With green finance increasingly becoming a topic of interest for fund managers and their investors, Kees Jager, head of funds in Guernsey, shares more on how Guernsey is going green with the Guernsey Green Fund.
Guernsey as a jurisdiction made a strategic commitment to green finance within the Financial Services Policy Framework in 2018. The newly formed Guernsey Green Finance, a member of the United Nations’ Financial Centres for Sustainability network, alongside many of the world’s leading financial centres, showed that Guernsey is now putting a real focus on supporting sustainability initiatives.
Subsequently, The Guernsey Financial Services Commission (the GFSC) launched The Guernsey Green Fund (the Green Fund), a global first in providing green accreditation to a regulated fund. The Green Fund enhances investor access to the green investment space by providing a trusted and transparent product that contributes to the internationally agreed objectives of mitigating environmental damage and climate change.
The criteria
Under the Green Fund Rules, Green Funds must spread risk, seek a return to investors as well as invest 75% of their portfolio in investments meeting at least one of the following green criteria:
- Renewable energy
- Lower-carbon and efficient energy generation
- Energy efficiency
- Agriculture, forestry and land-use
- Non-energy greenhouse gas reductions
- Waste and wastewater
- Transport
- Low-carbon technologies
- Cross-cutting issues
The remaining 25% of the portfolio can be invested in other asset classes, provided they don’t lessen or reduce the Green Fund’s overall objective of mitigating environmental damage. The Green Fund can voluntarily apply ESG Principles to the investment analysis and decision-making processes.
How does it work?
- Establish the fund, choosing from any of the island’s existing regulated fund regimes
- Demonstrate compliance with the Green Fund Rules
- Once a certification route is decided, provide assurance that the fund is run in accordance with green criteria (as above)
The two certification routes…
- A certificate from a suitable independent third party that the prospectus meets the notified green criteria
- A declaration from either a Guernsey- licensed fund manager or administrator, such as Intertrust
Once accredited, Green Funds are listed on the GFSC website and the use of the Guernsey Green Fund logo can be used on its various marketing and information materials (in accordance with the GFSC’s guidelines on logo use). The GFSC is currently in the process of registering the Guernsey Green Fund logo as a trade mark with Guernsey’s Intellectual Property Office website.
If you’re interested in discussing the Guernsey Green Fund in more detail, please get in touch.