Last year, we published a comprehensive analysis of the UK’s trade policy landscape: UK Trade Policy: An Independent Review. We encourage interested readers to look at the full report for more detail. Each chapter, listed below, can be read independently, with both an executive summary and key recommendations provided.
In this series of blogs, we summarise each chapter. This blog discusses the UK’s approach towards addressing the urgent demands of climate change and environmental sustainability while operating within an open, multilateral trading system. Specifically, we distinguish between three types of policy instruments proposed or implemented by the UK Government:
a) Policies directly targeted to encourage sustainable trade at the border such as the Carbon Border Adjustment Mechanism (CBAM), Deforestation Regulations, etc.
b) Policies aimed at environmental sustainability and climate change that indirectly affect trade such as those on emissions reductions.
c) Trade instruments that have an indirect impact on sustainability and climate change such as free trade agreements.
Within these categories, we find that the UK Government uses trade tools to advance domestic sustainability objectives, participates in multilateral initiatives that influence trade beyond the UK (whether legally binding or not), and adopts unilateral policies aligned with multilateral goals that also have trade effects.
Our findings indicate that while the pursuit of economic growth is seen as the most important priority for the Government, following closely is the goal of “environment and sustainability” considered to be equally important with “resilience and economic security”. Within this prioritisation, the language used in the trade corpus1 exhibits considerable variation, especially when discussing the aspects and approaches to addressing climate change and environmental sustainability.
Terms such as “sustainability”, “sustainable development”, “sustainably” are frequently used interchangeably, yet their substantive meaning and policy orientation have shifted over time, particularly across successive governments.
Even within the same administration, identical terminology reflects distinct policy approaches. The Labour government’s Industrial Strategy, for example, situates environmental considerations within the broader objective of economic stability, and growth through the concept of “sustainable growth,” framing sustainability as complementary to competitiveness and long-term economic resilience. The Trade Strategy adopts a similar approach and language but applies it differently. Although it also refers to “sustainable growth,” the emphasis lies on policy instruments that pursue non-trade objectives while generating indirect trade effects. These include mechanisms such as international investment agreements, intended to facilitate greater UK participation in global value chains, expand market opportunities for UK firms and enhance operational efficiency.
Variations in how sustainability is interpreted influence the prioritisation of sectors in trade policy. To examine this, we combined insights from our sectoral analysis of the trade corpus with a review of policy documents addressing different aspects of sustainability, which formed our ‘sustainability corpus’. Nine sectors appear in both corpora, although their relative prioritisation differs based on how frequently they may have been referenced in the documents. Sectors that rank highest in the sustainability corpus are not necessarily those prioritised most highly in the trade corpus, highlighting the differing emphasis placed on sectors depending on the specific trade policy goal under consideration.
This challenge is reinforced by the fact that responsibility for trade and sustainability objectives is spread across multiple government departments, which can reduce coordination and policy cohesion, an issue not addressed in the Trade Strategy. The link between Industrial Strategy sector plans and trade policymaking highlights these difficulties, as tools like trade agreements and subsidies are used both to support sustainable sectors, such as wind power, and high-emission sectors, like aerospace.
Turning to a more focused discussion on how sustainability is treated within the trade discourse, we find that climate, energy and economic growth are treated as mutually reinforcing. However, this relationship is framed primarily in terms of challenges UK businesses may face from climate impacts on global value chains, rather than how the UK’s own emissions might affect business participation. The Government appears to rely on other domestic policy instruments, rather than trade policy, to balance its core objectives of economic growth, sustainability, and climate and biodiversity protection. This is observed by the government’s increasing focus to support technological innovations and cutting-edge research to combat climate change and biodiversity loss that require the accumulation of critical minerals.
We find that provisions on environmental protection in UK Free Trade Agreements (FTAs) often signal intent rather than create enforceable obligations. They tend to rely on dialogue and consultation rather than binding dispute settlement2, which limits their practical impact. While some agreements such as the UK-New Zealand Trade Agreement explicitly reference climate change and decarbonisation strategies, this is inconsistent across treaties. There is broad recognition across most trade agreements of the need to facilitate trade in environmental goods and services. However, related provisions remain general rather than enforceable. This could be due to the absence of international consensus on how such goods and services should be defined.
Rather than conditioning preferential market access on trading partners meeting core environmental standards, the UK adopts a pragmatic approach to environmental provisions in trade agreements. The UK generally retains its high SPS standards while negotiating the maximum concessions on environmental protection that the partner is willing to accept. This approach has faced criticism from civil society, notably in the context of the UK–Australia FTA.
