French investors start campaign on tax responsibility with French corporates

Effort is lead by FrenchSIF’s Dialogue and Engagement Commission

A campaign on corporate tax responsibility, involving a network of French investors with  €4.46bn collectively under management, has released a new report analysing the tax practices of companies in France’s stock index CAC 40. 

The campaign is part of the French Sustainable Investment Forum’s Dialogue and Engagement Commission whose members are increasingly focused on the issue of tax opacity and avoidance because of the reputational and operational risks it presents to companies. 

Alexis Masse, President of the FrenchSIF, said: “Companies benefit from the quality of education and research, and from the infrastructures, institutions and healthcare systems of the countries in which they operate. Their contribution to the public finances of these countries is therefore part of the social contract. It is a mutually beneficial social choice. This is why the FIR [FrenchSIF], through its engagement, aims to remind companies that fiscal citizenship is an integral part of corporate social responsibility and to encourage them to adopt best practices.” 

The FrenchSIF finds that tax responsibility is a blind spot in ESG reporting and in need of a common framework.

As part of this work, the Dialogue and Engagement Commission sent a questionnaire on tax to the chairs of CAC 40 companies. It received 25 responses, representing 60% of the CAC 40, including from financial groups AXA, BNP Paribas, Société Générale and Crédit Agricole. 

Overall, the responses were of uneven quality, says FrenchSIF, in terms of their level of detail and their relevance. Information on tax policy is often scattered and difficult to exploit; and tax policies tend to be treated from a compliance angle rather than from a tax responsibility perspective.

In light of this, the FrenchSIF has recommended several changes in the tax policy of CAC 40 groups.

The seven recommendations include the board of directors being responsible for the company’s tax governance, the responsible tax strategy going beyond simply complying with laws and forbidding tax evasion practices, and the annual tax report detailing taxes paid in each jurisdiction.

According to the OECD, government tax revenue shortfalls range from between $100bn and $240bn each year, or between 4% and 10% of global corporate income tax revenues. The French Council of Economic Analysis (Conseil d’Analyse Économique) indicates that in France, this tax leakage may amount to approximately €5bn per year, a direct result of large corporations shifting their profits to jurisdictions with preferential tax rates. 

The CAC 40 companies that responded to the tax survey are: 

  1. Accor 

  2. Airbus 

  3. Air Liquide 

  4. Atos 

  5. AXA

  6. BNP Paribas 

  7. Bouygues 

  8. Crédit Agricole

  9. Danone

  10. Engie

  11. Hermès

  12. Kering

  13. L’Oréal

  14. Michelin

  15. Orange

  16. Pernod-Ricard

  17. PSA

  18. Safran

  19. Saint-Gobain

  20. Sanofi

  21. Société Générale

  22. Sodexo

  23. Total

  24. Unibail-Rodamco-Westfield

  25. Veolia