State of Sustainable Tax

Early days, but growing attention by U.S. execs evident in recent polling results

Brett Weaver

Brett Weaver

ESG Tax Leader, KPMG US

+1 206-913-6697

March 10, 2021
| Company executives1 who attended the KPMG Tax Governance Institute webcast, The Intersection of ESG & Tax, on January 22, 2021, weighed in on where their organizations stand on sustainable tax initiatives. By responding to a series of polling questions,2 the webcast attendees revealed the state of their approach to tax planning and compliance in light of their company’s business goals and approach to environmental, social and governance (ESG) principles. The majority (82%) of polling respondents were U.S.-based execs, providing directional insights on how tax and ESG are intersecting in the United States today and where the concept is likely to go.

Polling results

Sustainable tax initiatives are quickly gaining steam

Q: Does your company have a tax policy and/or tax strategy that is substantially focused on sustainable tax principles? n=439
Although most polling respondents do not have express policies focused on sustainable tax principles (55%), a meaningful share of execs has made it a priority with accountability (30%). This share is expected to grow rapidly in the near future, with nearly a third of respondents (31%) planning to adopt, for the first time, a sustainable tax policy and/or initiative.3

KPMG IMPACT Tax Leader Brett Weaver explains, “Greater attention on sustainable tax principles is taking a significant foothold in the United States. We hear it from clients, and we can look to the experience in Europe, where ESG tax initiatives have been underway for a longer time.” For example, a KPMG in Sweden study, shows rapid growth in tax transparency. In 2014, 36% of the largest listed Swedish companies had tax transparency initiatives, but by 2019, that had more than doubled to 73% of companies.4


No — Our tax policy/strategy is not foused on sustainable tax principles.

Yes — Our tax policy/strategy has been approved by our board and is part of our board's risk committee charter.

Yes — Our tax policy/strategy has been approved by our company's executive team.

Yes — But no internal stakeholder outside the tax function are involved.

Company values driving sustainable tax initiatives

Q: What is the most significant driver of your company’s sustainable tax initiatives? n=493

For companies with sustainable tax initiatives, core values and stakeholder ESG principles were reported by more than two thirds (68%) of execs as primary drivers of their efforts. Company reputation, and investing indexes followed as significant drivers.


Keeping with our company’s core values

Aligning tax with our overall company ESG initiatives

Enhancing and protecting our brand reputation and public reputation

Scoring well on third-party sustainable investing indexes (e.g., Dow Jones Sustainability Index)

Is the Board involved? If yes, investor demands may carry significant weight. Where sustainable tax initiatives are part of the Board’s risk charter,5 a third (33%) of these respondents viewed scoring well on sustainable investor indexes as the most important factor driving their sustainable tax efforts, followed by the company’s core values (22%). In contrast, where the Board is not involved in the company’s sustainable tax initiatives, core values are viewed as the most important driver (34%), whereas appealing to sustainable investor scores is the least important driver (only 8%).

What’s next on the sustainable tax front?

Q: What is your company’s next big “to-do” for your sustainable tax initiatives? n=400

Most execs reported that they are at the early stages of the sustainable tax journey, with 31% just getting started and another 45% in the building stage. Of those companies already on the journey, nearly half (47%)6 are looking at enhanced transparency around the taxes they pay. A full one quarter (25%) said their company doesn’t have a sustainable tax initiative.






Getting started (e.g., developing a tax code of conduct, tax policy and/or sustainable tax strategy)

Developing our tax governance and tax control framework that supports our sustainable tax policy/strategy

Providing more public transparency around the taxes we pay

Both enhancing our governance/controls and more external transparency

Nothing, we don’t have a sustainable tax initiative

Moreover, drilling down by where the respondents sit in the organization, revealed a gap between finance and tax execs and the business. It appears that the board of directors and other business teams are more open to increased public transparency around the taxes their companies pay than are their finance and tax teams—with 32% versus 20%, respectively, looking at external tax transparency as their next step on the sustainable tax journey.

Tax disclosures: Sticking to what's required, so far

Q: How transparent is your company regarding tax? n=400

Polling respondents reported that they are largely disclosing tax information only to the extent it is legally required (82%). Less than a fifth of these companies (19%) publish their tax policy/strategy, while only 5% provide substantive ESG tax disclosures. However, as noted above, a meaningful number of companies may soon be willing to disclose more information about the taxes they pay (21% of respondents currently looking at such measures).


Our tax disclosures are limited to what we are legally required to disclose (e.g., in our public financial statements)

We disclose our commitment to following our tax policy/strategy but do not publish them

We publish our tax policy/strategy

We publish our tax policy/strategy and include a substantive “tax section” in our ESG report

Tax function not playing a significant role in ESG

Q: What role does the tax function play in your company’s ESG initiatives? n=496

Polling respondents also noted that the tax function currently does not have a strategic seat at the table for their company’s ESG initiatives, with nearly half of respondents (47%) reported no involvement at all. and the other half of respondents with involvement largely limited to ESG tax incentives and/or base-level disclosures of tax principles (53%).

“Yet, we expect this to change quickly,” says Weaver. “We envision that a confluence of social and regulatory changes will soon force greater collaboration between tax and ESG groups for U.S. multinationals. The growing support within Europe for public country-by-country tax reporting,7 the increased importance of ESG on the U.S. corporate agenda, and as this survey indicates, the growing number of companies evaluating enhanced public transparency around their tax affairs will necessitate a new norm of close collaboration between tax and ESG leaders.”


Mostly focused on tax incentives (e.g., green tax credits) to help fund our initiatives

Mostly focused on sustainable tax practices (i.e., we do not engage in aggressive tax strategies)

Both ESG-related tax incentives and sustainable tax practices

None or very little


[1] Breakdown of polling respondents: 42% work in the tax function; 34% work in the finance function; 3% are board members; and the balance (17%) work in another function.

[2] Response percentages may not add up to 100% due to rounding.

[3] Refer to polling question “What is your company's next big "to-do" for your sustainable tax strategy?”, where 31% of respondents indicated they are starting to develop a tax code of conduct, tax policy, sustainable tax strategy, or similar initiative.

[4] Tax Transparency Study (2020), KPMG AB (Sweden).

[5] Refer to polling question "Does your company have a tax policy and/or tax strategy that is substantially focused on sustainable tax principles?"

[6] 21%/45%. Of the 45% (24%+9%+12%) of respondents who have started their journey, and among these respondents, 21% (9%+12%) are currently examining transparency around taxes.

[7] See “Council approves greater corporate transparency for big multinationals,” European Council (March 3, 2021).