Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Supported Hiyare conservation project, discovering new faunal species.
• Sponsored Sinharaja Bio-Diversity Gardens Project, establishing gardens in five schools.
• Rescued and treated 165 injured wild animals.
• Launched 'Embrace Nature' project, focusing on conserving Thalangama Tank.
• Funded hog deer breeding and rehabilitation program, releasing five deer.
• Supported fruit bat conservation program in Galle and Hiyare areas.
• Implemented 'Lights Out' policy at several locations, reducing energy consumption.
• Installed inverter energy-saving air conditioners in new branches.
• Working towards ISO 50001 certification for Head Office.

Social Achievements

• Continued investments in National Cancer Hospital, improving facilities.
• Partnered with NBTS to launch Blood Donor Card, providing 110,000 cards.
• Funded new classroom and donated physiotherapy equipment to School for the Blind.
• Refurbished Amunutenna Dweethika Kanishta Vidyalaya, constructing a library and computer lab.
• Donated books for seven libraries through Candle Aid Lanka partnership.
• Opened 33 libraries and math labs in rural schools.
• Won awards for HR practices: 'Best HR Strategy in Line with Business', 'HR Excellence for employee engagement', and 'Institutional building'.

Governance Achievements

• Complied with Corporate Governance Code for Licensed Commercial Banks.
• Established six Board Sub Committees to monitor operations.
• Obtained external auditor's certificate on internal control mechanism effectiveness.
• Maintained a healthy balance of experience and youth on the Board.

Climate Goals & Targets

Environmental Challenges

• Weakening credit demand leading to higher liquidity and slower loan growth.
• Policy rate cuts leading to a gradual decline in interest rates.
• Slow loan book growth resulting in excess funds invested in low-yielding assets.
• Increase in industry Non-Performing Loans (NPLs).
• Volatile gold prices impacting pawning business.
• Regulatory cap on interest rates negatively impacting credit card business.

Mitigation Strategies

• Diversified business mix to minimize earnings volatility.
• Steered high-yielding portfolios (cards, leasing, SME) to manage margin pressure.
• Reviewed internal pricing strategies to balance risk and rewards.
• Pushed for CASA growth to improve CASA mix.
• Took preemptive steps to minimize losses in pawning business (reducing advance quantum, introducing gold loan).
• Intensified volume growth in credit card business to compensate for narrowing margins.

Supply Chain Management

Climate-Related Risks & Opportunities

Awards & Recognition

• Asia's Best Employer Brand Awards - Best HR Strategy in Line with Business
• HR Excellence Award for employee engagement
• Award for "Institution Building"

Environmental Metrics

ESG Focus Areas

• Governance
• Risk Management
• Sustainability

Environmental Achievements

• Reduced energy consumption by 3.3%
• Recycled 48.5% of total paper usage
• Obtained CarbonConscious® Certification for three key locations

Social Achievements

• Achieved a customer satisfaction score of 76%
• Conducted 16 Nations Business Seminars with over 1800 participants
• Disbursed Rs. 230 Mn to 1,225 first-time borrowers through two-wheeler leasing
• Invested Rs. 4.1 Mn in educational infrastructure development in three rural schools

Governance Achievements

• Complied with all regulatory and prudential requirements
• Strengthened internal controls and risk management processes
• Improved credit quality, reducing NPL ratio

Climate Goals & Targets

Environmental Challenges

• Interest rate volatility and tightened liquidity
• Margin compression due to rising interest rates and competition
• Declining CASA ratios and increasing cost of funds
• Ceiling on credit card interest rates
• Loan to value ratio for leasing
• Increased import tariffs
• Talent attraction and retention

Mitigation Strategies

• Issued Rs. 5 Bn in debentures to fund growth and strengthen capital
• Implemented lean transformation initiatives for cost efficiencies
• Strengthened credit evaluation and monitoring processes
• Improved monitoring of early warning signals
• Implemented a comprehensive Human Resource Management System
• Revised remuneration and benefits structure
• Launched Life Cycle training program for employee development