Parliamentary scrutiny of the UK’s FTAs highlights important considerations regarding trade policymaking and sustainability. In particular, the Trade and Sustainable Development Domestic Advisory Group (TSD DAG) plays a key role in enhancing transparency on the interaction between sustainability and trade in the UK’s non-EU FTAs. Ensuring that it remains adequately resourced is therefore essential going forward.
Border measures have become an increasingly prominent feature of the UK’s approach to aligning trade policy with sustainability objectives.
The UK’s Carbon Border Adjustment Mechanism (CBAM), initially covering the same sectors as the EU scheme, reflects an effort to prevent carbon leakage and support domestic decarbonisation. Modelling evidence suggests that a CBAM is likely to increase domestic production in covered sectors at the expense of imports, contributing to lower overall emissions. However, it may also reduce exports in those sectors, as well as in downstream industries such as motor vehicles and services, due to changes in relative prices and input costs. In this respect, elements of the CBAM may stand in opposition to government goals around export growth. Concerns also remain regarding its potentially disproportionate impact on developing country exporters and its compatibility with WTO rules, both of which carry implications for the UK’s wider trade relationships.
The UK’s deforestation regulations illustrate a different type of border measure, based on regulatory conditions governing how inputs into production are sourced and managed. They signal a shift towards embedding environmental due diligence within supply chains and may foreshadow further interventions of this kind, for example in relation to critical minerals, organic agriculture, or plastics.
The Border Target Operating Model (BTOM) is a trade instrument with indirect sustainability objectives. It was introduced to strengthen biosecurity, regulatory control, and risk-based controls on imports that may pose environmental or health risks. The recent cancellation of the proposed Single Trade Window is especially significant in this regard. Without a unified digital platform to streamline documentation and data submission, administrative complexity remains high, increasing transaction costs and potentially undermining the efficiency and coherence of sustainability-linked border controls.
The UK has demonstrated a strong commitment to embedding sustainability within its trade policy on paper, but this is not applied consistently nor backed by binding commitments. Variation in the treatment of sustainability across UK policies and between UK policy and UK actions at the multilateral level underscores the need for stronger coordination across government. An interdepartmental committee or a central coordinating role within the Cabinet Office could help manage trade-offs between competing objectives and priorities, ensuring greater policy coherence. Conducting environmental impact assessments alongside Business and Trade Impact Assessments would further support an integrated evaluation of policy effects, alongside greater parliamentary scrutiny of FTAs and other trade agreements.
At the same time, the government must balance these sustainability objectives with the rising costs to businesses from increased bureaucracy and documentation, the potential impact on economic growth, and the need to ensure that domestic measures, such as border taxes and subsidies, comply with WTO rules. Closely related, an evaluation of public preferences and values attached to trade and sustainability would improve the legitimacy of policymaking and enable policymakers to assess the trade-offs and priorities.
" ["align"]=> string(7) "align_l" } ["group_column_2"]=> array(2) { ["text"]=> string(0) "" ["align"]=> string(7) "align_l" } ["_copy"]=> NULL ["group_column_3"]=> array(2) { ["text"]=> string(0) "" ["align"]=> string(7) "align_l" } ["group_core"]=> array(8) { ["layout_label"]=> string(8) "Untitled" ["tog_progress"]=> bool(false) ["tog_header"]=> bool(false) ["tog_padding"]=> bool(true) ["tog_background"]=> bool(false) ["tog_restriction"]=> bool(false) ["grp_lifecycle"]=> array(2) { ["datetime_start"]=> string(0) "" ["datetime_end"]=> string(0) "" } ["grp_identity"]=> array(2) { ["id"]=> string(0) "" ["class"]=> string(0) "" } } ["group_header"]=> array(3) { ["title"]=> string(0) "" ["intro"]=> string(0) "" ["align"]=> string(7) "align_l" } ["group_padding"]=> array(2) { ["top"]=> string(1) "1" ["bottom"]=> string(1) "0" } ["group_background"]=> array(2) { ["group_bg_colour"]=> array(2) { ["bg_colour"]=> string(7) "bg_none" ["bg_colour_pct"]=> int(100) } ["bg_image"]=> string(10) "bgimg_none" } ["group_restriction"]=> array(1) { ["role_access"]=> array(2) { [0]=> string(13) "administrator" [1]=> string(9) "developer" } } } } [1]=> array(2) { ["acf_fc_layout"]=> string(11) "layout_text" ["clone"]=> array(11) { [""]=> NULL ["group_bespoke"]=> array(3) { ["style"]=> string(7) "default" ["column_num"]=> string(1) "1" ["width_2_column"]=> string(8) "split-50" } ["group_column_1"]=> array(2) { ["text"]=> string(315) "