An independent expert group has been established to advise the government on green finance and to help clamp down on ‘greenwashing’ within the investment industry.
The Green Technical Advisory Group (GTAG) will oversee the government’s delivery of a “Green Taxonomy” – a framework for environmentally-friendly investments – unveiled by Chancellor Rishi Sunak last November.
It forms part of the Treasury’s wider plans to position the UK at the forefront of green finance, including the issuance of the UK’s first ever sovereign green bond later this year.
There is growing demand for investments fulfilling environmental, social and corporate governance (ESG) criteria. Recent figures from the Investment Association suggest that ESG investments quadrupled in 2020, while a separate study by OnePlanetCapital found that the ESG market is set to double in 2021.
But some providers have exaggerated their green credentials, known as ‘greenwashing’, to tap into the trend. The Green Taxonomy will make it easier for investors and consumers to understand how a firm is impacting the environment.
“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,” said City minister John Glen.
“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.
“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.”
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GTAG will be chaired by the Green Finance Institute and made up of financial and business stakeholders, taxonomy and data experts, and subject matter experts drawn from academia, NGOs, the Environment Agency and the Committee on Climate Change.
“The GTAG will 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,” said Ingrid Holmes, executive director of the Green Finance Institute.
“We’re delighted to chair the GTAG, and to welcome all 18 members onboard, 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.”
GTAG will first meet in June 2021 and is expected to run for at least two years. It will provide initial recommendations to the government in September 2021.