Mar 10, 2026 · 23 min · 7 segments
Welcome to Be It Resolved, the podcast where bold ideas meet courageous leadership. I am Rahul Bhardwaj, President and CEO of the Institute of Corporate Directors in Canada. In each episode, I speak…
Rahul BhardwajHost
It might not be in vogue so much these days, but how does the global minimum tax intersect with ESG?
Well, I think a couple of ways that we have to think about it from the perspective of tax generally.
Tax, how do tax policies drive ESG? Many countries use tax policies, including incentives and credits to drive environmental and social policy objectives.
If an incentive that's granted and is not tied to direct economic activity in a jurisdiction, those incentives can be neutralized by the application of the global minimum tax if they have the effect of reducing the effective tax rate below the minimum.
On the other hand, the global minimum tax makes allowances for tax incentives or credits that are directly and clearly connected to economic substance in a jurisdiction.
In overseeing ESG strategy for a company, boards should take note of the opportunities both of achieving ESG goals with available incentives and so forth that are offered by various jurisdictions, but also ensuring that they are compatible with the global minimum tax so that they're not neutralized.
But I think importantly, one of the things I think even before the GMT, we know that tax is relevant and increasingly so is a relevant measure of sustainability for companies.
Tax governance, including transparency, strategy practices, they're all considered now in questionnaires that support multiple sustainability indexes on which investors rely.
So here, again, the global minimum tax, I think by interrupting this race to the bottom and reducing some of the drivers for aggressive tax planning helps to support more responsible tax practices, which I think foster sustainability and enhance transparency.
And I think ultimately reduces the risk landscape associated with board oversight of tax strategy.
When you put it like that, there's some very lofty outcomes that are aiming to be achieved here.
And it's really building on a foundation, particularly around sustainability, that's now been integrated in so many, particularly with the institutional investors.
In Canada, 2026, it's the first year in which multinationals will have to report on their global minimum tax liability.
Because not all Canadian multinationals will be in scope, it's important for companies to determine whether they are within the scope of the global minimum tax liability.
and then to determine to the extent to which they may benefit from some safe harbors that exist in the system to simplify compliance.
It might not be in vogue so much these days, but how does the global minimum tax intersect with ESG?
Well, I think a couple of ways that we have to think about it from the perspective of tax generally.
Tax, how do tax policies drive ESG? Many countries use tax policies, including incentives and credits to drive environmental and social policy objectives.
If an incentive that's granted and is not tied to direct economic activity in a jurisdiction, those incentives can be neutralized by the application of the global minimum tax if they have the effect of reducing the effective tax rate below the minimum.
On the other hand, the global minimum tax makes allowances for tax incentives or credits that are directly and clearly connected to economic substance in a jurisdiction.
In overseeing ESG strategy for a company, boards should take note of the opportunities both of achieving ESG goals with available incentives and so forth that are offered by various jurisdictions, but also ensuring that they are compatible with the global minimum tax so that they're not neutralized.
But I think importantly, one of the things I think even before the GMT, we know that tax is relevant and increasingly so is a relevant measure of sustainability for companies.
Tax governance, including transparency, strategy practices, they're all considered now in questionnaires that support multiple sustainability indexes on which investors rely.
So here, again, the global minimum tax, I think by interrupting this race to the bottom and reducing some of the drivers for aggressive tax planning helps to support more responsible tax practices, which I think foster sustainability and enhance transparency.
And I think ultimately reduces the risk landscape associated with board oversight of tax strategy.
When you put it like that, there's some very lofty outcomes that are aiming to be achieved here.
And it's really building on a foundation, particularly around sustainability, that's now been integrated in so many, particularly with the institutional investors.
In Canada, 2026, it's the first year in which multinationals will have to report on their global minimum tax liability.
Because not all Canadian multinationals will be in scope, it's important for companies to determine whether they are within the scope of the global minimum tax liability.
and then to determine to the extent to which they may benefit from some safe harbors that exist in the system to simplify compliance.
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