Panellists at the first London-based Guernsey Sustainable Finance Seminar discussed insuring climate risks, carbon pricing and securing capital for sustainable projects.
Emmanuelle Bury, UK Country Head BNP Paribas, delivered a stark keynote address: “We are not just fighting for global warming, but our entire model of society.
“Fundamentally, finance industries have allowed the economy to thrive and grow. If we don’t act now with climate change, climate mitigations and food security, we will go back into a world of poverty.”
Emmanuelle accompanied His Majesty King Charles III on a visit to Guernsey earlier this year, along with members of the Sustainable Markets Initiative (SMI). In September, the SMI launched a nature risk tool drawing on the data from the taskforce for nature related financial disclosures.
She then turned to Guernsey’s role, saying: “Guernsey has reached success in just 50 years by making sure that it is always ready to accommodate the changing needs of the industry, financial services and society at large, and it has been very successful in doing so.”
Ana Haurie, Co-founder and CEO of Respira International, discussed the business case for investing in the climate. She said: “Where we can get most bang for our buck is in nature-based solutions, most of which are in the global south.
“Increasingly, equities portfolios are subject to carbon pricing, so investing in carbon credits is a way to hedge that risk.”
The panellists discussed solutions to unlocking the capital needed to bridge the sustainable finance gap. Amy Lazenby, Senior Investment Director and Team Head at Close Brothers Asset Management, said: “In order to attract more sustainable capital, we need to increase transparency and show that the returns match what you can get elsewhere.”
She added that TNFD and regulatory bodies providing detailed disclosure guidance and requirements will help increase flows of investments. Assets in nascent sustainability classes, she said, are often considered longer duration assets, which may not perform well in the short-term environment of rising interest rates, but Amy remained confident that this is a relatively short-term issue. Ana added that tension can arise when trying to attract capital to emerging markets: “Where we need to see more proactive involvement is from mainstream institutional investors.”
Ruth Murray, Investment Director at Gresham House, discussed investments beyond renewables within Gresham House’s British Sustainable Infrastructure Strategy, which is domiciled in Guernsey. She highlighted investments into digital inclusion in underserved areas in the UK, and solutions for hard-to-treat waste streams. She said national requirements, like the UK Government’s BNG requirements for planning, act as a catalyst in driving change.
Ana also emphasised the need for regulation, saying: “Regulation shouldn’t be voluntary, it should be mandatory. That is what will unlock the demand and capital that is required.”
The panel then touched on the role of the insurance markets in building risk management products to surround nascent markets, citing parametric insurance as a hedging tool in particular.
Mike Pickard, Director, Global (Re) Insurance / ILS Management at Aon, discussed his involvement with the world’s first humanitarian catastrophe bond. The bond was parametric in nature and was triggered by plume heights and the wind direction of a group of volcanoes.
Mike said this $3mn bond was a ‘proof of concept’ for the industry’s involvement: “What gets in the way of these transactions being bigger is the amount of donor funds, meaning the right balance is optimal in accessing investors.”
Mike was also instrumental in facilitating a bond in partnership with the IFRC that, when triggered earlier this year, saved an estimated additional 1.5 million people impacted by climate-related disasters.
Guernsey Finance Strategy and Sustainable Finance Director Stephanie Glover outlined Guernsey’s achievements in sustainable finance: “Guernsey was the world’s first jurisdiction to launch a regulated green fund regime, the Guernsey Green Fund (GGF) designation, in 2018, with a Net Asset Value of £5.1 billion.
“Regimes like these are essential for channelling capital into climate and nature-positive projects.”
The second panel outlined how Guernsey bolsters investment into sustainable projects.
Matthew Brehaut, Partner at Carey Olsen, said Guernsey was apt at finding solutions, and making the process as easy as possible, which is upheld by a highly responsive regulator: “In Guernsey, we work hand and glove to find the right structure to make the fundraising process as efficient as possible.”
Charlotte Parr, Director at Imperium Fund Services Limited, added that Guernsey’s strengths align with the priorities of venture capitalists including familiarity, cost, lack of administrative burden, speed to market, and proactive service providers. She said Guernsey’s Protected Cell Company (PCC) and Private Investment Fund (PIF) structures are rising in popularity due to flexibility in, for example, enabling different strategies or investor groups per cell within the PCC.
