On 1 September 2023, the Green Technical Advisory Group (GTAG) published the following reports:
- Developing a UK taxonomy adapted to the UK’s needs in the short and medium term: Scope, coverage and reporting considerations.
The report provides advice on the benefits and implications of adapting the coverage of the UK Green Taxonomy to better reflect the needs of the UK economy, drawing on the experience of the EU and other jurisdictions. The GTAG provides advice on whether an extended taxonomy that covers more transition but also harmful activities is the right approach for the UK currently. The report also provides a response to a recommendation from Chris Skidmore MP’s recent review of Net Zero in the UK, which recommended “Government to consider the appropriateness of a transition taxonomy (alongside a green taxonomy) that is simple and proportionate”. The GTAG also considers the value and implications of expanding coverage of the taxonomy to include more UK sectors and economic activities. It also looks at the UK’s approach to taxonomy reporting, focusing on suitable key performance indicators (KPIs) and identifying which entities should report.
Among other things the GTAG states in the report:
- That the UK Government should prioritise delivering a credible, robust, usable green taxonomy, keeping decisions about the options to extend (by which GTAG means to cover transition or harmful activities) for later review. Options to expand (by which the GTAG means to cover other sectors/industries in the UK) the taxonomy should be prioritised for certain sectors and activities, as set out in the report.
- Ensuring that the UK implements a taxonomy that clearly defines ‘green’ economic activities and is viewed as a credible, robust, and usable tool for the market should be prioritised, in the near term, over developing an extended taxonomy.
- The UK Government should outline how existing and planned policy initiatives can support the UK’s transition to ‘sense check’ the case for and against an extended taxonomy in the near term. As the UK Taxonomy consultation document is developed, the existing taxonomy design features that factor in transition should be utilised.
The GTAG believes that corporates should report ahead of financial institutions, as financial institutions are dependent on information disclosed by corporate clients and investee companies for their own reporting. Beyond sequencing, the report focuses primarily on the KPIs that should be used in taxonomy reporting. The GTAG has identified challenges with the European taxonomy reporting KPIs for financial and non-financial companies and sets out recommendations to address these issues.
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