Utilities Policy 82 (2023) 101568

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Utilities Policy
journal homepage: www.elsevier.com/locate/jup

Full-length article

Exploring tax-related sustainability reporting by electric utilities

Manuel Castelo Branco a, Delfina Gomes b, *, Adelaide Martins a
a
University of Porto, Portugal
b
University of Minho, Portugal

A R T I C L E I N F O A B S T R A C T

Handling Editor: Janice A. Beecher This study examines tax-related sustainability reporting among electric utilities. Our sample consists of the 32
electric utilities included in the S&P Global Sustainability Yearbook 2022. A content analysis was conducted to
Keywords: examine their level of tax-related sustainability reporting. The concepts of isomorphism and diffusion underpin
Isomorphism and diffusion the interpretation of the findings. Two sources of coercive isomorphism are identified: the State, via Directive
Responsible taxation
2014/95/EU, making sustainability reporting mandatory in the EU, and the laws transposing it; and European
Tax-related sustainability reporting
multinational corporations’ influence on Latin American subsidiaries. We also identified normative and mimetic
isomorphism related to awards and responsible tax initiatives in Spain.

1. Introduction
The disclosure by corporations of information to discharge their re­
sponsibility for their impact on the broader society, which is how the
European Commission (2011) defines corporate social responsibility
(CSR), has grown immensely since the beginning of the century. Such
discharge is mainly performed today through sustainability reporting
(SR). According to Cho et al. (2015, p. 80), the “heightened interest” in
such reporting is mainly driven by increasing societal concerns about the
social and environmental impacts of organisations’ activities; thus, SR
purports to offer information on such impacts. A recent KPMG survey on
the state of such reporting (KPMG, 2022, p. 13) mentions that SR “has
become standard practice for many companies, with steady growth over
the past decade”. According to this report, at the time of the analysis,
96% of the top 250 Global Fortune 500 corporations reported on sus­
tainability issues, and 79% of the top 100 companies (N100) from 58
countries. An interesting development is the emergence of integrated
reporting, that is, the provision of a single report combining both
financial and non-financial information. Regarding the N100, this is a
well-developed practice in the Middle East (with 55% of companies
adopting it). In Asia Pacific and Latin America, the rates of adoption are
30% and 28%, respectively. In Africa and Eastern Europe, 15% of the
companies adopt integrated reporting, whilst in Western Europe the rate
is 14%. North America lags behind with only 2% of the companies doing
it.
The issue of responsible tax behaviour can still be considered an
emerging issue of CSR/Corporate sustainability (CS) and the reporting
thereof.1 About ten years ago, KPMG (2013) considered this issue and
the one of anti-corruption as constituting a new wave of CSR. Two years
later, McCluskey (2015) wondered whether responsible tax behaviour
would constitute the next frontier of CSR. This newness is especially true
regarding sustainability reporting (SR). This much is evidenced by the
fact that only in 2019 did this topic achieve real prominence within the
Global Reporting Initiative (GRI)’s standards with the publication of GRI
207: Tax 2019 (Schnitger et al., 2021).
About five years ago, one could still argue that despite recent de­
velopments in responsible tax behaviour and its reporting, contributions
from academia to the analysis of such practices were “still in an early
stage” (De la Cuesta-González and Pardo, 2019, p. 2169). Contrary to
what happened regarding other sustainability issues, in the past decade,
scholars were still publishing articles on whether responsible tax
behaviour should be considered a CSR/CS issue (Bird and
Davis-Nozemack, 2018; Dowling, 2014). Since then, the situation seems
to have improved. The first literature reviews on this topic were pub­
lished (e.g., Whait et al., 2018), evidencing sufficient growth in the
literature. This notwithstanding, despite some researchers’ belief that

* Corresponding author. University of Minho, School of Economics and Management, 4710-057, Braga, Portugal.
E-mail addresses: mcbranco@fep.up.pt (M.C. Branco), dgomes@eeg.uminho.pt (D. Gomes), afmartins@fep.up.pt (A. Martins).
1
Despite some researchers considering CSR and CS as markedly different (Meuer et al., 2020), they are considered here as referring to the same reality. Cho (2020,
p. 627) mentions that CSR “accounting (and reporting) can be alternatively called ‘social and environmental’; ‘sustainability’; or, more fashionably ‘ESG (envi­
ronmental social and governance)’ accounting (and reporting)”. We will use the terms CSR and CS (and CSR reporting and SR) indiscriminately throughout this
paper.

