How adopting ESG can support your investment strategy

The decision to invest in a robust ESG strategy often represents an immediate and significant cash outlay,. In addition, there is more focus from Governments on imposing taxes and levies that can adversely impact those who do not follow ESG compliant behaviours.

With that in mind, it is key that businesses and shareholders are accessing and maximising tax reliefs available to support their investment strategy.

Here are our 3 key messages:

• Employee and employer savings can be made. Revisiting reward and implementing Company Car (or electric bicycle, EV charging unit) could lead to financial benefits. Salary Sacrifice arrangements, considering how travel and expense policies operate, as well what type of vehicle and travel support are provided can all help. By making practical changes to your reward strategy and travel policy, you can reduce your carbon footprint as well as employer costs, whist increasing take-home pay for employees. The Government has also continued to show its commitment to encouraging investment in energy efficient technology and vehicles through on-going reform of the R&D and capital allowances regimes. It is key that businesses understand how to access these reliefs.
• Getting to grips with the “Social” aspects of ESG can be complex given the number of possibilities and options. Focussing on your values and identity can be vital here. Having robust employee communications around reward is a good foundation to build on. Further, giving employees opportunities to input into reward initiatives, charitable activities and how they work on a day-to-day basis can improve employee engagement. This can help with recruitment and retention and also for positively impact how the organisation adapts and acts. These actions are likely to assist in strengthening brands and reputation.
• The “G” in ESG can sometimes be overlooked. The Government is investing a significant amount in compliance and will be extremely active in and interrogating employers across the UK, particularly in relation to:
  • IR35,
  • CJRS,
  • National Minimum Wage,
  • Corporate Criminal Offence,
  • Payroll and Benefits,
  • VAT,
  • Corporation Tax; and
  • the Construction Industry Scheme

If you haven’t had a HMRC review in the last three years, it will be worth enhancing and reviewing your governance, so you are confident that you have appropriate procedures in place and that reporting obligations have been met ahead of any enquiries.

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