UK Green Taxonomy Dropped: What SDR and Transition Plans Mean for Issuers

UK companies now face investor scrutiny without a government taxonomy safety net, a decision that reshapes how capital markets will evaluate credibility. On 15 July 2025, HM Treasury confirmed in its consultation response that it will not proceed with a UK Green Taxonomy, following mixed feedback during the 2024 to 2025 consultation.

Executive Summary

The UK government’s decision to abandon a domestic Green Taxonomy marks a major pivot in sustainability regulation, shifting the burden onto companies to prove credibility without the backing of an official list of “green” activities. Instead, issuers must now navigate existing frameworks: the Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR) and anti-greenwashing rule, the UK Transition Plan Taskforce (TPT) disclosure framework, and the adoption of ISSB standards as UK Sustainability Reporting Standards (UK SRS). Together, these mechanisms place the emphasis squarely on transparent, evidence-based disclosures and credible transition strategies that link financial decisions to decarbonisation.

For issuers, this environment raises three priorities: treat transition plans as operating strategies rather than communications tools, prepare for SDR scrutiny across marketing and disclosures, and integrate reporting into a single spine that connects TPT, SDR, and UK SRS requirements. Regulators are already enforcing against misleading claims, while investors are rewarding companies that tie capital allocation, governance, and financing decisions directly to measurable transition outcomes. Examples from SSE, Aviva, and NatWest show that shareholder engagement, external validation, and transparent financing commitments are fast becoming the standard of credibility.

The market implication is clear: credibility will no longer be judged by taxonomy eligibility but by execution. Companies that embed sustainability into governance and capital planning, substantiate every claim, and harmonise reporting across frameworks will earn investor trust and avoid regulatory friction. Those that rely on aspirational targets or fragmented disclosures risk being exposed under investor and regulator scrutiny.

Regulatory Shifts

This pivot matters because it leaves companies without a government-backed list of “green” activities to guide capital allocation or product design. Instead, attention has shifted to two frameworks already live for many issuers: the Financial Conduct Authority’s Sustainability Disclosure Requirements (SDR) and anti-greenwashing rule, and the rollout of transition plan expectations under the UK Transition Plan Taskforce (TPT). Together with the government’s endorsement of the International Sustainability Standards Board (ISSB) standards as UK Sustainability Reporting Standards (UK SRS), these frameworks mean the market will now judge credibility through transparent plans, decision-useful disclosures, and disciplined marketing rather than eligibility screens.

Why the taxonomy pivot matters

The absence of a UK taxonomy raises the importance of consistent disclosures that investors can compare across sectors. Companies cannot simply point to a list of qualifying activities; they must instead explain how their strategies and financing decisions align with decarbonisation pathways. The government consultation on UK SRS S1 and S2, open in 2025, confirms that the UK is moving ahead with ISSB-based reporting standards.

This shifting environment places three priorities at the top of the agenda for issuers:

1. Treat transition plans as strategy documents, not marketing.

2. Prepare for SDR scrutiny across labels, marketing, and disclosures.

3. Build one reporting spine that connects TPT, UK SRS, and SDR.

Each of these priorities determines whether a company is seen as credible or exposed.

Transition plans as strategy, not communications

The UK Transition Plan Taskforce has already set out a disclosure framework that defines what good looks like: governance, strategy, metrics, and implementation levers. Some issuers are already acting:

• SSE put its Net Zero Transition Report to an advisory vote at the July 2023 AGM, winning strong shareholder support. It now ties the report to annual progress tracking.

• Aviva has published a 2025 Transition Plan explicitly informed by the TPT framework, giving investors a detailed roadmap for a financial services group.

The lesson for all issuers is that a credible plan must link capital expenditure, portfolio mix, and executive incentives to measurable decarbonisation pathways. Plans that only list targets without explaining financing approaches, board-level accountability, or engagement with suppliers and customers often collapse under scrutiny. Investors increasingly expect plans to read like operating strategies rather than marketing brochures.

Preparing for SDR scrutiny

If transition plans are the backbone of credibility, SDR is the enforcement regime that keeps claims grounded. The FCA’s anti-greenwashing rule has applied since 31 May 2024 to all authorised firms. Its final guidance clarifies that sustainability-related claims must be clear, fair, and supported by evidence.

Adoption of the new SDR investment labels has been measured rather than rapid. Morningstar data reported in April 2025 shows that only about 80 funds, representing £34.5 billion in assets, had publicly announced plans to use a label. Operational challenges are evident: the Investment Association’s 2025 member survey revealed that many firms had to refile multiple times to secure approvals, while more than half adjusted product names and marketing to meet the standards.

Real-world enforcement examples underscore the risks of weak substantiation:

• The Competition and Markets Authority secured undertakings from ASOS, Boohoo, and George at Asda in March 2024 to improve the accuracy of environmental claims.

