A recent PwC report reveals that about half of Indian businesses are committed to prioritising tax transparency in their ESG practices--a positive trend towards a cleaner and more sustainable planet
A recent survey conducted by PwC India has unveiled a notable shift in the priorities of Indian businesses, with 50 percent expressing a commitment to prioritise tax transparency within their Environmental, Social, and Governance (ESG) practices.
This trend underscores a growing alignment with global ESG trends and a heightened awareness of the pivotal role tax transparency plays in fostering responsible corporate behaviour, building stakeholder trust, and contributing to sustainable development.
The survey examines the changing landscape of tax transparency in Indian businesses with insights from around 250 senior executives across different industries.
According to the survey findings, 48 percent of businesses are gearing up to embrace voluntary tax transparency within the next three years, opting to disclose their total tax contribution (TTC). This move emphasises the significance of proactively sharing information about tax-related practices as a means to enhance their ESG profile and score, with 47 percent of respondents identifying a reputation for responsible tax behaviour as the primary driver for tax transparency.
Furthermore, an improvement in ESG profile and score (44 percent) emerged as the second most critical factor propelling businesses towards embracing tax transparency.
The survey sheds light on the nuanced understanding among Indian businesses regarding the potential benefits of sharing information about tax transparency practices. Recognising tax as the largest societal contribution made by companies, these businesses aim to establish a clear link between tax transparency, overall sustainability, and societal responsibility.
In a parallel development, the survey indicates a resounding commitment to net-zero goals, with 50 percent of Indian businesses surveyed having made a net-zero commitment. Of these, 48 percent are determined to achieve this ambitious target by 2030. This not only underscores a sense of urgency among Indian businesses in addressing climate change but also reflects a shared ambition to transition towards a low-carbon economy.
However, concerns loom large in the form of carbon taxes, with 67 percent of respondents expressing apprehensions about their potential impact on supply chains. To navigate this challenge, businesses are exploring the integration of holistic digitised carbon measurement systems across their value chain and transparency in taxes paid across various jurisdictions.
This strategic move is seen as a means to mitigate risks and capitalise on opportunities associated with evolving carbon tax frameworks.
Moreover, the survey highlights a resounding consensus among respondents on the relevance of tax incentives for the adoption of ESG practices, with 93 percent considering them relevant or very relevant. Interestingly, 86 percent of businesses express a desire to allocate tax incentives towards environmental preservation.
Beyond environmental concerns, there is substantial interest in utilising tax incentives for inclusion and diversity initiatives (54 percent) and addressing social vulnerability (37 percent).
In conclusion, the PwC India survey underscores a dynamic landscape where Indian businesses are not only prioritising tax transparency in their ESG practices but also leveraging tax incentives strategically to drive positive environmental and social impacts.