From the earliest days of The B Team’s efforts to promote responsible tax, Shell joined other leading companies, investors, international institutions and civil society to help develop our Responsible Tax Principles. Shell was one of the first companies to endorse the Principles, and ever since has been using them as a framework to build trust among its stakeholders particularly through tax transparency.
The company has recently released its second Tax Contribution Report, after the successful release of its first report in 2019, making Shell one of the first multinational companies to disclose its corporate income tax payments on a country-by-country basis. The report provides comprehensive data and narrative concerning the corporate income tax Shell pays in each country in which it operates—this is a significant step that sends an important message to stakeholders.
"Taxes are a vital source of revenue for countries around the world and help to fund essential services like education, health care and transport. In times of crisis such as the COVID-19 pandemic, taxes are also central to government policies to support people’s lives and livelihoods," Jessica Uhl, Shell’s Chief Financial Officer said, "The taxes Shell pays are one of the many links between our business and the countries and communities where we operate. Today, it is more important than ever that we are open about our tax payments so that people can understand how much we pay and why."
In times of crisis such as the COVID-19 pandemic, taxes are also central to government policies to support people’s lives and livelihoods. The taxes Shell pays are one of the many links between our business and the countries and communities where we operate."
Shell’s decision to voluntarily provide comprehensive tax transparency was undertaken with a considered, staged approach. The company’s tax department undertook an assessment to understand how Shell met the Responsible Tax Principles. It was discovered that many of the principles outlined were already being adhered to, however, there was potential for improvement.
A series of discussions, led by the tax team, sought to engage specialists within the company to focus on these areas. One challenge the company faced was ensuring that public tax information was accessible to a diverse range of stakeholders, experts and non-experts alike. The tax team set up two workstreams—the first of these aimed to sustainably embed the Responsible Tax Principles internally and the second sought to improve external tax communications and transparency.
To advance the former, the company sought to explain the Principles through company updates, guidance and training materials, all tailored to suit different internal audiences. To improve external communications, the company decided on an approach of comprehensive voluntary transparency. This was a bold step—and there were concerns about how stakeholders might interpret tax information. The tax team facilitated many conversations to reassure those with concerns and made the case that responsible tax is vital to a long-term, sustainable approach to doing business. The team leading the transparency work noted that while there would always be external commentary based on different perspectives, the Shell team had much to be proud of, and nothing to hide.
Shell’s Chairman, Chad Holliday, explained the company’s position: "Trust can only be earned and kept if people see that we share their concerns and hopes for the future. They can only see that if we are transparent about what we do and why we do it. Transparency goes beyond publishing financial results and executive pay figures. It is about being as open as we can with governments, customers and partners."
Transparency goes beyond publishing financial results and executive pay figures. It is about being as open as we can with governments, customers and partners."
The result of the work to embed the Principles was a coherent, whole-company approach supported across the organization, and the results have been welcomed. Shell’s commitment to tax transparency has resonated strongly with employees.
"The overwhelmingly positive staff reaction to the publication exceeded our expectations, having the interest and support of our colleagues continues to motivate us in our work in tax and beyond," said, Alan McLean, Shell’s Executive Vice President Taxation
The company’s wider stakeholders also felt the impact of Shell’s comprehensive disclosure. A number of NGOs and policymakers welcomed the commitment to tax transparency, commenting that Shell is demonstrating leadership in this area.
Shell’s experience showcases how responsible tax practices are an important foundation of sustainable business. The adoption of the Responsible Tax Principles has provided a common language and intent, which applies to all Shell businesses, in every country in which the company operates. Shell is but one voice in this debate, but by sharing more about its approach the company hopes to contribute towards a more common understanding of best practice in tax transparency and responsible tax practices. Shell believes this will, over time, contribute toward fairer and more effective tax systems, which benefit wider society.
*In this article “Shell” means Royal Dutch Shell plc and/or any of its subsidiaries.
The B Team Responsible Tax Principles in Action is a series of short case studies to showcase some of the ways in which companies endorsing the Principles are putting them into practice. Read more on the responsible tax journeys of Anglo American, Repsol, Allianz, Vodafone and Safaricom below.