Mansion House: UK Green Taxonomy work will not proceed

HM Treasury (HMT) has published its response confirming the outcome of its consultation on the potential development of a green taxonomy in the UK. The consultation had sought views on whether such a taxonomy would be an appropriate tool for the UK to facilitate an increase in sustainable investment and mitigate the risk of greenwashing. In the response, HMT confirmed that the decision has been taken not to develop a green taxonomy in the UK, as such a taxonomy would not support the government's vision for the UK sector. Key themes evident in the feedback, which contributed to the conclusion that a taxonomy would not be the most effective tool for realising the UK's green finance ambitions, included: (i) the existence of a number of standards, frameworks and taxonomies that were already available; (ii) the difficulties with fragmentation and reconciling different approaches across jurisdictions; (iii) the complications of adding further data points into existing processes and procedures; and (iv) the limited evidence that a taxonomy would itself meet the objective of channelling capital towards net zero transition. While the work to develop a green taxonomy for the UK will not be proceeding, the response confirms the UK government's commitment to its other work on clean energy and growth, including the Financial Services Growth and Competitiveness Strategy — in respect of which sustainable finance is identified as a priority growth focus area.

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