3.0 Climate and Sustainability -Related Risks and Opportunities

3.1 Climate-Related Risks and Opportunities

3.1.1 Climate-Related Risks

SLT defines short-, medium- and long-term time horizons considering the rapidly evolving nature of the telecommunications industry, including technological advancements, high capital investment requirements and changing customer demand. These horizons guide the identification, monitoring and disclosure of climate-related risks and opportunities, including Scope 2 emissions and the SLT’s Net Zero targets.

1. Physical threats to network infrastructure from extreme weather events
Risk category	Physical
Risk type	Acute
Description	Riverine/rainfall flooding can cause severe disruptions to infrastructure, service continuity, and national connectivity. Landslides threaten physical network infrastructure, service continuity, and restoration capability. Cyclones pose severe risks to telecom networks because they simultaneously damage physical infrastructure, disrupt power systems, and impede field operations.
Time horizon	Short-term
Current effects on the business model and value chain	Service interruptions due to infrastructure damage and power outages. Diverting resources for emergency repairs. Disruption of National connectivity. Multi-day inaccessibility/safe access issues of sites for recovery teams due to events such as landslides.
Anticipated effects on the business model and value chain	Backup power failure when fuel or maintenance cannot reach sites. Supply chain disruptions slow delivery of spare parts. Hazardous access conditions requiring specialised personnel, safety equipment, and government clearance; maintenance becomes slower and more expensive.
Current and anticipated changes to the business model to address risks	More frequent extreme weather events will require investment in infrastructure that is climate adaptive and resilient. Prioritise power resilience investments. Relocation of infrastructure from high hazard zones.
Current and anticipated direct/indirect mitigation and adaptation actions	Network Infrastructure Protection (Targeting damages from cyclones, floods, and landslides) Implementation of Business Continuity Planning (BCP) that includes conducting vulnerability assessments to identify high-risk areas. Explore the feasibility of building field-resistant networks within identified vulnerable zones. Establishment of a dedicated maintenance department to ensure infrastructure integrity. Power and Supply Chain Resilience (Targeting disruptions due to severe climate change) Strengthening Backup Power Systems by investing in backup generators and more resilient power systems. Ensuring full operational readiness of all diesel generators, solar backups, and battery banks. Developing and identifying priority restoration protocols specifically for critical network sites to ensure rapid recovery during outages. Enhancing Supply Chain flexibility by maintaining sufficient buffer stocks to mitigate the impact of sudden climate-driven supply chain interruptions.
Current financial effects	Decrease in revenue due to service disruptions. Rising insurance premiums, emergency repair costs and specialised maintenance costs add on to expenses. Infrastructure damage resulting in impairment of assets.
Anticipated financial effects	Risk of customer churn due to recurring outages that will impact revenue negatively. Increase in the frequency of extreme weather may further increase insurance premiums and maintenance costs. Significant capital expenditure may be required for climate adaptive infrastructure and power resilience investments impacting cash flows and expanding asset base. Assets that become inaccessible or damaged due to extreme weather events may require impairment assessments.

2. Carbon pricing
Risk category	Transition
Risk type	Policy and Legal
Description	SLT monitors developments in carbon pricing mechanisms and considers potential future regulatory or market-based carbon costs in its climate risk assessments and financial planning. While carbon pricing is not currently significant for SLT, it is factored into long-term sustainability and Net Zero strategies.
Time horizon	Medium-term
Current effects on the business model and value chain	SLT’s exposure is limited as Sri Lanka is yet to impose a carbon tax. The Singapore subsidiary has an indirect exposure resulting in a minimal effect at the Group level. Decarbonisation plan targeting net zero emissions by 2045.
Anticipated effects on the business model and value chain	SLT operations may face indirect exposure to carbon tax imposed on power generators due to high electricity use. Invest in low carbon technologies and energy-efficient infrastructure. Real-time energy monitoring to enhance efficiency across data centres and network sites.
Current and anticipated changes to the business model to address risks	Strategic decision-making does not yet fully integrate carbon pricing risk. Monitor potential policy developments around carbon pricing and taxation mechanisms in Sri Lanka to stay ahead of emerging regulatory requirements. Introduction of internal carbon pricing to integrate climate costs into investment and procurement decisions that can help align SLT with its Net Zero targets. Expand renewable energy sourcing through power purchase agreements to enhance resilience to grid-based carbon intensity. Procurement decisions to support low-carbon equipment suppliers.
Current and anticipated direct/indirect mitigation and adaptation actions	Established a Group-wide decarbonization roadmap targeting Net Zero by 2045. Deployment of 873 renewable-powered sites
Current financial effects	Since, no carbon pricing has been implemented in Sri Lanka, no current financial effects on SLT’s financial position, financial performance and cashflows were recognised during the reporting period.
Anticipated financial effects	Low carbon and green connectivity solutions may result in customer growth and drive revenue. Compliance with carbon-pricing regulations may lead to higher operating expenses due to increased electricity and fuel costs. Additional capital expenditure will be required to support renewable-energy infrastructure and supply-chain transitions.

