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Guernsey Looks to Play its Part in Accelerating Green Finance on a Global Scale

August 6, 2019 • FINANCE & BANKING, Responsible Finance, Special Report: The Future is Green

Greening the financial system has become one of the key economic trends of developed countries as the world now works towards sustainable development. Guernsey, a country with just 25 square miles in land size houses Guernsey Green Finance that has played a significant role in the development and promotion of green and sustainable finance. Guernsey has carved its niche not just in merchant banking but also through its “green ventures” that ensure the environment is at the centre of all financial decision-making.

Guernsey is determined to live up to its reputation as a responsible global citizen, and its commitment to the Kyoto Protocol. Guernsey continues to support environmental stability and to import low-carbon electricity from France as part of our commitment as a community to lower our carbon use.

The global specialist finance centre of Guernsey has enjoyed a symbiotic relationship with the City of London for half a century it has specialised in financial services.

As I write this article, we have a presence at London’s historic Guildhall as the London Green Finance Initiative and the UK Government launch the UK’s Green Finance Strategy, which aims to boost sustainable finance and make the UK an international hub for expertise and funding that supports greener investment.

It is an approach which dovetails with Guernsey’s ambitions to play a part in the development of green and sustainable finance and ultimately, save our planet.

Guernsey is an island of just 25 square miles. We are part of Great Britain, though not the United Kingdom, and sit closer to France than to England.

Guernsey has developed specialisms in financial services since the 1960s when it started to carve a niche in merchant banking. Now, we look to support the City and the global financial services industry with our own specialisms, one of which is the development of green and sustainable finance.

Images For Visit Guernsey – Shot 2012

 

Guernsey is already home to the world’s first regulated green investment fund product, the Guernsey Green Fund.
But it is not just about making the most financially from the opportunities offered by green finance. Guernsey is determined to live up to its reputation as a responsible global citizen, and its commitment to the Kyoto Protocol. Guernsey continues to support environmental stability and to import low-carbon electricity from France as part of our commitment as a community to lower our carbon use.

Our financial services strategy encompasses a commitment to green and sustainable finance and is aligned with the United Nations’ Financial Centres for Sustainability (FC4S) international network and its assessment framework.

Over the years, Guernsey has developed as a specialist centre for the servicing of alternative assets, such as private equity, infrastructure and alternative debt. We are using that expertise to help to develop a global taxonomy for green and sustainable funds.

We have also been looking to provide a broad and comprehensive range of green and sustainable services. Guernsey is already home to the world’s first regulated green investment fund product, the Guernsey Green Fund. The International Stock Exchange, based in Guernsey, has introduced a green segment to its exchange, and we are actively reviewing the potential for the development of green insurance products.

Guernsey Finance has pursued this objective for the past 18 months, and has made rapid progress on the journey.

From developing the world-leading Guernsey Green Fund accreditation and securing membership of the United Nations’ Financial Centres for Sustainability network, we continue to drive further developments and innovations from Guernsey.

We have also been keen to work with others along the journey, including global public policy groups, and develop partnerships to exploit our leadership position in infrastructure services.

I am proud that we have made great progress towards working with the London Green Finance Institute. Earlier this year, industry representatives from Guernsey Green Finance met senior figures from the Green Finance Initiative to talk about how we could make progress together on climate finance.

Sir Roger Gifford, Chair of the UK Green Finance Initiative, said: “There is no greater imperative for bankers and investors than financing the transition to a low-carbon future. The UK has demonstrated global leadership in green and sustainable finance time and again but collaboration is key. It’s both natural and necessary, therefore, to combine with our colleagues in Guernsey and we welcome working with Guernsey Green Finance in support of climate finance.”

 

 

The London Green Finance Initiative did play a significant role in getting us to where we are today – Sir Roger visited Guernsey at the end of 2017 – and so we were delighted to agree a collaborative approach on this topic.

So now, as the UK seeks to take the lead in green finance, we are ideally positioned to support that drive to accelerate green finance.

The UK has said that it expects its own financial services sector to be at the heart of efforts to tackle climate change and reduce emissions to net zero by 2050.

Given the UK’s clear ambition in this space, it’s a real boost to Guernsey’s green strategy that we have already met with the Green Finance Institute’s leadership and agreed to work collaboratively.

The environment needs to be properly integrated into financial decision-making, and we need policy frameworks that can deliver investment at the scale required to solve these great environmental challenges. 

The UK’s new Green Finance Strategy should help boost sustainable investment, and will also expect companies with listed shares to disclose how climate change impacts on their work, reflecting the view that sustainability and climate change should now be considered as an operational risk for companies.

As the world now looks to shift to clean, resilient and sustainable economic growth, there is an opportunity to make London the go-to hub for green investment. This new strategy will help make the UK an international hub for expertise and funding that supports greener investment.

Included in it are plans to increase investment in sustainable projects and infrastructure, while ensuring the UK remains an international leader in decarbonisation, and meets its ambitious 2050 net zero carbon emissions targets.

“The UK has a long history of leading the way in tackling climate change, but we need to do more to protect our planet for future generations,” said John Glen, the UK’s City Minister, speaking at the strategy launch.

“The City has a vital role to play in securing a greener future for us all. By investing more in sustainable projects, it can not only protect our environment, but also help establish London as the pre-eminent international centre for green finance.”

“Today’s Green Finance Strategy will support this ambition, with new initiatives to boost funding for green ventures and ensure that the environment is at the centre of all financial decision-making.”

One of the important messages from the Guildhall was that aligning finance with sustainability is needed to deliver on the Paris Agreement on climate change and the UN Sustainable Development Goals, as well as the UK’s world-leading Climate Change Act and 25-Year Environment Plan.

The environment needs to be properly integrated into financial decision-making, and we need policy frameworks that can deliver investment at the scale required to solve these great environmental challenges.

The UK is in a unique position to green the global financial system. UK financial services, in particular the capital, expertise, and innovation in the City of London, are of systemic importance globally for defining and then ensuring the rapid adoption of sustainability -aligned financial services.

It is expected that green finance will be a core part of the UK’s forthcoming UN Framework Convention on Climate Change (COP26) Presidency in 2020.

The UK’s strategy is ambitious, and rightly so. The future for green finance is very exciting – and Guernsey is pleased to be more than playing its part on a global scale to accelerate our way to that future.

 

 

How the Guernsey Green Fund Works

By investing in a Guernsey Green Fund, investors can be assured that their investments have a positive environmental impact on the planet, which are being monitored against internationally recognised criteria.

• Establish a Guernsey fund from any of the island’s existing regimes

• Demonstrate compliance with the Guernsey Green Fund rules

• Provide assurance that the fund is run in accordance with green criteria

• Seek verification from a suitable independent third party that the prospectus meets notified green criteria, or a declaration from a Guernsey-licensed fund manager or administrator.  

By investing more in sustainable projects, it can not only protect our environment, but also help establish London as the pre-eminent international centre for green finance.
The Guernsey Green Fund provides market confidence in the product from the regulatory wrapper, reassurance that funds are invested into green assets, and offers a platform through which investments into green initiatives can be made. It enhances investor access to the green investment space by providing a trusted and transparent product. As demand rises, we expect that capital-raising will become easier for funds with the certification. We are looking to create a global benchmark.

About the Author

Dominic Wheatley is Chief Executive of Guernsey Finance, the promotional agency for Guernsey’s financial services sector. Guernsey Finance seeks to promote and connect Guernsey as the leading finance centre in chosen markets, particularly the UK, Middle East, South Africa, South-East Asia and North America. Guernsey is a member of the United Nations’ Financial Centres for Sustainability (FC4S).

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