- Tax is an important area that should be informing a company’s environmental, social, and governance (ESG) policies.
- Tax policies and reporting standards inform the governance piece of ESG and offer an opportunity for companies to build transparent and reliable models for disclosure.
While ESG topics collectively might seem relatively new, governance arguably has been an area of focus much longer than environmental and social justice considerations, although perhaps through a different lens.
Corporate governance is the set of rules, processes, and policies that guide and govern a business as it operates and manages risk. Tax laws have existed since the 1800s, and the history, scope, and heavy regulations put in place to enforce these laws have affected the processes and controls that are part of any organization’s overall governance strategy.
Areas of tax that can inform the governance structure and ESG strategy of an organization include:
- Tax strategy, including a tax risk policy
- Tax transparency and reporting
- Tax process optimization
- Tax integrity