‘Green taxonomy’ to sort the green from the greenwashed
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The UK government has tasked the new Green Technical Advisory Group with laying out a guide clarifying what does and what does not qualify as sustainable investment, in a bid to crack down on corporate greenwashing.
The Green Technical Advisory Group will contain representatives from academia, charities and business. It will develop a "green taxonomy" to set the bar for sustainability. Hundreds of sustainable investment funds are introduced every year amid increased consumer and enterprise interest in protecting the environment, but it can be challenging to compare these funds, which often use a raft of different metrics to make and support their eco-friendly claims.
“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.
“I look forward to receiving the advice of the expert Green Technical Advisory Group as we put in place a rigorous taxonomy that works for the UK and sets a high standard globally.”
A Treasury statement said: “The green taxonomy will help clamp down on greenwashing – unsubstantiated or exaggerated claims that an investment is environmentally friendly – and make it easier for investors and consumers to understand how a firm is impacting the environment.”
Last year, the EU developed its own green taxonomy which used six factors for rating products on sustainability, such as controlling pollution, restoring biodiversity and decarbonisation. The EU taxonomy included nuclear power as a sustainable product: the UK’s group will include a subgroup (the Energy Working Group) to assess how nuclear power, hydrogen and carbon capture should fit into the taxonomy.
The Green Technical Advisory Group will be chaired by the Green Finance Institute and will contain representatives from the CBI; the independent Committee on Climate Change; the London Stock Exchange; LSE, and WWF. It will meet for the first time this year and run for at least two years. It will provide its first set of recommendations to government in September. The group’s conclusions, however, will be advisory only and ministers will not be bound to any particular path.
Energy minister Anne-Marie Trevelyan commented: “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.”
Ingrid Holmes, executive director of the Green Finance Institute, added: “The [group] will play a key role advising the government on implementing a robust, science-based taxonomy that is adapted to the specific needs of the UK context and works for all stakeholders.”
In the absence of quantitative guidance regarding terms such as 'green', 'sustainable' and 'net-zero', companies have used their own definitions, often unhelpfully selective. Recently, Carbon Tracker found that of the 10 largest oil companies, seven had yet to set themselves climate goals which involve decarbonisation.
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