Understanding ESG-related impacts on transfer pricing
Environmental, social, and governance (ESG) policies and the movement towards greater sustainability will continue to transform many businesses. As internal and external stakeholders focus on ESG policies, multinational companies (MNCs) are responding to these pressures by making ESG-related changes to the business.
Given the rapid emergence and broad scope of these initiatives, transfer pricing leaders in tax departments need to take steps to:
- Understand ESG-related changes to the business.
- Revisit their analyses into what creates value and drive business profits.
- Determine if modifications to their transfer pricing policies are needed.