Business has reached a critical point in the transition to putting stakeholder primacy into practice—and to tell a powerful story of why. This is especially the case for the complex issue of corporate tax. Companies need a clear and compelling story to tell, to reassure their stakeholders that they are acting responsibly.
Companies adopting The B Team Responsible Tax Principles, including Vodafone, are seeking to do just that.
The company began providing a country by country breakdown of taxes paid in 2011, but after facing heightened public scrutiny and campaigns, it needed a new approach to sharing this information. Over the years, Vodafone has consistently increased the depth and breadth of its tax reporting—going beyond numbers and building a narrative around data to tell its tax story.
Vodafone didn’t stop there, though. Adopting a more proactive approach, the company turned to its diverse group of stakeholders—investors, civil society organizations and customers, amongst others—to ask what tax information would be valuable to them. Guided by this input, Vodafone worked to make this data accessible and approachable for all stakeholders. It provided an explanation of some of the complexities and misconceptions around the tax system, as well as a more comprehensive explanation of its tax data.
From there, Vodafone led with transparency around its position on contentious tax issues such as incentives, reflecting Principle 5 in the B Team’s Responsible Tax Principles. The company clarified the type of tax incentive that it utilizes in markets around the world, stating that it accepts incentives where the government “intends these strategies to deliver an outcome with a net public benefit.”
To illustrate this approach, Vodafone reported on its use of incentives in Portugal, explaining that it utilized an incentive that was designed as a public policy tool to attract investment, and expanding upon the implications of the incentive for its tax liabilities.
Vodafone Group Tax Director John Connors. Photo courtesy of Vodafone.
Raw tax data is complex and can be inaccessible to many of our stakeholders, which is why we provide a narrative and explanatory notes to complement the numbers."
Vodafone’s commitment to transparency is best evidenced in its reporting. The company produces an annual comprehensive tax report which runs to some 88 pages—one of the most comprehensive reports across multiple industries. The report balances the provision of comprehensive tax data, including full public country by country reporting, with narrative and explanation.
This balance is vital to Vodafone’s approach. “By publishing full tax data for every country in which we have a legal entity, we send a number of important signals,'' said John Connors, Vodafone’s Group Tax Director, “It demonstrates that we make significant tax contributions, it shows our commitment to transparency and it helps to mitigate the risk of ambiguity or misunderstanding that can result from complex accounting treatments.”
“But the narrative that accompanies the data is equally important. Raw tax data is complex and can be inaccessible to many of our stakeholders, which is why we provide a narrative and explanatory notes to complement the numbers,” Connors emphasized.
This approach has been well-received, including by investors that increasingly expect companies to demonstrate a responsible approach to tax. For Vodafone’s investors, the company’s data and narrative-driven reporting on sustainability risks and opportunities benefits their long-term outlook.
Vodafone Chief Financial Officer Margherita Della Valle. Photo courtesy of Vodafone.
At Vodafone we acknowledge our responsibilities to wider society...including being clear and transparent about the issues and our tax contributions in all our countries of operation."
Vodafone continues to develop its tax reporting, using The B Team Responsible Tax Principles to guide its approach. It adopted the Responsible Tax Principles not only to demonstrate its commitment to responsible tax practice, but to send an important signal that it recognizes the centrality of responsible tax to its wider obligations.
“At Vodafone, we acknowledge our responsibilities to wider society,” said Margherita Della Valle, Vodafone Group’s Chief Financial Officer, “We strive to ensure that we always act lawfully, ethically and with integrity wherever we operate. Our strong commitment to corporate transparency is evidenced through our programs, which address the areas that are the focus of intense public debate including being clear and transparent about the issues and our tax contributions in all our countries of operation.”
Vodafone has established itself as a leader on tax transparency, but isn’t resting on its laurels. With The B Team Principles as a foundation, the company is committed to constantly evolving its approach and to working with others businesses and wider stakeholders to establish new norms of responsible tax.