News & Insights

An ESG Framework for Cayman Funds

The government of the Cayman Islands has announced the creation of a legislative framework for the implementation of environmental, social and governance (“ESG) criteria for Cayman’s financial services industry.

ESG policies will focus on preventing greenwashing (the practice of claiming that products are environmentally friendly when they are not, including investment products). It is expected that policy consultation will commence in 2022.

The Cayman Islands mutual and private funds sectors are significant in size and well placed to make an important contribution to anti-green washing protection. There is an increase in investors wanting to invest in companies that have socially responsible investing and corporate social responsibility. Jurisdictions around the globe have taken an inconsistent approach to ESG. There is no standard definition of ESG and companies have attempted to greenwash the products without effectively changing their business practices and improving their environmental footprint or governance. The Cayman Islands government believes that it should participate in creating a more sustainable planet and that this can be accomplished by incorporating ESG factors into Cayman’s financial services industry.  

As ESG becomes a growing concern for many investors, Cayman Islands funds may assess the sustainability of the investment products and the accuracy of disclosures in the offering materials. Greenwashing, in the fund context, could occur in the use of product names, marketing and lack of disclosure, amongst others. Please contact your usual Stuarts attorney who can assist with any ESG queries or concerns you may have.

Contact our experts for further advice

View profile for Chris HumphriesChris Humphries
Managing Director and Head of Funds
, View profile for Jonathan McLeanJonathan McLean
Partner and Head of Banking & Regulatory

This publication is for general guidance and is not intended to be a substitute for specific legal advice. Specialist advice should be sought about specific circumstances.