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FC4S report shows Guernsey's high performance as a sustainable finance centre

16 March 2022

WE ARE GUERNSEY, and indeed Guernsey Green Finance, were honoured to be one of the contributors of funding to the fourth annual State of Play Report from the United Nations Financial Centres for Sustainability Network (FC4S).

‘Leading Financial Centres Stepping Up Sustainability Action’ was the result of FC4S’ annual assessment programme. Its findings identified several key areas where more focus is needed to underpin progress around the sustainable finance agenda.

WE ARE GUERNSEY Head of Sustainable Finance Stephanie Glover shares some insight into our contribution to the report, and her thoughts on the findings.

Findings

Overall, the report provides compelling evidence that financial centres’ initiatives were characterised by strong growth, increased scope, greater maturity and accelerated action across 2021. And with this year’s COP27 expected to focus on unlocking further capital in support of the transition, 2022 is shaping up to be an important year for financial centres and their sustainable finance activities.

This year’s assessment, which surveyed 29 financial centres around the globe, reveals seven key insights on how financial centres across all continents are mobilising their capital, resources, connectivity, and expertise to support low-carbon transition and the achievement of the UN Sustainable Development Goals (SDGs). It also identifies the barriers they need to overcome to achieve these goals.

It also suggested that:

  • Poor data quality and availability is a shared and enduring barrier cited by financial centres. It is the number one challenge for the third year in the row.
  • Standardisation of disclosure requirements, definitions and taxonomies will aid the adoption of sustainable finance options but also improve data quality and comparability.

Learnings for Guernsey

Over the three years we have been participating in the survey, it has been useful for Guernsey to see the positive progress we are making year on year. We are pleased to have seen an improvement in the depth and breadth of the survey, and in Guernsey's performance as a sustainable finance centre.

The assessment programme helped us to address and prioritise the areas where we still have room to grow and improve. It has illustrated to us the need to further coordinate our finance sector and our government to make changes, both as an island and an international finance centre.

The programme has provided a useful sense check of the global position and development of green and sustainable finance, and our place within it. Even for those who weren’t collecting the data and were unable to complete the survey, the assessment programme provided a gap analysis of the data they are missing and may wish to collect.

It has helped us in the development of our 2022 strategy for Guernsey Green Finance, highlighting our strengths and areas where we can improve. For example, since the survey launched, we have appointed a member of our government to chair our Guernsey Green Finance Strategy Group, Deputy Nick Moakes.

The process has also helped us see the global difficulties that exist around data collection and education. Identifying this has helped us collaborate more with other members to share best practices and how we can improve. To give an example, we have spoken to Luxembourg and Hong Kong on the development of their educational programmes. Collaboration is key to solving the climate crisis. Without the programme, we would have no opportunity to share our knowledge with other finance centres and learn from them.

Outcomes for Guernsey

We were able to share the findings of previous assessment programmes with policymakers and regulators in Guernsey. This has bolstered discussions which has led to the identification of areas where we could make changes and improve our own areas of policy and regulation. For example, in the summer of 2021, there was an update to the Guernsey Code of Corporate Governance, which asks boards to consider the impact of climate change on their strategy and risk profile.

Sharing the questionnaires to our financial services practitioners was invaluable. The survey provided us with a springboard to have deeper conversations with finance professionals and policymakers on sustainability.

We were able to present the findings of the Guernsey-specific report to our highest level of government, which garnered further support for our green and sustainable finance initiatives.

Market level changes

The Guernsey International Insurance Association (GIIA), said in the foreword of its ESG Framework: "The UN Sustainable Development Goals are placed centrally within this ESG framework for insurers and governance requirements follow UN principles." We see this as a clear indication of the value and importance of both the UN SDGs and the UN FC4S assessment programme. Our insurance sector in Guernsey is looking at ways to improve its methods of data collection following the survey last year.

It is worth noting that since the publication of GIIA’s framework, the Guernsey Association of Pension Providers has expressed an interest in creating its own ESG Framework, based on UN Principles. It is collaborating with both Guernsey Finance and GIIA to bring this project to fruition.

Listen to FC4S Managing Director Stephen Nolan talk about the Network’s roots in this clip from Guernsey Sustainable Finance Week 2021.

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