WHAT IS Guernsey Green Finance?
Guernsey Green Finance is the brand through which Guernsey Finance delivers on Guernsey's strategic commitment to sustainable finance.
Guernsey Green Funds
In October 2018, the Cibus Fund became the first to be awarded the Guernsey Green Fund regulatory ‘kitemark’ by the Guernsey Financial Services Commission. It closed at more than $320 million following its designation.
“Clearly there were a number of contributing factors, but I do think an important factor in bringing in those later funds, getting investors who were thinking about it to actually commit, was the Guernsey Green Fund designation,” said Jeremy Alun-Jones, Group Chief Operating Officer at ADM Capital.
The Cibus Fund is a private equity vehicle managed by London and Hong Kong-based fund manager ADM Capital, a manager with a track record of investing in the agribusiness sector, looking to reduce the negative impacts of agriculture on the environment. It has followed a thesis-driven approach which shows that demand for high-value food in many of the world’s fastest-growing regions exceeds regional production and processing capacity.
True North Real Estate Partners’ first fund, the Forestry Carbon Sequestration Fund, was designated as a Guernsey Green Fund in summer 2020.
The Forestry Carbon Sequestration Fund will focus on woodland creation, acquiring agricultural land across the UK to develop as Forestry Stewardship Council-compliant commercial forestry. This ecologically-beneficial forestry planting is the central element to reaching the fund’s 1.65 million tonne carbon sequestration target.
The fund is structured with a co-investment ‘side car’, allowing it to scale up if larger investments are available. It achieved its £30 million equity target at launch, exclusively supported by leading global investment firm Willis Towers Watson.
True North was set up in 2019 to focus on ESG-motivated real asset strategies and to meet the increasing institutional investor demand for opportunities leading on environmental and social impact rather than addressing these issues as a passive reporting function to legacy investment strategies.
Insight Investment, a leading global asset and risk manager, received a Guernsey Green Fund accreditation for its farmland fund, the Global Farmland Fund Limited (GFF), which invests in farming projects worldwide. The GFF is actively managed, closed-ended, and Guernsey-domiciled. It closed to new commitments in February 2013.
Resonance British Wind Energy Income II, an authorised, closed-ended investment fund, is focused on consolidating the fragmented small and medium-sized wind farm industry in Britain and Ireland, offering investment return and mitigating environmental damage.
It is the manager’s third Guernsey fund, having previously launched a similar UK onshore wind fund and a fund focused on industrial water treatment, waste to energy and resource recovery infrastructure projects.
Resonance Asset Management is an alternative asset management firm focused on originating, distributing and managing real asset investment funds for institutional investors. Its focus is on assets in growing and changing industries with compelling long-term investment themes, with areas of focus including alternative and conventional energy, water and waste treatment, environmental and agricultural assets.
London-listed fund NextEnergy Solar Fund was awarded the Green Fund designation in February 2020.
NESF is a specialist investment company that invests primarily in operating solar power plants in the UK. It invests up to 15% of its gross asset value in operating solar power plants in OECD countries outside the UK, with the objective to secure attractive shareholder returns through RPI-linked dividends and long-term capital growth by acquiring solar power plants on agricultural, industrial and commercial sites.
Kevin Lyon, Chairman of NESF, said:
"As a board, we are proud of NESF's green credentials and our team's commitment to ESG principles and responsible investment. Achieving Guernsey Green Fund status is further testament to the positive environmental impact that NESF and its solar investments continue to deliver, in terms of both reducing CO2 emissions through solar power generation and championing biodiversity across our solar estate."
The Bluefield Solar Income Fund, advised by Bluefield Partners, was the first London-listed fund to be awarded the Guernsey Green Fund mark in April 2019.
It holds more than 80 UK-based solar holdings, targeting long-life solar energy infrastructure assets, expected to generate energy output over a 25-year lifespan, and with an explicit objective to mitigate environmental damage.
“ESG issues are of increasing importance to investors,” explained Bluefield Partners’ James Armstrong. “As we witness the growth in environmental-themed funds, it is vital that investors are able to easily, and transparently, see a fund’s green credentials.
