UK unveils plans for developing green taxonomy

The UK's Treasury has named the experts that will advise it on the development of “standards for green investment” to mirror the EU taxonomy.

The Green Technical Advisory Group, announced today, will be chaired by Ingrid Holmes, Executive Director of the Green Finance Institute (GFI) – a partnership between the City of London and the Government. Other members include:

• Faith Ward, Chief Responsible Investment Officer at Brunel Pension Parnership, the asset manager for 10 of the country's local authority pension funds, who has been appointed as a representative of the Institutional Investors Group on Climate Change
• James Alexander, head of the UK Sustainable Investment and Finance Association, UKSIF
• Elizabeth Gillam, Head of EU Government Relations and Public Policy at Invesco, who is listed as a representative of the International Regulatory Strategy Group
• Nick Molho, Executive Director at sustainable finance advocacy body Aldersgate Group
• Rain Newton-Smith, Chief Economist for the Confederation of British Industry
• Mike Thompson, Chief Economist at the UK's Committee on Climate Change
• Alyssa Heath, Head of EU & UK Policy at the Principles for Responsible Investment (PRI)
• Prashant Vaze, Senior Policy Fellow for the Climate Bonds Initiative
• Lily Dai, Senior Research Lead for Sustainable Investment at FTSE Russell
• Nadia Humphreys, a sustainable finance expert at Bloomberg
• Anna Bond, Green Finance Manager at the UK's Environment Agency
• Paul Fisher, Fellow at the Cambridge Institute for Sustainability Leadership and former economist for the Bank of England
• Ben Caldecott, Oxford University scholar and head of the UK's Centre for Greening Finance and Investment
• Nick Robins, Sustainable Finance professor at the Grantham Research Institute, co-founder of Carbon Tracker and former Head of HSBC's Climate Change Centre of Excellence
• Theodor Cojoianu, a finance lecturer at Queen's University Belfast
• Rhian-Mari Thomas, CEO of the GFI and ex- head of green banking at Barclays, who is representing the Taskforce on Nature-Related Financial Disclosures
• Kate Levick, Associate Director of Sustainable Finance at NGO E3G
• Karen Ellis, Director of Sustainable Economy at WWF

In a statement, the Treasury confirmed that the group would “provide non-binding advice… on market, regulatory and scientific considerations for developing and implementing a UK Taxonomy which facilitates more informed investment decisions”. 

The taxonomy will be based on the EU's high-profile framework, which many of the Group's members helped develop. Holmes and Fisher were part of the original group that recommended the creation of an EU taxonomy back in 2018. E3G, WWF, Bloomberg, Climate Bonds Initiative and FTSE were also included in that group. Successive bodies – the EU's Technical Expert Group and the Platform on Sustainable Finance – counted Cojoianu and Humphreys among their members, as well as experts from the PRI. 

Holmes, who left her role as Head of Policy at investment house Federated Hermes last month to join GFI, said that although the official deadline for bringing the EU taxonomy 'onshore' under the EU Exit Regulations is January 2023, it will "likely be a two-year process" altogether. 

“Our mandate is to take the EU taxonomy as a starting point, and provide advice to Government on how to make it a UK initiative that supports the UK’s climate goals. How we suggest they do that is an open question – there are potentially lots of different approaches, and that will be the first point of discussion for us when we meet.”

For the first 12 months, the group will be required to meet quarterly. 

The UK's options include adopting the EU's current taxonomy and then revising it in line with its national priorities, or holding off until there has been a full assessment. 

The EU taxonomy seeks to identify business activities aligned with Europe’s mission of becoming Net Zero by 2050, but it has come under fire for deviating from scientific advice. Political and corporate pressure has seen the bloc water down its standards around forestry and bioenergy, while eyeing the inclusion of fossil-based gas and nuclear, against expert recommendations. 

The UK could also decide to adopt non-controversial elements of the EU taxonomy over the short term, while taking longer to develop its approach to some of these more contentious business activities. It will set up sub-groups to provide sector-specific advice, and an Energy Working Group will be established to advise on "key technologies" such as hydrogen, carbon capture, storage and nuclear.  The UK government pushed hard for nuclear to be included in the EU taxonomy during political negotiations that took place before Brexit, siding with France on the issue to block the legislative proposal in 2019.  

"We’re very aware that, for companies that work across multiple jurisdictions, any deviation from the EU’s regulatory expectations will create a potential burden," said Holmes. "So we’ll be weighing up the case for any divergence. But we know that the UK Government wants a rigorous science-based taxonomy."