BOC wins global recognition for Sri Lanka’s largest sustainability bond issuance

Bank of Ceylon (BOC) has received international recognition at Environmental Finance’s Sustainable Debt Awards 2026, winning the award for Innovation, Sustainability Bond Structure in Asia and the Pacific (APAC) for its Rs. 20 billion Basel III-compliant Tier II Sustainability Bond.

The award recognises a landmark transaction in Sri Lanka’s sustainable finance market, with BOC’s issuance identified as Sri Lanka’s largest sustainability bond and the first such issuance by a State - owned bank in the country. The transaction also represents a significant step in the development of the domestic green, social, sustainability, and sustainability-linked, or GSS+, bond market at a time when Sri Lanka is seeking to rebuild investor confidence, deepen its capital markets, and direct funding toward long-term economic, social, and environmental priorities.

The bond was issued on 22 December 2025 and was structured to serve two objectives. It strengthened BOC’s regulatory capital position through Basel III-compliant Tier II capital while ensuring that the proceeds were allocated exclusively toward eligible green and social projects. This dual structure, combining regulatory capital requirements with sustainability-linked use of proceeds, formed the basis of the international recognition received by the bank.

BOC Chairman Kavinda De Soysa stated: “On 22nd December 2025, sustainability moved from aspiration to execution, culminating in the successful issuance of Sri Lanka’s largest sustainability bond by any institution, with an affirmation of investor confidence in our governance, credibility, and long-term vision.”

“The Environmental Finance’s recognition for this issuance further affirmed our ability to integrate ESG considerations into capital allocation aligning with rigorous international standards, sending a strong signal to the global capital markets. This achievement reflects not just confidence, but a shared belief in what we can achieve together. It is the dedication, talent, and passion of our BOC team and all the stakeholders who partnered with us in guiding our vision into impact and setting the standard for excellence.”

Environmental Finance, established in 1999, is an international news and analysis service covering sustainable investment, green finance, and environmental markets. Its Sustainable Debt Awards recognise innovation across green, social, sustainability, and sustainability-linked bond and loan markets. The awards cover bond issuers, loan market participants, lead managers, investors, external reviewers, and other market participants that have demonstrated outstanding leadership in sustainable debt financing. The awards are judged by an independent panel of investor experts and are regarded as a global benchmark for innovation in sustainable debt markets.

For Sri Lanka, the recognition comes at an important stage in the development of sustainable debt instruments. Three Sri Lankan institutions were honored at the 2026 awards, reflecting the progress made in positioning the country’s GSS+ bond market internationally. 

The Colombo Stock Exchange played a key role in coordinating and encouraging listed issuers to seek international recognition, while the EU-funded Green Recovery Facility, implemented by Expertise France, also supported efforts to place Sri Lanka’s sustainable finance market on the global stage.

The introduction of Sri Lanka’s GSS+ Bonds Regulatory Framework in 2025, aligned with international principles, further strengthened the credibility of the market. BOC’s issuance followed this regulatory development and demonstrated how a domestic financial institution could introduce an instrument that addressed both capital adequacy and sustainable development priorities.

BOC General Manager and Chief Executive Officer Y.A. Jayathilaka stated: “For more than eight decades, Bank of Ceylon has operated at the heart of Sri Lanka’s financial ecosystem, by supporting national development while adapting to changing economic and social realities.”

“This trailblazing Rs. 20 billion Basel III-compliant Tier II Sustainability Bond issuance created history by the Bank of Ceylon. We are truly honoured to receive Environment Finance’s international recognition which is a testament to our team’s innovation and the strong leadership in sustainable finance.”

Acting Senior Deputy General Manager and Head of Global Markets G. A. Jayashantha said the award was significant because it recognised the structural complexity and market relevance of the issuance.

“This was not only a capital-raising exercise. It was a carefully structured sustainable finance instrument that had to meet the stringent loss-absorption requirements of Basel III Tier II capital while directing proceeds exclusively toward eligible green and social projects. That combination made the issuance complex, but it also made it highly relevant to the needs of Sri Lanka’s financial market,” Jayashantha said.

BOC’s winning structure was recognised under the Innovation, Sustainability Bond Structure category, rather than as a general green or social bond award. According to the bank, the defining feature of the issuance was its hybrid nature. The bond simultaneously satisfied Basel III Tier II regulatory capital requirements and channeled proceeds toward high-impact green and social projects. This combination had not previously been achieved by a State-owned bank in Sri Lanka through a publicly listed instrument.

