Paul Davies, partner, Michael Green, counsel and Sophie Lamb, partner, at Latham Watkins LLP, examine the recent report by the Environmental Audit Committee (EAC) concerning its investigation into the role of the Treasury in relation to sustainable development and environmental protection, and assess the practical implications for policy decisions going forward.Lexis®PSL subscribers can enjoy expert guidance, if you are not a subscriber, you can take a free Lexis®PSL Environment trial here. Why is the Treasury’s approach to sustainability important?The Treasury’s approach to sustainability is important because the Treasury occupies a pivotal position in government which enables it to promote policy coordination and policy coherence on environmental matters between and across government departments. The Treasury, through its control over government spending, taxation policy and regulation, is able to place sustainability at the forefront of policy consideration and balance the sometimes competing objectives of economic growth and environmental concerns. As the EAC’s report highlights, this is not always positive for the environment. For example, the Treasury was responsible for limiting Department for Environment, Food and Rural Affairs’ planned expansion of clean air zones that formed a key part of the UK’s air quality plan. The final Treasury-approved plan on air quality (including the limited clean air zones), was subsequently struck down by the High Court as non-compliant in a challenge issued by ClientEarth. The Treasury also plays an instrumental role in ensuring carbon budgets are met.