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UK government to crackdown on 'greenwashing'

·2-min read
Chancellor of the exchequer Rishi Sunak. Photo: Getty
Chancellor of the exchequer Rishi Sunak. Photo: Getty

The UK government has made moves to crack down on 'greenwashing' with a new independent expert group, established to advise on maintaining high standards for green investment.

The plans, released on Wednesday, aim to bring the UK further in line with its net-zero carbon emission target and create green jobs.

The Green Technical Advisory Group (GTAG) will support investors, consumers and businesses to make green financial decisions and will will oversee the government’s delivery of a “Green Taxonomy” – a common framework setting the bar for investments that can be defined as environmentally sustainable.

The government said that the Green Taxonomy will help clamp down on greenwashing – unsubstantiated or exaggerated claims that an investment is environmentally friendly – and make it easier for investors and consumers to understand how a firm is impacting the environment.

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Read more: BlackRock accused of 'greenwashing' $85bn in coal investments

The chancellor Rishi Sunak first announced the UK would implement a green taxonomy in November 2020, as part of wider plans to position the UK at the forefront of green finance, including issuing the UK’s first ever sovereign green bond later this year.

It is a thorny issue for businesses looking to prove their green credentials to investors, with high profile examples of greenwashing accusations having been levied at money management giants such as BlackRock (BLK) in recent months.

The government believes that better data will, in turn, help companies, investors and consumers to make informed green choices, support investment in sustainable projects and boost efforts to tackle climate change.

With hundreds of new sustainable investment funds coming to market each year and sales to UK retail investors tripling from 2019 to 2020, in theory, consumers and investors of all sizes will be able to make more informed decisions, and businesses will be supported as they plan to transition to net-zero.

“Transforming our financial system for a greener future is vital so we can protect the planet, reach net zero and grow our economy, and establishing a Green Technical Advisory Group and Energy Working Group are both crucial steps forward in developing our green UK taxonomy," said UK energy minister Anne-Marie Trevelyan.

“This will help the financial sector invest in the projects, technologies, and services of the future, strengthening the UK’s position as global leader in green finance and tackling climate change.”

The launch of GTAG comes shortly after the G7 agreement, with countries agreeing to make climate disclosures mandatory across their respective economies.

The agreement was secured at a meeting of G7 finance ministers chaired by Sunak last weekend.

Watch: G7 finance ministers reach global minimum corporate tax deal