3. Transition to lower emissions sources of energy
Risk category	Transition
Risk type	Policy and Legal
Description	Financial and operational impact of shifting from grid-dependent and diesel backup power to lower emission energy sources. SLT has considered the progressive shift from fuel based vehicles to electric vehicles (EVs) within its operational fleet.
Time horizon	Long-term
Current effects on the business model and value chain	Operations largely depend on grid electricity, diesel backup power and fuel-based vehicles. SLT aims to install 4,000 kW by end-2026, and 6,000 kW of solar capacity by end-2027.
Anticipated effects on the business model and value chain	Business model evolves to emphasize low-carbon, energy-efficient operations. Renewable infrastructure strengthens market position. Greater energy independence could enhance service reliability.
Current and anticipated changes to the business model to address risks	Sourcing decisions driven mainly by energy efficient sources. Enabled completion of solarisation of 873 sites. Expansion of on-site capacity with Battery Energy Storage (BESS) and adoption of long-term renewable Power Purchase Agreements. Prioritise capital investments based on long-term carbon reduction and energy cost stability rather than just upfront cost. Strengthen procurement criteria by favouring energy-efficient technologies and suppliers with clear emissions reduction commitments.
Current and anticipated direct/indirect mitigation and adaptation actions	Proactive alignment with the national energy transition agenda by embedding renewable energy integration and efficiency enhancements across its network infrastructure. Implementation of energy efficiency initiatives, including LED retrofits, inverter air conditioners, and optimising fleet management. Sustainability governance via an ESG Strategic Committee and pursuing ISO 50001:2018 and ISO 14001:2015 certifications.
Current financial effects	Majority of energy costs remain exposed to grid price fluctuations and fuel cost volatility. Investments in renewable energy impacts cash outflows and asset base and at the same time positively impact operating costs through savings on grid electricity and fuel.
Anticipated financial effects	Opportunity for price premiums by positioning as a resilient, reliable green brand. Energy savings can strengthen operating margins. Increase in assets due to upfront capital expenditure for renewable installations. Potential funding through green bonds or sustainability-linked loans.

4. Asset stranding
Risk category	Transition
Risk type	Policy and Legal
Description	Occurs when an asset can no longer operate profitably or legally due to climate-related policy, regulatory, or market changes such as a carbon-intensive asset becoming non-compliant under emission regulations or taxation, an asset’s output being replaced by a low-carbon alternative, making it obsolete or financially unsustainable or a policy ban or cost escalation rendering its continued operation uneconomical.
Time horizon	Long-term
Current effects on the business model and value chain	Includes legacy, fossil-fuel-driven infrastructure that may not be optimised for a low-carbon future.
Anticipated effects on the business model and value chain	Accelerate towards modern, energy-efficient digital infrastructure.
Current and anticipated changes to the business model to address risks	Asset lifecycle planning is based on technical performance and financial depreciation with limited climate integration. Capital allocation will increasingly favour future-proof, low-emission technologies over inefficient legacy assets.
Current and anticipated direct/indirect mitigation and adaptation actions	Initiated a structured renewable energy implementation plan to install 4,000 kW of solar capacity by end-2026, scaling to 6,000 kW by end-2027. Progressive replacement of diesel-based backup systems with on-site solar power to reduce fossil fuel dependency.
Current financial effects	Routine depreciation and maintenance costs that impact operating costs.
Anticipated financial effects	Upgrades to assets can enhance operational efficiency and lower energy costs in the long-term. Potential impairment of assets that are considered stranded. Investment to modernise existing infrastructure results in expanding the asset base.

