What are the ESG themes?
ESG criteria are used by organizations to assess the sustainability and social impact of activities. While the specifics can vary depending on the source and sector, there are some general themes that are emphasized.
Environmental
Environmental examines how a company contributes to sustainability and how it responds to environmental challenges, such as waste (recycling), greenhouse gases (emissions) and the production of, for example, plastic (production). This can include existing taxes that stimulate eco‑friendly behavior or are based on a ‘polluter pays’ principle. While it’s important to be in control of your tax risks and to take advantage of tax opportunities, it’s also important to ensure that you are compliant with current tax legislation and regulations on sustainability. Developments are rapidly taking place in the field of tax sustainability, not only at the national level but also at the European and even at the global level.
Social
Social examines how an organization treats its employees, for example, working conditions, health and safety. Responsible tax is an extension of corporate responsibility: recognizing that tax is the entry-level price we pay for a civilized and caring society. Tax as a corporate responsibility issue and organizations that pay their fair share of tax have grown in importance in recent years and are now considered priorities. An open and transparent dialog between companies, tax authorities, non-governmental organizations (NGOs) and consumers is the key to building trust. To stimulate this, an increasing number of tax benefits are available for organizations that pursue these social objectives.
Governance
Governance examines how a company is managed by looking at factors such as its remuneration policy and tax strategy. By being transparent about your tax position you create trust among your stakeholders. The starting points for this are: bringing structure to your reports, addressing the expectations of stakeholders and clearly explaining how your organization helps in tackling today’s challenges. One way in which our team of advisors can help you is by performing a PACT analysis (Purpose, Approach, Contribution and Tax).
Need ESG advice?
ESG is a trend that cannot be ignored in the tax world. It is crucial for tax managers to be aware of the impact of ESG on tax trends and to adjust their strategies accordingly. We offer comprehensive support and advice to help companies navigate this complex and rapidly changing tax landscape.
Contact us to discover how we can help you optimize your tax strategies in light of ESG.
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Frequently asked questions
What is ESG legislation?
ESG legislation is a set of rules and guidelines designed to promote the sustainability and social responsibility of companies. This legislation applies to various sectors and aims to increase transparency and accountability, as well as to encourage sustainable investments. Fiscal aspects are a part of this.
What are ESG standards?
ESG standards are guidelines and criteria that companies use to assess and improve their sustainability and social impact. These standards help companies to be transparent about their environmental and social performance. Within taxation, we know the following standards: Global Reporting Initiative (GRI) and the Tax Governance Code (from VNO NCW). Additionally, the Corporate Sustainability Reporting Directive (CSRD) has a connection with taxation
Is ESG reporting mandatory?
Yes, ESG reporting is increasingly becoming mandatory for companies, especially within the European Union. The obligation for ESG reporting is primarily established in the Corporate Sustainability Reporting Directive (CSRD), which replaces and expands the existing Non-Financial Reporting Directive (NFRD).
