Can taxes save the planet?


In the midst of a global pandemic and worldwide recession, it is somehow ironic to state that the world is facing a more far-reaching challenge in the coming years and decades. It is nothing less than the future of mankind and maybe of the earth which is at stake. Global warming may literally change the face of the earth with poles melting and seas threatening to submerge small islands and cause flooding inland. Less dramatic maybe is the possible relocation of Champagne grapes into non-EU England, but it is a small example which shows that climate change will impact our economy in the long term, even before mankind disappears.

As the famous polymath Ben Franklin once said, nothing is certain in this world but death and taxes: as the world is moving rapidly towards its death, taxes should be an efficient tool to prevent (or at least slow down) the deadly outcome promised by the ever increasing CO2 emission.

CMS has done extensive research on what options are available for companies and governments in order to support this growing drive to protect the planet. We would like to share this research with you.

Since the beginning of the year, our tax lawyers have researched and prepared articles which were then published by Bloomberg Tax in the form of Insights. These articles were very well received by Bloomberg readers and now we are combining them here in one thought-leadership document in order to focus on what is available and what can be done on a tax level within organisations in order to support this global push for tackling climate change.

In addition to the obvious reputational aspects to establishing greener company policies, there are also financial incentives to encourage better behaviour when it comes to respecting the planet.

The problem of climate change is a long-term one which smaller businesses have not yet prioritised (although they should). In fact, we see more and more large groups putting forward their climate change initiatives for the long term by striving to be greener businesses and integrating carbon offsetting into their business strategies even though it requires real “green” investments.

  • The first article provides an overview of current tax reforms and incentives being introduced by governments around the world to support efforts to reduce climate change.
  • The second article considers whether value-added tax can and should be used as a public policy tool in the EU in the fight to conserve the environment.
  • The third article focuses on how governments are providing tax measures and incentives to support and promote renewable energy and takes a look at what steps are being taken, with particular focus on measures in Germany and Spain.
  • The final article considers the role of taxation in encouraging green behaviour and suggests a way to re-engineer the tax system in order to reflect a company’s environmental impact.

We hope that by addressing these issues in this publication, we can inspire and advise you on your next steps to be a business that is working towards an end to climate change.