Supply Chain Management

Responsible Procurement

• Rigorous selection criteria including parameters pertaining to compliance with labour laws, human rights and compliance to minimum pay regulations

Climate-Related Risks & Opportunities

Physical Risks

• Drought and floods

Reporting Standards

Frameworks Used: GRI G4 criteria ‘In Accordance-Core’ option, International Integrated Reporting Council (IIRC) Framework

Certifications: ISO 50001 for Energy Management, CarbonConscious® for three key locations

Third-party Assurance: Messrs. Ernst and Young

Environmental Metrics

ESG Focus Areas

• Sustainability
• Corporate Governance
• Community Engagement
• Environmental Management
• Employee Engagement

Environmental Achievements

• Reduced energy consumption by 5.6% to 7,466,391 kWh
• Recycled 34% of total paper usage (12,912 kg)
• Installed a 40kW solar PV system generating approximately 23.81MWh of clean energy

Social Achievements

• Launched FriMi, Sri Lanka's first digital bank, enhancing financial inclusion
• Conducted 9 SME seminars with over 870 participants
• Invested Rs. 72 million in training and development, providing 100,528 training hours
• Improved employee retention rate to 86.8%
• Maintained a high customer satisfaction score of 80%

Governance Achievements

• Won the category award for Corporate Governance at the Corporate Citizen Sustainability Awards 2017
• Complied with all regulatory and prudential requirements
• Implemented a robust framework for related party transactions

Climate Goals & Targets

Environmental Challenges

• Moderating economic growth
• High interest rates
• Weakening of the agriculture sector
• Increased impairment in consumer and SME portfolios
• Intense competition in the financial services sector
• Talent retention
• Narrowing interest rate margins
• Adverse weather conditions impacting agriculture and tourism sectors

Mitigation Strategies

• Focused on growing profitable segments (SME, Corporate)
• Strengthened underwriting standards and monitoring mechanisms
• Enhanced collection capabilities
• Implemented lean initiatives and process efficiencies
• Invested in digital infrastructure and employee training
• Launched innovative products (FriMi, Max Bonus)
• Developed a comprehensive risk management framework
• Improved early warning signal systems
• Regional diversification through corporate offshore banking

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Due diligence on suppliers, focusing on compliance with labor laws, human rights, and minimum pay regulations

Climate-Related Risks & Opportunities

Physical Risks

• Adverse weather conditions impacting agriculture and tourism sectors

Transition Risks

• Not disclosed

Opportunities

• Value propositions in renewable energy, climate-smart agriculture, and smart mobility

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Global Reporting Initiative (GRI) Standards ‘In Accordance-Core’

Certifications: ISO 50001 (Head Office)

Third-party Assurance: Ernst & Young

UN Sustainable Development Goals

• SDG 4 (Quality Education)
• SDG 13 (Climate Action)
• SDG 15 (Life on Land)

CSR initiatives focused on quality education, environmental conservation, and biodiversity

Sustainable Products & Innovation

• FriMi (digital bank reducing paper consumption)
• Nations Peramaga (micro-financing scheme)

Awards & Recognition

• Category award for Corporate Governance at the Corporate Citizen Sustainability Awards 2017
• Ranked among top 25 corporates by Business Today

Environmental Metrics

ESG Focus Areas

• Health and safety
• Responsible lending
• Customer experience
• Digitization
• Operational efficiency
• Employee attraction
• Training and development
• Employee satisfaction
• Corporate Governance and Compliance
• Preserving the environment
• Corporate Social Responsibility

Environmental Achievements

• 17% reduction in Carbon Footprint
• 43% reduction in paper consumption
• 14% reduction in electricity consumption

Social Achievements

• Allocated LKR 7 billion of internally generated funds to drive business revival and disbursed LKR 1.8 billion under the Saubagya COVID-19 Renaissance Facility
• Maintained close and continued engagement with customers, offering tailor-made solutions and flexible repayment schemes
• Donated Personal Protective Equipment to frontline workers
• Net Promoter Score: 76%
• Customer satisfaction score: 96%

