Shift to net zero ‘offers innovation opportunity’
THE ‘vital role’ of financial services in the shift to net zero and the opportunities for Guernsey’s industry are highlighted in a new report published by Guernsey Finance.
The industry promotional body worked with Baringa Partners, a global leader in energy and environmental consulting, on the publication of ‘Private finance and its role in supporting the transition to net zero’.
The report states that within the Guernsey investment sector, the total net asset value of green funds could grow from £4.5bn to £56bn by 2040 – an estimate based on the global investment required to support transition to net zero.
The report said: ‘This represents a substantial untapped opportunity for product innovation, one that Guernsey is uniquely positioned to seize, with its agility in bringing new products to market and strong track record for innovation.’
It said the island can drive a proactive sustainability agenda and establish itself as a leading global centre for financing the so-called ‘just’ transition to net zero through sectors including insurance and investment management, and the development of new specialist expertise and support services around ESG, data and fintech.
The transition to net zero represents a substantial opportunity for product innovation in areas such as transition finance, turning ‘brown’ activities to ‘green’.
‘As a jurisdiction with over 60% of its GDP attributable to the finance sector, harnessing this opportunity could be critical to support Guernsey in remaining competitive within the context of wider movements towards sustainability in global financial markets.’
Stephanie Glover, head of sustainable finance at Guernsey Finance, said: ‘The opportunity to utilise financial services in driving the transition to net zero, especially in such a way that is as fair and inclusive as possible, is enormous.
‘This report provides practical guidance that organisations can take to embark upon that journey if they have not already begun.
‘The challenges are serious, but the solutions are there and Guernsey, as a force for global good, has a fundamental role to play in securing a net zero future.’
Guernsey Finance has long promoted the opportunity for private capital to be funding climate change mitigation. The goals of the Paris Agreement, which Guernsey has agreed to sign up to, aim for developed economies to invest $100bn annually to move to limiting global warming to below 2C this century.
‘This report provides a roadmap to net zero and shows that a joined-up approach is needed. Guernsey as an international finance centre can support those changes across the whole of the finance industry,’ said Rupert Pleasant, Guernsey Finance chief executive.