Consultation No. 4 2020 - Enhancing disclosure and governance requirements for sustainable investments

Summary

This is a JFSC consultation paper seeking industry feedback on proposed enhancements to disclosure and governance requirements for funds and investment business advisers marketing themselves as having environmental, sustainable or socially responsible (ES) investments. The aim is to counter greenwashing by requiring public statements, due diligence and governance around ESG credentials. No rules are yet final; this is a draft proposal open for comment.

• Who is affected: Private funds under the Jersey Private Fund Guide, CIF Law certified and recognised funds, unregulated and non Dom funds and their local service providers, and persons registered to carry on Investment Business who advise on funds with ESG products, but only where a fund is specifically marketed or held out as having ES Investments.
• Proposed fund level requirements (CIF Code, FSB Code, JPF Guide): Funds with ES Investments would need to produce a public statement of their ES Investments, implement an investment management process that verifies and documents ESG credentials using a recognised taxonomy, review those credentials annually, and maintain appropriate corporate governance and organisational structure with suitably skilled resources and reporting lines.
• Proposed adviser level requirements (IB Code): Registered persons advising clients on ES Investments would need to ensure the funds or fund providers they recommend meet the same disclosure, verification, annual review and governance standards.
• Where changes would sit: A new section titled Environmental, Sustainable and Socially Responsible Investing would be added to the Corporate Governance section of the CIF Code, FSB Code and IB Code, and to the Eligibility criteria section of the JPF Guide.

The JFSC invited written comments, via the JFSC directly or coordinated through Jersey Finance Limited, by 30 September 2020, and indicated it would publish feedback in Q4 2020. As a consultation, the document itself creates no binding obligations on firms unless and until the proposed code and guide changes are adopted.

Applies to

Private funds (Jersey Private Fund Guide funds) with ESG products or investments, Certified and recognised funds under the Collective Investment Funds (Jersey) Law 1988 with ESG products or investments, Unregulated and Non-Dom funds and their connected local service providers with ESG products or investments, Persons registered to carry on Investment Business under the Financial Services (Jersey) Law 1998 that advise on funds with ESG products or investments

Deadlines

• 30 September 2020: Deadline for interested parties to submit written comments on the consultation to the JFSC or, alternatively, to Jersey Finance Limited for inclusion in its coordinated industry response.
• Q4 2020: JFSC's stated timing for publishing feedback following the consultation.