The Guernsey Green Fund
Guernsey Green Fund
Objective of the Guernsey Green Fund
The Guernsey Green Fund designation endorses schemes through which investments into various green initiatives can be made. The Guernsey Green Fund enhances investor access to the green investment space by providing a trusted and transparent product that contributes to the internationally agreed objectives of mitigating environmental damage and climate change.
Investors in a Guernsey Green Fund are able to rely on the Guernsey Green Fund designation, provided through compliance with the Guernsey Green Fund Rules, to represent a scheme that meets strict eligibility criteria of green investing and has the objective of a net positive outcome on the planet’s environment.
Any class of Guernsey fund can notify of its intention to be designated a Guernsey Green Fund whether registered or authorised, open-ended or closed-ended providing it meets the eligibility criteria.
Where a fund has been designated as a Guernsey Green Fund by the Commission that fund will be listed as such on the Commission’s website. The designation also permits the fund to use the Guernsey Green Fund logo on its various marketing and information materials (in accordance with the Commission’s guidelines on logo use) so that it may clearly display its Guernsey Green Fund designation and compliance with the Guernsey Green Fund Rules.
The different sections of the Guernsey Green Fund are designed to allow flexibility to the applicant to select the sections that are most relevant to the product and its potential investors
How does it work?
Below is a flow chart that depicts the three elements of the Guernsey Green Fund:
- Set up the fund starting with one of Guernsey’s existing structure types.
- Demonstrate compliance with the Guernsey Green Fund Rules.
- Choose from two options regarding how the fund is certified so that investors and the Commission is assured the fund is run in accordance with the Guernsey Green Fund Rules. Additionally, the governing body of a Guernsey Green Fund can voluntarily apply Environmental, Social and Governance (“ESG”) Principles to the investment analysis and decision making processes of the fund.
How do I apply?
Applying for a Guernsey Green Fund will consist of three elements as detailed above.
Any Guernsey fund can notify of its intention to seek Guernsey Green Fund designation. In accordance with the Guernsey Green Fund Rules, applicants will be required to submit the appropriate notification forms to the Commission. A person seeking to use the description of a Guernsey Green Fund must submit:
- A final version of the Prospectus;
- In the case of a Route 1 Scheme, a declaration in accordance with Part 1 Schedule 1 of the Guernsey Green Fund Rules that the fund meets the Green Criteria;
- In the case of a Route 2 Scheme, a declaration in accordance with Part 2 Schedule 1 that the fund meets the Green Criteria; and
- Such other information that the Commission may require.
Processing the underlying fund application will vary according to the type of fund that has applied for Guernsey Green Fund status – please refer to our general information for fund applicants page which can be found here. For new funds, the usual timeframes will apply depending on whether the fund is applying through the authorised or fast track route and up to five additional days will be taken to process the Guernsey Green Fund notification. For existing funds, up to five days will be taken to process the Guernsey Green Fund notification.
The Commission will designate a fund to be a Guernsey Green Fund if it is satisfied that:
- The fund’s principal documents and prospectus appear to comply with the Guernsey Green Fund Rules, and
- A declaration has been provided in accordance with Schedule 1 of the Guernsey Green Fund Rules that the Guernsey Green Fund meets the selected green criteria.
The green criteria
Schedule 2 of the Guernsey Green Fund Rules contains a list of green criteria that are endorsed by the Commission as standards that can be adopted by a Guernsey Green Fund.
A Guernsey Green Fund must, in accordance with the Rules, comply with one of the criteria listed and the chosen criteria must be set out in the notification to the Commission and within the Scheme’s prospectus. It is the decision of the governing body of a Guernsey Green Fund to select the criteria which is most relevant to the Scheme.
The first set of standards to be added to the list were the Common Principles for Climate Mitigation Finance Tracking - version 2. These were developed by the Joint Climate Finance Tracking Group of multilateral development banks and a group of representatives of the International Development Finance Club member banks. They provide a flexible framework for entities to adopt and provide a comprehensive understanding of what encompasses climate change mitigation. As the Principles are activity based, they do not measure the management of funds and therefore leave it to the respective parties to operate the funds as they see fit.
This first set of standards was supplemented on 1 September 2022 by the Common Principles for Climate Mitigation Finance Tracking – Version 3. This was issued in October 2021 and updates the above referenced Version 2 (which was initially issued in June 2015).
A further set of standards was also added on 1 September 2022. This is the European Taxonomy for Sustainable Activities – technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change adaptation and for determining whether the economic activity causes no significant harm to any of the other environmental objectives. This Taxonomy is sourced from the European Commission Delegated Regulation (EU) 2021/2139 of 4 June 2021 – Annexes I and II. The addition of this set of standards has the added benefits not only of clearly adopting an internationally recognised definition of sustainable investment but also expanding the scope of the Guernsey Green Fund Rules to more clearly include climate change adaptation-related investment strategies.
The Commission will add to the published list of standards where it considers it appropriate and will consider applications for the inclusion of new green criteria however, we would encourage any person wishing to add a new standard to give the Commission adequate time to review the standards and consult third party expert opinion where necessary.
The fund will need to acquire certification in one of two ways and provide such certification to the Commission upon application:
- Route 1: a declaration from the designated administrator will provide the Commission with a certificate from a suitable independent third party that the prospectus meets the chosen green criteria. Details of the relevant third party must be provided to the Commission including the party’s name, address and expertise.
- Route 2: a declaration from a licensee that the fund meets the green criteria. A copy will be provided to the Commission in the form of a signed document from the designated administrator.
The purpose of certification is to provide certainty to investors that the Guernsey Green Fund is invested in accordance with the recognised green standards. The third party certifier must be independent of the governing body of the fund.
Use of the logo
The Guernsey Green Fund logo must only be used in connection with a fund designated by the Commission as a Guernsey Green Fund and in a manner and form that is not misleading to potential investors.
The logo must be reproduced from original artwork provided by the Commission and must comply with the Guernsey Green Fund Brand Guidelines which can be found here.
Its use must not be misleading. For example due consideration should be given to the placement of the logo on stationery or the homepage of an investment manager’s website if other funds within its portfolio are not designated as Guernsey Green Funds.
A scheme must cease to use the Guernsey Green Fund logo as soon as possible after its designation has been removed. For the avoidance of doubt use of the words Guernsey Green Fund is separately restricted under Rule 2.5(2) of these Rules.