London, 5 October, 2023 – Today, the Green Technical Advisory Group (GTAG) publishes its final piece of advice to the UK government on the design and implementation of a UK Green Taxonomy. This advice focuses on the long term “institutional home” for a UK Green Taxonomy, completing the suite of nine GTAG papers that have summarised the independent advice offered to the UK Government since the inception of the group in June 2021.
In the last two years, since the GTAG was established, the regulatory landscape for green finance has evolved significantly. An additional 21 taxonomies have been announced or come into force globally, reaching almost 50 taxonomies globally. Recognising the ever-changing landscape, the GTAG has recommended a considered approach to delivering a green taxonomy in the UK, one that learns from the efforts of those implementing taxonomies in other regions.
In this final paper, the GTAG makes the case for enduring governance arrangements for the UK Green Taxonomy and lays out the options for achieving this, concluding that as a least regrets option, HMG establish an Advisory Body to support implementation/development of the Taxonomy through Executive action in the short-term. This could be achieved either by providing additional funding and responsibilities to an existing body (e.g., the Financial Reporting Council/Audit, Reporting and Governance Authority) or creating a new entity (e.g., “GTAG 2.0”). The rationale for this was it could support both voluntary and mandatory approaches to disclosure and, further, mandatory disclosures via either route to final implementation. The rationale for this was it could support both voluntary and mandatory approaches to disclosure and, further, mandatory disclosures via either route to final implementation.
GTAG further recommends that in parallel, preparing for the medium term, HMG should initiate the process of legislating for long-term statutory decision-making powers. Again, this could be through granting powers/responsibilities and financial support to an existing body or to create a new organisation.
Ingrid Holmes, Chair of the GTAG and Executive Director of the Green Finance Institute, said:
“GTAG’s membership remain convinced of the steadfast need for a usable and scientifically robust green taxonomy, aligned to the UK’s net zero investment and wider environmental needs, within the increasingly busy disclosures landscape. Designed well, it will be an invaluable transparency tool, helping to ensure the integrity of disclosures and enabling reporting on objective measures of environmental sustainability.
As HMG takes the next step forward with the UK Green Taxonomy, via a formal consultation, it is critical to have a longer-term view on how the taxonomy will be evolved and overseen. A statutory footing for the institutional home would strengthen investor confidence in the Government’s commitment to a robust and science-based taxonomy.”
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