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British regulators aim to avoid EU ESG blunders (2022)
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As the United Kingdom prepares the development of its own ESG regulatory framework, the European Union, Bloomberg reports, might have some important lessons to teach the British, mostly from what some analysts deem to be the mistakes it made in creating its own framework. Among other things, ESG consultants urge British regulators not to succumb to the pleas made by traditional energy interests and not to categorize gas and nuclear energy as green:[1]
"UK regulators have been advised to avoid a number of key planks in the EU’s green taxonomy including the bloc’s handling of real estate, as Britain tries to build an ESG investing framework of its own.
"The EU’s treatment of sectors including real estate, shipping, bio-energy and hydrogen in its taxonomy is potentially 'very problematic,' according to the UK’s Green Technical Advisory Group. Applying the same standards as those laid out in the EU rulebook would be inconsistent with the UK’s net-zero ambitions, GTAG said on Friday.
"The EU has blazed a trail in sustainable investing, building an ambitious regulatory framework that’s widely seen as a global benchmark. But the speed with which the EU project has been pushed through has left it riddled with holes and inconsistencies, and even regulators inside the bloc have demanded urgent improvements.
"With the EU model as a starting point, Britain should pick and choose the elements that look appropriate for the UK market, and those that aren’t, according to Ingrid Holmes, chair of GTAG.
"'We’re going further and faster in a number of areas in the UK,' she said in an interview. Britain can make 'the detail shorter, easier to follow and easier to demonstrate compliance' than is currently the case in EU rules, she said.
"More broadly, however, the UK acknowledges that the EU’s taxonomy, which sets the rules for what can be treated as a sustainable activity, should serve as a template for its own ESG framework….
"Divergence from the EU’s taxonomy would potentially leave the investment industry facing more post-Brexit paperwork, with investors, banks and companies subject to both jurisdictions’ regulations….
"The taxonomy must 'remain science-based and avoid lobbying by vested interests which may be intended to soften the technical screening criteria,' it said.
"The EU’s controversial decision to include gas and nuclear power in its 'green' taxonomy has drawn particular criticism. And members of GTAG have spoken out against such an interpretation of 'sustainable.'”
See also
- Environmental, social, and corporate governance (ESG)
- Economy and Society: Ballotpedia's ESG newsletter
External links
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