annual review indst 2024 public - Flipbook - Side 28
28
EOS
Responsible Tax Practices
In 2024 we published our Responsible Tax Principles,
which set out our guidelines on practices and
disclosures. Joanne Beatty explains the rationale.
Asset owners have a responsibility to consider the tax
implications of their investments and to ensure that the
companies in their portfolios follow responsible tax practices.
Companies engaging in aggressive tax practices face
financial and reputational risks, prompting investors to seek
increased tax transparency.
Investors want to know that their portfolio companies are
paying taxes in line with business activities and complying
with the letter and spirit of the law. They want to understand
the extent to which a company is relying on access to
subsidies and credits, or any artificial shifting of profits to
operations in low tax jurisdictions. There is a risk that
companies deploying aggressive tax strategies may also
have weak corporate governance and compliance practices
more generally, leading to wider concerns.
Responsible tax is a key theme in our engagement with
companies. Two years ago, we wrote about our increased
focus on responsible tax practices, highlighting the financial
and reputational risks to investors from companies’ aggressive
tax practices.1 We emphasised that investors needed sufficient
information to gauge a company’s tax position and
governance approach, as well as to anticipate future risks to
their holdings. Through our tax engagement with companies
we are seeking increased transparency, including countryby-country reporting in line with international standards such
as the GRI Tax 207. Our responsible tax focus continued
in 2024 with the achievement of several milestones.
Our responsible tax principles,2 published in 2024, set out our
guidelines on responsible tax practices and disclosures.
The principles are primarily directed at boards, executives
and tax practitioners. We expect companies to articulate
clearly to shareholders how their tax practices meet the
principles in a manner appropriate for their specific situation.
We have aligned our 2025 regional vote policies, corporate
governance principles and engagement approach with our
responsible tax principles.
1
EOS Public Engagement Report
EOS Responsible Tax Principles Doc July 24
3
EOS Public Engagement Report
4
Approach to tax & transparency
2
Tax-related shareholder proposals
In the US, responsible tax remained the subject of
shareholder action. Tax-related shareholder proposals were
filed by charity Oxfam at Chevron, Kosmos, ExxonMobil and
ConocoPhillips.3 Two of the four proposals were successfully
challenged by ConocoPhillips and ExxonMobil on
procedural and ordinary business grounds respectively. While
the two remaining proposals did not receive majority
shareholder support, Chevron increased its tax transparency
releasing an updated tax transparency report.4
We continued our engagement with priority watchlist
companies focusing on the four critical areas in our
responsible tax principles: policy, governance, stakeholder
engagement and transparency. During the year we
engaged with tax experts at General Motors, Coca-Cola,
Barclays and Bayer among others, which provided us with
useful insights into best practices. In our engagement with
General Motors’ chief tax officer, the company
acknowledged the importance of responsible tax practices,
working with the tax authorities through the compliance
assurance process, which helps to reduce the overall risks
associated with tax practices.
At Coca-Cola, we discussed the company’s tax strategy
and disclosure with the head of tax, who confirmed that
the company has a plan to report taxes paid on a countryby-country basis as required under upcoming EU
legislation. We appreciate the detailed tax reporting that
Barclays provided against the GRI Tax 207 standard and
encouraged the bank to go further by providing more indepth reporting on a country-by-country basis. We continued
to engage with Bayer, seeking more transparency on its tax
policies and a willingness to expand its country-by-country
reporting to more countries.
We will continue our responsible tax focus, seeking to
achieve engagement outcomes in line with our principles.
Joanne Beatty
Theme co-lead:
Natural Resource Stewardship
