A recent PWC Survey reveals that among the respondents committed to net-zero targets, 48 percent aspire to attain their goals by 2030, underlining the resolve of corporate India to decarbonise their operations on a war footing
ESG principles have climbed to the top of corporate agendas, the clearest sign yet that global businesses are shifting decisively towards sustainable practices.
Endorsing this trend, PwC India’s survey on Tax Transparency in Indian Businesses, conducted between April and July 2023, says that most Indian businesses prioritise sustainability.
The PWC survey focuses on the state of tax transparency, as this is a pivotal component within the broader framework of ESG. Based on insights from 250 senior executives across industries, it reports the extent to which Indian businesses are aligned to global ESG trends, emphasising tax transparency as a key element.
The report highlights the challenges and opportunities for firms integrating tax considerations into their sustainability strategies, providing valuable insights for stakeholders, policymakers, and companies navigating responsible corporate conduct.
There has been a significant shift in the global business landscape towards prioritising sustainable and responsible practices in recent years. Companies are investing in sustainability and actively communicating their intentions, commitments, and achievements to stakeholders as a crucial aspect of their corporate strategy.
The report reveals that among the respondents committed to net-zero targets (50 percent), 48 percent aspire to attain their goals by 2030. Consequently, this group is set to embark on accelerated decarbonisation measures.
Approximately 60 percent of respondents emphasise the necessity to incentivise ESG interventions. The insights indicate that through incentives and policy interventions, governments can play a pivotal role in aiding businesses to fulfil their decarbonisation commitments, tackle income inequality, and foster diversity and inclusion. These aspects form fundamental elements of ESG transformation for businesses.
One significant survey revelation is that 43 percent of surveyed companies regard Total Tax Contribution (TTC) as a pivotal element in tax transparency. This reflects an increasing awareness within Indian businesses of the significance of transparent tax practices in building trust and cultivating a positive public image.
Furthermore, nearly half of the respondents (47 percent) recognise the importance of a well-defined tax strategy, signifying a shift towards more responsible tax practices aligned with regulatory requirements.
Around 60 percent of those surveyed believe that incentivising ESG interventions is necessary. The findings suggest that governments can help businesses meet their decarbonisation commitments, address income inequality, and promote diversity and inclusion through incentives and policy interventions. These are essential components of ESG transformation for businesses.
A significant survey discovery is that 43 percent of companies surveyed view Total Tax Contribution (TTC) as a crucial aspect of tax transparency. This indicates an increasing awareness among Indian businesses of the importance of transparent tax practices in establishing trust and building a positive public image.
Additionally, nearly 47 percent of respondents recognise the value of a well-defined tax strategy, indicating a shift towards more responsible tax practices that align with regulatory requirements.
Tax Transparency Implementation Gap
The report underscores a substantial disparity in adopting tax transparency practices, as 75 percent of businesses currently refrain from publishing their Tax Transparency Reports (TTRs). Nevertheless, a discernible trend indicates a heightened awareness among enterprises about the imperative to embrace such practices.
Additionally, the survey reveals that a mere 23 percent 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 tax disclosures' widespread and voluntary adoption. This trajectory aligns with global practices and evolving stakeholder expectations. Beyond showcasing a commitment to responsible corporate behaviour, 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 acknowledge 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 incentivising 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 emphasised, “Our survey reveals the evolving nature of tax transparency within the ESG framework, signifying a crucial transformation in corporate India. Adopting transparent tax practices and effectively communicating tax narratives is vital for building trust with stakeholders and aligning 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.”