Spring Green Consultation Paper (2021-03)

Summary

This is a joint consultation paper from the Guernsey Financial Services Commission covering two separate proposals: an amendment to the Finance Sector Code of Corporate Governance requiring boards to consider climate-related risk, and proposed changes to the Guernsey Green Fund Rules 2018 following a thematic review. Both proposals are open for comment and not yet in force.

Corporate Governance Code

• New clause: Proposes adding a requirement that the Board consider the impact of climate change on the firm's business strategy and risk profile and, where appropriate, make timely climate change related disclosures.
• Numbering: Would become clause 5.2(1) in the Risk section of the Code for general licensees, and Principle 18 for insurers.
• Proposed effective date: The Commission proposes the obligation apply for financial years starting from 1 October 2021.
• No new prescriptive rules: The Commission is not setting specific climate risk rules or disclosure standards at this time, leaving firms to draw on international frameworks such as TCFD.

Guernsey Green Fund Rules

• Monitoring frequency: Proposes amending section 6(1) so that designated administrators of closed-ended Guernsey Green Funds monitor against green and investment criteria at a minimum quarterly, rather than monthly; open-ended funds remain on a monthly minimum.
• Disclosure via stock exchange: Proposes amending section 8 to allow listed Guernsey Green Funds to satisfy certain prospectus disclosure requirements (rules 8(1)(a) and 8(1)(d)) through a recognised stock exchange market announcement instead.
• EU Taxonomy: Notes support for adding the EU Taxonomy for Sustainable Finance as alternative green criteria, but no final decision yet pending finalisation of the Taxonomy.
• Green Verifier licence dropped: The previously proposed Green Verifier licence category under the Protection of Investors Regime will not be pursued, as it lacked majority support.

The Commission is inviting comments on both proposals (Q1 on the Code amendment and Q2 on the GGF Rules amendments) via its Consultation Hub, with the consultation period running for eight weeks and closing on 5 May 2021.

Key obligations

• Respondents wishing to comment must submit responses through the Commission's Consultation Hub by 5 May 2021.
• If adopted, boards of licensees (and insurers under Principle 18) would be required to consider the impact of climate change on business strategy and risk profile and make timely climate-related disclosures where appropriate, for financial years starting from 1 October 2021.
• If adopted, designated administrators of closed-ended Guernsey Green Funds would be required to monitor against notified green criteria and investment criteria at a minimum quarterly (open-ended funds remain monthly).

Applies to

licensees, insurers, Guernsey Green Fund designated administrators, Guernsey Green Funds, listed green funds

Deadlines

• 5 May 2021: Deadline for submitting responses to the Consultation Paper via the Commission's Consultation Hub; consultation period is 8 weeks.
• 1 October 2021: Proposed date from which the new climate-change consideration clause in the Corporate Governance Code would apply, for financial years starting on or after this date.