Sustainable Finance and the SDGs

Recognising the urgency of the situation,  businesses have begun to realise that their longterm success depends on aligning their strategies  with sustainability goals and providers of finance  have identified both reduced risk and increased opportunity in  funding more sustainable businesses and projects.  Jersey’s ambition to be a leading sustainable IFC means we  recognise our responsibility to play our part in ensuring  our capital and expertise contributes positively to a more  sustainable future, namely achieving the UN Sustainable  Development Goals (SDGs).  Sustainable finance refers to the integration of environmental,  social and governance (ESG) factors into investment decisionmaking processes, risk management and business operations.  It means considering the impact of activities on external  stakeholders, including the planet. It also includes both the  ‘greening’ of the total financial system as well as the financing  of ‘green’ activities across industry. The overarching objective  is to allocate financial resources towards companies, projects  and initiatives that promote environmental protection, social  progress and ethical governance, in addition to generating  financial returns.  Embracing sustainable finance is crucial for several reasons.  Companies that actively pursue sustainability strategies are  more likely to create long-term value for their stakeholders,  enhancing their financial resilience and reputation and  being more attractive to customers and investors. Moreover,  considering ESG factors allows investors and businesses to  identify and mitigate potential risks, such as climate change,  resource scarcity and social issues, thereby safeguarding their  investments.  

With a financing gap of between $2.5 and $4.5 trillion per  annum, where money is invested is crucial in achieving the  2030 SDG agenda. Materials, resources, innovation, real estate,  technology and energy, are all high growth sectors where  investment can contribute significantly to the achievement of  the SDGs, or detract from them, depending on how they are  approached. The global regulatory landscape is fast evolving in this space,  both in terms of sustainable finance and corporate governance  and reporting more generally. Frameworks and standards are  numerous but alignment to the SDGs gives businesses and  jurisdictions the opportunity to consider the full spectrum of  sustainability challenges.  The finance industry has a vital role to play in financing the  achievement of the goals and, as a responsible IFC, Jersey’s  contribution has never been more important. While the SDGs intersect and should be considered a whole,  Jersey’s finance industry is contributing in the following ways:

GOAL 4: QUALITY EDUCATION 

Professional excellence and the pursuit of technical  qualifications has long been a part of capacity building in  a strong IFC. Given the vital role of allocators of capital in  financing sustainable activity, sustainability education across  the sector and expanding to how the industry works with  clients, is critical in accelerating adoption of more sustainable  economic models. Some specific early examples of this pursuit  are firms mandating sustainability education for all staff and  a number of local providers offering specific upskilling¹ to a  global audience.  

GOAL 13: CLIMATE ACTION 

As a signatory to the Paris Agreement and with an Island-wide  Carbon Neutral Roadmap in place², Jersey is contributing to  Climate Action through a credible plan to reduce territorial  emissions by 68% by 2030 vs a 1990 baseline and netzero  by 2050. Among business leaders, mitigation and adaptation  are equally important in reducing risk and managing impact  and this can be seen both through their own operational  transformations¹ and in the business they are doing with  clients¹. Many are now calculating and managing their supply  chain emissions and recent progress in investment reporting  has resulted in a focus on downstream emissions too.  

GOAL 16: PEACE JUSTICE AND STRONG INSTITUTIONS 

Jersey’s reputation as a stable and well-regulated IFC is the  backbone of its finance industry and is the common thread  running through all institutions operating from the Island.  With many firms committing to the UN Global Compact,  investment managers overwhelmingly supporting the  Principles for Responsible Investment and our own antigreenwashing legislation in place, Jersey’s contribution on the  global stage to the prudent management of institutions cannot  be underestimated. With political stability, regulatory rigour  and a plethora of experienced professionals to hand, Jersey  provides the ideal environment to support the sustainable  transition. 

GOAL 17: PARTNERSHIPS FOR THE GOALS 

To accelerate the pace and scale of change, last year the  sustainability industry in Jersey formed JASP – the Jersey  Association of Sustainability Practitioners. This professional  body represents the majority of providers on-Island who are  all working to support the finance industry in transitioning  businesses to more sustainable models.  Interoperability and convergence of standards and regulations  is an ongoing endeavour and Jersey’s long-standing position  as a neutral jurisdiction allows it to support organisations to  balance their regulatory needs in whichever marketplaces they  operate. Jersey is increasingly seeing fund launches under  SFDR or other sustainability reporting regimes, capital markets  transactions for sustainability enterprises or instruments and  family wealth in all forms, targeting sustainability objectives  alongside financial returns.

SUSTAINABLE FINANCE FLOWS 

With 1.7% of all roles advertised in Jersey classed as ‘Green  jobs’¹, business leaders increasingly targeting employee  learning and objectives in this area and reporting of  sustainability metrics and progress becoming the norm, it is  clear Jersey is extremely well positioned to support clients  seeking sustainable financial solutions. As our finance industry increasingly provides sustainability  reporting on assets, assesses ESG risks and initiates  discussions with all clients on these issues, we can expect to  see a transition of existing assets to more sustainable business  models and approaches and for Jersey to play a key role in the  transition to a more sustainable global economy.