5. Evolving stakeholder expectations around sustainability
Risk category	Transition
Risk type	Reputational
Description	Evolving stakeholder expectations around decarbonisation present both a high risk of being behind competition, but also an untapped opportunity for SLT which can result in enhanced reputation, cost savings and access to new markets/sustainable products.
Time horizon	Long-term
Current effects on the business model and value chain	Investor or regulatory pressure on sustainability reporting is emerging.
Anticipated effects on the business model and value chain	Sustainability performance becomes a differentiator in corporate and international markets. Stakeholders may require verified emission data and tangible outcomes may result in increased scrutiny across the value chain. Introduction of green connectivity services or low-carbon solutions for corporate clients. Enhanced ESG credibility may also strengthen market access, partnerships, and talent attraction and brand value, influencing pricing, contracts, and customer loyalty.
Current and anticipated changes to the business model to address risks	Pursuit of SBTi validation for emission reduction pathways to ensure alignment with international benchmarks. Enhanced stakeholder engagement and disclosure practices, including publication of detailed Scope 1, 2, and 3 emissions, progress against interim milestones, and ESG performance dashboards. Access to green financing, sustainability-linked loans etc., providing long-term funding flexibility.
Current and anticipated direct/indirect mitigation and adaptation actions	Commitment to the Net Zero 2045 roadmap that places SLT ahead of Sri Lanka’s national target of 2050 The establishment of a dedicated ESG Strategic Committee chaired by the CEO, membership in the UN Global Compact Network Sri Lanka, and alignment with international reporting standards such as GRI and Integrated Reporting Framework (IIRC) demonstrating strong governance and accountability. Proactive investments in renewable energy, energy efficiency, and digitalisation reinforce its environmental stewardship.
Current financial effects	Costs for ongoing ESG programme investments, reporting requirements and occasional consultancy expenses.
Anticipated financial effects	Risk of market share loss to climate-conscious competitors that will adversely affect revenue. Strong sustainability performance can increase access to green financing and ESG-linked incentives. However, the converse may result in reputational harm, potential regulatory penalties, and the loss of commercial opportunities.

3.1.2 Climate-Related Opportunities

1. Climate-driven innovation and digital diversification
Opportunity category	Products and Services
Description	Leveraging ICT, IoT, and cybersecurity expertise to support Sri Lanka’s NDC 3.0 objectives regarding grid modernisation, smart metering, and digital energy management.
Time horizon	Long-term
Current effects on the business model and value chain	Integrated ICT provider with competencies in IoT platforms, network connectivity, data analytics, AI, and cybersecurity.
Anticipated effects on the business model and value chain	Expansion into energy-tech and digital infrastructure markets. Service portfolio expansion such as solutions for smart and sustainable buildings, climate smart agriculture, smart cities, logistic optimisation, healthcare IoT etc.
Current and anticipated changes to the business model to address opportunities	Positioning as a strategic partner for national agencies to implement smart grid and renewable integration projects. New revenue streams from climate focused digital solutions. Strengthen role as a digital enabler of Sri Lanka’s low-carbon transition.
Current and anticipated direct mitigation and adaptation efforts to address opportunities	SLT’s strategic planning includes digital transformation, but climate-driven innovation is currently embedded unevenly across programmes. SLT can support Sri Lanka’s grid modernisation by providing digital infrastructure for smart metering, real-time energy monitoring, predictive maintenance, secure data transmission, and demand-side management. By leveraging its telecom network, data centres, and digital platforms, SLT can partner with the Government and development agencies to implement smart grid and energy digitalisation initiatives aligned with Nationally Determined Contributions (NDC). Diversify revenue streams by expanding into energy-tech and digital infrastructure markets.
Current and anticipated indirect mitigation and adaptation efforts to address opportunities	Some digital diversification efforts address efficiency or new markets, yet climate as a strategic driver is not fully integrated into all decision processes. Build advanced digital capabilities by hiring data and AI specialists and forming partnerships or acquisitions with software-focused firms.
Current financial effects	Standard revenue from existing ICT and connectivity services.
Anticipated financial effects	Climate-focused digital solutions open new high-growth revenue streams, while digital optimisation across internal operations may generate meaningful cost savings. Development of platforms, talent acquisition, and go-to-market efforts may require significant upfront capital and operating expenditure, however, are expected to yield long-term recurring revenue and cash-flow stability.

