June 2021 | Convergence of Tax and ESG examines the sometimes-murky relationships between tax, strategy, transparency, and diverse stakeholder interests in pursuing economic, social, and governance (ESG) goals.
In this article, the KPMG authors—Manal Corwin, Matt McNeill, and Brett Weaver—outline two ways that tax intersects with ESG:
- In governments’ use of tax policies as carrots or sticks to achieve desirable ESG outcomes
- In the intensified scrutiny of where companies earn revenue and pay taxes, with a focus on corporate tax strategies, governance policies, and tax transparency as a measure of sustainable business practices.
These intersections expose tensions between the public’s and investors’ demands for greater tax transparency and corporations’ tax contributions and government’s capacity to use tax incentives to attract investment or to achieve other desirable ESG objectives. The authors conclude that it will be critical that all ESG stakeholders—including the public, investors, business, and government policy makers—understand the nuanced and complex interaction between tax and ESG and adopt a balanced and constructive way forward.
This article appears here with the permission of the Canadian Tax Foundation.