Active asset managers and financial investors have shown a significant shift towards ESG issues in recent years with a clear trend in favour of ESG growth, particularly in Europe. For example, ahead of the Cop26 climate conference in Glasgow scheduled for November 2021, 168 asset managers and financial investors from 28 countries (which together represent more than US$17 trillion in combined assets) have signed up to support the Carbon Disclosure Project’s campaign to ensure that data on climate change, deforestation and water usage are properly reported by companies.
Developments such as “green bonds” are also gaining increasing traction to tap into this growing demand and provide investors with exposure to green assets. In 2020, US$152 billion was invested in ESG-labelled products and US$54 billion was invested in funds specialising in ESG issues in the first five months of 2021 alone. The proceeds from such bond issuances are used to fund eligible green projects complying with guidelines such as the “Green Bond Principles”, voluntary guidelines published by the International Capital Markets Association, promoting climate change mitigation, low carbon society and the achievement of the UN Sustainable Development Goals.
BVI companies provide issuers with a flexible and low cost vehicle, which can be tailored to meet the specific requirements of the proposed transaction while being internationally recognised and listed on exchanges around the world.
Some of the key features of BVI entities which may be of relevance to issuers of green bonds and other ESG products and in structuring ESG funds include:
Flexible corporate regime
There are no restrictions under BVI law on the objects of a BVI company, which can be unlimited or, in the case of a restricted purpose company, as specified in the memorandum of association of the company. The BVI Business Companies Act allows significant flexibility in how BVI companies are structured in terms of capital structure, management roles and required levels of shareholder involvement.
There are also no financial assistance restrictions or guarantee limitations applicable to BVI companies, with BVI companies having clear statutory power and capacity to grant guarantees regardless of corporate benefit.
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Greening the Economy: ESG and BVI Companies