DSince the early 2000s, multinationals have had to provide proof of their responsible behavior in social and environmental matters (corporate social responsibility, CSR), but the proud display of their civic commitments does not prevent many of them from continuing to “optimize” their tax contributions.
In 2015, the Organisation for Economic Co-operation and Development (OECD) estimated that public budgets worldwide were losing 4% to 10% of corporate tax revenues due to this tax evasion.
The Global Reporting Initiative (GRI), the international benchmark for corporate communication on sustainable development, attempted to shake things up in 2019. In order to encourage multinationals to be more transparent, it published a framework for tax information “expected by civil society”saying that paying taxes was a crucial issue for achieving the Sustainable Development Goals set in 2015 by the UN.
Corruption, money laundering, tax evasion
A big step forward? Our research unfortunately shows the limits of this approach to CSR based on the goodwill of firms (“Tax disclosure strategies and reputational risks: An exploration based on the standard GRI 207”, Quentin Arnaud and Sophie Giordano-Spring, Journal of Cleaner Production No. 470, 2024). We have established in particular that, among the one hundred and twenty largest listed French multinationals, those which, in 2020, communicated the most in this context often had locations in territories with very low taxation, and that a good number had been accused of corruption, money laundering or tax evasion.
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In fact, of the fourteen items included by the Global Reporting Initiative in its framework on corporate taxation (GRI 207 framework), thirteen do not allow us to truly understand the reality of practices. Firms use this framework to protect their reputation through clever narratives and manage to mask their problematic actions.
Only by comparing the actual activities of companies in each country and the profits they declare there can we identify the tax avoidance tactics of multinationals. A multinational that has no substantial activity in a low-tax country but declares a large part of its profits there is probably not doing so by chance.
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