GTAG publishes advice on scope and reporting under UK green taxonomy

On 1 September 2023, the UK Green Technical Advisory Group (GTAG), an independent expert group which advises the UK government on the design and development of a UK green taxonomy (the UK Taxonomy), published two reports containing technical advice for HM Treasury. The reports are as follows:

• Developing a UK taxonomy adapted to the UK's needs in the short and medium term; and
• Getting KPIs right: implementing an effective reporting regime for the UK green taxonomy.

What do the reports cover?

Developing a UK taxonomy adapted to the UK's needs in the short and medium term

This report provides advice on whether an extended taxonomy that covers more transition activities is the right approach for the UK. The GTAG indicates that it does not recommend the implementation of an extended taxonomy at this time. Alternatively, it suggests that the government prioritise delivering a credible, robust, usable green taxonomy, reserving decisions about the coverage of the taxonomy to extent to transition or harmful activities for later review.

The report also provides advice on the value and implications of expanding coverage of the UK Taxonomy to include more UK sectors and economic activities. Finally, the GTAG provides advice on the UK's approach to taxonomy reporting, focusing on suitable key performance indicators (KPIs) and identifying which entities should report.

Getting KPIs right: implementing an effective reporting regime for the UK green taxonomy

In this report the GTAG identifies issues with the European taxonomy reporting requirements and provides recommendations to address them. For example, the GTAG recommends that the approach to the green asset ratio be reassessed and a working group for designing technical screening criteria for financial services be set up.

For investment funds, the GTAG recommends reporting at the fund level and applying reporting to all funds, irrespective of ESG labelling. The GTAG also sets out its view 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.

See our reporting on the GTAG's Advice on the development of a UK Green Taxonomy report published in October 2022 here.