Trust in Resilience: Taking a tax lens to ESG

In Malaysia, it is currently mandatory for public-listed companies to disclose their management of material economic, environmental and social risks and opportunities via a Sustainability Statement in their annual reports. This is further amplified by the Malaysian Code on Corporate Governance 2021, which advocates board leadership integrating sustainability considerations in their corporate strategy, governance and decision-making. One may ask: how does taxation come into the ESG equation and what is taxation’s vital role in ESG? While not normally transparent, companies’ tax strategies and payment of taxes would be one of the largest contributions made to governments and social causes around the world. Taxation intersects with ESG initiatives, especially around tax policies, tax strategies, tax incentives and tax reporting. By including tax metrics in their ESG initiatives, businesses would improve their ability to communicate their contributions to their stakeholders and derive greater value from investments made.