Tax paying – the latest craze in CSR

There was once a time when the extent of a chief financial officer’s role in brand building was simply to approve next year’s marketing budget. But in recent weeks, the pressurized atmosphere of communal austerity has thrust CFOs into the spotlight as citizens question tax payments – or, more precisely, the lack thereof.

Can paying more tax increase your brand value?

Take, for instance, the indignation of the British press and public upon learning that Starbucks has only paid £8.5m in UK taxes over the past decade despite sales of over £3bn or how Facebook paid just £238k in UK taxes on revenue of £20.4m. Even if legally compliant, it doesn’t pass the ‘smell test’.

Corporate brands have always had to manage the tensions that coexist amongst their diverse audiences of consumers, employees, partners, communities and shareholders. Of all of these, the interplay between consumers and shareholders are often the trickiest to get right.

Shareholders seek maximum return on investment but their individual time-horizons vary. This means that a ‘long-term’ brand building effort may benefit investors with a long investment horizon whilst penalizing those with a more short-term timeframe. And regardless, no shareholder wants his or her investment to pay more taxes than required by law.

On the other side, consumers see brands as a ‘promise’ and expect corporate brands to represent and uphold a level of accountability. This means that brands must not only be as ‘fresh tasting’, ‘extreme whitening’ or ‘crunch-tastic’ as billed −  they must pay their fair share of taxes.

Brands have tried to enhance their reputation and provide a sense of accountability through extensive Corporate Social Responsibility initiatives. Over the past decade, most of our clients have established some sort of formal role that is responsible for ensuring that the company is perceived as a ‘giver’ not a ‘taker’. The most effective of these initiatives will support what the brand stands for and believes in rather than just funding ad hoc good deeds.

What brands are quickly learning through the events and reactions of the past few weeks is that in today’s world it’s not necessarily about CSR initiatives that go above and beyond. It’s about fulfilling the basic expectations of a taxpaying member of society.

Brands need to ensure that when paying attention to corporate social responsibility, they’re not overlooking something that even more compelling and resonating − communal social responsibility.

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