Posted in: news

3rd September 2020

The B Team Responsible Tax Principles in Action: Allianz's Journey Toward Meaningful, Stakeholder-Informed Reporting

As The B Team developed its Responsible Tax Principles, Allianz was with us from the outset. The company provided input and expertise and was one of the first to publicly commit to implementation. This support was underpinned by Allianz’s strong commitment to transparency, and its understanding that tax was a vital component of corporate responsibility and sustainability.

Allianz's latest Tax Transparency Report states: “Transparent and trustworthy dialogue with all stakeholders is fundamental to our corporate policy,” and the current report reflects both the company’s ongoing commitment to transparency, and to meaningful stakeholder engagement. It represents the latest—but not the last—stage of its responsible tax journey.

Since tax is a complex and technical issue, and since Allianz is a global company operating across 70 countries around the world, it is impossible to anticipate all legitimate questions that stakeholders might have. That’s why Allianz has adopted an evolutionary approach, enhancing its disclosures over time in response to stakeholder interests. This approach is reflected in more extensive quantitative and qualitative country based data, enhanced disclosure regarding attitude towards and engagement in tax havens and management’s overall approach to tax.

Therefore, and among other developments, Allianz has expanded its country-based reporting to cover all major countries it operates in, as well as providing an explanation when a country’s effective tax rate differs significantly from the country’s income tax rate. It also states clearly that the company does not use tax havens in order to avoid taxes on activities that take place elsewhere, and clarifies its definition of tax havens—based on the EU black list and grey list. Furthermore, where the company does have a presence in tax havens, it provides a justification. These commitments are reflected in the fact that entities located in tax havens contributed less than one percent to the company’s profit before income taxes in 2019.

Photo by World Economic Forum/Mattias Nutt

Economic growth depends on fair and effective tax systems. Responsible tax is a crucial part of this and helps build a future where everyone can truly thrive."

Oliver Bäte, CEO of Allianz and B Team Leader

The wider debate around corporate tax behavior, in Germany and around the world, also informed Allianz’s commitment to transparency. While the company believes that many stakeholder groups have a very legitimate interest in corporate tax behavior, it also recognizes that at times public tax debate has been characterized by misunderstandings. As a result, misrepresentations arise—for example based on differing and uncoordinated definitions of tax havens. Furthermore, inaccurate analyses of key figures published in company annual reports have included double or multiple counting of financial data, and thus also to unjustified conclusions.

In responding, Allianz chose not to shy away from difficult debates, but rather to address them head-on, through proactive and voluntary tax transparency.

Getting to this stage involved a concerted effort to secure internal support for voluntary transparency, including at the most senior levels of the company. Allianz’s tax department sought to build a compelling case that the company’s broader commitment to the principle of transparency must extend to tax—in the much same way that it does to other issues like climate change. For Allianz, tax is a core component of corporate responsibility and sustainability. As Allianz CEO and B Team Leader, Oliver Bäte, has said, “Economic growth depends on fair and effective tax systems. Responsible tax is a crucial part of this and helps build a future where everyone can truly thrive.”

Support for tax transparency has since been solidified—within senior management and throughout the organization. The challenge going forward is how the company can continue to bring this commitment to life. Even the most comprehensive tax reporting will not answer every question that might reasonably be asked. That means, for Allianz, the journey toward responsible tax is not yet finished. “In the future we will continue to explore how Allianz can improve its tax transparency report as part of our contributions for a sustainable development of the countries in which we operate,” Giulio Terzariol, Chief Finance Officer of Allianz, said.

The B Team Responsible Tax Principles act as the company’s ‘north star’ when it comes to tax policy and practice. As well as providing a robust framework for action, The B Team also provides a platform for stakeholder engagement—allowing Allianz to listen to and learn from investors, international institutions, NGOs and activists. This engagement is crucial for the company—helping ensure that it does not provide data simply for the sake of it, but rather to provide genuinely meaningful tax reporting to its stakeholders, after listening, and responding to, their needs.

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 Repsol, Vodafone and Safaricom below.