• The Tax Responsibility and Transparency Index will be presented at the launch event on 19th April, co-hosted by MEP Paul Tang at the European Parliament in Brussels.

• The Index thanks to its benchmarking score offers concrete support to enterprises interested in improving their tax approach.

On 19 April, CSR Europe and Fair Tax Foundation will officially present the Tax Responsibility and Transparency Index at a dedicated launch event co-hosted by MEP Paul Tang at the European Parliament in Brussels.

The Index, developed after 12 months of extensive consultation with businesses, investors, and civil society organisations, is a tool for companies striving for the highest standards of responsible tax conduct.

The Index has been co-developed by CSR Europe with the Fair Tax Foundation, a UK-based not-for-profit organization that encourages international companies to adopt a fair and transparent approach to taxation, as well as pioneering multinational companies including Enel, Fortum, Grundfos, Orsted, and Vattenfall within the framework of the collaborative platform “Responsible Tax”.

WHAT IS THE tax index about?

The Tax Index is a radical new tool that enables enterprises to benchmark themselves against current legislation and best practices, including for instance the European Public Country-by-Country Reporting recommendations of GRI 207, questions on current tax reconciliation disclosure from the Fair Tax Mark, guidance from the United Nations Principles for Responsible Investment, and the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct.

Uniquely, the Index also considers and rates activities such as:

• Commitment to the letter as well as the spirit of the law

• Supply chain conduct

• Public policy and lobbying

• Involvement in tax controversies

• Public country-by-country reporting of not just corporation tax, but all taxes paid [i]

The Index has been constructed with a view to the future: be that pending legislation, emerging civil society consensus on best practice or the increasing demands of institutional investors and asset managers.

For example, legislation is increasingly emerging to mandate country-by-country disclosure of data on income, profit, and tax, but the Index is also looking for an accompanying narrative that explains areas of seeming disconnect. The Index applies to companies of all sizes, especially those with European operations.[ii]

How does the index work?

Participation in the Index creates a safe space for multinational enterprises to benchmark their performance in five areas:

• Policy and strategy

• Management and governance

• Stakeholder and engagement

• Transparency and reporting

• Contribution and narrative

Multinational businesses opting to be assessed against the Index’s comprehensive criteria will receive an overall score, rated out of 100, along with feedback presented in the form of an itemized scorecard.[iii]

By participating, businesses gain the opportunity to compare their practices and disclosures in 5 distinct areas against an anonymous leadership cohort, allowing for insights into their standing among peers. [iv]

Businesses will be free to disclose their scores should they wish, and stakeholders can take assurance from the fact that assessments have been undertaken by qualified professionals rooted in civil society. However, it makes equal sense for participating businesses to initially restrict scores to internal discussion whilst they enact improvement measures.

As the adoption of the Index increases, we anticipate businesses striving for higher scores to take advantage of peer-to-peer learning opportunities to improve their performance.

Spyros Perikleous, Senior Project Manager at CSR Europe said:

“It is high time that companies adopt responsible tax conduct and commit to upholding ethical standards. Tax responsibility and transparency are a fundamental aspect of corporate responsibility and a vital tool to promote sustainability. We believe that tax should be considered a core element of the sustainability agenda and the overall ESG practices of companies.

Civil society, investors, and most importantly policymakers, are demanding companies enhance their tax transparency and ensure compliance within the bounds of legal and moral frameworks by paying their fair share of taxes in every geographical location they operate.

We are thrilled to have collaborated with the Fair Tax Foundation and a group of leading multinationals and key stakeholders to develop the Tax Responsibility & Transparency Index. We believe this tool will enable companies to understand the current expectations and requirements from legal and voluntary initiatives in the area of tax transparency and responsible tax conduct.”

Greg Yates, Senior Ratings Manager at the Fair Tax Foundation said: “Civil society, investors, policymakers and many businesses now recognise the importance of tax transparency and responsible tax conduct. The ongoing emergence of legislation and voluntary initiatives in this area is encouraging, but this can also create confusion.

So, we are delighted to have worked with CSR Europe and pioneering multinationals on this year-long project, the result of which is state of the art tax toolkit that has been shaped by contributions from a wide variety of stakeholders.

The Index allows businesses to benchmark themselves against both pending legislation and emerging best practices. With assessments undertaken by qualified professionals that are rooted in (and trusted by) civil society.”

JOIN THE Launch event: 19 April 2024 AT THE EUROPEAN PARLIAMENT

The Tax Responsibility and Transparency Index will be launched on 19 April 2024 at the European Parliament in Brussels. The event will explore the current state of play of corporate tax responsibility and transparency and feature reactions to the launch of the Index by a range of stakeholders.

To learn more about the Tax Responsibility and Transparency Index or join the upcoming launch event, please contact Spyros Perikleous (spk@csreurope.org ).

“We support this project because we believe that fair and responsible tax behaviour promotes sustainable development of the communities in which we operate. We believe that the development of shared and measurable metrics can contribute substantially on the one hand to communicating in a clearer and more understandable way to all stakeholders and on the other hand to constantly improving internal practices over time. The opportunity to collaborate with other leading companies from various sectors and a wide range of stakeholders from civil society, investors, and European policymakers is of great value to us.” – Alessandro Bucchieri, Head of Tax Affairs, Enel Group

“Development of the Index is an excellent initiative. It gives stakeholders a way to benchmark the tax responsibility and transparency of organisations, based on objective criteria providing much needed clarity and comparability. Tax integrity is vital for sustainable value creation. The Index makes this measurable and will help to drive positive change by rewarding responsible tax behaviour.” – Sarah Joiner, Head of Tax Management & Risk, DNB Bank ASA

[i] Corporation tax is an implicit focus of much of the Index’s consideration. However, where it makes sense to look at a broader range of taxes, this has been incorporated into the assessment.

[ii] Given the European Union and the UK have in recent years bee the centre of progressive initiatives, be that legislative or voluntary.

[iii] Scoring based as follows, with total points available 100: 

- Policy and strategy (15)

- Management and governance (20)

- Stakeholder and engagement (15)

- Transparency and reporting (25)

- Contribution and narrative (25)

[iv] Seven multinational enterprises have so far been assessed against a draft version of the Index.

UPCOMING EVENTS