Sustainable tax practices: insights from KPMG’s latest Nordic companies report

Despite investor preference and public country-by-country reporting rules being on the horizon, nearly a third of leading Nordic companies have not adopted the Global Reporting Initiative’s (GRI’s) sustainability reporting standard for tax, GRI 207. KPMG’s most recent annual review of Nordic companies’ public reports shows little change in reporting practices.

KPMG reviewed 151 listed and unlisted companies across Denmark, Finland, Iceland, Norway, and Sweden to assess the progress of public tax reporting in the Nordics and how it compares to the expectations set out in GRI 207.

In recent years, companies’ approach to tax has increasingly been recognised as a matter of public interest and an indicator of responsible business conduct. This recognition – by the wider public and companies themselves, combined with the essential role of tax revenues in funding government action, achieving the United Nations’ Sustainable Development Goals, and supporting the green transition – has led to a demand for, and expectation of, transparency by companies on their tax contributions and a responsible approach to tax.

GRI is an independent, international organisation providing the global common language for corporate transparency. In 2016, GRI transitioned from providing guidelines to setting the first global standards for sustainability reporting – the GRI standards. With these standards, GRI helps businesses and other organisations to understand and communicate their sustainability impacts.

In 2019, a standard for sustainability reporting concerning tax was published under GRI. Known as GRI 207, this is the first ESG standard for tax and requires qualitative and quantitative transparency in tax matters. The standard entered into effect on January 1 2021, and in the report The state of tax transparency in the Nordics, KPMG presents, for the second consecutive year, how leading Nordic companies have reported on tax matters and how many have adopted the new GRI standard.

After analysing annual reports, sustainability reports, tax policies, and separate tax reports, KPMG’s study shows that 56% – 85 of the 151 companies assessed – made a formal claim about following GRI standards for their sustainability reporting (compared to 61 out of 111 last year), while another 14 companies declared taking inspiration or guidance from the GRI standards, or GRI 207 specifically. Just 49 companies out of 151 assessed, or 32%, do not mention the GRI standards at all.

These figures indicate the established nature of sustainability issues and GRI standards in the Nordics, with Finland and Sweden having the highest proportion of companies adopting the GRI framework for sustainability reporting.

Despite the relatively high adoption rate of the GRI reporting framework, the survey found that far fewer companies were reporting under GRI 207. Companies that claim to report in accordance with GRI standards but do not report in accordance with GRI 207 are likely of the view that tax is not a ‘material’ topic, meaning that it does not need to be reported on.

However, some of these companies do have a public tax policy, and provided some form of tax reporting (but without referring to GRI 207 in their GRI content index), which suggests that some companies are not ready to address the disclosure requirements of GRI 207 or are unwilling to do so.

In Sweden, the 30 companies that form the OMX Stockholm 30 Index, Sweden’s major stock market index, were assessed as part of the report. Much like in Finland and Norway, there are a high number of Swedish companies that use the GRI standards for their sustainability reporting but few that already use GRI 207 for their tax reporting. However, some of the tax disclosures in Sweden were among those most closely aligned with GRI 207 across all the companies assessed for the purposes of this report.

However, while not covered in this assessment, Sweden is also home to one of the first companies outside the UK that was attributed a Fair Tax Mark, and home to a couple of the very few companies in the Nordics assessment that report fully in line with the quantitative disclosures in GRI 207.

There has been very little change in the reporting by Swedish companies compared to last year’s assessment. However, the pressure is expected to increase, and with public country-by-country reporting in the EU and Australia getting closer, as well as the Corporate Sustainability Reporting Directive, more companies are expected to start to report on their tax affairs in more detail in 2025, to stay ahead of the regulatory expectations.

Investor pressure is also increasing, with many investors favouring GRI 207 compared to the more limited EU directive, so it will be interesting to see how companies decide to report, especially with companies already using the GRI reporting standards.

Feel free to contact KPMG Sweden if you have any questions about the Nordic study or want to know how your company stands with regard to sustainability reporting for tax.