Sustainable finance is here to stay and many investors have embraced ESG and see its principles as the new norm. Once considered niche and a highly-specialised practice, integrating sustainability into finance is now rising into prominence, creating huge opportunities for financial centres such as Jersey.
Investor demand for sustainable investment strategies and products continues to rise. This is evidenced by the fact that asset owners, banks and insurers are now listening to the demands of all their stakeholders, not just investors, who have long valued embedding ESG perspectives into their services. As a result, many integrate sustainability into their investment, lending or underwriting decision making processes, intertwined with the first wave of sustainability regulation.
Supporting businesses to adopt a robust ESG framework is at the heart of Jersey’s mission, first laid out in 2021, to become a top sustainable finance centre by 2030. After all, Jersey’s credentials as a world leading finance centre will only become stronger by embracing sustainability.
Many businesses have already started to integrate ESG standards into their business models and are adapting their client offering to respond to changing demands. Through this, along with additional education and commitment to action, sustainable finance will become ingrained into finance, so there will be no distinction between the two.
Supporting this, Jersey will need to monitor and align to emerging regulations to ensure that it eliminates the risk of greenwashing and retains access to key markets, by understanding and adhering to high quality sustainable finance standards and regulations, such as the EU taxonomy and other similar frameworks.
In 2021, the Jersey Financial Services Commission (JFSC) made amendments to their codes of practice for funds and private fund guidance, following their 2020 consultation on enhancements to sustainable investments requirements.The consultation sought to obtain feedback on proposals to enhance the processes, procedures and disclosures around investments which are marketed as environmental and socially responsible.
Driven by the Government of Jersey’s commitment to enhance the profile of ESG investments, the JFSC were asked to provide confidence that such commitments made by funds in Jersey are supportable and not greenwashing. The resulting amendments are a positive reflection of the JFSC’s commitment to maintain high regulatory standards and aim to improve the clarity of sustainable investment requirements, enhance consumer protection and contribute towards the Island continuing to meet international standards.
To be a leading finance centre, Jersey must continue to embrace ESG. The bar is getting higher and the jurisdiction can edge ahead in terms of differentiating itself from competitors by embracing sustainability as a structural change to Jersey’s entire finance offering. Jersey can act fast by:
- Strengthening capacity building
- Embracing technology to enhance offerings
- Breaking down barriers such as costs of compliance and risks around greenwashing
By doing this, Jersey can accelerate industry change and will stand out as a jurisdiction of choice.
The bottom line is that a concerted effort from all parts of the ecosystem is required when adapting to the realities of sustainable finance. While this is achievable, it will be a challenge. Capacity building across all sectors (administrators, accountants, lawyers and other service providers) will take time and investment.
There is a recognition that if the industry pays attention to ESG investing and considers the environmental, social and governance factors, along with governmental collaboration, this will maximise Jersey’s potential for a brighter and resilient future for its businesses and Islanders.
By investing in specialist resources to support Jersey and the financial services sector, we can thrive together and the Island can continue to enjoy its premier international finance centre status. In addition, if you are a Jersey business looking for help devising a sustainable business model or integrating ESG, there are professional advisers on the Island that are willing and able to work with you on reaching your goals.