NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.

The international tax landscape has undergone significant changes in recent years. Governments are currently devising implementation plans for the global minimum tax reform of 15% led by the OECD – OCDE, which will take effect in 2024 and impact the world’s largest companies. Additionally, increased attention on multinational enterprises from tax administrators, governments, and civil society keeps making headlines.

How will this heightened focus on tax transparency globally affect companies on their circularity journey?


| The Science of Impact

The concept of “total tax transparency” is associated with the process of reporting all the taxes borne and collected by a company across countries. Although reporting is voluntary for most jurisdictions, it is increasingly a factor which demonstrates an organization’s contribution to society and used in ESG (environmental, social and governance) analysis by many stakeholders  first and foremost, responsible investors. Shareholder engagement over tax transparency issues has put significant pressure on public companies to report country-level information along with aggregate data, elevating the lack of tax transparency to a significant reputational risk factor.



By treating tax transparency as an enabler of sound ESG corporate commitments, it can help better define mandatory, country-level policies to tackle inequalities, reduce income gaps and ensure a fair distribution of wealth. In fact, with tax contributions increasingly seen as a way to fund key environmental and social benefits in the form of green subsidies, greater tax transparency can directly influence global trade relationships, responsible procurement and channel infrastructure investments into circular assets and services.

Circular economy approaches that involve the launch of business models such as PaaS (product-as-a-service) and promote the shift to circular and closed-loop environments, not only provide environmental benefits but also shield companies from materials’ shortages and price fluctuations. As communication of circularity strategies, objectives, and metrics continue to evolve, enhanced circular economy reporting by corporates may also trigger additional accounting and tax reforms.


>>click to zoom in | E&Y: How circularity translates into nonfinancial reporting (2023)


| Circularity Roadmaps Explained

Does tax transparency impact the circular economy? After all, tax regimes were introduced decades ago, when linearity of supply chains was undisputed, raw materials extracted, assigned a price as they entered production processes, and eventually discarded as waste of zero value. Digitization of commerce has generated the only noteworthy impact on tax regimes. No change can be attributed so far to the impact of climate disruptions.


In her recent contribution to Forbes, Aleksandra Bal, tax technology lead from Stripe, notes how the emergence of new circular business models which incorporate PaaS, product life extension or process design for recycling, is likely to trigger an accumulation of taxes as repair/resell/reuse models generate additional value for the consumer.

Are outright tax incentives and lower tax rates real enablers of circularity?


>>click to zoom in | Source: BDO United States


Most of the time, a chart can convey more than 1,000 words.

To have lasting impact in promoting circular businesses, processes and products, tax regimes will need to continue to evolve in alignment with business, social and environmental dynamics.


| Investing in the Circular Economy

The Inflation Reduction Act (IRA) of 2022 in the US is the most recent example of how paying attention to the tax benefits that circular businesses can tax into may lead to increased investor appetite for the assets emerging from a transition to the circular economy.

In summary, environmental credits from the IRA include:

  • $370 bn to clean energy programs
  • credits that are intended to facilitate long-term investment in renewables and reduce GHG emissions by 40%
  • direct boost to the economics of ESG investments.

Examples of environmental credits within the scope of the IRA encompass:

  • Investment tax credits (solar, battery storage, biogas)
  • Production tax credits (wind, solar, biomass)
  • Advanced technology tax credits (carbon capture & sequestration, clean hydrogen, clean fuels, EV and EV charging)

In addition, there are a variety of social credits introduced by the IRA such as bonus credit provisions for businesses that pay prevailing wages and hire qualified apprentices.

Increasingly, company disclosures that address tax transparency are opening the door on a more actionable dialogue on tax-related incentives in promoting sustainability strategies. For example, RMI estimates that the US will require a $175 billion investment in battery production by 2025. Additionally, it will need to increase its recycling capacity and promote circularity in the battery supply chain. A direct partner in advancing battery production, the domestic mining industry, will require significant incentives to achieve this goal. Thankfully, the IRA’s production tax credit will accelerate corporate investments of this type.

While there is no one-size-fits-all approach to tax transparency, it’s becoming clear that organizations can benefit financially and operationally from aligning transparent tax reporting with the broad ESG strategy of the company.


| You don’t want to miss this week

From Toronto, to Heraklion (Greece), and Geneva, this week offers new opportunities to connect with fellow circularity practitioners both in person and in hybrid mode.

Discover, grow and leave your mark!


June 19th – 20th: Canadian Circular Economy Summit (Toronto, Region Board of Trade). Co-hosted by the Circular Innovation Council and Circular Economy Leadership Canada, the first circularity summit in Canada will feature leaders from industry, government agencies, NGOs, and academia coming together to share learnings and best practices and create opportunities for cross-sectoral cooperation. Notable speakers include the Honorable Steven Guilbeault, Minister of Environment and Climate Change; Ramona Liberoff, Executive Director of Platform for Accelerating the Circular Economy (PACE)Apala Mukherjee, President of BASF Canada Inc, and Dr. Dianne Saxe, Ph.D, GCB.D, Councillor, City of Toronto and one of Canada’s most respected environmental and energy lawyers.

June 19th – 21st4th Symposium on Circular Economy and Sustainability (Heraklion, Crete  Greece). This year’s symposium is an opportunity for those interested in Circular Economy and Sustainability applications, from individual businesses or industrial zones to national, international, or global policies that will make feasible the effective application of circular economy principles for achieving Sustainable Development. A major innovation of this year’s Symposium is the bridging of engineering, management and economic knowledge to support the effective advance of circular and sustainability principles. This interdisciplinary event is supported by the Technical University of Crete, the International Network for Economic Research, and the Hellenic Association For Energy Economics (HAEE).

June 21st – 23rdInternational Automotive Recycling Congress IARC 2023 (Geneva). IARC will bring together 300 decision-makers from the automotive and recycling sector, especially car manufacturers, metal suppliers, plastic scrap traders, recyclers, shredder operators, policy-makers and many more. Abhijit Sanyal, Head of Metallics Europe for ArcelorMittal, and Jean-Philippe B., the CEO of Renault’s THE FUTURE IS NEUTRAL and former Chief Strategy Officer for Renault Group will deliver keynotes to the congress. The event will close with two plant tours: the innovative MTB Recycling and Manufacturing workshop near Lyon, France, and THÉVENAZ-LEDUC S.A., in western Switzerland, which includes a visit of the shredder and shear plant of Lindemann.


Off to another impactful week!



Alessia Falsarone is executive in residence, practitioner faculty at the University of Chicago, where she leads the Circular Economy and Sustainable Business program. The article is based on the author’s newsletter A Week of Circularity from the innovation knowledge hub.

All opinions expressed are those of the author and/or quoted sources. is an independent and neutral platform dedicated to generating debate around ESG investing topics.