• The Advertising Standards Authority banned HSBC adverts in 2022 for misleading environmental claims, a ruling that remains a reference point for the financial sector.

These cases show the evidentiary standard that SDR expects: claims must be substantiated, specific, and capable of independent verification. Issuers should assume that both regulators and investors will interrogate every assertion.

Knitting TPT, UK SRS, and SDR into one reporting spine

Fragmentation across transition plans, sustainability disclosures, and marketing claims creates friction and risk. To avoid inconsistencies and reduce audit headaches, companies should aim to build a single reporting spine that connects TPT-aligned transition plans, ISSB-based UK SRS disclosures, and SDR-governed marketing.

The government’s June 2025 consultation on transition plan requirements outlines possible implementation routes that would formally draw on TPT outputs. This confirms that integration is not optional; it will soon be a regulatory expectation.

Practical steps that pay off quickly include:

• Mapping TPT elements to UK SRS S1 and S2 disclosures, aligning metrics, and assigning data owners with clear sign-off points.

• Rebuilding product-level marketing claims against FCA FG24/3, deleting or rewriting any claim that lacks evidence.

• Linking capital expenditure and M&A screening processes to transition plan milestones so that the plan drives investment decisions rather than chasing them.

These integration moves reduce disclosure review cycles and build investor trust. They also help boards demonstrate that sustainability reporting is not a parallel exercise but an embedded component of strategy and governance.

Market implications

The pivot away from a UK taxonomy is not a retreat from sustainability regulation. Instead, it shifts the responsibility onto issuers to prove credibility through their own disclosures and strategic choices. Investors will now interrogate transition plans as if they were capital allocation blueprints, while SDR ensures that all claims are backed by evidence. At the same time, the UK’s adoption of ISSB standards ensures comparability with global frameworks.

For boards, this means credibility will depend on execution rather than classification. The companies that succeed will be those that connect governance, financing, and disclosure into a single narrative that withstands investor and regulator scrutiny.

If you want a focused external view on transition plan credibility, SDR readiness, and UK SRS alignment, we can run a fast, evidence-based review. This leaves you with a board-ready action list and a clear disclosure map. Get in touch to discuss scope and timing.

Transition plans must direct real capital

Investors no longer accept transition plans that read as aspirational documents. They are looking for capital allocation blueprints that tie investment decisions to decarbonisation milestones. Boards should hardwire the link between strategy, capital expenditure, and delivery schedules, then communicate it with clarity.

National Grid provides a strong example. In May 2025, it set out a five-year investment outlook of about £60 billion for the period 2024 to 2029, focusing on electricity and gas networks that enable system decarbonisation. The figure appeared in its full-year results presentation and annual report, accompanied by commentary on execution capacity. This level of transparency demonstrates to investors that the company is aligning financial resources with system-level decarbonisation.

For issuers in other sectors, the lesson is straightforward. Disclose the total investment envelope, identify which assets or programmes will shift the emissions profile, and set operational results for the next three to five years. Investors have grown weary of branded ambition slides that lack funding timetables, identified financing sources, or executive accountability.

Using shareholder signals to validate plan credibility

Transition plans gain legitimacy when investors have a structured opportunity to scrutinise them. SSE has made this explicit by subjecting its Net Zero Transition Report to an annual advisory vote since 2022. Shareholder support exceeded 97 percent in both its 2023 and 2024 meetings, and the company continues this practice in 2025. This creates a feedback loop that strengthens both plan quality and delivery.

For issuers considering a similar step, two elements are critical. First, publish the outcome of the vote in your annual report and explain how any investor feedback has been incorporated. Second, brief major shareholders on the capital linkage and operational levers before the vote. Doing so ensures the vote is a judgment on substance rather than communication style.

SDR as a continuous product governance regime

The FCA’s anti-greenwashing rule, in effect since 31 May 2024, should be treated as a continuous governance obligation. Final guidance FG24/3 makes it clear that claims must be fair, clear, and not misleading. For firms, this means maintaining a live register of sustainability claims, each linked to supporting evidence and sign-off owners. Claims must be re-tested whenever a product is redesigned or when the market context changes.

Early adoption data confirms that scrutiny is real. Morningstar figures published by IPE in April 2025 showed that only about 80 funds, representing £34.5 billion in assets, had announced plans to use an SDR label. The Investment Association’s 2025 member survey reported multiple refilings and marketing adjustments to meet the standards. These are early signals that both regulators and investors will expect issuers to apply the same level of rigour to their own disclosures and communications.

Enforcement is already shaping behaviour. The CMA secured undertakings from ASOS, Boohoo, and George at Asda in March 2024 to strengthen the accuracy of green claims. The ASA banned HSBC adverts in 2022 and later banned a Lloyds advert in December 2024 for misleading environmental claims. These cases show that regulators are willing to intervene and that substantiation must be robust and complete.

