UK must secure its leading role as a net-zero financial centre

With the US and EU raising the stakes through massive green subsidy push, the UK will need to significantly raise its game to attract capital through strengthened global investment credentials.

The Government’s independent advisory group, the Green Technical Advisory Group (GTAG), which advises on the design and implementation of a UK Green Taxonomy, has said that it must set clear standards in green finance as the US Inflation Reduction Act and the EU Net-Zero Industry Act will attract global capital.

Analysis published by GTAG highlights that regulatory proliferation risks making it more difficult and costly for investors to invest in green assets. With over 30 taxonomies now in development or implemented, significant market fragmentation and transparency risks arise where taxonomies are not aligned or interoperable. This undermines efforts to promote cross-border green capital flows and investment in green assets in the UK and elsewhere.
In a white paper GTAG outlines the opportunity for the UK to address this challenge through the development of a UK taxonomy that carefully considers cross-border investing, and seeks routes to international harmonisation where possible.

Ingrid Holmes, chair, GTAG, and executive director, Green Finance Institute said: “Building on its strong track record in world-leading green finance policy, the UK is well placed to help address the challenge of global market fragmentation, while at the same time securing its leadership on green and transition finance through a scientifically robust and usable taxonomy. This is particularly important given the UK’s globally focused financial sector, which has some of the deepest pools of internationally oriented capital, with 7.2 per cent of the global total of foreign listed companies listed in London. But the UK must act now.”

Promoting the International Interoperability of a UK Green Taxonomy sets out ten recommendations for working toward international interoperability without compromising the robustness or science- based nature of a UK Green Taxonomy. This includes recommendations on the opportunity for the UK to globally advocate for harmonisation across taxonomies where possible, and support the development of a list of core green economic activities that can be deemed equivalent to the UK Green Taxonomy through its engagement, membership and influence across sustainable finance- focussed international fora, including the G20 Sustainable Finance Working Group, Network for Greening the Financial System, International Sustainability Standards Board (ISSB), and International Platform on Sustainable Finance.

    Share Story:

Recent Stories