‘Green Isle’ Guernsey launches Natural Capital Fund regime

The Guernsey Financial Services Commission is pleased to announce three significant developments in its policy framework for sustainable finance coming into effect today.

First, the Commission is launching its Natural Capital Fund framework, a new offer in the growing Guernsey Sustainable Funds Regime marking the completion of a pledge made as part of COP26 to extend the Commission’s regulatory regime to include sustainable funds.

The Natural Capital Fund regime creates a regulatory designation for funds to help channel investment into biodiversity and natural capital projects that make a positive contribution and/or significantly reduce harm to the natural world. The intention is to provide environmentally conscious investors with assurance that their capital is deployed in efforts to promote the protection and recovery of the Earth's natural environment.

The Natural Capital Fund framework will complement the Bailiwick’s existing regulated Guernsey Green Fund regime, which now channels more than £4.9 billion into green investments. Together the Guernsey Green Fund and Natural Capital Fund regimes are designed to provide Guernsey funds with a suite of sustainability designations based on international standards.

Second, the Commission has taken the opportunity to expand the green criteria in the Guernsey Green Fund regime to include the EU Taxonomy for Sustainable Activities’ technical screening criteria for activities contributing to climate change mitigation and adaptation.

Third, the Commission is also publishing today anti-greenwashing guidance for the investment sector to ensure that adequate disclosures are made to investors in respect of any environmental sustainability claims made.

William Mason, Director General, commented “Climate change and nature loss are twin crises, inextricably linked in their impact on people and planet. With the addition of the Natural Capital Fund, the second branch of our sustainable funds framework, and the upgrading  of our ground breaking Guernsey Green Fund we hope to help Guernsey investment funds, and their investors, to channel profitably much needed capital to address this global environmental challenge.”

Gillian Browning, Director of the Investment, Fiduciary and Pension Division, referring to the anti-greenwashing guidance said “With these measures we are enhancing protection to investors from the potential risk of “greenwashing” - false or misleading environmental sustainability claims made to mis-sell investments. While there has been no evidence of greenwashing amongst local licensees, this additional investor protection is a prudent step to guard against a potential risk recognised by the global regulatory community.”

The new rules and guidance come into effect on 20 September 2022.

This policy announcement follows completion of a public consultation process. Full details of this consultation, including the Commission’s feedback statements and links to the relevant rules can be found on the Commission’s Consultation Hub where the feedback statement regarding the Natural Capital Fund Rules and Guidance, 2022 is also available. Further information about the Natural Capital Fund and its operation is available here. The Commission would like to thank all those who participated in the consultation process.