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

Summary

This is a feedback paper on Consultation No. 1 2021, summarising responses to the JFSC's proposals on anti greenwashing disclosure for Sustainable Investments and confirming the final amendments made to relevant Codes of Practice and the Jersey Private Fund Guide. It defines Sustainable Investment and sets out the mandatory disclosure requirements and effective dates that will apply once the amendments take effect.

• Who is affected: Certified Funds (via the CIF Code), Fund Services Businesses (via the FSB Code), Jersey Private Funds and their service providers (via the JPF Guide), and Investment Businesses providing investment advice (via the IB Code).
• Core disclosure requirement: Where a Fund, JPF or Registered person is marketed on the basis of investing in a Sustainable Investment as part of its investment objective, it must disclose material information on the sustainable investment strategy and objectives via website, prospectus, pre-contractual document or subscription-type documents, covering taxonomy alignment (or a statement of non-alignment), proportion of sustainable investments, basis of due diligence/benchmarking/performance measurement and reporting, and limitations of methodologies and data.
• FSB Code narrowing and notification duty: The FSB Code disclosure duty (new paragraph 2.10) is narrowed to Registered persons that are the Fund's governing body or otherwise responsible for the relevant disclosure documents; other Registered persons who are not subject to 2.10 must instead notify the JFSC in writing within five business days of becoming aware that a Fund is not making the required disclosures.
• Investment Business advice requirement: A Registered person giving investment advice on a fund marketed as a Sustainable Investment must inform and make available to the client the fund's sustainable investment disclosure information, or tell the client if no such information is available.
• Effective and transition dates: New funds/arrangements: effective date 15 July 2021. Funds/registered persons already existing or providing services before 15 July 2021: six month transitional period, effective date 17 January 2022. For the IB Code requirement, the effective date is 17 January 2022 (a six month transition).

The paper also records how specific industry feedback (e.g. on the definition, FSB Code scope, SFDR alignment, templates, and discretionary management) was addressed, and lists the amended wording inserted into each Code and the JPF Guide.

Key obligations

• A Fund, JPF or Registered person marketed as investing in a Sustainable Investment must disclose all material information on its sustainable investment strategy and objectives (taxonomy alignment or non-alignment statement, proportion of sustainable investments, basis of due diligence/benchmarking/performance measurement and reporting, and limitations of methodologies and data) via website, prospectus, pre-contractual document or subscription agreement type documents.
• Registered persons under the FSB Code who are not the governing body or otherwise responsible for the Fund's disclosure documents must notify the JFSC in writing within five business days of becoming aware that a Fund is not disclosing the required sustainable investment information.
• A Registered person providing investment advice on a fund marketed as a Sustainable Investment must inform and make available to the client the fund's disclosure information on sustainable investment strategy and objectives, or inform the client if no such information is available.
• Certified Funds and Registered persons must comply with the new disclosure requirement from 15 July 2021 for new funds, and by 17 January 2022 for funds/services existing prior to 15 July 2021.
• Investment Business registered persons must comply with the new advice disclosure requirement from 17 January 2022.

Applies to

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

Deadlines

• 15 July 2021: Effective date for the new sustainable investment disclosure requirements for new Certified Funds, Jersey Private Funds and Fund Services Business arrangements.
• 17 January 2022: Effective date (end of six month transition period) for funds and Registered persons that existed or were providing services prior to 15 July 2021, and for the Investment Business Code disclosure requirement (paragraph 2.30).
• within five business days: Deadline for a Registered person not subject to FSB Code paragraph 2.10 to notify the JFSC in writing after becoming aware that a Fund is not disclosing required sustainable investment information.