https://doi.org/10.1016/j.jup.2023.101568
Received 22 December 2022; Received in revised form 25 April 2023; Accepted 26 April 2023
Available online 3 May 2023
0957-1787/© 2023 The Authors. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).
M.C. Branco et al.
responsible tax behaviour is becoming a well-established CSR issue
mainly by way of tax-related reporting (Knuutinen and Pietiläinen,
2017), academic research on tax-related SR (Hardeck and Kirn, 2016)
seems to lag behind (Dinh et al., 2022). In one of the first empirical
studies on tax-related SR, empirical evidence of it was depicted as “rare”
(Hardeck and Kirn, 2016, p. 1338).
Be that as it may, there is nowadays some consensus around the idea
that sustainable development goals (SGDs) are impossible to achieve
without adequate taxation and tax behaviour. As noted by Hearson
(2019, p. 62), tax issues are “primarily integrated into the SDGs through
target 17.1, to ‘strengthen domestic resource mobilisation, including
through international support to developing countries, to improve do­
mestic capacity for tax and other revenue collection’“. What is more, as
pointed out by this researcher, taxation also plays an irreplaceable role
in addressing inequalities (SDG 10), supporting institutions (SDG 16),
and steering behaviour to achieve other SDGs (SDGs 12 to 15).
This study contributes to the growing literature on tax behaviour as a
CS issue by examining tax-related SR among electric utilities. The aim is
to explore how institutional pressures influence tax-related SR by elec­
tric utilities. In line with Ansari et al. (2010, p. 85), we also recognized
that “the adoption and diffusion of new corporate practices often re­
quires significant amounts of adaptive as well as interpretive effort”. The
choice of this sector is due to three main reasons, consubstantiating the
main contributions of this study to the literature on SR. First, organi­
sations providing a public service, such as utilities, are subject to sub­
stantial institutional and technical pressures that fashion organisational
practices, structures, and systems (Scott and Meyer, 1991; see Veltri
et al., 2023 and Venturelli et al., 2023, published in this special issue).
The electricity sector supplies a vital public service and is an environ­
mentally sensitive industry. It has also been exposed to political, social,
and ethical issues (Martins et al., 2020). Some of the controversies are
related to the accusation of rent-seeking behaviour by market partici­
pants (Joskow, 1997). Furthermore, in the last decades, the electricity
sector has been subject to deep and controversial reforms, including
regulation, corporatisation, privatisation, and restructuring (Dubash,
2003). Because of its “economic, political, historical […] attributes”, the
electricity sector is considered ‘‘politically salient”, which originates a
pervasive public interest in its practices (Henisz and Zelner, 2005, p.
362). Second, as emphasised by Slacik and Greiling (2020a, p. 585),
although “particularly prone to sustainability issues”, this sector “re­
mains under-researched regarding the quantity and quality” of SR.
Third, although there is a wealth of studies examining SR in the energy
sector, including electric utilities (e.g., Cormier and Gordon, 2001;
Imperiale et al., 2023; Slacik and Greiling, 2020a, 2020b; Traxler and
Greiling, 2019), none of them have examined the responsible taxation
issue.
Our sample consists of the 32 electric utilities included in the S&P
Global Sustainability Yearbook 2022.2 A content analysis of the sus­
tainability/ESG/integrated reports of these companies was conducted to
examine the level of their tax-related SR. To interpret our findings, we
use a lens of analysis based on the concepts of isomorphism and diffusion
developed by institutional theorists (Boxenbaum and Jonsson 2017;
DiMaggio and Powell, 1983, 1991; Powell and DiMaggio, 1991; Risi
et al., 2023; Scott, 2001). The findings prompted us to identify two
sources of coercive isomorphism: the State, via the so-called non-fi­
nancial reporting (NFR) directive (Directive, 2014/95/EU), making SR
mandatory in the EU; and European parent companies, which are likely
to have diffused and therefore influenced the good levels of tax-related
SR of their Latin American subsidiaries. We also identified sources of
2
S&P Global publishes annually its Sustainability Yearbook. We have used
the 2022 Sustainability Yearbook, highlighting the sustainability leaders which
have emerged from the 2021 Corporate Sustainability Assessment (CSA). See
https://www.spglobal.com/esg/csa/yearbook/2022/downloads/spglobal_s
ustainability_yearbook_2022.pdf, accessed 25/04/2023.
