UK gov repeals Green Taxonomy technical deadline
December 22, 2022
The UK government will not make any secondary legislation under the Taxonomy Regulations, with policymakers set to revoke their legal obligation to seal the climate segment of the upcoming rules by the end of the year.
In a Written Ministerial Statement made on December 14, Conservative peer Baroness Penn said the government would be reviewing its approach to taxonomy development to maximise the effectiveness of its sustainable finance agenda.
The Treasury intends to repeal the existing statutory requirement to set regulations on technical screenings by the start of 2023.
She wrote: “The development of a UK Green Taxonomy is a complex, technical exercise which is linked to multiple sectors of the economy and various legislative and regulatory frameworks. This complexity is also becoming apparent in the European Union (EU), where challenges have arisen during the implementation of the EU’s taxonomy.
“The government is clear that the value of a taxonomy rests on its credibility as a practical and useful tool for investors, companies, consumers and regulators in supporting access to sustainable finance. These are long-term matters, and it is important to proceed carefully.”
The legislation had been in the works since the EU Green Taxonomy was automatically transferred into UK law following Brexit.
Rishi Sunak, then Chancellor, unveiled plans for the UK’s Green Taxonomy in November 2020, alongside pledges to make the UK the first country to have mandatory Task Force on Climate-related Financial Disclosure requirements alongside the establishment of the UK Green Technical Advisory Group (GTAG) to evaluate and assess the UK’s sustainability-linked metrics and regulations.
The government plans to repeal existing EU laws surrounding financial services, including taxonomy regulations, with the introduction of the Financial Services and Markets bill which is currently before Parliament.
It will then consider how to use powers afforded in the bill to modify the existing EU laws.
GTAG published its advice on developing a UK Green Taxonomy earlier this year.
In a declaration following Baroness Penn’s ministerial statement, GTAG welcomed the clarity but said the priority should be to “ensure the design and implementation of such a complex policy instrument is done in a way that maximises its usability and usefulness for the market”.
It continued: “Done well, the prize of a scientifically rigorous and practical taxonomy will be significant for the UK’s globally focused financial sector.
“Thus, GTAG remains committed to providing ongoing independent advice to the UK government on the market, regulatory and scientific considerations for developing and implementing a Green Taxonomy, which we will continue to share publicly over the coming months and ahead of final implementation decisions being made by government later in 2023,” the statement read.
GTAG added that legislators should review their timeline given recent political changes.
Last Updated: 23 December 2022