Government ditches plan to stop businesses ‘greenwashing'
The plan for a so-called green taxonomy, a classification tool that would have required companies to be more accurate and rigorous in their environmental claims, has been ditched, the Treasury said.
'After careful consideration of the responses [to a recent consultation], 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,' it said.
• How to avoid greenwashing in your carbon-neutral claims
Other policies, it said, were 'of higher priority to accelerate investment into the transition to net zero and limit greenwashing'.
The planned policy was seen by environmentalists as an important tool for stamping out so-called greenwashing as well as helping direct new capital into areas most likely to help reduce climate change.
The UK Sustainable Investment and Finance Association, which has 300 members with £19 trillion of assets under management, described the move as 'disappointing'.
While 45 per cent of 150 responses to a Treasury consultation on the proposed taxonomy were positive, 55 per cent were 'mixed' or negative, it said.
Concerns centred around 'the real-world application of this policy, primarily driven out of experience of working with other taxonomies'. Some respondents said other policies would have more impact.
Separate rules from the Financial Conduct Authority on the labelling and naming of funds came into force earlier this year, while rules from the Competition and Markets Authority and Advertising Standards Authority have also been used to challenge greenwashing.
Some large companies in Britain already use an EU-devised taxonomy to calculate their emissions and impact on climate change.
Companies and fund managers have been able to make all kinds of 'sustainability' and green claims without an independently set framework through which to judge them.
'There was limited evidence of a compelling use case for a specific UK taxonomy that would achieve outcomes which could not be otherwise achieved using existing taxonomies or market frameworks, or other policy,' the Treasury concluded.
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