“We expect the Guernsey Green Accreditation criteria will help investors make informed decisions about a fund’s environmental impact, set against a globally recognised standard.”
Private Wealth and Local Firms
Bellerive Trust has been involved in impact investment with an agribusiness development project targeting a number of countries in Central Africa. The project takes in more than 10,000 hectares of farming land, which, aside from its agricultural potential, also benefits from the capacity to generate renewable energy from sunlight, creating multiple income streams for stakeholders. There is also the possibility for local residents to benefit from ownership.
In time, there will be scope for:
- Commercial and residential property developments
- Sanitation projects
- Transportation infrastructure
- Enhanced logistics
- Substantial employment of local residents in sustainable trades and businesses.
The overall aims of this project are to offer a sustainable income yield, local economic growth, and enhancements for local quality of life, while reducing food imports and increasing domestic nutritional self-sufficiency. Each project is designed to be self-sustaining and replicable, subject to local awareness, involvement and compliance measures (such as planning laws). Already, we can see a vast improvement in the social, economic and environmental conditions of the nearby residents of these Central African projects which could, in turn, spur innovation and legislative clarification as the economies develop.
In its role as an investment advisor to high net worth and government investment pools, IAM Advisory acts for numerous clients seeking to better understand and to enhance the ESG credentials of their investment portfolios.
As part of that goal, IAM Advisory recently supported one client to ensure that all its investment managers are signatories to the UN Principles of Responsible Investment (PRI) as well as becoming a signatory itself. Some firms have been reluctant to sign up to the PRI, but investors are well-placed to put pressure on investment managers to take ESG investment seriously and embrace the benefits of being a PRI signatory while taking on the additional responsibilities involved.
Michael Strachan, Managing Director of IAM Advisory said “We have found being a signatory of the PRI ourselves helps us to better advise clients on their ESG-focused investments by ensuring our client investment policies are aligned to the highest standards of responsible investment. The PRI organisation provides a strong set of helpful resources to better understand and lobby for developments in sustainable investments.” PRI Reporting requires signatories to ensure staff are adequately trained in ESG investment issues and to identify ways to incentivise staff to keep sustainable investment at the forefront of their investment advice. The PRI’s six principles form a strong framework for Guernsey-based investment professionals to deepen their ESG investing expertise.
Carey Olsen advised on Emerald Technology Ventures, a global leader in clean technology venture capital, on the launch of its fourth venture fund, Emerald Industrial Innovation Fund LP (EIIF). EIIF invests in early and expansion stage companies in the energy, water, advanced materials and industrial IT sectors.
Nobel Sustainability Fund LP were advised by Carey Olsen on the launch of the $300 million Nobel Sustainability Fund LP, a Guernsey limited partnership investing in sustainable and renewable energy and other clean technologies. The fund was launched by Earth Capital Partners Guernsey Limited in conjunction with the Nobel Sustainability Trust.
Also launched was the £100 million Nobel Sustainability Growth Fund (NSGF), a venture capital fund focused on the support of sustainable technologies in London. NSGF was launched by a partnership between Sustainable Technology Investors Ltd and the Nobel Sustainability Trust.
Innovest and Developing World Markets (DWM), a leading New York-based emerging markets impact fund manager, are partnering to pursue a new $75 million Global Displacement focused private equity investment strategy investing in refugee inclusive businesses world-wide. DWM has been focused on impact investments in financial inclusion across emerging and frontier markets since 2007 with a global presence of staff in 11 countries and more than $450 million in assets under management and advisory.
The Global Displacement PE strategy will seek investments in businesses operating in regions with significant refugee populations including refugee host and source countries. The strategy will primarily target investments into inclusive finance institutions, alongside a smaller proportion of investments in fintechs and operating businesses that are committed to employment, financing and service offerings for the displaced as well as host populations.
Innovest is serving as third-party impact advisor to DWM where it has supported the development of impact measurement and management strategy and will carry out independent verification of the social impact of the planned investments on refugee populations throughout the investment period.
Innovest has played a key role in advising a private foundation and a consortium of aligned HWNIs in the design, establishment and growth of an East African-focused microfinance impact vehicle. KIMS Microfinance aims to enhance local economic development in East Africa by providing high-quality diversified microfinance services to low-income, economically active youth, women, displaced and rural communities, offering savings, microenterprise and SME financing.
