The Treasury has announced the formation of a new independent body to provide ministers, officials, and businesses with guidance on how to address concerns over alleged greenwashing within the financial industry.
The Green Technical Advisory Group (GTAG) will oversee the government's delivery of a "Green Taxonomy" - a common framework that aims to provide clear standards that would establish when investments or financial products can be defined as environmentally sustainable.
Green financial products and ESG-focused funds have experienced a surge in demand in recent years. But their growing popularity has been accompanied by concerns that some green financial products struggle to deliver promised environmental benefits - fears that have been further amplified by cases of nominally green investment funds that continue to support carbon intensive businesses.
As such, the Government's planned Green Taxonomy - which mirrors a similar effort from the EU - aims to help clamp down on greenwashing while making it easier for investors and consumers to understand how a firm or product is impacting the environment.
However, the development of new taxonomies at both the UK and EU level have proved hugely contentious, sparking arguments over which assets should be classified as 'green' and debates over how the new guidelines should be policed.
As such, the experts appointed to GTAG have been tasked with providing independent, non-binding advice to the government on developing and implementing a green taxonomy in the UK context.
Expert panel assembled
The new group will be chaired by Ingrid Holmes of the Green Finance Institute and will bring together a host of leading financial and business stakeholders, as well as taxonomy and data experts, including Faith Ward of the Institutional Investors Group on Climate Change, Nick Molho of the Aldersgate Group, the CBI's Rain Newton-Smith, Mike Thompson at the Committee on Climate Change, and Ben Caldecott from the Centre for Greening Finance and Investment.
The formation of the new group was welcomed by City Minister John Glen, who said the Government wanted investors and businesses "to play their part in greening our economy and transitioning to net zero" and therefore it was "crucial we have a clear common definition of what green means".
"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," he said.
"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."
As chair of the new group, Holmes said it would "play a key role, advising government on implementing a robust, science-based Taxonomy that is adapted to the specific needs of the UK context, and works for all stakeholders".
"We're delighted to chair the GTAG, and to welcome all 18 members on board, all of whom have a demonstrable interest and/or track record of being engaged on the issue of developing and using taxonomies, and the practicality of applying a taxonomy in a UK-specific context," she added.
Energy Working Group appointed
The Government also today announced that as part of the GTAG it would appoint an Energy Working Group to provide advice on key technologies, such as hydrogen, carbon capture, utilisation and storage, and how to address nuclear power in the taxonomy.
The Government stressed that nuclear remained a "key element of the UK's net zero plans", but the inclusion of nuclear and a number of other technologies in the EU's planned taxonomy has proved highly controversial, sparking significant criticism from green groups.
Energy Minister Anne-Marie Trevelyan said that the ultimate goal of the new group was to help accelerate investment in the UK's green infrastructure and businesses.
She said: "Transforming our financial system for a greener future is vital so we can protect the planet, reach net zero and grow our economy, and establishing a Green Technical Advisory Group and Energy Working Group are both crucial steps forward in developing our green UK taxonomy."
"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."
This article was first published by our sister title BusinessGreen
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