2
Utilities Policy 82 (2023) 101568
normative and mimetic isomorphism related to awards and responsible
tax initiatives.
The paper proceeds as follows: in section two we provide a literature
review, which offers background on responsible tax behaviour and its
reporting, and brief relevant literature reviews on tax-related SR and
electric utilities’ SR. The theoretical underpinnings used in the study as
well as the research method are presented in sections three and four,
respectively. The main findings are presented and discussed in section
five. In section six some concluding remarks are provided.
2. Literature review
2.1. Tax-related sustainability reporting – an emergent research agenda
Until relatively recently CSR-related debates have largely ignored
that tax payment is one of the most important and obvious corporate
contributions to the broader society (Christensen and Murphy, 2004).
Some researchers tried to provide explanations for this state of affairs.
Fisher (2014, p. 353) mentioned that the taxation issue lacked the
“sensationalist, attention-grabbing nature of environmental and human
rights abuses”. For Dowling (2014, p. 183), on the other hand, tax
avoidance was not on the top of the agenda of CSR researchers and
scholars since the State was not viewed as one of the most important
field constituents.
The attention paid to corporate tax behaviour by the general public
has substantially increased in the past 15 years, not only as a conse­
quence of the 2008 crisis, which entailed a decline in public funding
sources but also of the many tax scandals that came to light (of which the
most well-known is probably the Panama Papers) (De la Cuesta-­
González and Pardo, 2019). As a consequence, numerous initiatives
have been created, such as the Spanish Foro de Grandes Empresas (Large
Companies Forum, which is a framework for collaboration between
large companies and the Spanish National Tax Agency) and the Código
de Buenas Prácticas Tributarias (Code of Good Tax Practices), endorsed
in 2010; the UK 2016 Finance Bill, which required large companies to
publish their tax strategy; or the Tax Transparency Code released in
2016 by the Australian Board of Taxation (Gribnau et al., 2018). Other
more recent examples are the B Team’s (2018)3 Responsible Tax Prin­
ciples and GRI’s SR standard GRI 207.
One of the most well-known conceptual models of CSR, Carroll’s
(1991) CSR pyramid, which is “still recognized as the most versatile
framework for describing CSR in different contexts” (Ligorio et al., 2022,
p. 4) leads to a dual perspective on tax behaviour. According to this
conceptual model, the CSR notion concerns four types of corporate re­
sponsibilities: economic, legal, ethical, and philanthropic (Carroll,
1991). The association one may establish between these responsibilities
and tax behaviour is a conflicting one (Gribnau, 2015; Gribnau and
Jallai, 2017; Hardeck and Hertl, 2014). On the one hand, economic
responsibility would lead a company to attempt to reduce as much as
possible its tax burden, as long as this is in line with its legal re­
sponsibility (in obedience to the letter of the law). On the other hand, by
entailing “reductions in national tax revenue and a redistribution of the
tax burden to fall on smaller companies and households”, such an
attempt is not consistent with ethical responsibility (Hardeck and Hertl,
2014, p. 322).
Also based on Carroll’s pyramid, Krieg and Li (2021) present a
slightly different view. These researchers also associate a company’s
economic responsibility with efforts to decrease its tax burden and its
legal responsibility with obeying the letter of tax law. However,
“aggressive forms of tax avoidance do violate the spirit of the law” (p.
485), and a company would not be fulfilling its ethical responsibility by
engaging in such practices. These authors also relate a company’s
3
See https://bteam.org/our-work/causes/governance/advancing-respon
sible-tax-practice, accessed 21/11/2022.
M.C. Branco et al.
philanthropic responsibility to its duty to pay a fair share of taxes.
Contrary to these latter researchers, we do not view the payment of
the fair share of taxes as a philanthropic responsibility, and we also do
not associate it merely with legal responsibility. Rather, we see it as a
core economic responsibility. We identify with Renouard and Ezvan’s
(2018, p. 153) view. They mention four main types of responsibilities –
economic and financial, social (towards employees and subcontractors),
societal and environmental (related to negative externalities and the
destruction of human capabilities), and political responsibility – and
attribute a prominent role to responsible tax behaviour, by placing
economic and financial responsibility at the core of CSR.
Following Geva (2008) who argues in favour of a “concentric-circle
model of CSR”, which “outlines the noneconomic social responsibilities
as embracing and permeating the core economic responsibilities” (p.
22), we conceive CSR as “an entity or system made up of interrelated
responsibilities, with mutual and reciprocal influence on each other” (p.
