Guernsey Green Fund - ESG investing

In many ways, a Guernsey Green Fund can be a win-win for conscientious investors.

13 May 2019

Incorporating ESG factors into investment strategies continues to be a hot topic, with many of today’s investors looking to invest more responsibly as a matter of course.

Incorporating ESG considerations is also increasingly attractive for investors because when paired with effective investment strategies, ESG investments can potentially provide enhanced returns in the medium to long-term.

What are the benefits of ESG investments?

While ESG investments can undoubtedly add a ‘feel good’ factor, there are also financially rewarding advantages too, with enhanced risk-adjusted returns in the medium to long-term a real possibility.  Investing in a company that has shown it’s socially aware and has a sound track record when it comes to corporate governance and the environment is in many ways common sense. An ESG company is likely to both grow its customer base through a positive brand image as well as have less chance of event driven costs than can occur to those businesses who are forced to change by public opinion, or worse, government or legal challenge to their operating model.

So how is ESG shaping the future of funds?

As a fund administrator, we see a lot of conversation around ESG investments as a whole, and particularly around environmental considerations. If we take a family office’s overall investment strategy via the use of a private fund, for example, we might typically see the younger generations in a family getting actively involved; they often view investments that make a positive environmental impact with the same importance as financial performance.

Specific fund products

In 2018, Guernsey announced new legislation which would allow for the set-up of green regulated investment funds. Under the rules, a Guernsey Green Fund is required to pursue a return for investors while at the same time, mitigating environmental degradation. Eligible funds are awarded a Guernsey Green Fund certification.

In many ways, a Guernsey Green Fund is a win-win for conscientious investors. On the one hand, they are still able to opt for an investment strategy which is focused on strong expected returns, but they can do that while also positively impacting the environment through their investments, by investing in renewable energy, for example.

How ZEDRA can help

The ZEDRA Funds team is currently working alongside fund managers who are either looking to set up a Guernsey Green Fund or who wish to apply for the initiative because their Guernsey fund already meets the relevant criteria for certification. Guidelines require that at least three-quarters of the fund’s assets and value must match the relevant ‘green’ standards as set out by the Guernsey Financial Services Commission.

There’s been a lot of interest in how we can help fund managers with Guernsey Green Funds, which shows that environmentally friendly investments are certainly on the rise.

For more information, please get in touch.

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