2. Cost savings by energy efficiency improvements
Opportunity category	Resource Efficiency
Description	Deployment of energy efficiency initiatives, including LED retrofits, inverter AC adoption, and vehicle fleet optimisation to deliver measurable cost reductions.
Time horizon	Long-term
Current effects on the business model and value chain	Implementation of LED retrofits, inverter AC adoption and reduction of vehicle fleet. Green buildings certifications for Pitipana data centre and SLTMobitel headquarters in Welikada.
Anticipated effects on the business model and value chain	Emphasise low-carbon and energy-efficient network operations. Infrastructure modernisation such as migrating from copper to Fibre, 5G prominence. Energy efficiency considered for vendor ratings.
Current and anticipated changes to the business model to address opportunities	Energy efficiency may become a core investment criteria for capital expenditure. SLT may set internal energy intensity or efficiency improvement targets, embedding energy performance into KPIs and management decisions. Scenario planning may increasingly consider future energy price trends.
Current and anticipated direct mitigation and adaptation efforts to address opportunities	Energy performance is increasingly considered when selecting network equipment, cooling technologies, and facility upgrades. Energy efficiency is likely to become a core investment criterion in CAPEX planning for network expansion and modernisation. Long-term strategy may prioritise software optimisation, virtualisation, and smart network management to reduce power demand.
Current and anticipated indirect mitigation and adaptation efforts to address opportunities	Procurement decisions are gradually favouring high efficiency technologies, even where upfront costs are higher. SLT may set internal energy intensity or efficiency improvement targets, embedding energy performance into KPIs and management decisions. Scenario planning may increasingly consider future energy price trends, reinforcing the business cases for efficient investments.
Current financial effects	Measurable reductions in energy use and associated costs.
Anticipated financial effects	Medium-to long-term energy efficiency gains may translate into permanent operating cost savings, lowering exposure to volatile energy prices and possible carbon taxes. Strong energy-performance metrics can unlock lower-cost green financing, reducing the Company’s overall cost of capital.

3.1.3 Material Adjustments

No material adjustment is required in relation to significant risk on climate-related risks and opportunities identified within the next annual reporting period to the carrying amounts of assets and liabilities reported in the related financial statements. During five year ended 31 December 2025. Company has already recognised a provision of impairment of LKR 121.4 Mn. due to damages caused by Ditwah flood on Telephone exchanges and generators. No further adjustment expected in next reporting period.

3.1.4 Climate-Related Transition Plan

SLT has established a comprehensive roadmap to achieve net-zero emissions by 2045, a target that is five years ahead of the national goal. To monitor progress, SLT tracks emissions through Carbon Assessment ISO14064-1:2018 Standards and has set specific infrastructure targets, such as installing 200 rooftop solar power stations with a total capacity of 6,000 kW by the end of 2026. Progress is further measured through the pursuit of global certifications, including ISO 50001:2018 for energy management and ISO 14001:2015 for Environmental Management Systems. Additionally, SLT monitors its renewable energy goal of meeting 10% of its total energy requirements through clean sources within the next two years.

3.1.5 Resilience

The Group’s approach to Sustainability and Climate Resilience is deeply embedded in its corporate philosophy under the theme “Co-Connection”, which integrates environmental and social.

