The opening day of WE ARE GUERNSEY’s Sustainable Finance Week saw the launch of two significant initiatives, highlighting the finance centre’s leading positing in sustainable finance. First, a report published by Guernsey Finance in conjunction with Baringa Partners – Private Finance and its Role in the Transition to Net Zero – sets out a roadmap to net zero for the finance industry.
Secondly, The Guernsey Financial Services Commission’s launched the world-first Natural Capital Fund regime. The regulatory designation for funds will help channel investment into biodiversity and natural capital projects that positively contribute to the natural world.
Day one of the three-day green finance summit explored the theme of biodiversity, its relationship to climate change and the emerging business models.
If you missed the sessions, here are nine key takeaways from the event for you to consider:
1. Skills developmentA lack of expertise and capacity is a challenge for firms looking to implement and service the increasingly specialised and complex world of sustainable finance. Firms wishing to upskill their workforce need to facilitate and accelerate opportunities for education.
2. Pace of action
Significant climate events are happening sooner than expected. Guernsey-born Rachel Scott, a BBC producer and director of an episode of Frozen Planet II, presented by Sir David Attenborough, set the scene for the importance of tackling climate change at pace. Wildlife has declined by 60% since 1970, and extreme weather events such as Typhoon Nanmadol, which recently struck Japan, show the impact on human life, economies and investments. Panelists agreed that we can pivot the risk into opportunity, but we have very little time left to make that transition.
3. Dual approach
We are facing a twin crisis with two overlapping but distinct problems – the erosion of nature and biodiversity and climate change. As Emma Howard Boyd, Chair of the Environment Agency said: “We need to green the financial system, but we also need to finance green.”
The focus has been on carbon and reaching zero in the financial world. However, nature has a significant role to play in both agendas.
4. Collaboration is critical
To succeed, we need environmental groups, the third sector, the government, the private sector and the regulator to share knowledge and collaborate.
Environmental regulators need to work with financial regulators to understand the positives and negatives of investible opportunities and try and avoid any unintended consequences in how people invest.
Partnerships are crucial in the development of standards, in sharing data and in creating new frameworks.
Also highlighted was the importance of partnerships in financing and the need to unlock significant private capital as stressed in the Guernsey Finance and Baringa Partners report – Private Finance and its Role in the Transition to Net Zero.
5. Understanding the risk
PwC’s Nynke Vries, a nature and biodiversity strategy specialist, said: “Risk is lighting a fire under the finance response.” However, the speakers agreed that we need to improve our understanding of risks arising from the threat to biodiversity, and the biodiversity risk within investment portfolios.
A true understanding of that risk is hampered by a lack of consistent, comparable data, which could limit capital deployment.
What you measure, you can manage. We don’t have all the answers to how nature can be evaluated or how the impact of nature-positive activities can be measured; we will need to take an iterative approach. Methodologies for measurement are coming fast though, and companies like the Environment Bank are pioneers.
7. Put nature first
There was a theme stressed by various speakers throughout the afternoon that the environment and nature must be placed at the heart of decision-making, investment decisions and how we manage our businesses.
8. Next-gen focus
We have an obligation to consider the next generation in everything we do today that impacts nature, and the 2030 timeline is just as relevant for nature as it is for net zero. We need to consider how we apply capital in a way where we are investing in a future world that addresses the risks of nature depletion.
We need a holistic approach to ensure a just transition. The interdependence of climate change, humanity and capital was highlighted throughout the session. There is an interconnectivity between policy, regulation and the financial system, and to ensure a just transition, we have to think about making it just for everyone. As Emma Howard Boyd said: “decisions must be made for all, not for a few.”
The first panel session from core day one of Guernsey Sustainable Finance Week (L-R): Josephine Bush (Guernsey Finance Sustainable Finance Strategic Advisor), Emma Toovey (Environment Bank Ecology Director), Olly Hughes (Gresham House Managing Director, Forestry), Emma Howard-Boyd (Environment Agency Chair), Nynka Vries (PwC Netherlands Nature and Biodiversity Strategy Specialist).
More to come on day two, when Guernsey Finance’s latest report, Private Finance and its Role in Supporting the Transition to Net Zero, will be discussed in more detail.