excellence, ensuring sustainability remains central to every major decision while supporting Sri Lanka’s broader sustainable development agenda.

This commitment has earned international recognition through an AAA ESG Rating from IdealRatings, reinforcing the Company’s alignment with globally recognised sustainability frameworks and strengthening investor confidence.

LB Finance’s environmental journey began in the 2013/14 financial year when it became Sri Lanka’s first financial institution to measure and publicly report its carbon footprint, setting a new benchmark for greenhouse gas accounting within the country’s financial sector. Building on that achievement, the Company became Sri Lanka’s first carbon-neutral financial institution in 2015/16 by offsetting its operational greenhouse gas emissions through verified carbon credits, proving that climate responsibility and financial services can go hand in hand.

The Company has continued to push the boundaries of sustainable finance. In 2025, LB Finance became the first financial institution in Sri Lanka to publicly commit to the Science Based Targets initiative (SBTi), marking another important milestone in its climate journey. Through this commitment, the Company is developing science-based near-term and net-zero greenhouse gas reduction targets that align with the latest climate science and global efforts to limit temperature rise.

LB Finance further strengthened its climate strategy by joining the Partnership for Carbon Accounting Financials (PCAF), adopting internationally recognised methodologies to measure financed emissions. During the 2024/25 financial year, it also became the first financial institution in Sri Lanka to independently verify its greenhouse gas inventory, including financed emissions, through Control Union Sri Lanka, demonstrating compliance with globally accepted standards.

Continuing its leadership, LB Finance became the first financial institution in Sri Lanka to quantify and independently verify avoided greenhouse gas emissions, commonly known as Carbon Handprint. Unlike traditional carbon footprint reporting, Carbon Handprint captures the positive environmental impact created through financing activities that enable customers to reduce their own emissions. During the 2025/26 financial year, the Company’s vehicle and solar financing portfolio generated 4,018 tonnes of independently verified avoided carbon dioxide emissions, highlighting the powerful role responsible finance can play in accelerating Sri Lanka’s transition to a low-carbon economy.

Its environmental leadership has also been reinforced through ISO 14001:2015 Environmental Management System (EMS) certification, making LB Finance the first NBFI in Sri Lanka to achieve this internationally recognised standard. The audit was conducted by Control Union Sri Lanka, while the certification was issued by Scandinavian Business Certification AB, accredited by SWEDAC, reflecting the Company’s disciplined and continually improving approach to environmental management.

Recognising that sustainable finance extends well beyond climate action alone, LB Finance has established a comprehensive Environmental and Social Management System (ESMS). By integrating environmental and social risk assessments into lending decisions, the Company encourages customers to adopt more sustainable business practices while strengthening responsible financing across its portfolio.

These efforts are complemented by a strong focus on operational sustainability. Expanded solar power generation across the branch network, improved resource efficiency, lower operational emissions and paperless banking through the LB CIM digital platform enable customers to access convenient financial services with a reduced environmental footprint.

Beyond environmental initiatives, LB Finance continues to create meaningful social impact through programmes that support education, livelihood development, biodiversity conservation and financial inclusion. Working alongside organisations such as the Marine Environment Protection Authority (MEPA), National Aquatic Resources Research and Development Agency (NARA), National Enterprise Development Authority (NEDA) and Ceylon Agro Food Technologies (CAFT), the Company delivers initiatives ranging from ecosystem conservation and entrepreneurship development to community education.

Supporting inclusive economic growth remains another key priority. Through LB Sanmitha, the Company provides tailored financial solutions and value-added services that empower small and medium-sized enterprises (SMEs). This is complemented by the LB Sanmitha Knowledge Platform, which strengthens financial inclusion by offering financial literacy, business awareness, entrepreneurship development and capacity-building programmes that help customers build resilient and sustainable businesses.

At the heart of this journey is a strong commitment to corporate governance. Transparent reporting, robust risk management, ethical business practices, enhanced cybersecurity and proactive stakeholder engagement continue to strengthen accountability while reinforcing the trust placed in the Company by investors, regulators, customers and the wider community.

As sustainable finance becomes increasingly important to economic development, LB Finance remains committed to leading by example. By embedding ESG principles into its strategy, operations and everyday decision-making, the Company demonstrates that responsible finance is far more than a corporate obligation. It is a powerful driver of long-term value creation, environmental stewardship and inclusive growth, helping build a more resilient and sustainable future for Sri Lanka.