The UK government has scrapped its plans to implement a green taxonomy.
In her Mansion House speech last night, the chancellor Rachel Reeves said: “For sustainable finance, I am determined to focus our efforts on policies that matter most to our world-leading sector and support investment in the transition.
“So, after consultation and consideration, I have decided not to pursue a green taxonomy, but instead work with regulators through the Transition Finance Council to capitalise on the £200 billion opportunity of the global transition to net zero.”
The plan for a UK green taxonomy was created back in 2020 when Rishi Sunak was chancellor and Boris Johnson prime minister.
The aim was to provide a framework for shaping which activities can be defined as environmentally sustainable, and improve the impact of both firms’ activities and investments on the environment, while also providing important backing towards a transition to a more sustainable economy.
The government’s decision means the UK is taking a different path to Europe, as the European Union has introduced its own comprehensive green taxonomy.
To assess the validity of a green taxonomy the Treasury undertook a consultation in November 2024 to get industry views on a UK green taxonomy.
Recent results revealed the consultation found that only 45% of respondents indicated a positive view towards an UK taxonomy, while 55% expressed mixed or negative views.
The Treasury crucially noted concerns centred on a “real-world application” of a green taxonomy, primarily driven out of experience of working with other taxonomies.
Supporting the position of the chancellor, while also expanding a little on her position, the Treasury issued a statement: “After careful consideration of the consultation responses, the government has concluded that a UK taxonomy would not be the most effective tool to deliver the green transition and should not be part of our sustainable finance framework.
“Whilst the government’s ambitions to continue as a global leader remain unchanged the consultation responses showed that other policies were of higher priority to accelerate investment into the transition to net zero and limit greenwashing.”
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