Consultation Paper on Proposals to Develop a Guernsey Green Fund (2018-04-23)

Summary

This is a GFSC consultation paper (issued 23 April 2018) proposing a new voluntary fund designation, the Guernsey Green Fund (GGF), governed by a set of draft Guernsey Green Fund Rules appended to the paper. It sets out how existing or new authorised or registered Guernsey funds (open or closed ended) could opt in to be certified as green, and invites industry feedback before the rules are finalised.

• Eligibility: Any type of Guernsey fund, new or existing, registered or authorised, open or closed ended, may apply for GGF designation.
• Investment criteria: At least 75% of a GGF's assets must be held in accordance with green criteria (initially the Common Principles for Climate Mitigation Finance Tracking); the remaining 25% must not undermine the climate mitigation objective, subject to an exclusion policy (e.g. fossil fuel power generation, uranium mining for nuclear power, landfill without gas capture).
• Certification: Funds choose Level 1 (third-party certification of prospectus compliance) or Level 2 (self-certification by the designated administrator or manager); funds may also voluntarily adopt ESG Principles.
• Application process: Designated administrators must submit application forms, a final prospectus, a Schedule 1 declaration of compliance with green criteria, the requisite fee, and any other required information; processing takes up to five days.
• Fees: A proposed £500 GGF administration fee will be inserted into the Fees Regulations once amended (expected the following year); no fee will be charged until then, though standard authorisation/registration fees still apply.
• Ongoing obligations: A GGF has continuing obligations to disclose portfolio composition to investors and the Commission, and to notify the Commission of any breach; if a breach of green criteria is not rectified within three months, the licensee must declare non-compliance, stop using the GGF designation, notify investors, and publish the non-compliance declaration prominently on its website.
• Designation removal: The Commission may remove GGF designation where a fund remains in breach of the green criteria for more than three months or otherwise ceases to meet the criteria.

The Commission poses 13 specific consultation questions covering the framework, application process, GGF Rules, green criteria, exclusion policy, certification levels, and the responsibilities of designated administrators and investment managers, and invites written or online feedback.

Key obligations

• Respondents wishing to comment must submit feedback on the consultation questions by Friday 1 June 2018, via the Citizen Space online tool or in writing/email to the Commission
• Under the proposed GGF Rules, a fund opting in must ensure at least 75% of its assets meet the selected green criteria and the remaining 25% do not undermine the climate mitigation objective
• Under the proposed GGF Rules, the designated administrator must submit a final prospectus, a Schedule 1 green-criteria declaration, and the requisite fee when applying for GGF status
• Under the proposed GGF Rules, a GGF must disclose its GGF status in its prospectus and provide investors and the Commission with ongoing information on portfolio composition and compliance with green objectives
• Under the proposed GGF Rules, if a breach of the green criteria is not rectified within three months, the licensee must declare non-compliance to the Commission, cease using the GGF designation, notify investors, and publish the declaration prominently on its website

Applies to

registered and authorised collective investment schemes (open-ended and closed-ended funds), designated fund administrators, investment managers, POI licensees, prospective and existing investors in Guernsey funds

Deadlines

• Friday 1 June 2018: Deadline for responding to the Consultation Paper on the proposed Guernsey Green Fund and GGF Rules
• three months: Period within which a GGF must rectify a breach of the green criteria before non-compliance declaration and loss of designation are required