Tech sector’s financial strength offers competitive advantage when reaping sustainable tax credits tied to ESG
By Brett Weaver
According to the just-released KPMG Survey of Sustainability Reporting, 83 percent of technology companies are now reporting on sustainability to address environmental issues. While it’s clear that many C-suite leaders and boards are increasingly adopting policies toward becoming carbon neutral, a KPMG webcast poll of nearly 500 tax professionals found that corporate values (42%) are the primary driver of ESG behaviors (followed by aligning tax with our overall company ESG initiatives, 26%). But in the wake of new legislation proposed by the Biden Administration to enhance clean energy production, corporate leaders and boards should be particularly mindful of the potential tax benefits tied to the E in ESG.
Sustainable tax credits are similar across industries, but the tech sector is perhaps best poised to take advantage of clean energy incentives given its financial strength, according to Dean Kamahele, KPMG Tax Industry Leader – Technology.
Although tax incentives are not yet a matter of the “tax tail wagging the dog,” Kamahele says that many tech companies can reap the benefits of a plethora of federal, state and local tax credits for deploying clean technology, such as wind technology, solar power, charging stations and energy-efficient building materials.
Moreover, falling clean energy costs, depreciation deductions and tax breaks have improved the economics behind energy conservation and clean power projects, effectively lowering barriers to investment. Beyond the efficiency of the actual projects, tax considerations should play a role in determining how to pay for green investments and in structuring green transactions.
In the wake of President Biden’s unveiling of an infrastructure plan laden with numerous incentives for the use and production of clean and renewable energy, the adoption of more environmentally sustainable policies and investments is here to stay. Technology companies possess a strong competitive advantage over other industries given their financial stability and strength and are often best positioned to capitalize on various sustainable tax credits, ultimately benefiting their bottom line.
To speak with Brett Weaver on the intersection of tax and ESG, contact Taylor Ovalle.
To speak with Dean Kamahele on tax in the technology sector, contact Bill Borden.
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