US Ranks No. 1 Using Tax Code to Shape Corporate Sustainability

 

USA, UK, France, Japan, China and South Korea are leaders in the use of taxes to drive corporate sustainability, according to KPMG’s Green tax Index. In the KPMG index, there are 200 individual tax incentives and penalties that are related to sustainability. At least 30 of these have been identified since 2011.

Significant policy areas in the index include energy efficiency, water efficiency, carbon emission, green innovations and green building.

The Green Tax Index gives companies insight on how countries are using taxes to influence corporate sustainability. For instance, the US tops the ranking for its renewable energy tax incentive while Japan takes the first place in tax incentives for green vehicle production. It shows that more electric and alternative fuel cars are coming out of Japan while the US shows a strong growth in the renewable sector. Therefore, the ranking countries can help companies to make budgets and evaluate global investments around the world before making investment decisions.

The US and South Korea have a green tax system weighted toward incentives rather than penalties. However, Japan and France green tax policies are more heavily weighted toward penalties than incentives. China has a balance between incentives and penalties in ranking with green tax policy and is more focused on resource efficiency (energy, water, and materials) and green building.

According to green tax policy, “The US ranks No. 1 among 21 countries most actively using the tax code to influence sustainable corporate activity, reflecting the country’s federal tax incentives for energy efficiency, renewable energy and green buildings, according to KPMG’s first Green Tax Index”.