This article was first published in Business Brief magazine.
Following on from her time at COP28, Guernsey Finance Strategy and Sustainable Finance Director Stephanie Glover talks about the role Guernsey plays in securing a just transition to net zero.
I was fortunate enough to attend last year’s COP28 conference in Dubai, which saw more than 160 nations make a declaration on sustainable agriculture, resilient food systems, and climate action.
Adaptation finance was also a core theme. With corporations and countries now experiencing climate impacts first-hand, adaptation financing presents a massive potential opportunity as so much growth is needed to meet the necessary adaptations. There is still a growing appetite for more bankable projects in the adaption and nature finance spaces.
One firm backing this ticket is Gresham House, a specialist alternative asset manager devoted to sustainable investing. The firm specialises in forestry, housing, sustainable infrastructure, renewable energy and battery storage investments.
Gresham House has opted for Guernsey as its domicile of choice. In December, the firm announced the close of its Guernsey-domiciled sustainable infrastructure fund, The British Sustainable Infrastructure Fund (BSIF) II.
The fund has raised just under £450 million, and the capital has been allocated to accelerate the deployment of real asset-based solutions to some of the biggest environmental and social challenges facing the UK.
Portfolio companies supported by the fund include alt-net providers connecting rural communities to gigabit broadband, vertical farms championing innovative agriculture techniques, and habitat banks supporting developers to deliver biodiversity net gain.
Speaking on the Sustainable Finance Guernsey podcast, Peter Bachmann, Managing Director of Gresham House’s sustainable infrastructure division and Fund Manager for the BSIF I & II, said: “We look to invest in new innovative real asset-based solutions to big environmental and societal challenges.
“We try to find solutions that ultimately create great financial returns, because our view is that there are these huge challenges out there, but these challenges also bring potential opportunities.”
These challenges have been distilled down into six areas: farming and resource efficiency, decarbonisation, digital inclusion, waste, health and education, and regeneration.
Changing the way we use our finite resources such as land, water and chemicals, Peter said, has got to change.
It’s no secret that the way we produce, eat, and dispose of food has a huge impact on the planet. In fact, food systems are responsible for roughly a third of global greenhouse gas emissions.
It’s clear that the way we produce food needs to change if the world is going to meet global emission reduction targets. So, what role does Guernsey play in tackling this issue?
Through its Guernsey-domiciled BSIF strategy, Gresham House has invested into Fischer Farms, which operates one of the largest vertical farms in the UK.
These farms, which use energy-efficient LED-based lighting systems to grow crops, provide yields 250 times greater than conventional farming. The crops use 98% less water than traditional farming, are 100% pesticide free, and add up to 14 extra days of shelf-life to lessen food waste which has proven popular with supermarkets.
"This is a great example of how the impacts that we are creating can also give us this quasi-monopolistic position in the market, and therefore a lot of cash flow certainty,” said Peter.
“To me, the just transition is about trying to create new industries that have a long-term future.
“If something isn’t profitable, it isn’t sustainable in itself. We have to ensure that these investments in this levelling-up agenda and the just transition are targeted into areas that are strategy-dictated.”
Guernsey's 'pioneering work' in the sustainable finance sector made it the jurisdiction of choice for Gresham House, said Peter.
“Guernsey is very supportive of what we’re trying to do.”
Not only is the fund domiciled in Guernsey, but the firm also chose local law firm Carey Olsen to advise on the structuring, establishment and regulation of BSIF II as a registered collective investment scheme. Ocorian provided administration and accounting services to the fund from its Guernsey office.
Peter added: “We’ve found Guernsey to be a very supportive environment that moves at the pace we want, and we don’t have a second to waste.”
