• Talks underway with 3 international index providers
• Top 100 listed companies to undergo ESG scoring
• Mandatory sustainability disclosures effective from Jan. 2025
• New standards SLFRS S1, S2 align SL with ISSB framework

The Colombo Stock Exchange (CSE) is presently in talks with three Environmental, Social, and Governance (ESG) index providers for the purpose of establishing the proposed ESG index in the CSE.

Speaking to The Sunday Morning Business, CSE Chief Executive Officer (CEO) Rajeeva Bandaranaike stated that the CSE had previously undertaken a project with Sustainalytics, a global leader in sustainability analysis, under which the ESG factors of the top 100 locally listed companies were researched, scored, and presented in a report.

He further revealed: “They did the scoring for all 100 companies and gave us a report. We wanted to see where those companies stood in order to see whether we could construct the index or not.”

Accordingly, he said that based on the findings of the report provided by Sustainlytics, it had been revealed that there was potential in the CSE to set up an ESG index. 

However, Bandaranaike stated that before introducing the proposed ESG index, the CSE must carry out additional work in collaboration with the listed companies.

He revealed that the CSE would have to engage the services of an international service provider to do the ESG scoring.

“For the ESG scoring, we will have to work with the top 100 listed companies and the index provider. We will have to get their [index] criteria and work with the companies to establish a framework. Only then can we publish the index. That process is currently ongoing,” he added.

Speaking to The Sunday Morning Business earlier this year, former Chairman of the CSE Dilshan Wirasekara revealed that the Colombo bourse had amended the CSE Listing Rules in order to introduce a mandatory obligation for sustainability reporting which shall be applicable only for the top 100 listed companies in terms of market capitalisation.  

Wirasekara further stated: “Two new accounting standards have been introduced on the integrated reporting framework, which are applicable from 1 January 2025. Those two standards are called SLFRS S1 and SLFRS S2. Both are sustainability standards. It has now become mandatory for the top 100 listed firms, in terms of market capitalisation, to report these disclosures in their annual reports.”

As the national accounting standard setter, the Institute of Chartered Accountants of Sri Lanka had in collaboration with the International Sustainability Standards Board (ISSB) introduced the following Sustainability Disclosure Standards with effect from 1 January: 

• SLFRS S 1: General requirements for disclosure of sustainability-related financial information
• SLFRS S 2: Climate-related disclosures