• Net-Zero Vision: The Group has established a long-term commitment to achieve net-zero carbon emissions by 2045.
• Renewable Energy Transition: To mitigate grid-based energy risks and reduce its carbon footprint, SLT has deployed 873 renewable energy-powered sites and plans to install 6,000 kW of rooftop solar power capacity by 2026.
• Nature-Based Solutions: In partnership with the Department of Forest Conservation, the Company launched a Mangrove Restoration Project covering 4.2 hectares in Pubudugama to enhance climate resilience, support carbon storage, and protect biodiversity.
• Operational Efficiency: The Company prioritises energy-efficient infrastructure, including the installation of 2,020 energy-efficient lighting units alongside a shift toward a paperless operation and an optimised, transparent vehicle fleet management system.
• Governance and Risk Disclosure: SLT has established a dedicated ESG Strategic Committee chaired by the CEO and has initiated the process of identifying and disclosing sustainability and climate-related risks in alignment with SLFRS Sustainability Disclosure Standards (SLFRS S1 and S2).
• Standards and Certifications: The Group is pursuing ISO 14001:2015 (Environmental Management System) and ISO 50001:2018 (Energy Management) certifications ISO – 14064-1:2018 to align its daily operations with global sustainability benchmarks.

3.1.6 Resources Allocated to Climate-Related Risks and Opportunities

SLT adopts a structured approach to resource and manages climate-related risks and opportunities (CRROs) by integrating them into its overall business strategy and operational planning processes. SLT allocates financial, human, and technological resources to support climate initiatives, including energy efficiency improvements, renewable energy investments, and resilient network infrastructure.

Dedicated internal teams, supported by cross-functional collaboration, are responsible for implementing and monitoring climate-related initiatives. Capacity building is enhanced through continuous learning and partnerships with recognised institutions, enabling access to global best practices and technical expertise.

3.1.7 Plans to Achieve Climate-Related Targets

Energy efficiency improvements remain a key priority, with initiatives such as the adoption of energy-efficient equipment, optimisation of network operations, and modernisation of infrastructure, including the transition to fibre-based technologies. These measures support reduced energy consumption across operations. In addition, SLT is strengthening its climate governance and data management systems to monitor performance, track progress against targets, and ensure alignment with international standards. Climate considerations are increasingly embedded into investment decisions and long-term business planning

3.1.8 Progress of Plans Disclosed in Previous Reporting Periods

Key initiatives have been advanced in alignment with strategic priorities, including sustainability commitments, operational improvements, and risk management actions. Progress includes strengthened governance oversight, continued implementation of climate-related initiatives, improved data collection and monitoring systems, and ongoing capacity building across relevant teams. Where applicable, targets are being tracked regularly to ensure alignment with long-term objectives.

3.1.9 Expected Effects of Climate-Related Risks and Opportunities on Financial Position

SLT expects its financial position to evolve in alignment with its strategy to manage climate-related risks and opportunities. Strategic investments in energy efficiency, renewable energy, resilient infrastructure, and digital transformation are anticipated to require upfront capital expenditure in the short-term, while delivering operational cost efficiencies and risk reduction benefits over the medium and long-term. SLT expects improved cost optimisation, reduced energy intensity, and potential savings from renewable energy adoption. These improvements are anticipated to positively contribute to profitability and cash flow stability.

In the long-term, the strategy is expected to strengthen the SLT’s competitive position, enhance access to sustainable financing, reduce exposure to climate-related risks, and support stable revenue growth. Improved resilience and alignment with sustainability standards are anticipated to positively influence investor confidence, capital availability, and overall enterprise value.

3.1.10 Expected Effects of Climate-Related Risks and Opportunities on Financial Performance

SLT’s financial performance is expected to evolve positively over time as its strategy to manage climate-related risks and opportunities is implemented. This is expected to involve transitional costs associated with climate-related investments, including energy efficiency upgrades, renewable energy adoption, and infrastructure resilience improvements, while also creating new revenue streams from sustainable digital initiatives. During the year, SLT invested LKR 420 Mn. in renewable energy installations.

