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T Magazine: Tax insight for business leaders
Tax as a catalyst for a more sustainable future.
Sustainability has moved from being a "nice to have" to a "must have" for today's business leaders. There is now a recognition that sustainability is not just good for reputation; it is also good for business. And increasingly, this means more than risk management or cost reduction through improved energy efficiency. Market-leading companies now see that a clear sustainability strategy allows them to develop better products, make their workforce more productive and grow more quickly than their competitors.
The reasons for this high-level attention are well understood. Growing concern about climate change, resource scarcity and the impact of business on society are encouraging companies to think more carefully about the impact of their short-term decisions on their long-term viability. Customers, investors and other stakeholders are all scrutinising business more carefully and placing increasingly stringent demands and expectations on corporate behaviour. The days when corporate social responsibility could be left to the public affairs department are fast becoming history - companies now need substance, as well as form, in their sustainability pledges.
As well as coming under the scrutiny of boardrooms, sustainability is also forming a key part of fiscal policy. Around the world, regulators are ramping up the use of a range of indirect taxes, including exploring new carbon taxes, to raise revenues and steer companies toward more responsible energy usage. At the same time, there is a growing availability of tax credits and incentives to stimulate investment and innovation into sustainable industries and business models.
Although individual jurisdictions differ in their approach, it seems clear that taxes will form an important part of international efforts toward more sustainable business practices. In this fast-changing environment, it is becoming increasingly important to have the right people and processes in place to understand the impact of these taxes and incentives on their business. Clear lines of communication between the tax function and the business will become increasingly important. Only then can the company be confident that it is taking full account of all green taxes and incentives in its investment planning.
In this issue of T Magazine, we explore the sustainability agenda in the context of a rapidly evolving fiscal and regulatory environment. We look at how leading companies are responding to calls for greater corporate responsibility from stakeholders, and discuss the importance of cost management and tax planning as a component of a sustainability strategy.
I hope you find the publication valuable and stimulating.
Stephan Kuhn, area tax leader for the Europe, Middle East, India and Africa (EMEIA) region at Ernst & Young