A group of institutional investors has endorsed a new tax reporting standard, published Thursday by the Global Reporting Initiative, aimed at providing better visibility into how much tax multinational corporations are paying globally.
In efforts to boost disclosure of how much companies contribute to the tax revenues of countries where they operate and therefore reduce tax avoidance, the standard was launched to help investors compare companies' approaches on a country-by-country basis, GRI said on its website.
Among supporters of the initiative are money management firms Aberdeen Standard Investments, Hermes Investment Management, MFS Investment Management, Royal London Asset Management, as well as the Dutch Association of Investors for Sustainable Development.
"We recognize that tax legislation around the world is ill-equipped to deal with an increasingly globalized business environment. We therefore welcome the publication of the GRI Corporate Tax Standard," said Ashley Hamilton-Claxton, head of responsible investment at Royal London Asset Management, in a news release.
"Corporate tax practices are highly relevant for investors. An understanding of a company's tax practices can help an investor to better understand earnings risk and opportunity." said Robert M. Wilson Jr., research analyst and investment officer with MFS Investment Management, also in the release.
"At the same time, a firm's approach to taxation also provides important signals regarding its governance, by putting a spotlight on a management team's and a board's risk tolerance," he said.