Consultation Paper No. 1 2021 - Disclosure requirements related to Sustainable Investments

Summary

This is a JFSC consultation paper proposing new disclosure requirements to guard against greenwashing of Sustainable Investments. It follows an earlier consultation (CP4 2020) and industry engagement, and proposes amendments to several codes of practice and the Jersey Private Fund Guide. It is a draft consultation, not yet a binding rule, and invites feedback before finalisation.

• Who is affected: Certified Funds (via the Certified Funds Code of Practice), Fund Services Businesses (via the FSB Code), Jersey Private Funds and their service providers (via the JPF Guide), and Investment Businesses that provide investment advice (via the IB Code).
• Core proposal for funds: Where a Fund, JPF or Registered person has a Sustainable Investment as part of its marketed investment objective, it must disclose via website, prospectus, or subscription documents all material information on the Sustainable Investment strategy and objectives, including taxonomy alignment (or a statement of non alignment), the proportion of sustainable investments, the basis for due diligence/benchmarking/performance measurement, and any limitations of methodologies and data.
• Core proposal for investment advice: Where a Registered person advises a Client on Sustainable Investments marketed as such through a fund, it must provide the Client with the fund's Sustainable Investment disclosure information, or inform the Client if no such information exists.
• Transition period: New funds would need to comply from the effective date, with a six month transition period allowed for legacy funds and for the investment advice requirement.

The consultation also summarises feedback received on the earlier CP4 2020 proposals and explains how the JFSC narrowed the scope so requirements apply only where Sustainable Investments are actively marketed as such, rather than to any fund with an incidental sustainable element. Respondents were asked to comment via a published response form by the stated deadline; the JFSC intended to publish feedback in Q2 2021.

Key obligations

• Once finalised, a Fund, JPF or Registered person marketing a Sustainable Investment objective must disclose material information on the strategy and objectives via website, prospectus or subscription documents, including taxonomy alignment status, proportion of sustainable investments, due diligence/benchmarking basis, and methodology/data limitations
• Once finalised, a Registered person giving investment advice on a fund marketed as a Sustainable Investment must provide the Client with the fund's Sustainable Investment disclosure information, or notify the Client if no such information exists
• Respondents wishing to comment on the proposals must submit feedback in writing using the published response form by the consultation deadline

Applies to

Certified Funds, Fund Services Businesses, Jersey Private Funds and their service providers, Investment Businesses providing investment advice, Registered persons

Deadlines

• 23 April 2021: Deadline for submitting written comments on the consultation proposals
• Q2 2021: JFSC's target for publishing feedback on the consultation
• six month transition from effective date: Transition period for legacy funds and for the investment advice disclosure requirement to comply with the new Sustainable Investment disclosure requirements once adopted