The UK government has officially decided not to move forward with its proposed UK Green Taxonomy — a key component of its sustainable finance framework intended to classify climate- and environmentally sustainable economic activities.

In a statement released by HM Treasury, the decision was attributed to mixed feedback from a public consultation, with fewer than half of respondents supporting the value of such a taxonomy. Many stakeholders indicated that other elements of the sustainable finance framework, such as transition plans and reporting standards, should take priority.

Originally announced in 2020 by then-Chancellor Rishi Sunak, the UK Green Taxonomy aimed to provide a consistent framework to define environmentally sustainable activities, guide investment decisions, and enhance transparency around firms’ environmental impacts. However, concerns raised during the consultation included doubts over the real-world application of taxonomies based on global experiences, and skepticism regarding their effectiveness in achieving intended goals such as tackling greenwashing or driving investment flows.

Launched in November 2024, the consultation revealed that only 45% of participants expressed a positive view of the taxonomy, while 55% reported neutral or negative feedback. Around one-third of respondents believed that the taxonomy’s goals could be better achieved through alternative policy tools, including the UK Sustainable Reporting Standard (UK SRS), sector-specific transition plans, and targeted economic incentives.

Some respondents also raised concerns about the resource burden of developing and maintaining a taxonomy, which could detract from the implementation of other sustainable finance initiatives.

The UK’s decision contrasts with the direction of many other jurisdictions. Over 20 countries already have government-endorsed green taxonomies in place, and about 30 more are considering developing one. The EU, for example, has not only implemented a taxonomy but recently announced a major simplification effort to improve usability.

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