People
Bring your workforce on your ESG journey.
ESG is a collective effort. You will need support from your whole workforce to successfully meet your ESG objectives. Embedding ESG across the workforce experience will be key – covering everything from ‘green’ employee benefits to decarbonising business travel and ESG-linked executive remuneration.
At the same time, ESG is an increasingly important differentiator when it comes to talent attraction and retention - one in five workers has turned down a job because the organisation’s ESG commitments did not align to their values. ESG is now a key driver of your wider employee value proposition.
After all, businesses have statutory obligations to meet. Pay gap reporting is driving a renewed focus on payroll governance and bringing to light questions around fair pay. And it’s not just internal stakeholders who are paying attention – many external stakeholders will also take a keen interest in these issues.
Tax leaders will have a crucial role to play across all of these areas.
*Source: KPMG survey in March 2023 – of 500 UK Tax Leaders
People-led ESG initiatives will often be driven by HR, or potentially the wider business. However, tax needs to play a central role. The design and implementation of ESG-related employee policies can bring about tax complexities and there will be compliance obligations to manage. You therefore have these important tasks on your people to-do-list:
Work closely with HR and the wider business, to manage the risks and realise the tax value in people initiatives. That will mean knowing what projects are on the go; what their aims are; how far they’ve progressed; and the risks, opportunities and compliance needs emerging from them.
There are potential tax savings in many green benefits, such as salary sacrifice schemes for electric vehicles or impact-invested pensions – both for employees and employers.
So, push for these initiatives to be easily accessible to staff and communicate the benefits. And when it comes to those savings, confirm that the surplus is ‘redeployed for good’: invested in the organisation’s wider ESG programme.
Are your people related policies, systems, frameworks and controls robust enough to support your responsibilities in relation to real time reporting and compliance with evolving mandatory reporting regimes, minimum wage rates and other people related taxes? Pay gap reporting – whether mandated or voluntary - is a core part of IDE progress.
Knowing where you stand gives you the insights to make impactful changes. Tax has the data to make this happen. But public reporting brings additional scrutiny – are you confident that your governance frameworks are sufficiently robust to support your disclosures?
Are you able to automate the compliance and reporting process to strengthen your governance? Digitising internal communications (e.g. P11Ds) creates a robust audit trail. At the same time, digitisation allows for greater accessibility across the workforce.
