The fundamental role and purpose of business in society is under an intense level of scrutiny in the current climate. Historically, the main priority of business has been to generate profit and return on investment for shareholders. In today’s world, however, stakeholders are increasingly expecting business to help address the big issues facing society such as COVID-19, climate change, sustainability and societal inequalities. The expectation is for businesses to demonstrate how tackling these issues shapes the organisation’s purpose, strategy, and vision.
The development of Environmental, Social and Governance (ESG) standards are one of the main products of these stakeholder-driven expectations placed on businesses. These metrics are broad and can range from standards such as those on energy consumption, waste disposal, and water; to standards on tackling corruption, protecting human rights and, more recently, tax.
Through this ESG lens, tax, and transparency around tax, is increasingly being incorporated into the governance heading (or under the “Prosperity Pillar”, per the World Economic Forum’s metrics), with businesses expected to address stakeholder concerns on the topic and publicly disclose how their tax strategy helps address issues around climate change and economic inequalities.
It is worth noting that, while there were recent developments in the US and EU on public country-by-country reporting, here we will focus on voluntary disclosures.
How is the voluntary tax transparency landscape changing?
