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An expert group has been created to advise the government on standards for green investment, with the aim of creating a UK green taxonomy.
The Green Technical Advisory Group announced on Wednesday will oversee the government’s delivery of a common framework defining what investments can be considered environmentally sustainable.
Chancellor Rishi Sunak first announced that the UK would implement a green taxonomy in November 2020. The UK decided to create its own taxonomy after its exit from the EU.
The EU’s taxonomy regulation came into force on 12 July last year, and last week the bloc formally adopted its Taxonomy Climate Delegated Act. Critics had warned the EU risked letting vested interests influence its metrics and thresholds, and stressed the need for independence for creating the UK’s standards.
The UK government said that its Green Taxonomy will help clamp down on greenwashing, given that hundreds of new sustainable funds coming to market each year and sales to UK retail investors tripled from 2019 to 2020.
The advice the Green Technical Advisory Group will provide will be non-binding for the government.
The group will be chaired by the Green Finance Institute and made up of financial and business stakeholders, taxonomy and data experts, and subject matter experts from academia, NGOs, the Environment Agency and the Committee on Climate Change.
“We want investors and businesses to play their part in greening our economy and transitioning to net zero, so it’s crucial we have a clear common definition of what green means,” said John Glen, economic secretary to the Treasury.
A UK green taxonomy will provide better data on the environmental impact of firms, supporting investors, businesses and consumers to make green financial decisions and accelerating the transition to net zero, he argued.
HM Treasury, the Financial Conduct Authority, the Bank of England and other government departments and regulators will be observers to the group, which will first meet this month and is expected to run for at least two years. It will provide initial recommendations in September.
The government will also establish an Energy Working Group as part of the GTAG to provide advice on technologies such as hydrogen, carbon capture, utilisation and storage, and how to address nuclear power in the taxonomy, which the government described as “a key element of the UK’s net zero plans”.
Energy minister Anne-Marie Trevelyan said establishing a Green Technical Advisory Group and Energy Working Group are both crucial steps forward in developing a green UK taxonomy.
“This will help the financial sector invest in the projects, technologies, and services of the future, strengthening the UK’s position as global leader in green finance and tackling climate change.
Can the taxonomy group keep lobby groups at bay? Should its advice be binding?