U.S. ranks first in using tax code to influence sustainable corporate activity

NEW YORK—The United States ranked first among 21 countries most actively using the tax code to influence sustainable corporate activity, according to the inaugural edition of the KPMG Green Tax Index.

The study cites a long-established program of U.S. federal tax incentives for energy, including specific incentives for energy efficiency, renewable energy and green buildings.

Japan, the U.K., France, South Korea and China also ranked highly among the leading countries using tax as a tool to drive sustainable corporate behavior.

Canada was tied with Spain for eleventh place.

Key policy areas explored in the index include energy efficiency, water efficiency, carbon emissions, green innovations and green buildings.

“The KPMG Green Tax Index provides important directional insight for corporate sustainability decision makers, CFOs and board members into how countries are using taxes to influence corporate behavior,” said John Gimigliano , principal-in-charge of sustainability tax in the Washington National Tax practice of KPMG LLP. “Japan, for example, tops the rankings in its promotion of tax incentives for green vehicle production, while the U.S. favors a comprehensive system of renewable energy tax incentives.”

Gimigliano says that is why we’re seeing more green cars coming out of Japan and dramatic growth in the U.S. renewable sector.

“These activity-based rankings can be of value to corporate sustainability decision-makers as they allocate budgets and evaluate investments around the world,” said John Hickox , advisory partner and U.S. practice leader for Climate Change & Sustainability Services at KPMG LLP.

The KPMG index identified over 200 individual tax incentives and penalties of relevance to corporate sustainability. At least 30 of these have been introduced since January 2011, reflecting the pace of green investment growth globally.