Making 'green' greener
By Jay Broudy
Oregon companies of all sizes are learning that sustainable business practices are not just about being "green." A sustainability program can increase an enterprise’s bottom line and its understanding of related risks. Developing a coherent, cohesive strategy that leads to a new way of doing business – one that positions the company for success and ensures a more sustainable future for generations to come – is a new business imperative.
Taking the First Step
An important component of a comprehensive sustainable business strategy is maximizing return on investment, and a critical first step for Oregon companies is to turn to their tax department.
Current U.S. tax policy encourages investment in sustainability projects to reduce energy use and environmental impact. And based on increasing calls for energy independence from across the political spectrum, it would seem that we can expect more encouragement, in the form of incentives, credits and grants, in the future.
Applying a Tax Lens is Critical to Help Drive ROI
To capitalize on these opportunities, companies need to consider the potential tax benefits of sustainability investments. Sometimes, companies can mistakenly forego projects because they believe they don’t meet their minimum thresholds for return on investment. But tax incentives can improve return on investment, lower effective tax rates, and increase cash flow. We’ve seen some of these benefits run as high as 50 percent of a project’s cost.
To help retain the tax benefits they can capture, companies also need to identify and manage evolving federal and state statutes and regulations that have created an array of regulatory requirements and business risks. Otherwise, a company may lose those benefits if challenged by federal or state tax authorities, because of insufficient documentation or misclassification.
KPMG Portland Managing Director Jay Broudy is a member of the firm’s sustainability practice. Adam Uttley, a Los Angeles-based partner in KPMG’s sustainability practice, also contributed to the article.
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