Three ways forward in sustainable finance

10 September 2020

Guernsey has the opportunity to take a lead in three important issues in sustainable finance where there is currently a leadership void, according to Tim Hames, the former Director-General of the British Private Equity and Venture Capital Association (BVCA).

Writing in Making Waves, a Guernsey Finance white paper, Mr Hames reviews this summer’s Guernsey Sustainable Finance Week and draws some conclusions from it, with three key recommendations for Guernsey Green Finance to consider.

Ending the Information Asymmetry

It emerged during Sustainable Finance Week that more than 2,200 studies of sustainable finance have been completed globally. Some 93% of them saw no adverse trade off between sustainable investment, and positive net returns.

“The data required to act sustainably is out there, but I very much doubt whether this is widely known,” Mr Hames writes.

“One of the biggest reasons why sustainable finance has not made even more progress until this point is the intuition that doing good and obtaining good returns is, quite literally, too good to be true. Yet more than enough evidence is clearly there to make that case.

Public and Private Capital as co-investors

The relationship between private and public capital in the UK and elsewhere in this policy domain has not always been straightforward. What is the best balance for the economy and society after the coronavirus ends? How can public and private capital not simply co-exist, but actually co-invest?

There has to be a means found for there to be a bridge between public capital and private capital. Should Guernsey Green Finance be an earlier adopter in this realm? If it were to be seen as such, then it could achieve very substantial prominence as a player.

Rethinking the private equity fund model

There is no particular magic around the nation of 10 years as the life of a private equity fund. Why not change it?

Reforms have failed in the past largely because general partners are not convinced that any limited partners would back it. Is this still true? Might it be time to reconsider this matter and encourage some contemplation about what longer-term private equity funds may look like.

Dr Andy Sloan, Chair, Guernsey Green Finance, said: “We had hoped that through this event we would be able to contribute some perspectives and perhaps policy proposals to this important global dialogue. Tim’s analysis has gone further than we had hoped, and he has suggested areas that Guernsey Finance might itself look to progress. We shall be doing so.”

Read the full report here: https://www.weareguernsey.com/literature/making-waves-the-power-of-private-capital/

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