Jersey Sustainable Finance Week: A blueprint for the future

The future of sustainable finance in Jersey looks promising, with the island poised to become a leader in Nature Finance.

At a recent Jersey Finance event, experts discussed the island's potential to leverage its regulatory strength, alternative investment expertise, and strategic location to attract capital for environmental projects. Jersey's Sustainable Finance Action Plan aims to position the island advantageously on the global stage by focusing on innovation in sustainable finance.

Despite challenges like climate change and unsustainable investment patterns, the event highlighted optimism for Jersey's role in re-imagining financial activities. With Nature Finance gaining traction globally and considering over half of the global GDP relies on nature, Jersey is well-positioned to meet the demands of clients and investors focused on sustainability, thereby enhancing its competitive edge in the financial sector.

In this briefing, Ogier's Global Head of Regulatory Rachel Cropper-Mawer picks out her key takeaways from the event.

The future of sustainable finance

In many cases these dangers aren't being heeded and top financial institutions continue to make unsustainable, short term investments. For example, in 2022 150 financial institutions provided a total of $6.1 trillion in funding to the 350 companies with the biggest exposure to deforestation. In his session, Andrew Mitchell of Equilibrium Futures put the cost of this financial decision-making frankly, stating: “If we don’t re-imagine the movement of money we will finance ourselves into extinction.”

Despite his stark view, the future of sustainable finance looks positive and a key theme throughout the week was Jersey's potential to become a key player, mobilising capital and channelling funds into environmental projects. The concept of nature finance, which focuses on investing in the improvement and regeneration of the natural environment, is playing an increasingly large role in the global economy, unsurprising given that latest estimates show US$58 trillion of global GDP – well over half – as being dependent on nature, and Jersey is uniquely positioned to become a hub for this financial activity. The island's strong regulatory framework, transparency, expertise in alternative investments, strategic location and collaborative ecosystem make it an ideal environment for sustainable innovation. 

The role of women in sustainable finance

Women are emerging as powerful stakeholders in the financial world, currently controlling more than 30% of the investable wealth in the US. By 2030 it is anticipated that women will control around US$34 trillion in investable assets. Women are twice as likely as men to consider the environmental and social impact of their investments. Financial advisers must adapt to these evolving priorities or risk obsolescence. Notably, 70% of widows change their financial advisers within a year of their spouse's death, and 82% of women express distrust towards financial institutions lacking ESG commitments. For women, ESG considerations are not merely social issues but market expectations.

The role of fund managers and family offices in nature finance

ESG and sustainability considerations are becoming core issues for fiduciaries exercising investment powers on behalf of investors. There is a growing recognition that the risk-return trade-off in investments should not come before values, and that integrating ethical considerations with investment decisions is essential for aligning financial objectives with broader societal goals.

The role of artificial intelligence (AI) in nature finance

AI is poised to be a transformative tool for nature finance, and can be used to identify and evaluate investment risks. However, its deployment must be approached with caution. AI systems are associated with increased electricity consumption and CO2 emissions, and 44% of AI systems exhibit gender biases. Mindful utilisation of AI is essential to harness its potential without exacerbating environmental issues.

Jersey's Sustainable Finance Action Plan

It is timely, therefore, that against the backdrop of Jersey Sustainable Finance Week, work continues apace on implementing Jersey's Sustainable Finance Action Plan, following 2024's consultation on the same. Working groups are already well underway between Government, the Jersey Financial Services Commission and industry. Focusing on topics such as how environmental risks may best be captured in regulatory codes of practice, these sessions will ensure action points are implemented in a collaborative manner, harnessing the innovation for which Jersey's finance industry is well known with the aim of putting Jersey in a leading position for sustainable finance.

Conclusion

Jersey Sustainable Finance Week reinforced the importance of integrating sustainable practices into the financial sector. By addressing environmental challenges, empowering women investors and leveraging AI responsibly, the finance industry to shape a sustainable and resilient global economy and Jersey, with its strategic advantages, is well-placed to lead this charge.

How Ogier can help

Our specialist teams of lawyers and corporate professionals work with clients from across industries to implement and deliver on sustainable investing and ESG related mandates, and to seize the opportunities emerging in the sustainability landscape.

About Ogier

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Disclaimer

This client briefing has been prepared for clients and professional associates of Ogier. The information and expressions of opinion which it contains are not intended to be a comprehensive study or to provide legal advice and should not be treated as a substitute for specific advice concerning individual situations.

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