Green investors given greater assurances over sustainable finance

It gives environmentally conscious investors assurances that their money is used in efforts to promote the protection and recovery of the Earth's natural environment.

Green investors in Guernsey are being given greater assurances that their money is being used for sustainable projects.

Under new regulations from the Guernsey Financial Services Commission, the Natural Capital Fund framework is expanding on the policy already in place.

Following public consultation, there are three elements which came into effect yesterday (20 September 2022).

Firstly, the Commission has launched its Natural Capital Fund framework. It is part of the growing Guernsey Sustainable Funds Regime and marks a completion of a pledge made as part of COP26 to extend the Commission’s regulatory regime to include sustainable funds.

The Natural Capital Fund regime is based on international standards and gives environmentally conscious investors assurances that their money is used in efforts to promote the protection and recovery of the Earth's natural environment. It creates a regulatory designation for funds to help channel investment into biodiversity and natural capital projects that make a positive contribution and or significantly reduce harm to the natural world.

The Guernsey Financial Services Commission says the Natural Capital Fund framework will complement the Bailiwick’s existing regulated Guernsey Green Fund regime, which now channels more than £4.9 billion into green investments.

Secondly, the the green criteria in the Guernsey Green Fund regime has been expanded to include the EU Taxonomy for Sustainable Activities’ technical screening criteria for activities contributing to climate change mitigation and adaptation.

Director General William Mason, said: “Climate change and nature loss are twin crises, inextricably linked in their impact on people and planet. With the addition of the Natural Capital Fund, the second branch of our sustainable funds framework, and the upgrading of our ground breaking Guernsey Green Fund we hope to help Guernsey investment funds, and their investors, to channel profitably much needed capital to address this global environmental challenge.”

Thirdly, the Commission is also publishing anti-greenwashing guidance for the investment sector to ensure that adequate disclosures are made to investors in respect of any environmental sustainability claims made.

Gillian Browning, Director of the Investment, Fiduciary and Pension Division, said “With these measures we are enhancing protection to investors from the potential risk of “greenwashing” - false or misleading environmental sustainability claims made to mis-sell investments. While there has been no evidence of greenwashing amongst local licensees, this additional investor protection is a prudent step to guard against a potential risk recognised by the global regulatory community.”