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Guernsey Sustainable Finance Week webinars - the highlights

10 June 2020

Thurs 11 June: Private equity key part of economic recovery from pandemic

Private equity funds can play a significant role in framing the economic recovery from the global coronavirus pandemic, three senior figures from the sector agreed in the final instalment of our Sustainable Finance Week webinar series.

"Private equity has a massive opportunity," said Richard Burrett, Chief Sustainability Officer to fund manager Earth Capital, Fellow at University of Cambridge Institute for Sustainability Leadership and former Chair of the UNEP Finance Initiative. "On the whole it’s a more patient form of capital, ideal for the young business ideas which are going to be required in the green and sustainable recovery, and I look forward to it with a lot of enthusiasm."

Mr Burrett added that the pandemic had offered many lessons, certainly raising questions about global supply chains, digital rather than physical connections, and resilience.

 

"Covid-19 has underscored the reasons why some of us do sustainable investing – we really understand the vulnerabilities, dependencies and impacts of what we are investing in and we need to be even more careful about this as we emerge.

"And companies with a clear focus on sustainability issues do outperform."

Divya Seshamani, Managing Partner of Greensphere LLP and Member of the UK Government’s Council of Sustainable Business where she leads the Net-Zero Carbon initiative, agreed the pandemic recovery was an opportune time for the sector.

"Now is a great time to be in private equity," she said. "People are starting to take risk seriously and in PE your greatest challenge is mitigating risk. Systemic risk is not on the radar of enough people."

"You cannot just focus on return, you have to focus on risk. They are not mutually exclusive, they are the same thing. If you don’t focus on risk you won’t get the returns."

Gurpreet Manku, Deputy Director General and Head of Policy at the British Venture Capital Association (BVCA), highlighted the virtues of patient capital in the recovery.

"A benefit of PE is time. This is a long-term asset class and the portfolio companies will have the benefit of time to adjust their business models."

The panellists agreed that in terms of enhancing the attraction of green and sustainable investing, disclosures reporting needed to improve and move away from ticking boxes to providing easy-to-understand important information.

"We need a much more nuanced understanding of the companies we invest in," said Mr Burrett. "A push to greater and better disclosure by companies would be very helpful. That’s why we should push back on global taxonomies – life is more complex than that."

Ms Seshamani said: "Fund managers need to do more – a very lazy taxonomy means you end up with terrible returns because they are not managing risk, not doing their job."

Gurpreet Manku added: "Lots of firms out there want to do this well. I don’t want that message to get lost. People want to do the right thing – what they don’t need is a checklist or “boiler plate” disclosures to complete – that’s not going to help."

If you missed it, you can listen to the full discussion here.

 

Weds 10 June: Important role for private capital in financing sustainability

There is a role for private capital to finance the sustainability agenda but there is still plenty of work to be done, our panellists agreed in the second webinar of Guernsey Sustainable Finance Week.

The live audience for the webinar may have disagreed with panellist’s David Bain’s contention that “Billionaires will solve climate change” – a poll narrowly voting that policy makers would be more important.

But while there is no little demand for private investment into green and sustainable projects, that can be held back by lack of adviser knowledge, concerns about greenwashing, funding strategies, and issues surrounding ESG reporting – many of these concerns were raised by Guernsey Finance research carried out and published in 2019.

Guernsey remains keen to play its part, developing robust, transparent product in this area, including the Guernsey Green Fund, the world’s first regulated green fund, and most recently principles for the private equity sector for green investment.

There are arguments whether sustainable investing has been impacted positively or negatively by the coronavirus pandemic.

“Family discussions around implementing sustainable investing have become challenging because the market is in turmoil,” said Taeun Kwon, Head of Private Wealth Programmes at the University of Zurich’s Centre for Sustainable Finance and Private Wealth, on our webinar panel.

“But we’ve seen interest in impact investing and about how private wealth can impact society and create a better world.”

David Bain, Editor of Family Capital magazine, said sustainability was an issue which had caught on within the family office sector before the pandemic, and the issue facing family offices was whether to invest directly or indirectly, through sustainability-focused funds.

“Sustainable and impact investing is moving out of the alternative space and becoming mainstream. There are good returns out there, and direct investing in sustainable areas is, to some extent, about long-term returns,” he said.

Taeun Kwon said that the influence of private capital could even spread into infrastructure – traditionally a sector for sovereign wealth funds and public money.

“It is pretty clear that public capital alone isn’t going to be enough,” she said.

David Bain welcomed family office involvement in a broad range of sustainable investments. “Family offices are well ahead of the curve. It is always better for society that it is not taxpayers’ capital being risked, but the family office capital.”

Fellow panellist, turnaround expert and private investor Jon Moulton, highlighted the changing UK policy tone towards companies and capitalism and the expectation of responsibilities extending beyond pure financial returns, and panellists agreed that collaborative family office investment networks would be an enabler in this area.

David Bain said that the opportunities which could be driven from the private wealth and family office sectors were huge.

“I don’t see the impact of single family offices easing off. There will be a big transfer of wealth from baby boomers to millennials over next 10-20 years and those individuals are more driven around sustainability issues,” he said.

Summing up, Dr Andy Sloan of Guernsey Green Finance said: “We've heard today that returns, direct investing and ‘it’s impact, not ESG!’ are the three factors driving family office money into green and sustainable finance.”

Listen back to the full discussion here.

 

Tues 9 June: Coronavirus pandemic offers an opportunity for sustainable finance to support economic recovery

The global coronavirus pandemic should provide an opportunity for green and sustainable finance to grow on an international scale, according to speakers at the first in our series of webinars for Sustainable Finance Week.

Our speakers Ben Caldecott, founding Director of the Oxford Sustainable Finance Programme, and strategic adviser to the UK Green Finance Initiative’s Chief Executive, and Anjalika Bardalai, Chief Economist and Head of Research at TheCityUK, explored the potential structural impact of Covid-19 on financing climate action.

Both agreed that there was significant momentum behind “Build Back Better” campaigns and ensuring a resilient recovery, which could include government bailouts to support sustainable outcomes.

Mr Caldecott said that developments such as regulation seeking to achieve policy outcomes and more public ownership were a possibility as the opportunity emerged to change behaviours.

Ms Bardalai said she hoped that governments would see the opportunity to fully integrate ESG in its broadest terms within programmes to rebuild the economy, and added that financial services would have a huge role to play.

She argued that sustainable finance had not gone mainstream in the past few years, despite increased profile and media coverage, but the wider focus on ESG since the outbreak of the pandemic meant that sustainability would now be seen to have a wider focus than solely green issues, while the crisis had shown how climate, environmental and social concerns were now seen as closely related.

“If ever there was a moment to see the beneficial links between financial services improving the real economy, this is it,” she said. “Wherever we will get to in the next one, two, five years, of economic rebuilding, financial products and services are going to be at the forefront of this and hopefully we will see a virtuous circle.”

Mr Caldecott said that Guernsey and the City of London would have the opportunity to support economic recovery with the development of green products, services and structures.

Both agreed that there was a role for private capital in financing sustainability, which is the focus of Wednesday’s webinar. You can still register for the event here.

Listen again to our first webinar here.

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