Integrating Energy Efficiency into risk management systems of banks in Sri Lanka

Small and Medium Enterprises (SMEs) are considered as the engine for economic growth and employment generation in Sri Lanka. But increasing prices for oil products and electricity have affected the competitiveness of numerous SMEs in the industrial sector. Energy efficiency is thus an important means to keep the costs for SMEs in Sri Lanka down and counteract the rising energy prices. However, in order to tap existing potentials for energy efficiency (EE) investments and cost savings for SMEs challenges for SMEs in retaining loans are to overcome. Sri Lanka therefore seeks to develop a policy environment that fosters EE investments for SMEs.

The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) has initiated the SME Development Programme in cooperation with the Ministry of Finance and Planning of Sri Lanka. Under the programme adelphi supported two partner banks in Sri Lanka to anchor energy efficiency considerations in their standard banking procedures. The focus lied on the development of tools and trainings to enable banks to understand energy risks and integrate them in their risk management and loan evaluations of SMEs. This ensured that energy costs and the risks that go along with them are now considered when evaluating and pricing loans for SMEs. Further adelphi trained the customers’ relations departments of the banks to enable them to identify energy intense SMEs and engage customers with high saving potentials.