TS&W, which has £55 billion assets under management, has chosen Jersey for the launch because of its confidence in the Island’s green credentials, even suggesting in a webinar that Jersey could become the globe’s first carbon-neutral island in 2030.
The launch of the offshore Sustainable Managed Portfolio Service also coincided with the coming onstream of AAL Recycling’s £3 million aggregate washing plant at the La Collette recycling centre, the type of investment which TS&W look for in their portfolios.
Louie French, manager of Tilney Sustainable Managed Portfolio Services, visited AAL’s aggregate washing plant, which will produce high-grade products from soil, stone and concrete waste, recycling up to 100%. The facility can supply 250 tons of concrete a week, and produce sand and stone, avoiding the need for materials to be dug out from natural resources or imported. The company has been recycling 100,000 tons of waste a year, with the same amount ending up in landfill, but it is hoped that the new machinery will reduce significantly the amount dumped.
The launch of the offshore investment portfolios is also significant for Jersey as TS&W are far from being new boys on the block of ESG investing, an area which Morningstar estimates stands at more than $2 trillion across global markets.
Local fund managers will now be able to leverage the track record of Mr French and his team who run the group’s six sustainable strategies, ranging from Conservative to Maximum Growth. Tilney Sustainable Portfolio fund, for example, recently won Best ESG Strategy at the City of London Wealth Management Awards and the Tilney Sustainable Model Portfolio Service range has a ten-year track record. They were also launched into the financial adviser market in August 2020.
Mr French told JEP Business that the portfolios had built up a strong performance record which is now available through Jersey.
‘I started in sustainable investing when ESG wasn’t a term that was widely recognised, and sustainable portfolios were decidedly niche,’ he said.
‘The concept of the circular economy is something which is sure to be discussed at COP26, and I’m hoping will also become a mainstream term. I’m delighted to see that Jersey has made a significant step in this direction already with the upgraded recycling facilities at La Collette.’
Making the portfolio range available offshore will expand ready-made choices for investors but the Jersey office can also build bespoke solutions for clients with different policies meaning that smaller investors can also take part.
Despite the growth in ESG investing, some investors remain cynical and believe there is a threat of being misled about where their investment money goes. Mr French acknowledged that greenwashing was a major challenge for the whole investment community but highlighted increasing regulation.
‘For example, the EU has already introduced their Sustainable Finance Disclosure Regulation and the UK government announced similar measures last week,’ he said.
‘The big challenge market participants currently have is ESG data coverage and quality, which requires significant improvement for funds to make these new regulatory disclosures. We therefore expect to see significant upgrades from data providers over the final quarter and into 2022, to help investors with greater transparency of where their money is invested.’
This challenge has also been taken up in Jersey where new rules are being introduced to protect investors from greenwashing.
However, as Mr French admitted, ethics and sustainability can be subjective. Most oil and defence companies, for example, would fail TS&W’s pre-defined screening policies, but investors might change their attitudes as commodity and energy prices start to rise as expected, and investors see their top ten holdings changing.
‘That’s why we prefer to report our positive impact alongside the UN’s Sustainable Development Goals and use case studies to support the decisions,’ he said. ‘That helps highlight the nuances in this area of the market, which is sometimes lost with some of the more blunt reporting metrics.’
Matt Falla, managing director at Smith & Williamson International in Jersey, said that last week’s launch was an incredibly exciting development in terms of providing sustainable financial solutions from Jersey.
‘It is something that our industry here is working towards, supporting an environmentally and socially sustainable global economy,’ he said.
‘By launching and managing this new portfolio service from Jersey, we are making a clear statement about our intentions to do just that.
‘Smith & Williamson International are also proud to be the first patron of Genuine Jersey and supporting the organisation in championing local products, which is an excellent way to reduce the carbon footprint of the Island’s food imports while also supporting local businesses.’