Seed funding plus growth capital secured from funders including the UK Aid and USAID has enabled KIMS to disburse more than $18m in financing to more than 15,000 micro business clients since 2014, with an active portfolio of $4.8m disbursed to 5,300 clients. The business intentionally seeks to make a profit to ensure sustainability but reinvests all profit back into its social mission.
Innovest's support include management strengthening, market analysis, partnership brokering, corporate structuring support, innovative finance design and impact measurement.
Innovest is serving as the impact advisor to a multinational gold mining company's efforts to stimulate economic diversification and job creation its mining communities in Ghana in order to mitigate the negative economic impact of mine closures set to occur within the next 10-15 years, ensuring no net-job loss and decline in income in the local community post mine closure.
The company intends to achieve this through investments in non-mining business ventures that are financially sustainable and provide secure jobs to building a local economy which has a decreasing reliance on mining as the primary economic activity. These investments will be made via the creation of a substantial community investment vehicle.
Innovest is supporting the company in these efforts through strategy development, local market needs analysis, opportunity identification, impact measurement and the design of a mission aligned investment strategy for the mining company which will draw on an existing endowment to provide growth capital to the most commercially viable of these non-mining business projects as well as leveraging investments from third party investors and donor funded capacity building vehicles.
Innovest Advisory is a development consultancy firm that seeks to unleash the power of public and private capital to address some of the world’s most challenging issues such as unequal access to healthcare, education, jobs and financial services for vulnerable populations.
Global events such as the climate crisis, refugee movements and COVID-19 continue to hit the world’s poorest communities the hardest. Our mission is to support the creation and scaling of sustainable market-based solutions that have a catalytic impact on these global development challenges with and for the most vulnerable.
Addressing these global challenges will require unprecedented levels of finance, with the UN estimating that £920 billion a year will be needed to meet the United Nations Sustainable Development Goals (SDGs). At Innovest Advisory we believe that cooperation will be essential to design and implement scalable solutions and we support public and private impact funders and social impact companies with a range of advisory and project management services.
At Innovest Advisory, we help our clients develop innovative funding and development tools, and leverage our international network to contribute funding, know-how and capabilities to achieve agreed development outcomes.
The impact investment movement offers a unique opportunity for the Channel Islands to be a global conduit for financing for good, showcasing how private investment can play a central role in solving the critical global issues and driving new business to the islands.
Environmental & Social Impact Monitor (ESIM) is a not-for-profit accreditation service for island businesses, looking to contribute to Guernsey being recognised as a leading centre for green and sustainable business and finance. It rates businesses on environmental and social commitments.
Its products and services include:
- Environmental and social accreditations for organisations
- Industry wide benchmarking on organisations’ performances against environmental and social criteria, and the UN Sustainable Development Goals
- Carbon Offset Plus – an impact-based carbon offset of the future
- Bespoke consultation in sustainability practices and integration.
Founder Marc Laine said he intended the new business would enhance Guernsey’s reputation for green finance, provide a clear opportunity for the island to demonstrate its commitment and alignment with the UN Sustainable Development Goals, and facilitate the development of a new advisory and auditing sector which would ultimately be able to export skills to other jurisdictions.
Financing sustainability in the post C-19 era
On-demand webinar series
Coming into 2020, climate finance and financing sustainability had moved definitively front and centre of the global policy agenda. Despite the impact of the Covid-19 crisis, changing the world order, climate change remains a threat that has not gone away. The impacts and influences of the Covid-19 pandemic will be deep seated and structural.
While we are still living through the formative experience of Covid-19, Guernsey’s Sustainable Finance Week, delivered in an online format, explored these influences and impacts in a series of dialogues around the central issue of the role that private capital will play in financing sustainability post Covid-19.
We explored, amongst many other issues, what implications the responses to the pandemic situation may hold for climate action, and what steps could be taken with private capital to align the immediate response to the sustainability imperative.
Leading figures from the worlds of sustainable finance and private wealth convened to discuss this topic during a series of webinars.