Guernsey has launched its first voluntary green private equity principles, to bring climate risks and resilience into the heart of private equity decision-making based on better climate disclosure and risk management.
Among the highlights of the principles and practice, developed by Guernsey Green Finance, are the following:
• Boards ensure climate change risks are given proper consideration at every stage of an investment’s lifecycle, from the raising of funds and due diligence, through to the investment, holding period and later exit process.
• Green financial instruments – including green bonds, asset-backed securities, investment funds and insurance – should be aligned to the investment process, with climate change risks and the goal of climate change mitigation in mind.
• Boards will aim to foster a culture of reporting findings and outcomes to the relevant stakeholders regarding the success of climate mitigation achievement, against agreed international standards.
• Staff, stakeholders and investee companies are educated on climate change risks, the importance of climate change mitigation through sustainable investments, and the carbon footprint of our investments.
Andy Sloan, Chair of Guernsey Green Finance, commented: "Time after time, our research has thrown up concerns that sufficiently simple guidance for the private equity industry is lacking. We have developed these pragmatic and proportionate principles in response to that demand.
"Their aim is to help create simple reporting and transparency to enable private equity firms to become ‘green and sustainable’ and to guide the industry towards playing its part to transition the global economy to becoming carbon-neutral."
The principles, written largely from a general partner perspective but also applicable to limited partners, are based on a two-pillar framework – process, comprised of governance, culture and transparency; and portfolio, covering risk assessment, assets, taxonomy, measurement and reporting.
• To read the new Green Private Equity Principles document click here