Guidance Note: Sustainable Finance

Summary

This is a Jersey Financial Services Commission guidance note explaining how firms should meet two existing obligations under the codes of practice: managing sustainability-related risks (focused on climate change) under Principle 3, and ensuring sustainability-related claims are fair, clear and not misleading under Principle 7 (anti-greenwashing). It does not create new legal rules but clarifies supervisory expectations and baseline good practice, and flags a future amendment to the codes.

Sustainability risk management

• Risk assessment: Firms should assess climate-related financial risks (physical and transition risks) as part of ordinary risk management, using a single financial-materiality lens (not double materiality).
• Documentation: Document the assessment proportionately to the firm's business and risk profile.
• Board escalation: Escalate assessment and conclusions to the board (or equivalent) for oversight; if risk is immaterial, only periodic review is needed.
• Proportionality: Low-complexity firms with stable risk profiles may conduct a qualitative desktop assessment roughly every three years; firms with more material risk should apply deeper analysis, metrics/limits and periodic board reporting.
• Integration: Climate risk should be integrated into existing risk categories (credit, market, liquidity, operational, strategic, reputational), risk appetite frameworks, product approval and outsourcing oversight, rather than run as a separate framework.

Anti-greenwashing guidance

• Fair claims: Sustainability-related claims made about a firm, its products or services (via websites, marketing, investor/client reports, social media) must be correct, substantiated, clear, complete, balanced and based on fair comparisons.
• Fund disclosures: Where a fund or Jersey private fund is marketed as investing in sustainable investments, disclosures must cover taxonomy alignment (or state none applies), proportion of sustainable investments, due diligence/benchmarking/reporting basis, and methodology limitations.
• Investment business duty: Registered persons advising clients on funds marketed on a sustainable investment basis must provide the client with the relevant sustainability disclosure information, or tell the client if none exists.
• Code amendment from Q1 2027: From Q1 2027, an enhanced Principle 7 (Principle 4 for money services businesses) wording applies across all codes, requiring sustainability claims to be backed by robust evidence and not unclear, misleading or unfair.
• Records: Firms should keep proportionate records showing how sustainability claims were reviewed, approved and evidenced, and how limitations were explained.

The guidance applies to firms regulated under the Jersey codes of practice, including banks, fund services businesses, certified funds and Jersey private funds and their service providers, investment businesses, money services businesses, insurance businesses and trust company businesses.

Key obligations

• Firms must identify, assess and manage sustainability-related risks, with a focus on climate change, as part of their existing risk management frameworks under Principle 3.
• Firms must document climate risk assessments proportionately and escalate assessments and conclusions to the board or equivalent for oversight.
• Firms must ensure sustainability-related claims about themselves, their products or services are fair, clear, not misleading and capable of substantiation, per Principle 7 (Principle 4 for money services businesses).
• Funds and Jersey private funds marketed as investing in sustainable investments must disclose taxonomy alignment, proportion of sustainable investments, methodology basis and limitations via website, prospectus, pre-contractual documents or subscription agreements.
• Registered persons providing investment advice on funds marketed as sustainable investments must provide clients with the relevant sustainability disclosure information, or inform the client if no such disclosure exists.
• From Q1 2027, firms must comply with enhanced code wording requiring sustainability-related claims to be backed by robust evidence and not unclear, misleading or unfair.
• Firms should maintain proportionate records evidencing risk assessments, board oversight, and the evidence and approval basis for sustainability claims.

Applies to

banks, certified funds, fund services businesses, Jersey private funds and their service providers, investment businesses, money services businesses, insurance businesses, trust company businesses

Deadlines

• Q1 2027: Enhanced Principle 7 (Principle 4 for money services businesses) wording requiring sustainability claims to be backed by robust evidence applies to all firms governed by the codes of practice.