Green taxonomy continues to be at the top of the agenda in the tyre retreading industry with the HM Treasury issuing a response to its UK Green Taxonomy Consultation in July, concluding that “it would not be the most effective tool to deliver the green transition and should not be part of our sustainable finance framework.”

UK Walks Away from Taxonomy to Focus on Other Measures

The past few months have seen EU Taxonomy talk at the heart of a busy regulatory landscape as far as tyre retreading is concerned, following a clarification made by the European Union to BIPAVER. In the clarification, it confirmed the industry’s compliance with green taxonomy regulations. Shortly after the announcement, we published our own assessment of the significance of the news for the UK’s own retreading sector.

In this assessment we stated that, in our opinion, whilst the UK did not have its own taxonomy regulations, the EU ruling was overall undoubtedly beneficial, with the sector receiving credible third-party validation as a sustainable activity, thus allowing retreaders to reference the EU’s decision in marketing, sales and ESG discussions and potentially open doors in future public procurement tenders. Vaculug’s Head of Sustainability and Compliance Process & Business Excellence Manager, Mark Holloway supported this view in his comments to Retreading Business, stating that the retreader was seeing ESG “becoming ever more important to our customers”.

At the time of publication, and interpreting the UK Government’s own communications, it was expected that some form of taxonomy would be implemented, even if it diverged from the EU’s own system. This expectation is further underlined when we consider that the UK had onshored part of the EU Taxonomy regulations, even though there were doubts as to whether the UK would double-down on Brexit or remain closely aligned with the EU. We potentially have our answer now.

So why has the UK opted to scrap its plans for a UK Green taxonomy?

In the consultation, the UK Government received 150 responses with 55% expressing mixed or negative views as they cited concerns surrounding practical complexity, implementation challenges, regulatory overload and duplication and fragmentation with regards to existing frameworks on the international stage, especially if they were not aligned with the EU approach.

On top of this, and crucially, around a third of respondents highlighted that other policy tools would be more effective in achieving environmental objectives than any standalone taxonomy. The policy tools that were explicitly mentioned in the announcement included transition plans, sector roadmaps, and the UK Sustainability Reporting Standards (UK SRS) aligned with global reporting frameworks.

In comparison to EU taxonomy, the UK Sustainability Reporting Standard (UK SRS) is a very different tool that serves distinct and overlapping purposes. Now, we are not experts in sustainability reporting, nor classifying sustainable activities, or even legislation. We are also not going to dive into the pros and cons of the UK Government’s strategy in its attempts to encourage and standardise sustainability reporting and stimulate green investment in sustainable activities. However, for context, we are going to explain the key differences between UK SRS and EU taxonomy.

Firstly, the UK SRS is a set of guidelines designed to standardise and enhance sustainability reporting for businesses in the UK, whereas EU taxonomy is a classification system that defines which economic activities are considered environmentally sustainable. It (EU Taxonomy) is also a framework to guide investments towards projects that contribute to the EU’s environmental objectives.

UK SRS, which is based on international standards, focuses on disclosure frameworks that encourage companies to report on environmental risks, impacts, metrics and targets. It is expected that the UK Government will introduce mandatory reporting using SRS from 2026 onwards for certain companies. “Which companies will be mandated to report using SRS?”, you ask. It is anticipated that the following companies could be impacted and be in the scope of the mandatory reporting:

• UK-listed companies in regulated markets
• Financial institutions
• Multinational companies with UK operations
• Sectors with sustainability risks such as energy, manufacturing, construction and transport
• Public interest entities such as those providing public services

It is likely that the potential initial scope will expand over time, particularly as alignment with international frameworks and stakeholder expectations evolve. As far as retreading is concerned, with SRS, the potential for public interest entities and the transport sector to have mandatory reporting could open up an opportunity to expand the use of retreads or at least provide a platform as to how retreads can be used to enhance their sustainability credentials as a part of their reporting.

In a nutshell, UK SRS is all about transparency and accountability, whereas EU taxonomy is about eligibility, classification and certification, and the two could be used to complement each other.

So, we are at the point again of trying to understand how this impacts the UK retreading industry. As we have already established, we expect large fleet operators, especially listed and investor-backed ones, to be subject to UK SRS, which provides UK retreaders with a real potential to position their products as climate and circularity-aligned to assist the subjected companies to meet their sustainability and disclosure goals and become key ESG partners.

Retreaders can leverage this by supporting fleets and public entities through offering data on emissions savings, comparative lifecycle carbon analysis against new tyres, and circularity benefits such as rubber reuse and waste reduction.

You might be thinking how retreaders can acquire this data. This type of data has already been extensively reported through previous research, and we would expect that larger tread rubber partners should be able to support in the supply of this data, as well as in assisting retreaders to build their own data collection systems to provide their own personalised data to fleets. The BTMA will probably be able to support in the provision of this data and case studies as well.

Furthermore, even though the UK has dropped its own taxonomy, EU taxonomy-compliance still serves as crucial third-party validation allowing fleets and public procurement bodies to reference the EU ruling in their own sustainability disclosures when UK retreaders are entering these discussions with fleets and public entities.

However, as always in these discussions, the potential for an EU retread label will continue to rear its head and as we have covered extensively, the lack of an EU retread label will continue to make new tyres look more compliant and superior on paper, even though retreads outperform them environmentally. Whilst all the above arguments will assist UK retreaders in arguing for the involvement of retreads in a fleet’s tyre policy, the retread tyre label will certify all those same arguments and act as regulation’s own answer to a tyre repair patch to plug over any gaps.

There is light at the tunnel though. As we have reported on previously, Paolo Tosoratti, from the Directorate General for Energy at the European Commission, confirmed that the EU hope to have an adopted text for the EU retread label in 2026. Until then though, data, lifecycle assessments, and references to EU taxonomy compliance remain essential.