27). According to this view of CSR, all economic responsibilities
encompass also legal and ethical issues. Economic responsibility is not
limited to wealth creation. It is mainly about the generation of wealth
aimed at the improvement of standards of living, “supplying the needs
and wants of people for goods and services, and selling them at fair
prices, providing jobs and decent wages to the workforce, expanding
career opportunities in all parts of society, and eliminating poverty” (p.
24).
The two better-known instruments of tax-related non-financial
reporting are country-by-country reporting (CbCR) and tax strategy
disclosure (Oats and Tuck, 2019). The origin of the demand for the first
has been associated by Murphy (2016, p. 97) with the contention that
globalisation is not benefitting most citizens. According to him, “some
nation states and large parts of the world’s population have lost out as
the power of the global corporation has risen, including its power to not
pay tax in the right place at the right rate and at the right time” (ibid.).
Despite some considering it “as a potential extension or subsystem of
corporate financial reporting” (Wójcik, 2015, p. 1174), this type of
reporting has come to be mainly associated with SR, in part because of
the importance that the GRI has attributed to it by considering it an
important aspect of tax-related SR in GRI 207 (Schnitger et al., 2021). As
a tool of tax-related SR, CbCR can be looked at as the provision of
companies’ tax-related information “by reference to the geographical
location in which they take place” (Oats and Tuck, 2019, p. 574). Such
information is related to aspects such as a company’s turnover and
number of employees, but also subsidies received, and taxes paid.
In the UK, large companies have been required to publish a tax
strategy statement since 2016 (Oats and Tuck, 2019). Such a document
includes mainly qualitative information concerning UK taxation, such as
their approach to risk management and governance arrangements or
their attitude towards tax planning. GRI 207 includes aspects of the two
instruments. It requires the provision of qualitative information per­
taining to a company’s approach to tax and tax governance, as well as
quantitative information on profits, taxes paid, and other activity in­
dicators on a country-by-country basis (Schnitger et al., 2021).
2.2. Electric utilities sustainability reporting and tax-related sustainability
reporting
Literature focused on electric utilities’ SR is relatively scant (e.g.,
Cormier and Gordon, 2001; Slacik and Greiling, 2020a, 2020b; Traxler
and Greiling, 2019) and fails to mention explicitly the taxation issue.
The same is the case with studies examining SR more broadly in the
energy sector (e.g., Imperiale et al., 2023; Manes-Rossi and Nicolò,
2022; Talbot and Boiral, 2018).
Given the focus of this paper is on tax-related SR, we will only pre­
sent in more detailed fashion studies on electric utilities that examine SR
in general and not specific issues. For example, Cormier and Gordon
(2001) offered a longitudinal study of social and environmental
reporting by three Canadian electric utilities in their annual reports and
3
Utilities Policy 82 (2023) 101568
found that the publicly owned companies disclosed more than the pri­
vately owned ones. Based on samples of 489 energy companies’ sus­
tainability reports retrieved from the GRI database, Slacik and Greiling
(2020a) and Slacik and Greiling (2020b) examined, respectively,
compliance with the materiality principle of the GRI and the coverage of
indicators based on the GRI’s G4 SR Guidelines. Slacik and Greiling
(2020b) found only a moderate coverage of indicators, with the
coverage of the sector-specific indicators lagging behind the coverage of
the standard-disclosure ones. They also found an underrepresentation of
the social dimension. Regarding indicators also explored in our study,
they found that the indicator of DEVGD was the most disclosed eco­
nomic indicator. Slacik and Greiling (2020a) found poor coverage and
quality of material aspects. One finding relevant to our sample pertains
to the good relative performance of Spain (10 companies), Italy (7
companies), and the US (6 companies). Portugal was the better
performer, but only one company from this country was considered.
Another relevant finding is that “economic performance” was one of the
only two relevant material categories regarding which compliance was
achieved (the other being “emissions and climate change”). Traxler and
Greiling (2019) analysed 83 GRI G4 sustainability reports from com­
panies and found a prevalence of the economic dimension, with the
indicator of DEVGD being the most frequently disclosed.
Regarding literature on tax-related SR, few studies have been pub­
lished in academic journals thus far. To the best of our knowledge, the
first studies on tax-related SR were published within the past ten years
(Hardeck and Kirn, 2016; Ylönen and Laine, 2015). More recently, the
few articles published on this topic include Faúndez-Ugalde et al.
