Baroness Penn, Parliamentary Secretary in HM Treasury, announced today that the UK Government will not make secondary legislation under the Taxonomy Regulations this year. This means that the UK will not fulfil its legal obligation to put the climate element of the Green Taxonomy into law by the end of 2022. The government will repeal the legal requirement and will provide a further update in the Green Finance Strategy in early 2023.
The government’s decision is disappointing. The UK’s Green Taxonomy is a centrepiece of the Greening Finance Roadmap, designed to provide the market with a clear science-based definition of green investment. Investors and businesses have called for government to set a clear standard and prevent greenwashing.
However, there is an upside. In light of market feedback that the EU Taxonomy is difficult to use, together with stakeholder concerns that the EU Taxonomy is not entirely science-based, the UK is now in a position to learn from these experiences and to ensure that the UK Taxonomy is usable and has high integrity.
As of late 2022, many UK firms are required to use the EU Taxonomy, meaning that the UK has lost the opportunity for early-mover advantage. International convergence and interoperability will need to be a key priority for the UK as it takes its own approach forwards.
Kate Levick, Associate Director at E3G said:
“Today’s announcement to delay the implementation of the Green Taxonomy is a missed opportunity to show UK leadership in preventing greenwashing, but also offers a new opportunity to learn from the experiences of other jurisdictions and create a taxonomy that is easy to use and based on science.”
Eduardo Lopez, Researcher at E3G said:
“Action by the financial sector is central to the UK’s goals for net zero emissions by 2050 and for climate adaptation. If the UK is to be a Net Zero Financial Centre, as promised at COP26, then it will be essential to have a green taxonomy that defines net zero investment.”
Available for comment
Kate Levick, Associate Director, E3G
m: +44 (0) 7860 861225, email@example.com
Eduardo Lopez, Researcher, E3G
m: +44 (0) 7901 085214, firstname.lastname@example.org
Notes to Editors
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