Green Taxonomy Trashed: UK Ditches Plans After “Very Mixed” Reaction
July 17, 2025
The UK government has opted to scrap plans for a long-awaited green taxonomy due to “very mixed” feedback to a public consultation.
More than half (55%) of the 150 respondents to the consultation by the UK Treasury had expressed “mixed or negative” sentiment about the idea, while 45% had indicated “positive” sentiments.
“After careful consideration of the consultation responses, the government has concluded that a UK Taxonomy would not be the most effective tool to deliver the green transition and should not be part of our sustainable finance framework,” the Treasury said in a statement. “Whilst the government’s ambitions to continue as a global leader remain unchanged the consultation responses showed that other policies were of higher priority to accelerate investment into the transition to net zero and limit greenwashing.”
The consultation ran for 12 weeks from November 14, 2024, until February 6, 2025. The consultation response from the Treasury said that concerns over the taxonomy largely focused on the real-world application of the policy.
It noted that this was “primarily driven out of experience of working with other taxonomies, and concerns on the extent to which taxonomies were delivering on desired objectives”.
Additionally, a third of respondents argued that other policies would be “more impactful” in achieving the two core objectives of the taxonomy in channelling investment and tackling greenwashing.
These other policies included UK Sustainability Reporting Standard (SRS), transition plans and sector roadmaps and real economy policies and economic incentives. Minerva Analytics reported last month that a consultation on the UK SRS was one of three launched by the government. These consultations are due to close on September 17, 2025.
The government has stated that the SRS will provide investors “clear” and “comparable” information on sustainability-related financial risks and opportunities to help support “informed investment decisions”.
Of the 150 respondents to the UK green taxonomy consultation the largest segment was the financial services sector, which accounted for 59, followed by the energy and nuclear sector which contributed 25 responses.
Asset managers, pensions or insurance and investment organisations comprised 14 of the respondents. This included Brunel Pension Partnership, Impax Asset Management, Nest and Schroders.
The consultation responses from multinationals detailed concerns that the taxonomy could “add further fragmentation” in international attempts to address greenwashing. These concerns included potentially exacerbating some of the challenges and costs of arbitrage between the different existing taxonomies.
Other countries including Australia, Canada, the EU and India already have or are actively developing sustainable finance taxonomies which also look to tackle greenwashing among other objectives. Earlier this month, however, the European Commission adopted new measures to “simplify” the EU taxonomy and slash red tape for companies as part of its first omnibus package.
Responses also argued that in the long-term focusing on driving towards greater international alignment on sustainable finance frameworks would be more impactful than introducing a UK Taxonomy.
Meanwhile, around a third respondents said that the taxonomy was “unlikely to have a material impact on final investment decisions”, the policy’s other key objective alongside preventing greenwashing.
“Having used consultation responses to inform an assessment against the two objectives of channelling capital and reducing greenwashing, the government does not consider there to be compelling evidence that a UK Taxonomy would deliver these objectives in a proportionate way,” the Treasury stated. “Whilst there is some indication that there is positive sentiment towards the policy, the distinct value of a UK Taxonomy over and above other policy was not clear.”
It added that it intends to “focus on delivering the plans that respondents have told us will have the greatest impact and will consider how best to align our ambitious policies to support investors to make investment decisions”.
“We strongly welcome the acknowledgement of the importance of climate transition plans and the UK sustainability reporting standards in supporting the wider economy’s efforts to reach net zero,” said Oscar Warwick Thompson, Head of Policy and Regulatory Affairs at UK Sustainable Investment and Finance Association, one of the taxonomy consultation respondents.
However, he added that it was “disappointing that the government has concluded that a green taxonomy has no place in the UK’s sustainable finance framework”.
“We now want to see swift delivery of commitments on transition plans and the sustainability reporting standards,” said Warwick Thompson.
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Last Updated: 17 July 2025