The green taxonomy question: EU vs UK

No, the UK decided on 15 July 2025 not to proceed with a UK Green Taxonomy. HM Treasury concluded that other measures were higher priority for directing investment and tackling greenwashing, shifting focus to disclosure standards (UK SRS), ESG-ratings regulation and transition plans.

The EU Taxonomy is a science-based classification system defining which economic activities count as environmentally sustainable. Introduced by Regulation (EU) 2020/852, it sets six environmental objectives and treats an activity as sustainable only if it substantially contributes to at least one, does no significant harm to others, and meets minimum social safeguards.

The EU Taxonomy's six environmental objectives are: climate change mitigation, climate change adaptation, sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems.

Yes, the EU significantly simplified the Taxonomy through the Omnibus Simplification Package published on 26 February 2025. This reduced scope and reporting burden, made taxonomy reporting voluntary for smaller in-scope companies, and streamlined templates to align better with CSRD reporting.

Not for UK reporting — there is no taxonomy-alignment calculation to perform under UK SRS. However, UK companies with significant EU operations or seeking EU green finance may still need to assess EU Taxonomy alignment under EU requirements, just as they encounter double materiality through European obligations.