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UPDATE ON THE UK GREEN TAXONOMY

10 November 2022 | London

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New information on the government's sustainable finance plan has come to light, but key questions remain

A year on from the UK Government's October 2021 report, Greening finance: a roadmap to sustainability investing, which promised a consultation on the green taxonomy for the first quarter of 2022, the House of Lords debated the current progress of the green taxonomy.

Answering questions on behalf of the government, Baroness Penn, parliamentary secretary to the Treasury, declined to answer when the government plans to publish the taxonomy. While Baroness Penn acknowledged it was delayed, she stressed it was an important part of the government's "ambitious" programme of work on sustainable finance, and the government "remains committed" to producing the green taxonomy. The government will continue to work with scientific experts and market participants to develop the taxonomy.

Perhaps hinting the government is analysing legislative and market reaction to the EU taxonomy, Baroness Penn noted it was important to learn from approaches being developed in other jurisdictions, and time should be taken to properly make the taxonomy "user-friendly and operable."

The importance of an internationally aligned taxonomy was also touched on, and Baroness Penn referred to the government's support for the work of the International Sustainability Standards Board.

Baroness Penn confirmed the green taxonomy would be science-led, and referred to the advice of the Green Technical Advisory Group (GTAG), but stated the government has not made any decisions about the inclusion of gas and nuclear in the green taxonomy.

While the publication, on 25 October 2022, of the consultation on the UK Sustainability Disclosure Requirements marked a positive step for the government (and its approach to sustainable finance), the government's timeline for the publication of the green taxonomy remains unclear. This is despite GTAG's recommendation that the government send a "rapid market signal" on its approach to a green taxonomy.

UPDATE FROM THE UK TRANSITION PLAN TASKFORCE (TPT)

In a separate development, the TPT published its Disclosure Framework and Implementation Guidance for the private sector on how to produce credible and robust climate transition plans. It emphasised that companies across the economy should take concrete, short-term actions using all possible levers to contribute and prepare for the transition to net zero.

The TPT invited users to test the Framework and Guidance via a Sandbox and respond through a public consultation which is open until 28 February 2023.

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