It’s clear to see that governments and cities around the world are introducing more sustainability taxes, legislation and incentives. The key question though is - what role do associations play to support members to navigate this increasingly complex regulatory environment?Increasing international regulation
In September 2015, world leaders adopted the 2030 Agenda for Sustainable Development (which included 17 Sustainable Development Goals) and in December 195 world leaders signed the UN Climate Treaty. Both agreements were focused on galvanising private and public collaboration to accelerate transformative change, and unleash the investments needed to lead our world towards a low carbon, resilient and sustainable future.
As key instruments in making this change happen, governments will be increasingly implementing sustainability incentives and tax programmes. For example, KPMG in their Green Tax Index – analysed 23 countries and highlighted 200 tax incentives and penalties of relevance to corporate sustainability.
The role of associations
Industry associations have a great opportunity to develop programmes to help their corporate members cut through the complexity of different sustainability policies and economic instruments around the world. They can fulfil a need to advise businesses on how to improve performance, implement long-term sustainable tax strategies and understand and communicate the total tax contribution they make to society.
Knowledge and awareness gap
Research highlights a clear gap in knowledge and awareness, and that business is not yet maximising the opportunities. EY in their Sustainability Tax Survey gauged the level of involvement of corporate tax departments with their companies’ broader environmental and sustainability initiatives. Of the 223 Senior Executives that responded only 28% of tax directors believe their company has a sustainability strategy or is developing one.
Only 16% of companies that have an environmental sustainability strategy said their tax or finance departments are actively involved. Furthermore only 17% of respondents said their companies were aware of and use available incentives to reduce costs related to environmental sustainability initiatives. 37% were unaware of any such incentives.
Closing the gap
At MCI we see that associations have an opportunity to develop member initiatives in four key areas:
Transformational change required
As environmental and social challenges gather pace, future business value depends on carving competitive advantage out of complex and unpredictable risks. Associations have a key role to play to support their members to navigate this labyrinth of risks, align with the UN sustainable Development Goals and build capabilities for business to become more transparent and sustainable.
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