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Top Sustainable Funds? The Best Sustainable Investment Funds

David Postlethwaite, Sustainable Finance Lead of Jersey Finance, explains how the Island aims to mitigate the risk of sustainable investments being mislabelled

As COP26 aims to super-charge global action on climate change, we have seen a spotlight cast on the vital role sustainable finance can play in achieving a global net zero. ESG criteria, green finance standards and climate-related disclosures have all become topics of increasing importance, while trust and transparency are critical to the success of this redeployment of global capital.

That’s why in July this year, Jersey’s financial regulator, Jersey Financial Services Commission (JFSC), announced it would be making changes to a number of its Codes of Practice and the Jersey Private Fund (JPF) Guide, in order to mitigate the risk of sustainable investments being mislabelled – a practice commonly known as ‘greenwashing’. Following feedback received during a wide-ranging consultation, Jersey has now adopted new disclosure requirements that apply to funds marketed on the basis of making investments which contribute to environmental or social objectives.

Sharing similar aims to the EU’s Sustainable Finance Disclosure Regulation (SFDR), these amendments aim to mitigate any potential risks of greenwashing by supporting top sustainable funds finance through a proportionate disclosure regime – creating the right environment for ESG investing to flourish. Early next year, these disclosure obligations will be extended to the investment management sector.

The regulator’s objective was to “set the tone” early and foster investor confidence in sustainable investments through transparency. “We don’t see there being any issue of greenwashing in Jersey, but we wanted to be clear to any potential ‘bad players’ that this sort of behaviour would not be welcome here”, says Matthew Clegg, Senior Manager, JFSC. “By internationally showcasing the fact that Jersey is a leading jurisdiction with high-quality regulation and requirements in this area, you actually end up attracting the right type of business”, he adds. 

These amendments come as the International Monetary Fund (IMF) recently announced that US$20 trillion will be required to achieve the goal of reducing global carbon emissions to net zero by 2050. The IMF is now urging regulators to step up measures to protect investors from misleading environmental claims.

Jersey’s new regime looks to international best practice as its source, drawing on the work of the IOSCO Sustainable Finance Network and other leading jurisdictions. But it also recognises Jersey’s key role as a platform for deploying capital globally – requiring a balanced framework that avoids duplication or divergence in terms of disclosures. 

“We wanted to create something that was practical and proportionate for Jersey, but still maintained the highest international regulatory standards”, says Clegg. “It’s important that we develop a future-proof approach that works across multi-jurisdictional requirements and accounts for the global nature of finance.”

This echoes Jersey’s overall strategy for sustainable finance. In March 2021, Jersey Finance launched ‘Jersey for Good: A Sustainable Future’ – a long-term strategy based on collaboration across stakeholders to ensure Jersey plays its part in the global transition.

We have an ambitious collective vision for Jersey – that by 2030, Jersey will be recognised by its clients, key stakeholders, and other partners as the leading sustainable international finance centre in the markets it serves. Such recognition can only be built on genuine credentials, and we believe Jersey’s new disclosure regime is an important step in this journey.

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