Driven by global pressures, investor expectations, and evolving national regulations, corporate environmental reporting is increasingly gaining traction in Sri Lanka.
However, the effectiveness of these disclosures in ensuring corporate accountability and delivering tangible environmental impacts is yet to be seen. While reporting is becoming mandatory for many large companies, it also plays an important role in achieving Sri Lanka’s broader goal of sustainable growth.
As the country strives to build a resilient and green economy, it is crucial that environmental reporting evolves beyond box-ticking exercises to become an instrument of real impact. Aligning corporate environmental efforts with national priorities and fostering an ecosystem of shared responsibility are key.
The Centre for a Smart Future (CSF) recently hosted a stakeholder discussion on corporate environmental disclosures which brought together key national players from leading corporates, consulting firms, industry associations, and institutions such as the Central Bank of Sri Lanka (CBSL), the Colombo Stock Exchange (CSE), the Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka), and the Ministry of Environment (MoE).
This session facilitated interdisciplinary engagement to address the challenges of reporting and the broader need for sustainable business practices. It also highlighted nuances that must be considered in developing a national roadmap for environmental reporting.
This article highlights key takeaways and observations from the stakeholder discussion.
Bottlenecks to effective environmental reporting
Participants highlighted several challenges hindering effective corporate environmental reporting in Sri Lanka, including organisational constraints, data limitations, and fragmented regulatory efforts. A key issue is the tension between compliance-driven reporting and meaningful environmental impact, with many businesses treating disclosures as a bureaucratic exercise rather than a strategic tool for sustainability.
Limited access to standardised climate data further complicates accurate reporting, while a lack of coordination among stakeholders and regulatory bodies leads to inefficiencies and duplication of efforts. To address these challenges, participants emphasised the need for a national sustainability reporting roadmap that integrates financial institutions, regulators, and corporations in a unified framework.
A Sri Lanka-centric approach beyond global pressures
Sri Lanka’s industries face differing pressures to report on environmental metrics. Export-driven sectors such as textiles and manufacturing must comply with strict international regulations, pushing them to refine their disclosures. In contrast, companies focused on the domestic market lag due to weak enforcement and low consumer demand for environmental commitments.
While some argue that sustainability is not a core priority for these domestic businesses, others contend that the intent exists but lacks structured implementation. Disclosures, in this context, are an existing tool and mechanism for comparison and dialogue.
A key take away from the discussion was the need for Sri Lanka to define its sustainability priorities independently rather than merely following global trends. Participants highlighted shifting regulations in the Global North — such as delays and scaling back of the EU’s Omnibus Directive, CSRD and CSDDD — as cautionary examples, emphasising the importance of an impact-driven, context-specific approach.
An intrinsic, nationally relevant sustainability agenda would prioritize critical issues like biodiversity loss and nature-related risks over emissions-centric reporting shaped by developed nations. Aligning environmental reporting with Sri Lanka’s specific challenges and opportunities will ensure that it drives meaningful, long-term impact rather than remaining a compliance-driven exercise.
Context-specific policy landscape to support reporting
While global standards such as the Global Reporting Initiative (GRI), the Task Force on Climate-Related Financial Disclosures (TCFD), and the International Financial Reporting Standards (IFRS) provide strong guidelines, a one-size-fits-all approach remains ineffective. Participants criticized Sri Lanka’s premature adoption of IFRS standards without adequate preparation for local businesses. “The IFRS is like having 4-star accounting in a 1-star economy,” said one participant.
A coordinated approach is essential to integrate both SMEs and large enterprises into a structured sustainability reporting framework. Organizations such as the Stock Exchange, accounting bodies and the Ministry of Environment should take the lead in developing a national strategy. While the CSE and CA Sri Lanka are actively engaging with corporations, particularly for the implementation and development of the SLFRS Sustainability Standards, participants emphasised that the MoE must play a more proactive role in addressing regulatory gaps.
The National Green Reporting System (NGRS) was identified as an underutilised tool that could help Sri Lankan SMEs align with international standards. However, many SMEs struggle with sustainability adoption due to resource constraints and limited technical expertise.
This underscores the need for policies that support capacity-building across all businesses, rather than focusing solely on large corporations. The MoE should enhance its efforts to support SMEs by providing technical guidance, resources, and training.
The road ahead
A well-designed national roadmap for environmental reporting, backed by policy support, technical capacity-building, and incentives, will be crucial in ensuring that reporting translates into real-world impact.
By focusing on Sri Lanka’s unique environmental challenges and risks, rather than merely responding to external pressures, businesses can contribute to a future where sustainability is embedded in corporate strategies and national development goals alike.
For Sri Lanka to achieve inclusive and sustainable growth, environmental disclosures must serve a larger purpose: guiding businesses toward resilient, responsible practices that benefit both the economy and the environment. This needs a holistic approach — one that integrates SMEs, larger corporations, financial institutions, and policymakers in a shared commitment to sustainability. As highlighted in the discussion, the effectiveness of sustainability reporting depends on shifting mindsets, building strong data ecosystems, fostering collaboration, and aligning reporting frameworks with national priorities.
CSF’s stakeholder session emphasised the need for more such interdisciplinary discussions that help in understanding and shaping the country’s sustainability discourse. CSF recognises that sustainability reporting is not merely a compliance exercise.
Rather, it is an essential mechanism to drive systemic change, catalyse implementation of sustainability practices throughout value chains, and improve corporate transparency. By engaging key national stakeholders, CSF aims to bridge gaps, foster collaboration, and advocate for a Sri Lanka-centric approach to environmental reporting.
The writer is a Researcher at the Centre for a Smart Future (CSF). CSF is an interdisciplinary policy think tank focussing on an inclusive and sustainable economic recovery for Sri Lanka. Visit www.csf-asia.org/knowledge-insights for more.