3.2 Sustainability-Related Risks and Opportunities

3.2.1 Sustainability-Related Risks

1. High energy consumption in network infrastructure and dependence on fossil-fuel-based grid electricity
Description	Energy-intensive operations and assets, such as network infrastructure, drive high energy use and significant operating costs, while dependence on fossil-fuel-based grid electricity exposes the entity to energy price volatility and potential power shortages.
Time horizon	Medium-term.
Current effects on the business model and value chain	Energy-intensive operations and assets drive high energy use and fluctuating operating costs. Working towards net zero by 2045.
Anticipated effects on the business model and value chain	Backup power and network operations must transition to renewable and low-carbon solutions. Supplier screening will increasingly consider carbon intensity with pressure on suppliers to measure their carbon footprint.
Current and anticipated changes to the business model to address risks	Solarisation of 873 remote sites. CEO-chaired ESG Strategic committee established to drive sustainability initiatives. Carbon taxation related considerations to influence procurement and investment strategies.
Current financial effects	Fluctuating prices for electricity and fuel directly impact operating costs. Investment in renewable energy increases cash outflows and capital expenditure. Costs of regulatory compliance will increase operating costs.
Anticipated financial effects	Power purchase agreements and own generation of renewable energy may reduce energy-related operating costs. Potential introduction of carbon taxes may result in higher operating costs. Investment in low carbon equipment and technology may increase short-term capital expenditure and cash outflows but reduce long-term operating costs. Strong ESG performance, such as good progress towards “Net Zero”, initiatives etc., can enhance brand value and customer growth leading to increased revenue.
Mitigation actions	Continue network migration by using smart meters and network monitoring tools, optimising cooling systems, modernising the transport network, replacing legacy equipment with energy. efficient models and using renewable energy sources. SLT’s roadmap to increase the use of renewable energy to 35% by 2030. Comprehensive energy audits for selected sites. Reduction of electricity usage through energy efficient lighting solutions and dashboards to track real time energy usage.

2. Lack of circularity in equipment and devices
Description	A regulatory and operational environment for e-waste management combined with the lack of formal circular strategy leads to potential resource depletion and high disposal costs.
Time horizon	Medium-term.
Current effects on the business model and value chain	Operation of an in-house copper recycling plant, recovering 4,800 kg copper in 2025 which in turn is sold to suppliers Partnership with e-waste management suppliers registered with the Central Environmental Authority (CEA). Refurbishment and redeployment of functional end-of-life equipment from client premises and electronic equipment used by SLT.
Anticipated effects on the business model and value chain	Establishing or partnering with recycling infrastructure and investing in a nationwide take-back programme. Secondary revenue streams through resale and partnerships with refurbishment specialists.
Current and anticipated changes to the business model to address risks	Although many initiatives relating to circularity in equipment and devices have been carried out a cohesive strategy needs to be implemented. Customer engagement strategies include take-back initiatives and e-waste recycling schemes tied to loyalty programmes. Potential regulatory requirements stem from extended producer responsibilities.
Current financial effects	Cost of safe disposal of e-waste impacts operating costs. Asset write-downs due to impairment of obsolete equipment.
Anticipated financial effects	Shift to circular models (leasing/refurbishing) may reduce operating costs. Refurbished devices can create secondary revenue streams. Potential extended producer responsibilities can drive SLT to select suppliers with high recycling capabilities.
Mitigation actions	Compliance and education – Disposal aligns with CEA and Basel standards, educates public on responsible e-waste handling. E-Bill and Waste Reduction – Digital billing reduces paper waste, supporting circularity goals. Broad Scope of Recycling – Recycles devices which have reached the end of life (Devices include phones, laptops, chargers, routers, antennas etc.).

3. Breaches of customer privacy, misuse of personal data, or unauthorised disclosure of information
Description	Customers are increasingly concerned about how their privacy is protected across mobile, internet and e-mail services. As the telecommunication industry increasingly relies on large volumes of customer data - including location information, browsing behaviour and demographic insights - to enhance service quality and create new revenue opportunities, the importance of strong data protection practices continues to grow. For SLT, insufficient management of data privacy could result in reduced customer trust, higher churn, and significant financial impacts arising from legal and regulatory exposure.
Time horizon	Short-term
Current effects on the business model and value chain	Compliance with Sri Lanka’s Personal Data Protection Act (PDPA) and global standards.
Anticipated effects on the business model and value chain	As cloud and digital services expand, privacy risks become more complex and interdependent with partners. Consent management to regulate non-contractual data processing activities, such as marketing, location tracking, and behavioural analytics. Vendor management and process standardisation require PDPA-compliant contracts.
Current and anticipated changes to the business model to address risks	Privacy governance is delegated to IT and legal teams. SLT can use privacy and trust as competitive differentiators through privacy-first communication and certifications. PDPA consent requirements may limit data availability, impacting previous strategies of monetising anonymised or aggregated customer data.
Current financial effects	Compliance costs contributed to higher operating costs.
Anticipated financial effects	Fines for potential breaches will not only increase operating costs but impact the reputation of SLT that may lead to loss of customers and revenue. Continuous CAPEX required for higher security and privacy requirements. Potential breaches may result in loss of customer goodwill and negative revenue impact.
Mitigation actions	Establishment and enforcement of a comprehensive Data Privacy and Protection Policy in line with Sri Lanka’s Personal Data Protection Act (PDPA) and global standards such as General Data Protection Regulation (GDPR). Development of an Incident Response and Reporting Framework. Implementation of ISO 27001-certified security frameworks and 24/7 Cybersecurity Operations Centre. Establishment of data access and handling protocols.

