Why organizations should enlist the tax department in designing ESG strategy

When formulating ESG strategy, don’t forget to leverage your tax department

Company leaders increasingly look to gain shareholder value and stakeholder support through environmental, social and governance (ESG) initiatives. But too often, the role the tax department has to play in this strategy goes overlooked and under-leveraged.

A number of recent market and societal forces – from global climate change to increasing stakeholder capitalism and the fight for racial equity and social justice – have heightened the importance of a company’s ESG strategy. ESG is often used interchangeably with “sustainability” and “corporate responsibility,” and the term encompasses a variety of issues that impact a company’s short- and long-term value.

Stakeholders – customers and employees alike – are paying close attention to companies’ ESG activities and messaging, and that focus only continues to grow. EY research shows that investors are incorporating ESG into their investment decisions at unprecedented levels. Consumers, too, are looking at how companies address sustainability and social issues. They are making purchasing and brand loyalty decisions based on the information they find.

To stay relevant, companies need a balanced, thoughtful ESG strategy that is integrated into their operational DNA – and the tax department has a role to play in designing that strategy.