(2022), Hardeck et al. (2019), Holland et al. (2016), Kao and Liao
(2021), and Reiter (2020). Ylönen and Laine (2015) offered a qualitative
case study on one of the largest forestry and pulp companies in the world
and conclude that “the company makes very few tax-related disclosures,
despite its extensive CSR claims and ostensible wide commitment to
transparency” (p. 18). Based on a sample of 218 SR of Fortune 500
companies relative to the year 2018, Reiter (2020) offered a descriptive
analysis of tax-related SR. She found that only 47 of these reports
addressed tax issues in a significant way. She concluded that “despite
widespread concern with tax avoidance and tax policies of large
multinational firms, the talk about taxes in the sample sustainability
reports does not, with a couple of exceptions, have much to say about
that issue” (p. 61).
Hardeck and Kirn (2016) and Hardeck et al. (2019) are probably the
most relevant for our study, namely because our sample includes
countries considered in their samples. Using a sample of companies
listed in the US, the UK, and Germany, Hardeck and Kirn (2016)
examined the tax-related disclosure in sustainability reports from the
period 2007–2012. Their findings revealed that companies listed in the
UK presented the highest level of tax-related SR and that this type of
reporting increased significantly over time. On the contrary, such type of
reporting in the other two countries was “rather low and more stable
over time” (p. 1349). Regarding these latter countries, these authors
found it to be worthy of mention that several companies listed in the US
“expressed a negative attitude toward taxes (i.e., they often stated that
they lobbied for lower taxes)”, whereas those listed in Germany pre­
sented a “slightly higher level of reporting” and seemed to be “less
hostile toward taxation” (ibid.).
Based on a sample of 4438 CSR reports from 24 countries, Hardeck
et al. (2019) examined the association between Hofstede’s dimensions of
culture and views about tax and CSR in CSR reports. They found that
cultural differences shape the relevance of tax and views towards tax in
CSR reports (Hardeck et al., 2019). Important findings for our study
include: Spain as the country with the highest percentage of reports with
tax-related information, with this country, Italy and Korea having over
90% of the reports with such type of information; France and the UK
having, respectively, about 74% and 69% of reports with tax-related
information; the US and Hong Kong having among the lowest percent­
ages (57% and 48%, respectively).
M.C. Branco et al.
As they examine countries that we analyse in our study (Chile,
Portugal, and the UK), Faúndez-Ugalde et al. (2022); Holland et al.
(2016)) and Neves and Albuquerque (2019) are also relevant empirical
papers. Holland et al. (2016) examined tax-related disclosures in
(Financial) annual reports and CSR reports over 11 years
(2004/05–2014/15) of seven listed companies that were subject to
specific tax-related criticisms in the UK. They found a general increase
over the period, but also a reluctance to either challenge the criticism or
confirm its acceptance. Based on financial and CSR reports, Neves and
Albuquerque (2019) examined disclosures pertaining to income taxes.
Regarding CSR reports, of 17 companies’ reports, these researchers
found only “a note on tax or a statement on tax payments” in the reports
of only 6 companies. Faúndez-Ugalde et al. (2022) used a sample of 30
Chilean-listed companies and examined their tax-related SR compliance
with GRI 207 requirements. They depict their findings as demonstrating
unclear issues in their tax sustainability related to the GRI 207 and
suggest that companies use their CSR activities “more to moderate
reputation risk than to aim at transparency” (p. 1). Also using a sample
of UK companies and examining their CSR reports for the period
2010–2014, Kao and Liao (2021) examined the association between
tax-related disclosures and tax avoidance. These researchers found a
positive association between these two variables.
3. Theoretical framework
This study is underpinned by the theoretical constructs of isomor­
phism and diffusion of organisational institutionalism (Boxenbaum and
Jonsson 2017; DiMaggio and Powell, 1983, 1991; Greenwood et al.,
2017; Powell and DiMaggio, 1991; Scott, 2001). Neo-institutional the­
orists have stressed the importance of conforming to the external envi­
ronment for the social validity and survival of organisations. The focus is
on how organisations obtain legitimacy through processes of compli­
ance and isomorphism within a specific organisational field (Box­
enbaum and Jonsson 2017; DiMaggio and Powell, 1983). In societal
sectors, such as the electric and water utilities sectors (Venturelli et al.,
2023), social, cultural, and political issues explain the organisational
change. Legitimacy is defined as ‘‘the perceived appropriateness of an
organization to a social system in terms of rules, values, norms, and
definitions” (Deephouse et al., 2017, p. 32). This perspective has been
used in several studies on corporate reporting that are relevant to our
study, either because of the focus on tax-related reporting (Depoers and
Jérôme, 2019) or because they examine the diffusion of NFR in the EU
(Korca et al., 2021; Posadas and Tarquinio, 2021; Ştefănescu, 2022).
