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UK Government launches new taskforce to tackle greenwashing in finance sector

Edie Empowering Sustainable Business

First published on 9 June 2021

Called the Green Technical Advisory Group (GTAG), the taskforce will comprise of members from NGOs, trade bodies and academia, alongside organisations that will use the finalised taxonomy and organisations with expertise in creating such frameworks. It is set up to be independent from the Treasury and other Government departments.

Organisations represented within the GTAG's membership include the Green Finance Institute, WWF, the Institutional Investors Group on Climate Change (IIGCC), the Confederation of British Industries (CBI) and the Aldersgate Group. Under the category of taxonomy and data experts sit representatives from the likes of the UN Principles for Responsible Investment (PRI), the Climate Bonds Initiative and the Government’s own Environment Agency and Climate Change Committee. 

The Green Finance Institute’s executive director Ingrid Holmes has been appointed as chair of the GTAG. Until April 2021, Holmes headed policy and advocacy at investment manager Federated Hermes International. Prior to taking up these roles, she was a director at think-tank E3G, contributing to the establishment of the now-closed UK Green Investment Bank.

The taxonomy set to be developed by GTAG will help to reduce greenwashing in the financial sector; it will outline which kinds of financing activities can be badged using terms such as “sustainable” or “low-carbon”. This framework will be presented to the UK Government as advice; there will need to be further steps before it is enshrined in law. A timeframe for the publication of recommendations is yet to be announced.

The Treasury said in a statement that while it welcomes the “hundreds of new sustainable investment funds coming to market each year and sales to UK retail investors tripling from 2019 to 2020”, it has heard evidence that many providers are making unsubstantiated or exaggerated claims about the environmental impact of financed projects.

A 2020 Schroders poll of 650 institutional investors with more than $25.9trn in assets under management globally saw respondents citing greenwashing as the biggest challenge to improving – or delivering against – sustainability targets. A more recent survey of 4,600 individual investors by software-as-a-service firm Workiva found that 90% find it hard to trust ‘green’ claims from providers at face value.  

“We want investors and businesses to play their part in greening our economy and transitioning to net-zero, so it’s crucial we have a clear common definition of what green means,” Economic Secretary to the Treasury John Glen said.

“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.”

Glen claimed that GTAG’s taxonomy advice will inform a “rigorous” framework that “sets a high standard globally”. The European Union (EU) is notably already in the process of implementing a green finance taxonomy in stages. Under current rules, activities that cannot be classed as ‘green’ include gas-fired electricity generation and airport expansions.


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