Sustainable finance needs to ‘upskill’ to make an impact — and fast, experts find

A conference in Jersey brought together a range of private wealth experts who found that sustainable finance structures will have to improve and innovate at record pace to make a positive impact

The global sustainable finance industry will have to accelerate the metrics and innovation of its investment frameworks for the international private wealth community to ‘get it right on ESG’, a group of private wealth experts joining Jersey Finance’s first-ever virtual private wealth conference concluded last week. The half-day event attracted a range of private wealth practitioners, from lawyers to wealth managers and digital consultants.

The appetite for viewing investments through the Environmental, Governance and Social criteria (ESG) has increased among the wealthy in 2020, a direct result of the devastating effects the pandemic unleashed globally. ‘Private investors and family offices are more focused than ever before on how their wealth can generate value to the world we live in, both now and in the future,’ observed Jersey Finance CEO Joe Moynihan, who spoke to a mixed panel of experts who were present with him in the studio as well as advisers who Zoomed in from abroad.

Panellist Andrew Mitchell of Equilibrium Futures, who is currently working with Jersey Finance to implement a sustainable finance strategy for the island nation, believes ‘Jersey can have a big impact’ in this field. ‘We’re already really good on the G of ESG, but we need to upskill the understanding of what sustainable finance means,’ he told viewers live from the studio with Moynihan. He commented that Covid-19 had been the ‘penny drop’ moment in terms of sustainable finance: ‘Things are going to have to move very fast in terms of frameworks, tools, data and metrics if we are to get ESG right,’ he said.

‘Expertise and upskilling will be vital and IFCs like Jersey, that have strong track records on oversight, regulation and compliance, can have a really important role to play on the governance strand. Family offices can also have a big role to play, given they are aligned with long-term horizons and multi-generational wealth,’ Mitchell concluded.

There was also a call for a more systematic approach to measure the impact of ESG strategies. ‘There needs to be a system where all of this can come together and tell us, “Are we actually on track to be climate resilient?”’ Darshita Gillies, founder & CEO of Maanch, a company specialising in solutions to accelerate impact towards the UN’s Sustainable Development Goals, told the audience.

One panel agreed that philanthropic strategies are becoming more sophisticated, and that HNWs are working more collaboratively to pursue their charitable giving. This is why those within the private wealth sphere have to satisfy clients’ growing demand for clearer reporting, ESG measurement and data-driven analytics.

Also speaking at the event were Lord Hague of Richmond, who explored key areas of acceleration in 2021 and how government-mandated innovation will be necessary to combat climate change, while CEO and mobile app Olio co-founder Tessa Clarke discussed how the food-sharing app was helping to tackle food waste, climate change and poverty. American-British actress Ruby Wax, who is a prominent campaigner, discussed the importance of good mental health.

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The event closed with Jersey Finance CEO Moynihan emphasising on the opportunities that lie in the field of sustainable finance and that private wealth advisers from around the world need to pay attention to the evolving needs of wealth creators. ‘As custodians of wealth, they are acutely aware of their responsibilities, particularly in light of the pandemic, but they need specialist expertise and support as approaches to sustainable finance become more sophisticated and evidence driven.

‘I firmly believe that, given the experience Jersey has in regulatory change, compliance and governance, we have a critical role to play in supporting the philanthropic and sustainable finance aspirations of the next generation of investors, as we move forward to a period of major global economic recovery,’ he said.