The government released its long-awaited Green Finance Strategy on Thursday, announcing a widespread review of policies and regulations as it seeks to channel investment towards the green economy.
The delayed report sets out proposals to pursue the government's ambition of making London the world's first net zero aligned financial centre.
It said the proposals would "ensure the necessary finance flows to our net zero, energy security and environmental industries".
A key part of the plan is the so-called Green Taxonomy, a tool to provide investors with clarity on which activities are labelled as green.
"This will support the quality of standards, labels and disclosures used in the industry for green finance activity," the government said. It expects to consult on the Taxonomy in autumn 2023.
It confirmed nuclear will be included within the UK's Taxonomy, subject to consultation, as it is considered a "key technology within our pathways to reach net zero".
Another main concern for the government is clamping down on greenwashing, the practice of making investments look more environmentally friendly than they actually are.
It said it will "consult on the specific steps and interventions" needed to protect against greenwashing and maintain "high integrity" in markets.
The Financial Conduct Authority (FCA) is already introducing labels to help consumers navigate the market of sustainable investment products, in particular by ensuring the name reflects the sustainability profile of the product.
A new consultation into ESG ratings providers will also be launched to help ensure better outcomes for consumers.
"This will position the UK to serve as a global hub for voluntary carbon trading," the report said.
Transition plans were also an area of focus for the government. Transition plans detail how firms intend to reach net-zero by 2050.
Currently, the Financial Conduct Authority requires listed companies, as well as large asset owners and managers, to disclose transition plans on a 'comply or explain' basis.
The government committed to a consultation on introducing disclosure requirements for the UK's largest private companies too. This is likely to "align closely" with the FCA, the report said.
In other areas the government will launch a call for evidence on Scope 3 greenhouse gas emissions reporting. Scope 3 includes emissions across a firm's supply chain, not just its direct emissions.
The Green Finance Strategy was released alongside a series of other measures detailing the government's environmental and energy security policies.
The wider strategy received a lukewarm reception with industry figures suggesting the proposals failed to go far enough to enable the UK to compete with other rivals.
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