Governance Achievements

• Appointment of 2 new Directors; Chief Executive Officer as an Executive Director and an IT professional as a Non-Executive Director
• Implemented a process for evaluating performance of Sub-Committees
• Strengthened the RCSA mechanism & KRI

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic and its impact on the global and Sri Lankan economy
• Sharp slowdown in credit demand
• Rising impairments
• Difficulties in ensuring uninterrupted service to customers
• Exchange rate volatility
• Government restrictions on imports
• Escalating impairments

Mitigation Strategies

• Reinvented service delivery, leveraging digital capabilities and personalized customer service
• Strengthened customer relationships through moratoriums, restructuring facilities, and personalized repayment schemes
• Reset HR strategy with focus on employee health and safety through flexible work arrangements, team divisions, transport facilitation, and digital infrastructure enablement
• Enhanced liquidity buffers
• Proactive monitoring of emerging developments and specific impacts across industry sectors
• Cautious approach to lending, exiting high-risk segments, and proactively managing risk-return dynamics
• Enhanced collection and recovery capability by investing in a collection platform
• Cost efficiencies through digitalization and new ways of working
• Strengthened risk identification and mitigation methods
• Invested in strengthening network security mechanisms
• Augmented capital and strengthened balance sheet

Supply Chain Management

Responsible Procurement

• Procurement criteria incorporate environmental and social consideration while incentives are offered to service providers with higher E and S standards.

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards, IIRC

Third-party Assurance: Messrs. Ernst and Young (Financial Statements only)

UN Sustainable Development Goals

• SDG 4 (Quality Education)
• SDG 13 (Climate Action)
• SDG 14 (Life Below Water)
• SDG 15 (Life On Land)

CSR initiatives revolve around Quality Education and Environmental Stewardship

Sustainable Products & Innovation

• Nations On-Site Leasing
• FriMi (repositioned as a full-service digital bank)
• Round up Savings feature

Environmental Metrics

ESG Focus Areas

• Climate Action
• Green lending decisions
• Empowering customers, employees and communities through sustainable business practices
• Adoption of best practices and standards in ESG performance

Environmental Achievements

• 20% reduction in energy consumption compared to 2019
• 22 MT paper savings through automation and digital onboarding
• 56% of loans & advances screened for social & environmental criteria

Social Achievements

• Facilitated remote working arrangements for 295 employees
• 45% female representation including 28% at Management Level
• 85% Employee Retention
• LKR 8.3 Mn investments in CSR initiatives

Governance Achievements

• Establishment of the Board Information Technology Advisory sub committee
• Review and updated key policies
• Zero incidents of non-compliance with laws and regulations relating to the social and economic area

Climate Goals & Targets

Environmental Challenges

• Pandemic led disruptions to operations
• Macro-economic headwinds including the country’s foreign currency stress situation, rising interest rates and escalating inflation
• Regulatory developments
• Customers’ unprecedented shift towards digital channels and increasing sophistication
• Increased stakeholder emphasis on Environment, Social and Governance (ESG) considerations

Mitigation Strategies

• Emphasis on portfolio quality and profitability through selective lending
• Delivery of customer-centric solutions through a lifecycle proposition and relationship driven approach
• Digitisation of external and internal customer processes
• Implementation of a hybrid working model
• Integrating environmental and social consciousness
• Proactively pre-empting challenges faced by our customers and arriving at solutions while ensuring recoveries and collections were sustained

Supply Chain Management

Responsible Procurement

• Revised procurement policy to strengthen the evaluation of suppliers

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters resulting from climate change could impact continuity of the Bank’s operations

Reporting Standards

Frameworks Used: GRI Standards: Core option, Integrated Reporting Framework of the International Integrated Reporting Council

Third-party Assurance: Messrs. Ernst and Young

UN Sustainable Development Goals

• Goal #4
• Goal #13
• Goal #14
• Goal #15

Our initiatives are centered on the two key pillars of Education and Environmental Stewardship. These pillars are aligned to the Sustainable Development Goals of Quality Education (Goal#4), Climate Action (Goal#13), Life below water (Goal#14) and Life on land (Goal#15).

