Tax Incentives For ESG

Experts from seven countries outline some of the tax incentives that aim to encourage the more widespread pursuit of environmental, social and governance-related goals.

Introduction

Tax measures can be instrumental in encouraging better ESG (Environmental, Social, and Governance) behaviour by businesses and individuals. By offering tax incentives and penalties tied to ESG performance, governments can stimulate positive environmental and social practices within the corporate sector. For instance, tax breaks for companies that invest in renewable energy, reduce their carbon emissions, or implement diversity and inclusion initiatives can drive corporate sustainability efforts. Conversely, imposing higher taxes on environmentally harmful activities or companies with poor social governance can discourage detrimental practices.