4. Low adoption and usage of services owing to digital divide
Description	Due to low adaptation and usage of services by people in rural areas result in reduced revenue. Digital inclusion initiatives can also create new revenue streams when risks are mitigated and sustainability financing opportunities.
Time horizon	Medium-term.
Current effects on the business model and value chain	Gamata Sannivedanaya (Connect Sri Lanka): Expanding digital access and growing the subscriber base. Nationwide fibre expansion.
Anticipated effects on the business model and value chain	Investment in long-term infrastructure expansion. Shifting revenue mix from voice to high-speed data and building a future customer base for long-term growth. New revenue streams through digital payments, e-learning, telemedicine, and IoT services.
Current and anticipated changes to the business model to address risks	SLT directs investments toward rural coverage based on affordable package strategies. Inclusion will be a core business segment with service-bundling strategies. Deepen public-sector partnerships to expand rural connectivity and support government digital services.
Current financial effects	Expanding into rural areas where adoption is low and providing affordable packages impacted the cost of capital.
Anticipated financial effects	Higher digital penetration builds a future customer base. ESG-linked financing opportunities grow as investors favour measurable inclusion outcomes.
Mitigation actions	Accelerate broadband and 4G/5G network expansion to underserved rural and remote communities. Provision of affordable packages and community digital centres to guide pricing strategy. Public-private partnerships with government and NGOs to support digital inclusion initiatives and digital skills training programmes.

3.2.2 Sustainability-Related Opportunities

1. Digital inclusion
Description	Revenue growth by expanding customer base and market reach, strengthening long-term customer base and brand loyalty, product innovation to meet the needs of affordability of low-income communities, enables broader sustainability solutions.
Time horizon	Short to Medium
Current effects on the business model and value chain	Gamata Sannivedanaya (Connect Sri Lanka): Expanding digital access, growing subscriber base to and shifting revenue from voice to high-speed data. Nationwide fibre expansion. National AI Expo & Conference : a transformative shift in the nation’s digital evolution.
Anticipated effects on the business model and value chain	Investment in long-term infrastructure expansion, including fibre and mobile networks in rural areas. Digital inclusion initiatives can create new revenue streams through digital payments, e-learning, telemedicine, and IoT services. ESG-linked financing opportunities are growing as investors favour companies with measurable inclusion outcomes.
Current and anticipated changes to the business model to address opportunities	Fibre and mobile network infrastructure expansion in rural areas.
Current and anticipated direct mitigation and adaptation efforts to address opportunities	SLT directs investments toward rural coverage. Affordable packages and community digital centres guide pricing strategy decisions. Prioritise projects delivering social and environmental impact using blended and concessional financing. Treat inclusion as a core business segment with service-bundling strategies.
Current and anticipated indirect mitigation and adaptation efforts to address opportunities	Public-private partnerships with government and NGOs support digital inclusion initiatives. Deepen public-sector partnerships to expand rural connectivity and support government digital services.
Current financial effects	Enhance the existing customer base as SLT focuses on Digital Inclusion in rural areas and attracting customers to the new products. Expanding into rural areas where adoption is low and providing affordable packages may have an impact on cost of capital. Investment in awareness programmes.
Anticipated financial effects	Higher digital penetration will build a future customer base resulting in long-term revenue growth potential. Financial inclusion measures in rural/hard to reach areas may result in reduced revenue due to low adoption/providing subsidised packages. Access to funding from investors favouring socially inclusive companies may also result in lowering the cost of capital.
Mitigating actions	Broadband Expansion – SLT extended 4G/5G to rural areas. Subsidised broadband for students/SMEs. Introduce affordable Connectivity-SLT leads in low-cost social tariffs. Provide discounted services or financial assistance to schools and disadvantaged communities. Implement programs to develop and enhance digital literacy and technology skills. Collaborate with universities, technical and vocational institutions, and non-governmental organisations to support youth and women in digital education and learning initiatives.

