Sustainable tax governance: a shared responsibility

Abstract

Governments and businesses share the responsibility for sustainable development, the environmental, societal and economic aspects of which are expressed in Sustainable Development Goals (SDGs) and environmental, social and governance factors (ESG). Tax is fundamental to collaborative steps towards sustainability and should therefore be integrated into both public and corporate sustainability agendas. Corporate tax governance should reflect the organisation's purpose, values and principles geared towards its sustainability commitment. Sustainable tax is a boardroom responsibility. Companies committing to SDG and ESG objectives should build on CSR, which should inform sustainable corporate (tax) governance. This requires that the ethical obligation to go beyond (strict) compliance with the law be viewed as an obligation to pay a fair share of tax and be proactively transparent to enhance accountability to a wide set of stakeholders. Important challenges are the change of mindset needed to integrate tax into the ESG framework and the design of a (public transparency) benchmark which provides detailed tax data to enable a proper analysis of corporations' substantive tax performance.

Keywords: sustainability, public governance, corporate governance, stakeholder theory, shareholder primacy, taxes, tax governance, Sustainable Development Goals (SDGs), environmental, social and governance factors (ESG), CSR, beyond compliance, fair share, accountability, transparency, public country-by-country reporting, corporate sustainability