Green finance will likely cause future market fragmentation
01 December 2021 UK
Image: Proxima Studio
There is an increasing concern that green finance will cause fragmentation in financial markets in years to come, according to Miles Celic, chief executive of TheCityUK at this year’s Guernsey Funds Forum.
Celic made the comments as part of a session entitled: “How will the funds sector develop in the future?”, where panellists discussed the legacy of the recent 2021 United Nations Climate Change Conference, more commonly known as COP26.
In the panel discussion, Celic highlighted that although demand for green finance is high and “some really innovative companies are merging in [the] space”, there needs to be a “global standard and consistency to monitor this relatively new sector of the market”.
Daniela Silcock, head of policy research at Pensions Policy Institute, expanded on some of Celic’s comments, indicating that there is so much potential for pension funds to be utilised within green finance.
She said: “Pensions are an enormous untapped area; look at the globally ageing population. We can help with infrastructure and the fabric of society to drive those investment opportunities. Defined contribution schemes will have a strong role to play there.”
A primary challenge, however, is knowing which data to collect to monitor the performance of green finance initiatives — and to provide as evidence to regulators to demonstrate environmental, social and corporate governance (ESG) compliance, Silcock said. “It is so difficult to prove such a new thing”, she added.
Considering the legacy of COP26 in terms of influencing greentech, Celic said that the conference was “not a flash in the pan, and it will continue to influence how the financial industry can be part of the climate crisis solution.”
He added: “In the fintech space, the UK is a stronger position than many European countries combined, but we are still slightly behind in the greentech arena. France and Germany have many more opportunities in green finance compared to the UK. The UK is doing well, but more needs to be done.”
In keeping with the forum’s theme of “Building Tomorrow” the panel also discussed how the world will emerge to create a better future after the COVID-19 pandemic and what this will mean for asset management.
Celic noted that the pandemic had highlighted exciting opportunities outside of London, such as Edinburgh, Glasgow, Birmingham and Manchester, where many fintech and greentech companies are innovating and growing.
He added: “I wouldn’t underestimate the consequence of both Brexit and COVID-19 in influencing the high standards of those looking for roles in fintech and greentech — those who are looking at where the best opportunities lie. COVID-19 influenced a shift in what people look for from a job: a sense of purpose.”
But, according to Celic, there is “a skills crisis underpinned by a war for talent; financial services now has a competition from fintech in recruiting graduates and young people. The financial sector feels this acutely.”
Turning to the subject of foreign investment, moderator Daisy McAndrew then asked the panel why the UK and Guernsey are so attractive to foreign investors.
To this question, Damon Ambrosini, partner, international tax at BDO LLP, said: “The UK has a global reach with its time zone as an advantage, as well as having a robust UK legal system. It remains attractive to US assets and investors.”
He added: “Guernsey has a leading role as a pivotal alternative investment place, flexible regulations are well known within private equity. Guernsey specialises in administration, so people see value and consolidation there — there is a need to scale the management of those funds.”
To conclude the panel, McAndrew asked the panellists if greater collaboration would make future attainments, such as the advancement of ESG initiatives and equity and diversity, more achievable.
Silcock added: “To achieve collaboration we need more financial services to be invested in mutually agreed goals which will make profound changes to the environment, diversity and inclusion, as well as within the investment space.”
This years’ keynote speaker, Rohit Talwar, entrepreneur, author and CEO of Fast Future, touched on the conference’s theme of “Building Tomorrow”. It is widely believed, he said, that over the course of the next 10 years there will be more innovation than previously seen throughout the course of human history.
Expanding on this point, Talwar highlighted how changes in technology are likely to drive us toward achieving or meeting the United Nations Sustainable Goals.
“How will the goals be met?” Talwar questioned. “What are these businesses doing to build trust, and what will the consequences be if, by 2025, the world has not reached net zero emissions — given the known consequences if that goal is not reached?”
In an effort to reach that objective, Talwar affirmed that frictionless commerce, and rewriting the law in automated software — which is already widely taking place in Singapore and Japan — are likely to support advances in meeting the pressing climate issue.
However, the question remains, Talwar said: “who are the industry players paving the way, and setting the world up for that?”
Commenting on Guernsey's place in asset management, WE ARE GUERNSEY chief executive Rupert Pleasant, commented: “It is these very times that highlight the role that Guernsey plays, offering stability, substance and flexibility in a world where, as Rohit described, those who are not changing fast enough will become obsolete.
“Guernsey has always been at the forefront of innovation in financial services. The island launched the first-ever commercial deployment of blockchain technology for the private equity market, which addressed the needs of investors seeking greater transparency, security and efficiency. It’s clear that innovation, people, power and ability to move at speed are important to emerge from the pandemic and build tomorrow.”
