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Magazine Issues » May 2021

Jersey and sustainable investing

Sophie_ReguengoThanks to Boris Johnson, the UK prime minister, we know that committing to slash carbon emissions is more than simply ‘bunny hugging’ – it’s serious stuff, writes Sophie Reguengo (pictured) of Ogier law firm in Jersey.

That said, as the owner of a moody rescue buck of a rex rabbit, I would argue that ‘bunny hugging’ is not for the fainthearted, but I take his point; we need concrete action, not fluffy promises.

So what is Jersey doing in the investment funds space to support funds with an objective to invest sustainably?

A consultation paper relating to sustainable investments was published by the Jersey Financial Services Commission in late 2020 and focused on the potential for mislabelling sustainable investments, a phenomenon most commonly known as greenwashing. The concern is that there is potential for some funds to overstate their sustainability credentials.

The feedback showed universal support across the finance industry to address the risk of greenwashing. Feedback also acknowledged that as the world is transitioning towards a more sustainable business and financial ecosystem, the regulatory framework for funds in Jersey ought to be flexible enough to support investment funds with genuinely sustainable investment objectives and for there to be alignment with international terminology, without being too prescriptive.

A more recent consultation, which closed mid-April, focused on the mandatory disclosure of all material information when a fund or registered person has a Sustainable Investment (being one that contributes to either an environmental or social objective) as part of its investment objective. Such material information will likely include (i) the proportion of investments that are sustainable; (ii) the basis on which due diligence, benchmarking and performance measurement and reporting are to be conducted; (iii) any limitations to methodologies and data; and (iv) alignment with any specific taxonomy.

The proposals set out in the consultation will affect certified funds, fund services businesses, Jersey private funds (JPF) and their service providers and investment businesses. Codes of practice and the JPF Guide will be updated accordingly.

These consultations are in line with, and are part of, the pathway for Jersey to achieve its 2030 Vision, which was recently launched to ensure that the island continues to be at the forefront of funds services, as it has been for the last 60 years. The aim is to be recognised as the leading sustainable international finance centre in the markets it serves and there is a genuine, galvanised effort across industry, alongside the government and the Jersey Finance Services Commission, to deliver on this commitment in a meaningful way.

As a member of the Jersey Finance Steering Committee for Sustainable Finance, responsible for overseeing the implementation of the sustainable finance strategy, I know that the island is committed to coordinating on policy, legislation and regulation that supports and accelerates the delivery of this goal, scales up sustainable finance and removes barriers.

We must ensure these are not politically correct acts of ‘bunny hugging’ but meaningful steps. The investment funds industry must listen to experts in the field of sustainable finance and Jersey must provide that all-important substance and bolster the good governance of its domiciled funds.

By Sophie Reguengo, partner, Ogier in Jersey

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