In a world that has to address the risks posed by climate change, social inequity, financial instability and other disruptions, companies are becoming increasingly conscious about the importance of corporate responsibility, with a particular focus on the sustainability agenda. Companies have recognized the need to take urgent social and environmental action and have started laying down a long-term sustainability strategy interwoven with building long-term value.
Investors are now looking at the sustainability policies of target companies when deciding where to invest. Regulators have become more critical, intending to encourage businesses to genuinely green their operations. Consumers are beginning to consider the sustainability-related activities of companies when flexing their purchasing power, actively choosing more sustainable options despite higher price points.
Sustainability is defined as the balance between the economy, environment, and equity and is usually referred to as the ability to maintain or support a process continuously over time. The UN World Commission on Environment and Development defines sustainable development as progress that “meets the needs of the present without compromising the ability of future generations to meet their own needs.” In today’s business world and in the process of being sustainable, companies ought to make use of scarce resources responsibly.
This is why sustainability, and how a sustainable and effective tax ecosystem can advance it, was a key focus for the recently held 2nd SGV Tax Symposium. We see that Tax and Sustainability are critically connected in achieving our Tax Vision, where we foster transparency, inclusivity, and responsible tax practices, working with the regulators to create a level playing field that benefits businesses, individuals, and our communities.
With a strong and efficient tax system, governments and regulators have the resources to promote incentives, policies and regulations that strengthen the country’s sustainability programs. In turn, when the country moves along a more sustainable and efficient socio-economic path, it creates more opportunity for increased tax revenue and compliance from responsible private and corporate citizens.
We can already see this in some jurisdictions where governments are encouraging citizens and businesses to make the necessary changes in lifestyle, manufacturing, packaging, and purchasing decisions that help meet sustainability targets. At the same time, governments have been leveraging indirect tax policies to help achieve sustainability targets. It is not uncommon for governments to use both the policy stick (i.e., carbon levies, plastic packaging, excise taxes, waste management fees) — and carrot (i.e., incentives) for sustainable development.
During the Conversation with C-Suites panel at the 2nd SGV Tax Symposium, executives from the real estate, investment management, and mining sectors emphasized how their respective industries promote sustainability.
Robinsons Land Corp. (RLC) Chief Financial, Risk, and Compliance Officer, Kerwin Tan, discussed how the real estate business spearheads sustainable solutions in its operations. In RLC, this includes integrating solar and other renewable energy across all Robinsons malls, transitioning to LED lights, revolutionizing workspaces, and embracing digital transformation by developing mobile applications and portals that will provide easy access to Robinsons’ products and services. Their stakeholders, which include customers, tenants, and employees, are at the forefront of providing these strategic, sustainable solutions. To measure the positive impact of these projects, RLC has a data management system that allows it to effectively record the changes in its energy consumption.
Meanwhile, President and Chief Executive Officer of Global Ferronickel Holdings, Inc. Dante Bravo said that the mining sector, on a macro level, is currently focused on sustainability. Mr. Bravo said Global Ferronickel has embedded environmental management solutions in its mining operations, from the clearing of vegetation, stripping of topsoil, mining, truck loading and hauling, and stockpiling, among others. He added that the company continues to adhere to global environmental standards (e.g., ISO certifications) and continues to develop and support host and neighboring communities with health assistance, educational and livelihood programs, and employee welfare, among others.
While the panelists appreciate and recognize the current actions of the government in promoting sustainability, they also felt that more can be done to promote sustainability goals in various sections of the economy. The panelists agreed that the government should consider granting even more incentives, in addition to the current benefits already granted by current law, to encourage more businesses to invest in sustainable projects. It was further emphasized that this initiative should be viewed as a long-term investment that will make the country more competitive, attracting more investment, which in turn will translate to revenue via compliance and payment of taxes.
The sustainability journey itself may be challenging, but the required results must be delivered sooner rather than later. Many have taken the first steps to design tax frameworks and risk management methodologies to accelerate the transition. Organizations should adjust their strategies, stay abreast of policy uncertainty, and ensure that they drive corporate sustainability to create long-term value.
This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinions expressed above are those of the author and do not necessarily represent the views of SGV & Co. or EY.
Fabian K. Delos Santos is the head of Tax of SGV & Co.