24 February, 2020
Just when you thought sustainability reporting couldn’t get any more thrilling, combine it with tax and you’re set to have the time of your life.
This month, the Global Reporting Initiative launched a new tax transparency standard. GRI is a widely adopted sustainability reporting framework that allows companies to report progress in a transparent and standardised way. Having a section for tax seems a very logical move, although it does raise some question, chief amongst them being isn’t this a matter of regulation? Don’t companies have to do this anyway?
Well the short answer is no, or not comprehensively at any rate. The new standard requires companies to report on their business activities and payments within tax jurisdictions, as well as their approach to tax strategy and governance. Which is well above and beyond the current norm.
Being clear on tax and contributing to the economies and societies of which businesses are part is an essential – if obvious – part of their responsibility, so we commend this. Money generated from taxes is what will fund, among other things, the much-needed structural changes that will help us transform into low carbon economies. And tax avoidance is a major contributor to inequality. Of course, tax transparency doesn’t guarantee good tax practices, as demonstrated by the Fair Tax mark in the UK, but it might prompt someone to think twice as they exploit yet another loophole in tax laws.