Can Profit and Planet Truly Coexist?
In the face of escalating climate challenges and increasing socio-economic volatility, the traditional capitalist model is undergoing a profound transformation. The rise of Environmental, Social, and Governance (ESG) reporting and the surge in green financing mark a pivotal shift where ecological stewardship and financial performance are no longer viewed as opposing forces. Across the globe, and now more than ever in Sri Lanka, this evolution has sparked a deeper inquiry: can we design an economy where profit and planet not only coexist but thrive together?
What was once dismissed as corporate window dressing has become a powerful strategic lever. ESG is no longer a peripheral concern, it is central to how companies secure investment, engage customers, and maintain legitimacy. In today’s complex global market, transparency and accountability are currencies in themselves. And the companies that understand this are not only future-proofing their operations, but also redefining capitalism
for a new era.
In Sri Lanka, where environmental sensitivity is embedded in cultural heritage and religious teachings, this conversation assumes a uniquely relevant tone. The island’s deep-rooted Buddhist ethos of balance and non-harm complements modern ESG principles, offering a cultural foundation upon which green capitalism can authentically grow. Yet, for these ideals to translate into practical action, Sri Lankan businesses must shift from passive acknowledgment to active transformation.
A central vehicle for this change is ESG reporting. Globally, ESG metrics are shaping capital flows. Investment giants like BlackRock and sovereign funds from Scandinavia and the Middle East now demand measurable sustainability indicators before allocating funds. While Sri Lankan firms have begun incorporating basic ESG frameworks, the effort remains largely inconsistent and fragmented. What is needed is a standardized, transparent, and locally contextualized ESG framework that resonates with our socio-economic fabric.
Consider the apparel industry, one of Sri Lanka’s largest export sectors. Brands like MAS Holdings and Brandix have shown early leadership by investing in green manufacturing, ethical labor practices, and sustainability certifications. These moves have not only enhanced their global reputations but also unlocked access to premium markets and green financing. Their success stories exemplify how environmental and social responsibility can be a powerful competitive advantage, not a cost burden.
Green financing mechanisms such as ESG-linked loans, green bonds, and sustainability-focused equity funds are further accelerating this shift. In countries like Singapore and Vietnam, small and mid-sized enterprises are increasingly accessing capital based on their environmental performance. Sri Lanka must follow suit by building a robust green finance ecosystem. This means encouraging commercial banks to offer preferential lending rates tied to sustainability targets, and supporting the Central Bank of Sri Lanka in issuing guidelines for green financial instruments.
To do this effectively, Sri Lanka must also invest in the foundational elements that enable ESG growth. First, our data infrastructure is lacking. Without reliable data collection on emissions, labor practices, and governance standards, ESG reports will remain anecdotal and lack credibility. Second, there is a dire need to build institutional capacity. Most companies, especially SMEs, are unaware of ESG frameworks, let alone equipped to comply with them. A national-level education and support program, potentially through public-private partnerships, is urgently needed.
Furthermore, the government has a strategic role to play. While voluntary compliance has driven some progress, a regulatory nudge is now necessary. The adoption of a Sri Lanka- specific ESG disclosure mandate, modelled perhaps on the EU’s Corporate Sustainability Reporting Directive (CSRD) but adapted to local realities, could standardize practices and level the playing field. A national ESG taxonomy tailored to Sri Lanka’s development
priorities, such as climate resilience, biodiversity conservation, and inclusive growth, would provide clarity and direction.
However, the shift toward green capitalism is not without risks. Globally, the ESG landscape is still evolving, with inconsistencies in measurement, data manipulation, and the growing threat of “greenwashing” where firms exaggerate or falsify their sustainability claims. For Sri Lanka, where public trust in institutions is already fragile, any perception of ESG being used as a marketing tool rather than a governance commitment could backfire severely. This underscores the need for independent auditing mechanisms and greater stakeholder
engagement, including civil society and academia, in monitoring ESG performance.
Another key concern is equity. Green capitalism must not become a luxury reserved for the elite or large corporations. Sri Lanka’s informal economy, which employs nearly 60 percent of the workforce, must also benefit from this transition. Microenterprises, farmers, and grassroots innovators should be integrated into green value chains. One example is the potential for green microfinance programs that support sustainable agriculture, renewable energy adoption, and climate-smart technologies in rural communities. This approach not only decentralizes the benefits of green capitalism but aligns with Sri Lanka’s development goals of poverty alleviation and rural revitalization.
There is also an opportunity to leverage our diaspora and academic institutions to strengthen ESG capacity. Sri Lankan professionals working in global ESG and sustainability roles can contribute knowledge, tools, and mentorship. Universities can partner with industry to create ESG training programs, case study repositories, and local research to enrich both policy and practice. If nurtured properly, this ecosystem can evolve into a regional hub for green innovation and thought leadership.
Strategically, the embrace of green capitalism also positions Sri Lanka to gain a competitive edge in global trade. With major export markets in Europe and North America tightening sustainability regulations, compliance with ESG standards is fast becoming a requirement rather than a differentiator. Proactively aligning with these expectations can enhance the country’s brand image, reduce regulatory risk, and attract environmentally conscious investors and buyers.
But the transition must go beyond compliance. The real test lies in how businesses reimagine value creation. Green capitalism is not simply about retrofitting existing models with eco-labels. It requires a shift in mindset, from short-term profits to long-term impact, from extractive practices to regenerative systems, and from shareholder primacy to stakeholder inclusivity. This is where cultural alignment becomes powerful. Sri Lanka’s philosophical traditions emphasize harmony with nature, community interdependence, and ethical conduct, values that resonate deeply with the principles of sustainability.
In conclusion, the question is no longer whether profit and planet can coexist. The evidence, both global and local, suggests that they must. The real question for Sri Lanka is whether we will lead this transformation or lag behind it. Green capitalism offers a pragmatic, culturally compatible, and economically viable path forward. But it demands courage, coordination, and commitment. If we rise to the occasion, Sri Lanka can not only adapt to a changing world but help shape it, one green innovation at a time.
