Aggressive tax practices are an investment risk

Companies that engage in aggressive tax practices, either for themselves or for their clients, reduce tax revenues available to governments for delivering public services and infrastructure. Companies that engage in these practices also face potential earnings risk arising from new regulation alongside reputational risk, which can negatively impact share prices and hurt investors’ portfolios.

This is a particular concern for companies that rely on consumer trust and confidence, such as financial institutions. Through our analysis we have, for a number of companies in this sector, deemed the risks associated with poor tax practices to be too high to be considered for investment in the Sustainable Future fund range.

We assess our holdings for tax-related risks, which includes whether companies are domiciled or have subsidiaries in tax havens. We continue to engage with companies in our portfolios to better understand company-specific tax-related risks, how these risks are being addressed and how prepared companies are for upcoming changes in tax regulation.

We have worked with 10 other global investors and the Principles for Responsible Investment (PRI) to develop a guidance document for investors on how to engage with investee companies on corporate tax responsibility.


Harriet Parker is an investment manager and Chris Foster is an investment analyst on the Alliance Trust Investments Sustainable Future fund team.

Jonathan Boyd
Editorial Director of Open Door Media Publishing Ltd, and Editor of InvestmentEurope. Jonathan has over two decades of media experience in Japan, Australia, Canada and the UK. Over the past 17 years he has been based in London writing about funds and investments. From editing the newsletter of the Swedish Chamber of Commerce in Japan in the 1990s he now focuses on Nordic markets for InvestmentEurope. Jonathan was awarded Editor of the Year at the Professional Publishers Association (PPA) Independent Publisher Awards 2017. Shortlisted for the same in 2016, he was also shortlisted in 2017 and 2015 for the broader PPA Awards category Editor of the Year (Business Media).

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