IPE ESG Briefing: UK taxonomy: good idea or bad idea?

Should the UK government should introduce a green taxonomy? Yes, and No.

That’s the feedback it will have to weigh up now after a consultation closed last week. According to the Investment Association, which represents the mainstream asset management industry, things have moved on since 2020 when the move to a taxonomy was first announced and there’s no longer a need for a UK taxonomy.

UKSIF, a sustainable finance association, has said the government should proceed with a taxonomy, with a key argument being that this way, the UK could influence the development of a common, global approach to taxonomies by having a voice in international fora. Yesterday morning AIMA, another industry body, said it basically told the UK Treasury that introducing a green taxonomy would be a bad idea, with no clear market benefit.

In the European Union, the European Commission’s omnibus initiative is taking up a lot of the limelight. There are now rumours that it could be delayed until March (it has been expected later this month). Last week more than 150 financial institutions put their name to a statement calling on the EU to rethink their plan to overhaul the bloc’s sustainability and due diligence rules. They acknowledged some changes were necessary, but said they could be made without having to re-open the fundamental texts underpinning the Corporate Sustainability Reporting Directive, Corporate Sustainability Due Diligence Directive and the EU Taxonomy.

Meanwhile, as US president Donald Trump forges ahead with executive orders rolling back environmental regulations, the manager of Norway’s sovereign wealth fund has downplayed the effect on how companies are actually behaving with regard to decarbonisation.

NEST, the UK pension fund that is nearing £50bn (€60bn) in assets under management, has said it is in talks with all of its external managers that have exited the Net Zero Asset Managers initiative and Climate Action 100+.  

Stewardship has long been touted as a way that institutional investors can safeguard beneficiaries’ interests by driving real world change. In France a new project has been launched to help investors assess just how effective their corporate engagement is. ERAFP and FRR are on board the initiative, which will address “a proliferation of engagement activities without a clear evaluation framework”.

Items to note:

• The IPE Transition Conference & Awards 2024 is taking place on 17 June at the Cardo Brussels, Autograph Collection in Belgium

Susanna Rust

ESG Editor