Sustainable finance in Jersey: What’s next?

Despite international geopolitical headwinds, the investment case for financing the transition to a more sustainable society remains clear. The UK alone requires around £60bn of capital per year to 2030, whilst the annual investment gap to support developing countries to meet the UN Sustainable Development Goals is now around $4 trillion. Meanwhile, the messages from global financial institutions in response to recent extreme weather events could not be clearer about the need to better manage sustainability-related risks.

The size of the global sustainable finance market continues to expand at a remarkable pace, albeit unevenly distributed, with global ESG assets under management expected to reach USD34 trillion by 2026. So far, Jersey has an estimated £78bn of ESG-oriented assets under management, which is great progress - but there is more to do to ensure we capture our market share.

Transitions are hard and what we are seeing is an evolution. In uncertain times, IFCs such as Jersey have a significant advantage as safe and reputable jurisdictions from where capital can be deployed for good. We have long promoted the benefits in terms of efficiency and interoperability of the Channel Islands, and this is set to continue whilst the major onshore jurisdictions evolve their regulatory frameworks and approaches.

Trends for sustainable finance in 2025 include nature-positive finance, transition finance, climate-resilient investment, new forms of blended finance, climate and nature tech investment, and ethical use of AI in support of sustainable finance. The key question is where and how these trends play out, into which markets, and the role Jersey’s financial services sector can play. Join us at our Summit event on 11 March “How can Jersey accelerate financing the transition?” to discuss more.

Jersey Finance launched the Jersey for Good initiative in 2021 which set out the island’s aspiration to be a leading sustainable IFC in the markets it serves. A complementary policy and regulatory framework provides a supportive enabling environment and continued market access. The Sustainable Finance Action Plan is the first step towards such a framework, and was developed in response to a comprehensive industry consultation in 2024. The Action Plan has three objectives:

• Keeping pace with the international regulatory landscape: Many of Jersey’s major markets and competitor jurisdictions already have sustainable finance policy and regulatory frameworks, and this has fast become a sign of a well-regulated, responsible financial centre. Jersey’s approach has learned from early adopters in sustainable finance markets, leveraging actions taken by large jurisdictions like the EU and UK, but also IFCs such as Singapore and the Cayman Islands.
• Meeting demand for sustainable finance products and services: Demand for sustainable financial products continues to rise, and Jersey must be able to service such demand to remain competitive. For example, PwC Channel Islands’ recent Wealth Management Survey showed that more than 50% of respondents reported that their clients are interested in sustainable investing, diversified across a range of preferences. Our products, services and expertise must evolve to meet these needs, whilst intersecting with demand for technology solutions and other market trends.
• Capturing share of growth of sustainable finance markets: Despite headwinds, over the past five years sustainable funds have delivered superior returns in eight of 10 of the past half-year intervals, achieving a median performance of 4.7% more than traditional funds. PwC’s 2025 Global CEO Survey found that climate-related investments are six times more likely to have increased than decreased revenue. Capturing a proportion of this growth will be important to maintaining Jersey’s overall competitiveness.

The Action Plan includes five priorities focused on building capabilities and supporting growth of the sustainable finance sector: International Engagement, promotion of sustainability considerations in Fiduciary Duties, increasing Skills in the financial services industry, the development of New Products, and enhanced Data gathering and reporting processes. Together, these priorities:

• Support the development of client service excellence by reinforcing messages around legal certainty and sharing best practices, enhancing the reputation of Jersey's financial services industry and potentially attracting new clients;
• Emphasise the importance of international engagement, leveraging inter-agency cooperation to maximise the presence and impact of interactions with international partners and alliances;
• Promote the advantages of using Jersey financial products for sustainable financing purposes;
• Include provisions to maintain the industry's access to our key markets through bilateral agreements and international cooperation.

Recent global extreme weather events have highlighted the extent to which financial systems are susceptible to climate-related shocks. Robust management of sustainability risks comprises both physical risks and transition risks (such as changes in market demand, technology obsolescence, reputational risk, regulations and litigation risk) and, crucially, how management of these risks are priced into the financial system where needed.

The Action Plan includes five priorities focused on protecting the industry. These are enhanced Environmental Crime considerations, Corporate Sustainability Disclosures, Sustainability Risk Management obligations, expanded Anti-Greenwashing requirements and Market Access protection measures. It is helpful to note:

• Businesses will be encouraged to consider how to manage their sustainability risk exposure. This proactive approach helps businesses anticipate and mitigate potential financially material risks, thereby safeguarding their business’s long-term viability.
• One of the Plan’s priorities is the adoption of some form of corporate sustainability disclosures, on a proportionate basis. This year we can expect to see the first wave of reporting under the EU’s Corporate Sustainability Reporting Directive and hear an update from the UK on its endorsement of the ISSB’s IFRS Sustainability Standards. Local reporters will have the advantage of insights from early reporters, including sector-specific insights and what actions others are taking to realise opportunities and manage risks. Around three quarters of companies preparing to file under CSRD say that they are factoring sustainability into decision-making to a greater extent as a result. In fact, according to PwC’s 2024 Global Investor Survey, 71% of global investors agree that companies should incorporate sustainability directly into their corporate strategy.

The Action Plan signals direction of travel, but with much of the detail to be worked through. Meanwhile, we have three no-regrets recommendations for those in Jersey’s finance industry:

1. Take opportunities to engage and collaborate. Encourage your colleagues to participate in the upcoming Sustainable Finance Summit. Look out for a Jersey Financial Services Commission (JFSC) consultation later this Spring on Sustainability Risk Management, Sustainability Integrity and Corporate Sustainability Disclosures. There will be plenty of opportunity to engage in further consultations and upskilling events to evolve products, services and incentives
2. Consider how you manage sustainability risks in your organisation. Think about the extent to which sustainability considerations are embedded in your organisational strategy, including your ability to respond to potential obligations under the Plan. These include your approach to tackling environmental and social financial crime, making sure promotional claims are evidence-based and avoid potential for greenwashing, and how you govern and manage material sustainability risks, opportunities and impacts in your business. Consider whether you have the data and resources you need to leverage the opportunities that both the protect and promote measures could present.
3. Keep your eye on the international agenda. We are expecting a number of updates to the international sustainable finance regulatory landscape in the first half of this year, including announcements from the UK on the adoption of Sustainability Disclosure Standards and updates to the EU’s Corporate Sustainability Reporting Directive. As these evolve, we will share more of our insights about the implications for Jersey’s finance industry. Look out for more news from us on the hotly-anticipated EU Omnibus Regulation in the coming weeks.