The importance of ESG taxes for sustainable outcomes
ESG is a critical part of modern business environments and organizations are considering ESG for long-term value creation. Stakeholders
interested in ESG profiling of companies would range from government regulators to investors to end customers. This is because ESG does
way more than enhance a company’s reputation – it also helps to build resilience, mitigate risk and improve on financial returns.
Taxation is an integral part of ESG and tax transparency and compliance are vital to the ESG conversation. ESG tax compliance reflects a
business’ commitment and contribution toward ESG for the benefit of society. Non-compliance therefore can lead to reputational risks for a
business. Businesses need to consider the taxation landscape which includes a wide scope going beyond legal obligations and reporting
requirements. Today, organizations are required to volunteer information about how they approach tax management, including their tax
behaviour and consequentially, the taxes they actually pay.
Taxes in environmental, social and governance
Environmental, social and governance tax components play different roles - for example, in the environmental agenda, tax is used as a tool to
drive sustainable processes within business and therefore would constitute elements such as net zero, green incentives, carbon adjustment
mechanisms, taxation on carbon and plastic packaging, and compliance and reporting. In the social segment, taxation would straddle supply
chain ethics contributing to positive human impact, equal pay, flexible workforce, ethical investments, philanthropy and transparency and
disclosures. Tax in governance would be inclusive of but not limited to total tax contribution and reporting, alignment in tax behavior with ESG
policy and stakeholder communication.
At Exalogic Consulting, we help you transition to a green business. Our consultants are experts in helping you navigate the complexities of ESG taxation, particularly those pertinent to the country your business is present in. We help you understand the importance of net-zero tax implications and handhold you toward meeting your ESG tax goals. Leverage our expertise to respond to ESG tax policies with measures that deliver sustainable business outcomes.