ESG tax reporting and disclosure services

Elevating your ESG tax agenda

From voluntary commitments to mandated obligations, sustainability reporting is becoming the focus for companies worldwide – and South Africa is no exception:

The National Treasury released the South African Green Finance taxonomy in April 2022 as a classification system that defines a minimum set of assets, projects and sectors that are eligible to be defined as ‘green’ or environmentally friendly. The expectation is that a range of South African regulatory authorities will provide guidance and undertake assessments to inform the development of future regulatory instruments.
The Johannesburg Stock Exchange (JSE) has a history of promoting strong governance and sustainability disclosure globally. Locally, the JSE has existing requirements for ESG disclosure through its links to the King Codes on corporate governance. It has also issued Sustainability and Climate Change Disclosure Guidance, aiming to promote transparency and good governance and guide listed companies on best practice in ESG disclosure.
The Companies & Intellectual Property Commission (CIPC) introduced ESG reporting alongside XBRL filings by public and state-owned companies in Q4 2023. Initially voluntary, the initiative transitions to mandatory disclosure as of the financial year 2025-26. The CIPC’s aim is to enhance transparency and accountability by highlighting the framework that drives internal decision-making.

Integrating tax into your ESG agenda

Businesses are increasingly adopting and articulating tax principles aligned to their broader ESG agenda. This is a critical element in providing them with their social licence to operate, which is ever more important to shareholders, investors and wider communities.

Tax is a key ESG metric: external stakeholders are interested in your business’s tax behaviours and expect to see evidence of how your business is responsible and transparent in terms of aggressive tax strategies, along with the level of economic contribution the business makes to society.

Businesses are publishing wider tax statements, strategies and control frameworks, as well as signing up to transparency standards: there are a number of key organisations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change. These include the OECD/G20 Principles of Corporate Governance, the GRI (Global Reporting Initiative) for comprehensive tax disclosure and the Stakeholder Capitalism Metrics of the International Business Council (IBC) of the World Economic Forum.

Finance and tax executives must be able to have informed conversations with their stakeholders about tax and wider economic contributions. This becomes vital in the M&A space where an investor’s ESG programme will include an evaluation of the investor’s and investee entities’ tax control framework. This is an essential part of the Principles of Responsible Investment (PRI).

How BDO can help

BDO helps businesses demonstrate and substantiate how they are responsible and transparent in their approach to tax matters and tax payments. Greater transparency and improved tax governance mean providing relevant and meaningful data and insights about your tax strategy and tax contributions across all the jurisdictions in which you operate.

Our services include:

The design and implementation of a responsible and transparent tax strategy and policy
Assistance with drafting or reviewing your tax statements, reporting or disclosure for your integrated reports
Performing a gap analysis of your ESG tax metrics and designing implementation plans
Designing, implementing and embedding a tax policy and/or digital tax governance
Designing and implementing a tax control framework.