The structure required BOC to meet the regulatory conditions that govern how Tier II capital behaves under financial stress, while also embedding sustainability objectives aligned with the International Capital Market Association’s Green Bond Principles, Social Bond Principles, and Sustainability Bond Guidelines. The issuance was also aligned with Sri Lanka’s national Green Finance Taxonomy.

BOC accounted for more than 25% of total listed debt issuances on the Colombo Stock Exchange in 2025. The bank said this reflected not only the scale of the sustainability bond, but also BOC’s continuing contribution to Sri Lanka’s listed debt market and capital market infrastructure.

With assets representing approximately 22% of total banking sector assets and a nationwide customer touchpoint network of more than 2,413, BOC said the issuance carried broader systemic relevance. As a State-owned bank with a large domestic presence, BOC’s move into listed sustainable debt signaled that sustainability-linked capital market instruments can be developed and absorbed within the local market.

The transaction was backed by independent pre-issuance assurance from KPMG and transparent disclosure through BOC’s Sustainable Finance Framework.

“The oversubscription of the bond and its closure on the opening day showed that investors are prepared to support credible, transparent, and well-governed sustainable finance instruments. For Sri Lanka, this is an important signal, especially at a time when the country is rebuilding confidence and seeking long-term capital for development,” Jayashantha said.

The proceeds of the bond will be allocated with up to 75% directed toward social projects and the remaining 25% toward green initiatives. The social component is expected to support employment generation through MSME lending in rural areas, food security, public healthcare, education, and essential infrastructure. 

The green component will cover areas such as renewable energy, energy efficiency, clean transportation, and sustainable water management. The allocation framework reflects Sri Lanka’s post-crisis priorities, where access to finance, basic services, employment creation, and climate-related investment remain important for recovery and long-term resilience. 

The governance structure supporting the issuance was also recognised by the Environmental Finance judging panel. BOC has established a dedicated board-level Sustainability Committee and adopted a clear exclusion list that bars financing for areas such as fossil fuels, deforestation, and weapons. The bank has also integrated environmental and social risk management systems into its credit processes.

The judging panel highlighted the importance of BOC’s governance arrangements and remarked that it was “great to have sustainability bonds in Sri Lanka”. BOC said the recognition reflected the importance of transparency, independent assurance, and clear allocation rules in building confidence around sustainable finance instruments.

BOC’s Investment Banking Division offers services beyond traditional banking, including capital market and advisory solutions. The bank obtained the Corporate Finance Advisor License from the Securities and Exchange Commission of Sri Lanka (SEC) in December 2025. 

Following this, a specialised Corporate Finance Advisory unit was formed within the Investment Banking Division to provide independent, transaction-oriented advisory services to corporate clients, SMEs, and institutional investors. 

The unit provides end-to-end support across capital structuring, mergers and acquisitions, and strategic fundraising initiatives. The Investment Banking Division also provides underwriting services for initial public offerings and supports financing for large infrastructure and development projects.

BOC also operates a dedicated business unit for private wealth management clients under the SEC’s Investment Manager Licence. This unit primarily serves high-net-worth clients by providing professional investment management solutions tailored to individual financial goals. 

The bank said BOC Wealth Management is designed to provide clients with trusted guidance, personalised attention, and investment management solutions under one roof.

In addition, BOC is a Professional Clearing Member of the Colombo Stock Exchange. Its Investment Operations unit, operating under the Investment Banking Division, provides trustee and custodian services for unit trust funds and corporate clients, with funds exceeding Rs. 500 billion.

The Environmental Finance recognition places the bank in the APAC sustainable finance spotlight and creates a precedent for other State-owned enterprises and financial institutions in Sri Lanka. The bank added that the issuance has already begun encouraging peers in the sector to explore similar instruments.

The role of the Colombo Stock Exchange in facilitating the listing process and supporting international recognition showed how public-private collaboration can accelerate sustainable finance adoption, even in frontier markets. 

The award was not only a recognition of a single transaction, but also an indication of the direction in which Sri Lanka’s financial sector can move. By combining capital strength, governance, sustainability, and domestic market mobilisation, the bank said the issuance had established a new benchmark for sustainable debt in Sri Lanka.