Awards & Recognition

• Best Digital Bank 2021 World Economic Magazine
• 8 accolades at the FITIS Digital Excellence Awards 2021
• SLIM Awards - Online brand of the year

Environmental Metrics

ESG Focus Areas

• Climate action
• Renewable energy
• Energy efficiency
• Natural resource optimization
• Biodiversity preservation
• Green lending
• Inclusive workplace
• Supporting women-led businesses
• Community upliftment
• Ethics, transparency, and accountability
• Environmental and social risk management
• National and international collaborations to achieve SDGs

Environmental Achievements

• Reduced paper consumption by 33% year-over-year through digitization; saved 7.4 MT of paper in 2022.
• All advances above LKR 25 Mn are screened for environmental and social compliance.

Social Achievements

• Provided a distress allowance for eligible employees to support them during high inflation.
• Continued to provide flexible working arrangements.
• Invested LKR 16.1 Mn in CSR initiatives, including school supplies, computer labs, and support for local arts.

Governance Achievements

• Established a process for a Board-led ESG agenda supported by expanded systems, processes, and controls.
• Maintained a strong liquidity position and capital buffers above regulatory requirements.

Climate Goals & Targets

Environmental Challenges

• Unprecedented volatility and uncertainty in the economic environment due to political instability and economic crisis.
• High levels of social instability during the first half of the year.
• Increased emphasis on digitalisation giving rise to new risks associated with cyber security and customer data protection.
• Introduction of new regulations pertaining to sustainability, forex, liquidity, interest rates and technology risk management.
• Significant increase in impairment charges due to macroeconomic conditions.

Mitigation Strategies

• Implemented a selective lending strategy and maintained portfolio quality.
• Strengthened the Bank’s liquidity position.
• Minimized exposure to foreign currency sovereign bonds.
• Invested in digitalisation to enhance customer experience and increase operational efficiency.
• Implemented cost-saving initiatives, resulting in a decline in the Cost to Income ratio.
• Strengthened capital buffers to withstand foreseeable credit losses.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Timely payment
• Ease of doing business
• Good business practices

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: GRI Standards, International Integrated Reporting Framework

Certifications: ISO/IEC 27001:2013

Third-party Assurance: Ernst & Young

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Most Valued Credit Card Base and Campaign Promoter at the Daraz Payment Partner Performance Awards 2022
• FriMi awarded Silver for Best Use of Data and Merit for Small Budget Impact at the SLIM DIGIS 2.2
• FriMi ranked 2nd amongst the Most Loved Brands in the FINTECH category by LMD Brand Finance

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced carbon footprint to 4,271 MTCO2e
• 65% of loans and advances screened for environmental and social impacts
• Investments in renewable energy and agriculture

Social Achievements

• Launched Nations Women Programme to empower women in managerial positions
• Increased average training hours per employee to 27
• Investments in CSR initiatives (LKR 19.3 Mn)
• Maintained a high employee retention rate of 79.2%

Governance Achievements

• Implemented a board-approved ESG strategy
• Appointed a Senior Independent Director
• Established an ESG Management Framework

Climate Goals & Targets

Environmental Challenges

• Challenging macroeconomic environment due to macroeconomic pressures stemming from the country’s external financing position.
• Increased tax rates, fuel pricing adjustments, and electricity tariffs.
• Subdued economic activity impacting borrowers’ repayment capacity.

Mitigation Strategies

• Agile strategy, digitalisation, and continuous capacity building
• Preserving financial stability by enhancing liquidity and implementing a selective lending strategy
• Proactive measures to preserve portfolio quality and support business revival
• Customised support to customers facing repayment pressure
• Effective management of funding costs and asset quality

Supply Chain Management

Responsible Procurement

• Supplier Assessment Procedure (in process)

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather, flooding

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products

Reporting Standards

Frameworks Used: GRI Standards, Integrated Reporting Framework, UN Sustainable Development Goals

Certifications: ISO/IEC 27001:2013

Third-party Assurance: Messrs. Ernst & Young

Awards & Recognition

• Five awards at FITIS Digital Excellence Awards 2023
• FriMi ranked among top 3 Most Loved Fintech Brands