The UK government should use its planned green taxonomy to inform a ‘net zero test’ for public sector spending, according to the Green Technical Advisory Group (GTAG). The taxonomy could be used to assess whether public investments make a significant contribution to climate change mitigation and adaptation, and whether they do any significant harm to the UK’s broader sustainability goals, it said in a new paper. A new ‘Budget Tagging Tool’ could be complemented by an additional tool measuring the emissions impact. The call was part of a series of recommendations to use the taxonomy to support the UK’s green finance policy and regulatory framework. Use cases for the wider use of the taxonomy – a consultation on which is expected in the autumn – focused on promoting market integrity, consumer protection, avoidance of greenwashing and mobilising capital to support UK environmental goals. GTAG’s other recommendations included application of the green taxonomy to existing or planned elements of the UK’s emerging regulatory framework for sustainable finance, such as Sustainability Disclosure Requirements, net zero transition plans and the Financial Conduct Authority’s proposed labels and disclosures regime. As well as proposing a role for the green taxonomy in central and local government funding, GTAG said it could underpin a UK Green Bond Standard that built on the existing green gilt programme. “The standard should be voluntary in the first instance, and look to complement existing standards. This would support alignment of private sector issuances of green bonds,” it said.
In the next instalment of its advice to HM Treasury, the Green Technical Advisory Group, chaired by the Green Finance Institute, has laid out the value case for applying the UK Green Taxonomy to the wider policy landscape. pic.twitter.com/7ZGPujEFQY
— Green Finance Institute (@GFI_green) August 15, 2023