“There is no global security without climate security.”
Prime Minister Keir Starmer's recent remarks at COP29 in Baku, Azerbaijan, are a promising reminder of the UK's commitment to addressing climate change. In his speech, he outlined a new target for the UK - to reduce all greenhouse gas emissions by at least 81% on 1990 levels by 2035.
Not only is this essential for the prosperity of our planet, but it also presents economic opportunities in driving growth, creating jobs and ensuring energy security.
It is pleasing to see the significant progress and discussions had at COP29, following on from Guernsey’s attendance at COP28 last December. As an international finance centre (IFC) with a strong focus on sustainable finance, we recognise the pivotal role we can play in scaling up climate finance to meet global sustainability goals.
The PM’s sentiments were echoed by the keynote speaker at the recent Guernsey Sustainable Finance Seminar in London.
Emmanuelle Bury, UK Country Head BNP Paribas, said: “We are not just fighting for global warming, but our entire model of society.
“Fundamentally, finance industries have allowed the economy to thrive and grow. If we don’t act now with climate change, climate mitigations and food security, we will go back into a world of poverty.”
Gresham House, who spoke on a panel at the seminar, discussed natural capital investments. Their recent natural capital report found that 50% of UK asset owners are either already investing in natural capital or will do so within the next 18 months. Additionally, 73% of UK asset owners would invest in natural capital to support climate adaptation.
These are encouraging findings, especially considering that alongside financial performance, the report found that supporting climate adaptation and mitigation was the biggest driver of investment in natural capital, followed by the good stewardship of members’ assets and reducing nature-related investment risk.
Panellists urged more proactive involvement from mainstream institutional investors into these emerging asset classes which alongside government initiatives and regulation will be a catalyst for change. Metrics such as water usage and biodiversity creation were highlighted as key impact indicators within the nascent asset class of nature.
With corporations and countries now experiencing climate impacts firsthand, it is essential for financial centres like Guernsey to use their expertise to contribute positively to the challenges and opportunities presented by climate change. Particularly if we are serious about meeting 2030 deadlines, we cannot afford to let the opportunities for the private sector to contribute to net zero goals slip through our fingers.
In particular, Guernsey is proud to support the UK’s mission to achieve clean power by 2030 by using our expertise in, for example, the structuring and administration of investments into wind and solar energy. We were delighted to join the United Nations’ FC4S British and Irish Isles transition finance working group to further collaborate and support the UK in meeting these goals.
Guernsey fund regimes enable capital to flow effectively into infrastructure investments, channelling investments into sustainable infrastructure projects around the UK.
Our latest research report conducted by Frontier Economics shows that Guernsey channels investment of £57 billion from around the world into the UK economy primarily in private equity, property and infrastructure. Frontier Economics estimates that the social value for the UK from investment via Guernsey is worth £3-4 billion; This contributes to improved infrastructure in the energy, health and education sectors, and more extensive social housing stocks.
For example, The Guernsey-domiciled NextEnergy Solar Fund (NESF) invests primarily in solar power plants across the UK and in all four nations (approximately 85% of its asset base). As of April 2024, NESF owned circa 950MW of operational solar PV and energy storage assets across the UK, enough to power 301,000 households per year.
Another Guernsey-domiciled fund, The Bluefield Solar Income Fund, finances solar sites that collectively produce enough energy to power a city the size of York.
With the announcements and commitments made at COP, and attitudes shifting to favour natural capital, these investment structures are only set to grow and in Guernsey, we are perfectly placed to support this international investment.
