Tax, Sustainability Departments’ Disconnect is ‘A Missed Opportunity’

by | Mar 20, 2012

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Many companies could be missing opportunities for financial savings as tax departments and sustainability programs lack integration, according to a survey from Ernst & Young.

Only 16 percent of companies that either have or are developing an environmental sustainability strategy said their tax or finance departments are actively involved in it, according to Working Together: Linking sustainability and tax to reduce the cost of implementing sustainability initiatives.

The survey included responses from 223 senior executives, at companies predominantly in the U.S. Of the survey respondents, 19 percent were chief sustainability officers, while 81 percent were tax directors or their equivalent.

Just 28 percent of tax directors believe their company has a sustainability strategy or is developing one, compared to 90 percent of chief sustainability officers surveyed.

The lack of involvement by the tax department in the sustainability strategy is reflected in the lack of awareness and limited use of incentives for sustainability initiatives, with over 37 percent of survey respondents unaware of such incentives.

For some incentives, such as federal tax deductions for energy efficient buildings and incentives for renewable energy, awareness levels were over 80 percent. However, for state tax credits and incentives, awareness levels hovered around 50 percent – and levels were even lower for local credits and incentives.

Even for those who are aware, only 17 percent of respondents said their companies actually use available green incentives. This lack of awareness represents missed opportunity, Ernst & Young says.

According to two reports released earlier this year by Ernst & Young, such incentives helped the U.S. surpass China last year as the number one country for renewable energy investments, reversing positions held since 2009.

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