Green taxonomy: why the UK has none, and how the EU’s works

No. HM Treasury decided on 15 July 2025 that work to develop a UK Green Taxonomy “should not proceed”, after a consultation that ran from 13 November 2024 to 6 February 2025.

Its response named three priorities instead: the UK Sustainability Reporting Standards, assurance of sustainability reporting, and transition plans.

Not on any published plan.

The government concluded that a UK Taxonomy would not support its vision for the sector and declined even to answer the consultation’s design questions.

Any material describing a UK taxonomy as forthcoming or in development predates, or ignores, the July 2025 decision.

The EU Taxonomy, set by Regulation (EU) 2020/852, is a classification of which economic activities count as environmentally sustainable.

An activity qualifies only if it contributes substantially to one or more of six environmental objectives, does no significant harm to the others, is carried out in compliance with minimum safeguards, and meets technical screening criteria set by the Commission.

Climate change mitigation; climate change adaptation; the sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems.

They are listed in Article 9 of the Taxonomy Regulation.

Under Article 18 they are procedures an undertaking implements to ensure alignment with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

They are a test of the undertaking’s procedures, not of the activity’s outcome, and without them no activity of that undertaking can be aligned.

The Regulation itself was not amended: Omnibus I amends four directives and no regulation.

Its reporting population shrank because Article 8 follows the CSRD scope, now above €450 million turnover and 1,000 employees.

Reporting was simplified separately by Delegated Regulation (EU) 2026/73, applying from 1 January 2026, which lets companies skip assessing activities below 10% of a KPI.

Not for UK reporting: UK SRS has no taxonomy-alignment calculation.

A UK group meets the EU Taxonomy through an EU subsidiary in CSRD scope, which must make Article 8 disclosures, through EU customers or investors that ask for alignment data, or when raising finance marketed in the EU against Taxonomy criteria.

The EU classifies activities as green or not through the Taxonomy and requires the largest companies to disclose their aligned share.

The UK chose disclosure without a classification: listed companies report against UK SRS on a comply-or-explain basis from 2027, and FCA rules govern sustainability claims about investment products.

From 1 January 2026, a non-financial undertaking may skip assessing eligibility and alignment for activities whose cumulative turnover, capital expenditure or operating expenditure is below 10% of the relevant KPI. It must still report those amounts separately as non-material. It is an opt-out from the assessment, not from the disclosure.