Celic made the comments as part of a session entitled: “How will the funds sector develop in the future?”, where panellists discussed the legacy of the recent 2021 United Nations Climate Change Conference, more commonly known as COP26.
In the panel discussion, Celic highlighted that although demand for green finance is high and “some really innovative companies are merging in [the] space”, there needs to be a “global standard and consistency to monitor this relatively new sector of the market”.
Daniela Silcock, head of policy research at Pensions Policy Institute, expanded on some of Celic’s comments, indicating that there is so much potential for pension funds to be utilised within green finance.
She said: “Pensions are an enormous untapped area; look at the globally ageing population. We can help with infrastructure and the fabric of society to drive those investment opportunities. Defined contribution schemes will have a strong role to play there.”
A primary challenge, however, is knowing which data to collect to monitor the performance of green finance initiatives — and to provide as evidence to regulators to demonstrate environmental, social and corporate governance (ESG) compliance, Silcock said. “It is so difficult to prove such a new thing”, she added.
Considering the legacy of COP26 in terms of influencing greentech, Celic said that the conference was “not a flash in the pan, and it will continue to influence how the financial industry can be part of the climate crisis solution.”
He added: “In the fintech space, the UK is a stronger position than many European countries combined, but we are still slightly behind in the greentech arena. France and Germany have many more opportunities in green finance compared to the UK. The UK is doing well, but more needs to be done.”
In keeping with the forum’s theme of “Building Tomorrow” the panel also discussed how the world will emerge to create a better future after the COVID-19 pandemic and what this will mean for asset management.
Celic noted that the pandemic had highlighted exciting opportunities outside of London, such as Edinburgh, Glasgow, Birmingham and Manchester, where many fintech and greentech companies are innovating and growing.
He added: “I wouldn’t underestimate the consequence of both Brexit and COVID-19 in influencing the high standards of those looking for roles in fintech and greentech — those who are looking at where the best opportunities lie. COVID-19 influenced a shift in what people look for from a job: a sense of purpose.”
But, according to Celic, there is “a skills crisis underpinned by a war for talent; financial services now has a competition from fintech in recruiting graduates and young people. The financial sector feels this acutely.”
Turning to the subject of foreign investment, moderator Daisy McAndrew then asked the panel why the UK and Guernsey are so attractive to foreign investors.
To this question, Damon Ambrosini, partner, international tax at BDO LLP, said: “The UK has a global reach with its time zone as an advantage, as well as having a robust UK legal system. It remains attractive to US assets and investors.”
He added: “Guernsey has a leading role as a pivotal alternative investment place, flexible regulations are well known within private equity. Guernsey specialises in administration, so people see value and consolidation there — there is a need to scale the management of those funds.”
To conclude the panel, McAndrew asked the panellists if greater collaboration would make future attainments, such as the advancement of ESG initiatives and equity and diversity, more achievable.
Silcock added: “To achieve collaboration we need more financial services to be invested in mutually agreed goals which will make profound changes to the environment, diversity and inclusion, as well as within the investment space.”
This years’ keynote speaker, Rohit Talwar, entrepreneur, author and CEO of Fast Future, touched on the conference’s theme of “Building Tomorrow”. It is widely believed, he said, that over the course of the next 10 years there will be more innovation than previously seen throughout the course of human history.
Expanding on this point, Talwar highlighted how changes in technology are likely to drive us toward achieving or meeting the United Nations Sustainable Goals.
“How will the goals be met?” Talwar questioned. “What are these businesses doing to build trust, and what will the consequences be if, by 2025, the world has not reached net zero emissions — given the known consequences if that goal is not reached?”
In an effort to reach that objective, Talwar affirmed that frictionless commerce, and rewriting the law in automated software — which is already widely taking place in Singapore and Japan — are likely to support advances in meeting the pressing climate issue.
However, the question remains, Talwar said: “who are the industry players paving the way, and setting the world up for that?”
Commenting on Guernsey's place in asset management, WE ARE GUERNSEY chief executive Rupert Pleasant, commented: “It is these very times that highlight the role that Guernsey plays, offering stability, substance and flexibility in a world where, as Rohit described, those who are not changing fast enough will become obsolete.
“Guernsey has always been at the forefront of innovation in financial services. The island launched the first-ever commercial deployment of blockchain technology for the private equity market, which addressed the needs of investors seeking greater transparency, security and efficiency. It’s clear that innovation, people, power and ability to move at speed are important to emerge from the pandemic and build tomorrow.”
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