ISEP responds to UK Green Taxonomy Consultation

Key Recommendations

A well-designed taxonomy must balance ambition with practicality, ensuring that it facilitates sustainable investment while remaining workable for businesses and investors. ISEP strongly supports a UK Green Taxonomy that:

• Embeds double materiality – ensuring that environmental and social impacts are considered alongside financial risks, in line with the EU approach. This enhances transparency and accountability, helping investors distinguish between genuine sustainability efforts and surface-level compliance.
• Aligns with global frameworks – including the EU Taxonomy, to ensure regulatory consistency and market efficiency for UK businesses operating internationally.
• Avoids regulatory divergence – which could lead to higher costs, complexity, and reporting burdens for UK companies that interact with multiple taxonomies.
• Incorporates the “Do No Significant Harm” (DNSH) and Minimum Safeguards (MS) principles – ensuring that investments classified as sustainable do not create negative environmental or social externalities.
• Recognizes transition finance as a key enabler of the net-zero economy – with clear, science-based pathways to support businesses moving toward sustainability.
• Covers a broad range of environmental objectives – beyond climate mitigation, including biodiversity, circular economy, water management, and pollution prevention.

The UK Green Taxonomy will be a critical tool for enhancing the credibility of sustainable finance, but its success depends on global alignment and robust governance. A taxonomy that diverges significantly from international and EU standards risks creating inefficiencies, undermining investor confidence, and increasing compliance burdens.

By embedding double materiality, regulatory interoperability, and strong transition finance mechanisms, the UK can remain competitive in global sustainable finance markets while reinforcing its commitment to responsible investment and green economic growth.

Next Steps

ISEP urges the UK Government to seize this opportunity to develop a world-class sustainable finance framework that ensures clarity, consistency, and credibility in the UK market. We will continue engaging with policymakers, industry leaders, and sustainability professionals to support the development of an effective UK Green Taxonomy.

For more details on ISEP’s response, visit iema.net or contact policy@iema.net.

To read the ISEP consultation response in full click here.

To learn more about the ISEP EIA Quality Mark click here.