Recognising the urgency of the situation, businesses have begun to realise that their long-term success depends on aligning their strategies with sustainability goals and providers of finance have identified both reduced risk and increased opportunity in funding more sustainable businesses and projects.
Jersey’s ambition to be a leading sustainable IFC means we recognise our responsibility to play our part in ensuring our capital and expertise contributes positively to a more sustainable future, namely achieving the UN Sustainable Development Goals (SDGs).
Sustainable finance refers to the integration of environmental, social and governance (ESG) factors into investment decision making processes, risk management and business operations. It means considering the impact of activities on external stakeholders, including the planet. It also includes both the ‘greening’ of the total financial system as well as the financing of ‘green’ activities across industry. The overarching objective is to allocate financial resources towards companies, projects and initiatives that promote environmental protection, social progress and ethical governance, in addition to generating financial returns.
Embracing sustainable finance is crucial for several reasons. Companies that actively pursue sustainability strategies are more likely to create long-term value for their stakeholders, enhancing their financial resilience and reputation and being more attractive to customers and investors. Moreover, considering ESG factors allows investors and businesses to identify and mitigate potential risks, such as climate change, resource scarcity and social issues, thereby safeguarding their investments.
With a financing gap of between $2.5 and $4.5 trillion per annum, where money is invested is crucial in achieving the 2030 SDG agenda. Materials, resources, innovation, real estate, technology and energy, are all high growth sectors where investment can contribute significantly to the achievement of the SDGs, or detract from them, depending on how they are approached.
The global regulatory landscape is fast evolving in this space, both in terms of sustainable finance and corporate governance and reporting more generally. Frameworks and standards are numerous but alignment to the SDGs gives businesses and jurisdictions the opportunity to consider the full spectrum of sustainability challenges.
The finance industry has a vital role to play in financing the achievement of the goals and, as a responsible IFC, Jersey’s contribution has never been more important.
While the SDGs intersect and should be considered a whole, Jersey’s finance industry is contributing in the following ways:
Goal 4: Quality Education
Professional excellence and the pursuit of technical qualifications has long been a part of capacity building in a strong IFC. Given the vital role of allocators of capital in financing sustainable activity, sustainability education across the sector and expanding to how the industry works with clients, is critical in accelerating adoption of more sustainable economic models. Some specific early examples of this pursuit are firms mandating sustainability education for all staff and a number of local providers offering specific upskilling¹ to a global audience.
Goal 13: Climate Action
As a signatory to the Paris Agreement and with an Island-wide Carbon Neutral Roadmap in place², Jersey is contributing to Climate Action through a credible plan to reduce territorial emissions by 68% by 2030 vs a 1990 baseline and netzero by 2050. Among business leaders, mitigation and adaptation are equally important in reducing risk and managing impact and this can be seen both through their own operational transformations¹ and in the business they are doing with clients¹. Many are now calculating and managing their supply chain emissions and recent progress in investment reporting has resulted in a focus on downstream emissions too.
Goal 16: Peace Justice and Strong Institutions
Jersey’s reputation as a stable and well-regulated IFC is the backbone of its finance industry and is the common thread running through all institutions operating from the Island. With many firms committing to the UN Global Compact, investment managers overwhelmingly supporting the Principles for Responsible Investment and our own antigreenwashing legislation in place, Jersey’s contribution on the global stage to the prudent management of institutions cannot be underestimated. With political stability, regulatory rigour and a plethora of experienced professionals to hand, Jersey provides the ideal environment to support the sustainable transition.
Goal 17: Partnerships for the Goals
To accelerate the pace and scale of change, last year the sustainability industry in Jersey formed JASP – the Jersey Association of Sustainability Practitioners. This professional body represents the majority of providers on-Island who are all working to support the finance industry in transitioning businesses to more sustainable models.
Interoperability and convergence of standards and regulations is an ongoing endeavour and Jersey’s long-standing position as a neutral jurisdiction allows it to support organisations to balance their regulatory needs in whichever marketplaces they operate. Jersey is increasingly seeing fund launches under SFDR or other sustainability reporting regimes, capital markets transactions for sustainability enterprises or instruments and family wealth in all forms, targeting sustainability objectives alongside financial returns.
Sustainable Finance Flows
With 1.7% of all roles advertised in Jersey classed as ‘Green jobs’¹, business leaders increasingly targeting employee learning and objectives in this area and reporting of sustainability metrics and progress becoming the norm, it is clear Jersey is extremely well positioned to support clients seeking sustainable financial solutions.
As our finance industry increasingly provides sustainability reporting on assets, assesses ESG risks and initiates discussions with all clients on these issues, we can expect to see a transition of existing assets to more sustainable business models and approaches and for Jersey to play a key role in the transition to a more sustainable global economy.