50% of Indian Businesses Prioritize Tax Transparency in ESG Strategies: Report
PwC India's survey on Tax Transparency in Indian Businesses conducted between April and July 2023 highlights a significant alignment of Indian businesses with global ESG trends, emphasizing tax transparency as a crucial component.
Indian businesses are trending towards tax transparency in line with global ESG standards, as per the survey.
Upcoming Trend: 48% of Businesses to Voluntarily Embrace Tax Transparency in Next Three Years.
Motivations for Tax Transparency: Reputation and ESG Enhancement Lead.
Indian Companies Recognize Benefits of Voluntary Tax Transparency for Sustainability and Social Responsibility.
Half of Indian Businesses Pledge Net-Zero Emissions, 48% Aiming for 2030 Target.
Survey Reveals Concerns: 67% Fear Impact of Carbon Taxes on Supply Chains.
Survey Highlights: 93% Find Tax Incentives Crucial for ESG Adoption.
The evolving landscape of global business has witnessed a significant shift towards sustainable practices, with companies increasingly prioritizing environmental, social, and governance (ESG) principles. In this context, PwC India’s survey on Tax Transparency in Indian Businesses, conducted between April and July 2023, explores the state of tax transparency as a pivotal component within the broader framework of ESG. This survey, based on insights from 250 senior executives across various industries, sheds light on the alignment of Indian businesses with global ESG trends, emphasizing tax transparency as a key element. The findings underscore the current status, challenges, and opportunities for businesses in integrating tax considerations into their sustainability strategies, providing valuable insights for stakeholders, policymakers, and businesses navigating the dynamic landscape of responsible corporate conduct.
Tax Transparency in Indian Businesses
In recent years, there has been a notable shift in the global business landscape towards sustainable and responsible practices. Companies now prioritize sustainability as a crucial aspect of their corporate strategy, making investments in this area and actively communicating their intentions, commitments, and achievements to stakeholders. PwC India’s survey, conducted between April and July 2023, delves into the state of tax transparency in Indian businesses. The findings underscore the pivotal role of tax transparency within the broader framework of environmental, social, and governance (ESG) principles.
ESG Alignment in Indian Businesses: A Deep Dive
The report, based on insights from approximately 250 senior executives spanning various industries in India, offers a comprehensive overview of how businesses are aligning with global Environmental, Social, and Governance (ESG) trends. Specifically, the report zooms in on tax transparency. Noteworthy findings reveal that among the respondents committed to net-zero targets (50%), 48% aspire to attain their goals by 2030. Consequently, this group is set to embark on accelerated decarbonization measures.
Incentivizing ESG: A Crucial Need
Approximately 60% of respondents emphasize the necessity to incentivize Environmental, Social, and Governance (ESG) interventions. The insights indicate that through incentives and policy interventions, governments can play a pivotal role in aiding businesses to fulfill their decarbonization commitments, tackle income inequality, and foster diversity and inclusion. These aspects form fundamental elements of ESG transformation for businesses.
Survey Insight: Emphasis on Total Tax Contribution (TTC)
One significant survey revelation is that 43% of surveyed companies regard Total Tax Contribution (TTC) as a pivotal element in tax transparency. This reflects an increasing awareness within Indian businesses regarding the significance of clear tax practices in building trust and cultivating a positive public image. Furthermore, nearly half of the respondents (47%) recognize the importance of a well-defined tax strategy, signifying a shift towards more responsible tax practices aligned with regulatory requirements.
Tax Transparency Implementation Gap
The report underscores a substantial disparity in the adoption of tax transparency practices, as 75% of businesses currently refrain from publishing their Tax Transparency Reports (TTRs). Nevertheless, there is a discernible trend indicating a heightened awareness among businesses about the imperative to embrace such practices. Additionally, the survey reveals that a mere 23% of Indian companies presently incorporate the GRI 207: Tax standard in their tax transparency-related reporting, highlighting both the limited uptake of international reporting standards and a notable opportunity for expansion in this domain.
Future Outlook: Growing Embrace of Tax Disclosures
The survey indicates a forthcoming surge in the widespread and voluntary adoption of tax disclosures. This trajectory aligns with global practices and evolving stakeholder expectations. Beyond showcasing a commitment to responsible corporate behavior, such transparency in tax matters plays a pivotal role in upholding the overall integrity of the tax system.
ESG Leader’s Insight on Tax Transparency
Sambitosh Mohapatra, ESG Leader at PwC India, remarked, “The intrinsic connection between tax transparency and ESG principles is increasingly apparent. Indian businesses are acknowledging the significance of incorporating tax considerations into their sustainability strategies, showcasing a dedication to responsible corporate conduct and societal contribution.”
Policy Interventions for ESG Incentives
The report highlights the crucial role of policy interventions in incentivizing Environmental, Social, and Governance (ESG) practices. It underscores the significance of coordinated measures, combining green taxes and incentives, to effectively achieve India’s climate goals.
Evolving Landscape of Tax Transparency in ESG
Sambitosh emphasized, “Our survey reveals the evolving nature of tax transparency within the ESG framework, signifying a crucial transformation in corporate India. The imperative to adopt transparent tax practices and communicate tax narratives effectively is vital for building trust with stakeholders and aligns with pioneering efforts supporting India’s climate ambitions. Embracing these practices not only showcases a commitment to ethical business operations but also has the potential to substantially enhance a company’s reputation among investors, customers, and the broader community.”
PwC India’s report stands as a valuable resource for businesses, policymakers, and stakeholders. It provides insights into the dynamics of tax transparency and its growing significance in today’s sustainable business environment.
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