More investors join tax avoidance campaigns: lobbying this week’s G20 for action

Investors including the powerful £150bn UK Local Authority Pension Fund Forum (LAPFF) have joined an increasing number of long-term shareholders lobbying for the tightening of rules on corporate tax avoidance. They are urging this week’s G20 Leaders’ Summit in Brisbane, Australia, to support the OECD’s Action Plan on ‘base erosion and profit shifting’ (BEPS) that seeks more transparency and disclosure on cross-border financial arrangements by multinationals.
RI reported earlier this week that trades union-nominated trustees in pension schemes in 19 countries, managing over $20 trillion in assets, will push for tax risks to be prioritised in the hiring of asset managers and in their subsequent investment reports. The latest investor statement is signed by LAPFF, which comprises 61 UK public sector pension funds, Bâtirente, the CA$1.4bn Quebec pension fund, Royal London Asset Management (RLAM), Paris-based OFI Asset Management, and Triodos Investment Management from the Netherlands.
The investors are calling for a comprehensive multilateral tax agreement at G20 2015, which will be held on 15 and 16 November, as recommended by the OECD in Point 15 of the BEPS Action Plan. The letter also calls on multinational corporations to “recognise that many existing financial practices around secrecy and taxation are not sustainable and no longer meet institutional investor governance expectations nor reflect growing civil society views of responsible, transparent corporate behaviour within a licence to operate.”The wording is significant because many multinationals justify their complex and controversial tax management structures as part of their legal obligation to shareholders.
LAPFF Chair, Councillor Kieran Quinn said: “As international investors, ensuring sound governance practices are embedded in corporate activities, including taxation planning and associated reporting and disclosure mechanisms is a fundamental concern. Financial secrecy, opaque accounts and aggressive tax practices do not best meet our underlying objectives as inter-generational investors aiming for sustainable value creation.”
The investors say that tax avoidance practices stymie the role of financial markets for matching long-term, patient capital such as pension funds with genuine productive investment opportunities for value creation over time.
They say that taxation reforms for tax transparency and disclosure by companies on a country-by-country, public basis would best assist asset owners in investment governance, risk management and due diligence obligations, which they say are “vital to carrying out our fiduciary duties.”
Responsible Investor reported last week that major asset owners and fund managers had featured in a huge cache of leaked tax documents focused on Luxembourg’s complex, low-tax regulatory regime published on-line in a co-ordinated investigation by global media.