As more companies report on their tax affairs, and as their reporting matures, expectations grow too. While in the Nordics, we see already high compliance with the first section of GRI 207, namely 207-1 Approach to Tax, scores are lower for GRI 207-2 and GRI 207-3. In our previous blog, my colleague Simon Tornø Olesen tackled GRI 207-2 (Tax Governance, control, and risk management), and provided insights into how these disclosures can be improved. In this blog, I would like to consider GRI 207-3: Stakeholder engagement and management of concerns related to tax.
Whether or not companies identify tax as a material topic under the EU Corporate Sustainability Reporting Directive (“CSRD”), stakeholder expectations and regulatory initiatives such as public country-by-country reporting directive continue to drive a growth in transparent tax reporting. The Global Reporting Initiative sustainability reporting standards remain the most widely used standards around the world, and as we have shown in our Nordics tax transparency reports (2022 & 2023) – and as our colleagues have shown similarly in the Benelux – GRI 207[1] is the leading standard for tax reporting.
First published in 2019 and effective since 2021, GRI 207 sets out detailed disclosure requirements for both the “quantitative” and the “qualitative” part of tax reporting. Companies that claim to report in accordance with the GRI sustainability reporting framework are expected to follow GRI 207 for their tax reporting if they identify tax as a material topic (which, arguably, virtually all MNEs should) – but even for companies that do not formally use the GRI standards, they are a great source of inspiration.
There are three disclosure requirements in GRI 207-3:
The reporting organization shall report the following information:
a. A description of the approach to stakeholder engagement and management of stakeholder concerns related to tax, including:
i. The approach to engagement with tax authorities;
ii. The approach to public policy advocacy on tax;
iii. The processes for collecting and considering the views and concerns of stakeholders, including external stakeholders.