An increasing focus on ESG from multiple stakeholders has meant a fundamental shift in how UK businesses operate, incorporating sustainability, responsible governance, and social responsibility into their core strategies. Tax, often viewed as a financial function, cuts across any ESG agenda and adds significant value.
Your expertise in finance and taxation positions you as a key player in your organisation's ESG journey. From mitigating tax-related risks associated with ESG initiatives to optimising incentives and reliefs for sustainable practices, your insights can contribute significantly to the broader ESG agenda. Meeting tax compliance and governance requirements contributes considerably to the perception of your organisation with multiple stakeholders.
Here, we explore the intersection of ESG and tax across three key areas, offering valuable insights into how you can make a meaningful impact.
Governments across the world have set ambitious environmental targets, and they need businesses to help them achieve these. The tax system is one lever governments can pull to put an additional cost onto activities or products seen as environmentally damaging. The UK already has a number of environmental taxes, as do many countries forming part of UK business supply chains. Environmental taxes are only likely to increase and widen in scope.
Your organisation can proactively engage with environmental taxes to enhance your net-zero goals. It's not just about compliance; it's about leveraging tax strategies to add value to your sustainability agenda. From horizon scanning for upcoming tax changes to the implementation of transformative shifts, discover how tax can be a catalyst for positive environmental change.
Effectively mitigate costs associated with environmental taxes and better understand their impact on your bottom line.
Governments can also encourage the meeting of environmental targets through incentivising certain activities. Whether this is directly through the tax system (eg Research & Development relief, capital allowances) or through other types of support like grants, business can use this support to help pay for ESG-related improvement and change programmes.
By staying informed and proactive, your business can position itself to take full advantage of these incentives, ultimately driving positive change while enhancing the financial returns.
Tax governance is becoming an increasing priority for businesses of all shapes and sizes. Changes in tax legislation continue to focus on processes, controls, governance and corporate responsibility. As we navigate this ever-evolving landscape, it's crucial to comprehend the implications and requirements it places on your business.
With potential penalties and sanctions all the way up to criminal prosecution, the compliance implications are clear, but the impact on deals and due diligence cannot be understated either. As UK businesses engage in transactions, these regulations add complexity and can be costly if left untreated. However, by staying informed and proactive, you can navigate this landscape effectively.
Unearthing the role that tax can play in reducing your organisation's environmental impact
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