Source · Select Committees · Work and Pensions Committee
Recommendation 6
6
A green taxonomy will be vital to the success of measures introduced by the Government...
Recommendation
A green taxonomy will be vital to the success of measures introduced by the Government to tackle climate change. It will support pension schemes, especially smaller schemes, in assessing the merits of different investments and avoiding the risk of “greenwashing”. We recommend that as far as possible the taxonomy should align with international standards, whilst also reflecting the UK context. (Paragraph 28) 32 Pension stewardship and COP26
Government Response
Acknowledged
HM Government
Acknowledged
The Government is committed to developing a Green Taxonomy aligned with international standards as far as possible, whilst also reflecting the UK context. This month, the Government announced that the UK will become the first ‘Net Zero Aligned Financial Centre’21 and the development of the Green Taxonomy will play an important role in achieving this commitment. The UK’s Green Taxonomy will clearly set out the criteria which specific economic activities must meet to be considered 17 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p. 34. 18 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p. 34. 19 Greening Finance: A Roadmap to Sustainable Investing, (publishing.service.gov.uk), p. 34. 20 Governance and reporting of climate change risk: guidance for trustees of occupational schemes (publishing. service.gov.uk) 21 COP26 Finance Day speech - GOV.UK (www.gov.uk) Government Response: Pension stewardship and COP26 5 environmentally sustainable. This will give investors and savers useful information on the proportion of their portfolio invested in environmentally sustainable activities. As highlighted in the ‘Greening Finance: A Roadmap to Sustainable Investing’, a core principle of the Taxonomy’s implementation is that it is ‘built for the UK to support a global transition.’22 The Government will take an approach that is suitable for the UK market and consistent with UK Government policy. There will also be a clear focus on the benefits of coherence and compatibility with other international frameworks.23 For example, the Technical Screening Criteria (TSC) for the climate change objectives in the UK Green Taxonomy will be based on those of the EU Taxonomy, which the UK supported the development of whilst still a Member State.24 However, the Government is currently reviewing these and expects to consult on UK draft TSCs in the first quarter of 2022, ahead of legislating by the end of 2022.25 The Government has also established the Green Technical Advisory Group (GTAG) to provide independent advice on development and implementation of the UK Green taxonomy, including any deviations from existing international frameworks.