2. Low-carbon value proposition and green innovation
Description	Positioning core connectivity products as low-carbon or net-zero-ready services and innovating in-site design (renewable integration and energy-efficient cooling) to attract enterprise and public-sector customers with ESG commitments.
Time horizon	Medium
Current effects on the business model and value chain	Site design and deployment through prioritising renewable energy integration, energy-efficient cooling, and reduced diesel dependency through green innovation.
Anticipated effects on the business model and value chain	Core connectivity products positioned as low-carbon or net-zero-ready to attract customers with ESG commitments. Equipment procurement embedding carbon criteria in Request For Proposals (RFPs) and vendor selection to promote low-carbon variants.
Current and anticipated changes to the business model to address opportunities	Leveraging green initiatives primarily for operational cost reduction and brand reputation enhancements. Establishment of an ESG Strategic Committee. Prioritising digital solutions that reduce carbon (e.g., Smart Agriculture, Energy IoT, and Dematerialisation). Financing sustainability projects through green bonds and sustainability-linked loans.
Current and anticipated direct mitigation and adaptation efforts to address opportunities	SLT does not yet include carbon impact analysis alongside financial ROI when evaluating projects. SLT has set a target of achieving net-zero emissions by 2045. Enterprise service development will prioritise digital solutions that reduce carbon, such as smart agriculture, energy IoT, and balancing market demand with ESG impact. Vendor and partner selection will favour suppliers with credible decarbonisation plans, ESG certifications, and circular-economy commitments.
Current and anticipated indirect mitigation and adaptation efforts to address opportunities	ESG Strategic Committee has been established to evaluate sustainability opportunities and guide initiatives. Finance sustainability projects using green bonds and sustainability-linked loans.
Current financial effects	Operational cost reductions through green initiatives. Cash outflows for investments in capital expenditure resulting in an increase in costs.
Anticipated financial effects	Additional revenue streams from green products. Proactive engagement prepares SLT for potential future regulatory compliance costs and carbon taxes. Investment in green buildings and infrastructure may result in increased capital expenditure in the short-term but reduce long-term operating costs.
Mitigating actions	e-SIM transition –Cuts material use and logistics emissions by digitising mobile line activation. E-Bill and Waste Reduction –Digital billing reduces paper waste, supporting circularity goals. Solar panel installations. Dashboards to track real-time power use. Optimise office space and operations (proposed mitigation action). Adopt hybrid or flexible working models to reduce building occupancy and related energy use.

3.2.3 Expected Effects of Sustainability-Related Risks and Opportunities on Financial Position

SLT expects its financial position to evolve over the short, medium, and long -term as it implements strategies to manage sustainability-related risks and opportunities. In the short-term, capital expenditure may increase due to investments in energy-efficient technologies and green infrastructure, potentially impacting liquidity and asset composition. Over the medium-term, these investments are expected to enhance asset efficiency, reduce operating costs, and strengthen the SLT’s balance sheet through improved resource utilisation. In the long-term, the transition towards a low-carbon business model, supported by climate-driven innovation and digital inclusion, is expected to enhance asset resilience, reduce exposure to climate-related risks, and improve overall financial stability and enterprise value.

3.2.4 Expected Effects of Sustainability-Related Risks and Opportunities on Financial Performance

SLT anticipates changes in its financial performance across the short, medium, and long-term as a result of its sustainability strategy. In the short-term, profitability may be moderated by initial implementation costs and investments in sustainability initiatives. However, in the medium-term, performance is expected to improve through cost savings from energy efficiency, operational optimisation, and increased revenues from sustainable products and services. Over the long-term, sustained financial performance is anticipated through enhanced competitiveness, stronger customer demand for low-carbon solutions, and reduced regulatory and climate-related risks, ultimately supporting stable revenue growth and improved margins.