Weaving Taxes into the Green Fabric: How Indian Businesses Embrace ESG with Fiscal Transparency
MUMBAI (India CSR): Tax and sustainability – an unlikely duo? Think again. A recent study by PwC India reveals that Indian businesses are increasingly finding synergy between these seemingly disparate concepts. Titled “Tax Transparency in ESG: Insights into Indian businesses and their sustainable practices,” the report sheds light on how tax considerations are being woven into the fabric of corporate ESG frameworks.
Incentivizing Green: A Call for Policy Action
The survey, conducted between April and July 2023, polled nearly 250 tax heads, sustainability leaders, CFOs, and CXOs of Indian businesses. It paints a clear picture: 93% of respondents believe tax incentives are crucial for ESG adoption. Nearly 60% are confident in the need for policymakers to introduce such incentives, with preserving the environment topping the list of preferred areas for investment.
This appetite for green tax breaks extends beyond environmental initiatives. Inclusion and diversity (54%) and addressing social vulnerability (37%) also emerge as potential beneficiaries of fiscal nudges. It’s a resounding call for policymakers to consider tax as a strategic tool to drive responsible corporate behavior.
Transparency Gap: Room for Improvement
While the desire for ESG-linked tax breaks is evident, the report exposes a gap in current practices. 75% of respondents lack a public tax transparency report, highlighting a potential disconnect between intentions and actions. Despite over 70% acknowledging stakeholder and regulator interest in tax transparency, the lack of standardized disclosure frameworks indicates a need for robust systems.
The limited adoption of internationally recognized standards like GRI 207: Tax further underscores this gap. However, it also presents an exciting opportunity for growth. By embracing such frameworks, Indian businesses can not only enhance their global standing but also unlock the potential of standardized disclosure for stakeholder trust and engagement.
Voluntary Disclosure on the Horizon: TTC Takes Center Stage
Looking ahead, the survey paints a promising picture. 48% of businesses plan voluntary tax transparency initiatives within the next three years, with the Total Tax Contribution (TTC) framework gaining traction. The TTC framework, by providing a comprehensive view of a company’s tax contribution to public finances, empowers stakeholders with valuable insights.
Net-Zero Ambitions and Supply Chain Concerns
The commitment to net-zero is also strong, with half the surveyed businesses setting sights on this goal. Notably, 48% aim to achieve it by 2030, showcasing ambitious green targets. However, concerns surrounding carbon taxes in various jurisdictions (67% of respondents) reveal potential supply chain disruptions.
This highlights the critical role of robust carbon measurement systems and transparent tax reporting across geographies. By integrating these practices, businesses can not only mitigate risks but also leverage the opportunities arising from evolving carbon tax frameworks.
From Tax Transparency to Sustainable Growth
The PwC India study paints a compelling picture of Indian businesses embracing ESG, with tax transparency emerging as a key differentiator. As businesses weave fiscal considerations into their sustainability strategies, a win-win scenario emerges. Increased transparency can boost stakeholder trust, while well-designed tax incentives can accelerate the transition to a greener future. The time is ripe for Indian businesses to capitalize on this synergy and cement their position as responsible players in a globalizing, sustainable economy.
So, what are the key takeaways? : ESG
- Indian businesses are increasingly recognizing the link between tax considerations and ESG practices.
- There is a strong demand for tax incentives to support ESG adoption, with environmental initiatives, inclusion and diversity, and social vulnerability emerging as potential beneficiaries.
- A significant gap exists in tax transparency practices, with a lack of standardized reporting frameworks and limited adoption of international standards.
- Voluntary tax transparency initiatives like the TTC framework are gaining momentum, indicating a shift towards greater disclosure.
- Businesses remain concerned about the impact of carbon taxes on their supply chains, highlighting the need for transparency and robust carbon measurement systems.
- By integrating tax transparency into their ESG strategies, Indian businesses can mitigate risks, capitalize on opportunities, and contribute to a sustainable future. The journey towards weaving taxes into the green fabric has begun, and the future looks promising.
This is just the tip of the iceberg. For each heading, we can further elaborate with insightful data, relevant quotes from the survey, and real-life examples of Indian businesses successfully navigating the tax-ESG landscape. By adding deeper analysis and actionable insights, we can turn this into a comprehensive and valuable resource for businesses, policymakers, and anyone interested in the intersection of tax and sustainability in India.
(India CSR)
India CSR offers strategic corporate outreach opportunities to amplify your brand’s CSR, Sustainability, and ESG success stories.
📩 Contact us at: biz@indiacsr.in
Let’s collaborate to amplify your brand’s impact in the CSR and ESG ecosystem.
