UK shelves development of green taxonomy and 'reviews priorities'

The British government has announced that it will not proceed with the development and implementation of the green taxonomy in the United Kingdom. According to HM Treasury , the classification system designed to identify environmentally and climate-sustainable economic activities has been deemed a secondary priority compared to other areas of the regulatory framework.

The initiative was launched in 2020 by the then Chancellor of the Exchequer, Rishi Sunak , with the aim of defining a common benchmark for environmentally sustainable activities and promoting greater awareness of the environmental impact of economic activities and investments, to support the transition towards a sustainable economy.

In the official statement, HM Treasury clarified that the decision not to move forward with the taxonomy was made following a public consultation, which revealed that less than half of the participants recognized its added value. Specifically, only 45% expressed a positive opinion of the new system, while the remaining 55% expressed mixed or negative views. Among the main critical issues highlighted were doubts regarding the taxonomy's actual applicability in real-world operational contexts.

Following this assessment, approximately a third of those consulted suggested focusing on other priorities, deemed more effective for guiding the sustainable transition. These include the UK Sustainability Disclosure Standard (UK SRS) , transition plans , sectoral roadmaps , as well as additional measures to support the real economy and economic incentives . These tools were considered more relevant to effectively direct investments towards sustainable solutions and counter greenwashing .

The British government's decision contrasts with other countries that are strengthening or developing taxonomy systems for sustainable finance, such as Australia, the European Union, Singapore, Hong Kong, Canada, and India . The European Union , in particular, has begun a process of simplifying its taxonomy in an effort to make it more accessible to businesses, although there is some controversy over the validity and effectiveness of the criteria adopted.