A survey conducted by professional services firm, Ernst & Young, has found that companies in the US are missing out on potentially lucrative financial rewards, simply because of a lack of collaboration between their sustainability and tax departments.
The survey, called Working Together: Linking sustainability and tax to reduce the cost of implementing sustainability initiatives, found that only 28% of tax directors think their company has a sustainability strategy, in contrast to the 90% of chief sustainability officers (CSOs) questioned.
Out of the 223 senior executives that were interviewed, the ratio of CSOs and tax directors was 19% to 81% respectively, but it’s still an unbalanced and contradictory statistic.
“Reducing energy consumption and carbon emissions, switching to alternative energy and fuel sources, innovating for cleaner technologies and offsetting carbon emissions – all of these efforts have tax considerations”, said Paul Naumoff, global and Americas leader of climate change and sustainability services and cleantech tax Services at Ernst & Young.
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“Companies with tax departments that aren’t taking sustainability efforts into account are missing an opportunity.”
Corporate social responsibility (CSR) has developed in recent times to encompass sustainability, and this month’s Responsible Business Exhibition highlighted the abundance of innovation, inspiration and positive thinking buzzing around the space.
The Ernst & Young survey emphasised the lack of boardroom-level awareness at the tax incentives of promoting and implementing sustainability measures within businesses. This “represents missed opportunity”, reads the press release.
CSR in the UK came under fire in November, when a University of Leeds study claimed that data used by businesses to prove environmental commitments may be incorrect.
CSR lecturer at the university, Dr Ralf Barkemeyer, called some of the reporting “appalling” and at times, a “scandal”, leading to questions about the legitimacy of a 2011 KPMG report, which had CSR reporting down as at an all-time high.
Only last week, a group of global investors from 12 countries that manage over $3 trillion of assets called for improved corporate reporting on environmental, social and corporate governance (ESG) activities.
It is imperative that companies build CSR into their business plan as a cornerstone rather than a late addition and ensure that reporting is transparent.
It is becoming increasingly clear that businesses choosing to focus on ethical, sustainable and responsible issues will ultimately be the most profitable.
And it’s not just at a corporate level where the difference is made. Investing with ethical and sustainable criteria in mind can drive CSR initiatives to the front of the agenda.
To find out more, ask your IFA, or fill in our online form and we’ll help connect you to a specialist.