Financing commitments as evidence of delivery

Investors increasingly look for financing targets as evidence that plans are being executed. NatWest provides a clear example. In early 2025, the bank announced it had achieved its £100 billion climate and sustainable funding and financing target ahead of schedule and set a new £200 billion Climate and Transition Finance target for 2025 to 2030. It also published details of an independent second-party opinion on its framework.

For issuers, the transferable lesson is the importance of external validation and transparent progress reporting. Finance teams gain traction when they publish a schedule of financing instruments—green bonds, sustainability-linked loans, or structured transition finance—each explicitly tied to a transition plan milestone. Investors value being able to trace a financing instrument directly to a delivery lever rather than to a broad theme.

Raising the bar on data and assurance

The UK’s decision to endorse ISSB standards as UK SRS raises the bar for disclosure quality and assurance. Companies will need strong internal controls, consistent data across S1 and S2, and readiness for external verification. A practical way to start is to build a single disclosure map that links TPT plan elements to UK SRS metrics and to SDR-governed claims.

Tesco offers a concrete example of outcome-focused reporting. In its 2025 sustainability report, Tesco disclosed a 65 percent reduction in operational emissions compared with its 2015–2016 baseline, while noting that about 98 percent of its footprint lies in the value chain. This level of data-driven disclosure—specific on Scope 3 concentration—meets investor expectations for precision and transparency.

Preparing for system-level constraints

Transition plans must also account for external dependencies such as infrastructure readiness and regulatory approval. Ofgem signalled provisional approval of about £24 billion for electricity and gas networks for the next price period. Coverage in the Financial Times highlighted the implications for the timing and scale of grid investment. For issuers, the lesson is clear: reference these system-level signals explicitly in transition plans, and outline mitigation strategies if network or policy timelines diverge from corporate targets

Priorities for issuers

Given these dynamics, four immediate actions stand out:

1. Build one reporting spine that connects TPT plans, UK SRS reporting, and SDR marketing. Assign ownership, establish controls, and set a cadence for updates.

2. Tie capital and financing to plan levers, publish the timetable, and seek external validation wherever possible.

3. Maintain a live register of claims across websites, investor decks, and factsheets, ensuring each is linked to evidence and approvals under FCA FG24/3.

4. Engage investors early on the mechanics of transition plans before advisory votes or major financing events, then report back on how feedback influenced delivery.

Our experience shows that the first 60 to 90 days after a diagnostic are decisive. A short integration sprint across finance, legal, investor relations, and sustainability teams can remove avoidable friction and significantly raise credibility by the next results cycle.

Conclusion

The UK has stepped away from creating a domestic taxonomy and instead placed the emphasis on credible transition plans, robust reporting, and substantiated claims. Issuers that align strategy, capital, and disclosures into one coherent framework will navigate this environment more effectively and with fewer regulatory or investor surprises.

If your team wants to pressure test its transition plan, align with UK SRS and SDR requirements, and prepare for tough investor Q&A, we can support with a structured review and execution playbook.

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Written by: Gasilov Group Editorial Team

Reviewed by: Rafael Rzayev, Partner – ESG Policy & Economic Sustainability

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Frequently Asked Questions (FAQ): Green Taxonomy Shifts

What does the end of the UK Green Taxonomy mean for companies that already use the EU Taxonomy?

UK issuers with EU listings or operations will still face EU Taxonomy disclosure requirements in those markets. The UK decision only shifts domestic focus to SDR, UK SRS, and TPT transition plans. Companies should continue EU Taxonomy reporting where relevant while aligning internal data models with ISSB-based reporting.

How will the FCA review sustainability claims under the anti-greenwashing rule?

The FCA expects claims to be fair, clear, and not misleading, supported by evidence that is specific, current, and accessible. Firms must maintain an auditable trail for each claim, removing or rewriting statements where substantiation is weak. This applies to all sustainability-related claims in marketing, disclosures, and product design.

Are SDR investment labels gaining traction, and what does slow adoption imply?

Adoption has been deliberate rather than fast. Morningstar data in April 2025 showed only about 80 funds, representing £34.5 billion in assets, declaring plans to use an SDR label. This signals that investors and regulators will interrogate claims carefully, so issuers should expect more detailed questions in roadshows and results presentations.

What are credible transition finance signals companies can reference?

Banks are scaling transition finance commitments and subjecting frameworks to independent review. NatWest reported achieving its £100 billion climate and sustainable funding target ahead of schedule, then launched a £200 billion Climate and Transition Finance target for 2025 to 2030. The external validation of its framework adds credibility, offering a practice others can emulate.

Which enforcement examples show the current standard on green claims?

The CMA’s undertakings with ASOS, Boohoo, and George at Asda, along with ASA rulings against HSBC in 2022 and Lloyds in 2024, demonstrate that claims must be complete, substantiated, and not misleading. Regulators expect companies to avoid omitting material context and to provide proof for every claim.