Organisations are integrated into an institutional environment. They
structurally reflect the socially constructed reality of their organisa­
tional field, thus resulting in the tendency for organisations to become
isomorphic within institutional environments (Meyer and Rowan,
1991). Isomorphism is, accordingly, defined as “a constraining process
that forces one unit in a population to resemble other units that face the
same set of environmental conditions” (DiMaggio and Powell, 1983, p.
149). DiMaggio and Powell (1983) identify three types of isomorphism:
coercive, normative, and mimetic. The first type of isomorphism “results
from both formal and informal pressures exerted on organisations by
other organisations upon which they are dependent and by cultural
expectations in the society within which organisations function” (p. 150,
see also Boxenbaum and Jonsson, 2017). Acknowledging that coercive
pressures are mainly associated with a company’s legal and contractual
context, in their study of the influence of institutional pressures on tax
reconciliation disclosure, Depoers and Jérôme (2019, p. 94) emphasise
the role of the State, which has an important role by way of regulations,
such as corporate reporting requirements, that reflect somewhat the
expectations of the pressure groups. Coercive pressures result also from
resource dependence, such for example the enforcement of specific
practices, including accounting practices, so that the organisation is
eligible for state grants or certifications from specific entities (Box­
enbaum and Jonsson, 2017). But “pressures arising from institutional
4
Utilities Policy 82 (2023) 101568
complexity do not affect all organisations equally” (Greenwood et al.,
2011, p. 339; see also Raaijmakers et al., 2015).
Referring to coercive isomorphism as pushing companies “to change
and comply with rules, laws, directives, and other types of regulation”,
Korca et al. (2021, p. 357) offer the NFR directive as an example of a
coercive mechanism influencing SR in Europe. Posadas and Tarquinio
(2022, p. 4) also view this directive as a “coercive factor”. Based on their
findings on the effects of the directive on sustainability reporting by
Italian and Spanish listed companies, Posadas and Tarquinio (2022, p.
23) suggest that mandatory SR has achieved higher degrees of norma­
tivity in Spain than in Italy. These authors further argue that “the pro­
duction of normativity not only depends on formal legislation but also
stems from structural elements, such as the congruence of legislation
with previous practices and the existence of prior norms” (ibid.) In ef­
fect, they assert, in the Spanish case, “the new requirements set by the
EU Directive fit with the existing reporting landscape, where govern­
mental initiatives had already been taken to support the development of
responsible practices among companies” (ibid.). Ştefănescu’s (2022, p.
318) analysis of the process of adoption of this directive across all EU
Member States offers evidence suggesting “all types of isomorphism in
transposing” it, “supported by the national regulatory quality (coercive),
the past similar reporting experience (mimetic) and the strength of the
accounting profession (normative).”
Depoers and Jérôme (2019, p. 94) identify an additional coercive
force, “the State as a shareholder” (p. 94). They argue that the State acts
as a powerful stakeholder and responds to public expectations and de­
mands. We argue that multinational corporations (MNCs) also act as a
coercive force. Based on the arguments offered by Hunter and Bansal
(2007, p. 137) regarding environmental communication and trans­
posing them to the case of tax-related SR, we put forward that MNCs are
likely to standardise their global tax-related SR “to achieve a common
level of credibility across all subsidiaries”. As is the case with environ­
mental issues, most stakeholders that have high tax-related expectations
of MNCs are in developed countries (ibid.). These stakeholders include
non-governmental organisations, like the Tax Justice Network, local and
federal governments, and institutional and private investors (ibid.).
What is more, as environmental activists, the tax justice ones “appear to
be increasingly savvy; better connected because of improved informa­
tion technology; and more able to mobilize support for their causes”
(ibid.).
Normative isomorphism is associated with professionalisation,
which has two aspects that are “important sources of isomorphism”
(DiMaggio and Powell, 1983, p. 152): formal education and professional
networks. Normative isomorphism also results from pressures regarding
what is widely considered a proper course of action, or even a moral
duty (Suchman, 1995). As explained by Boxenbaum and Jonsson (2017),
this happens when there are signals from the organisational environ­
ment that the adoption of a particular practice is a correct moral choice.
For example, in Spain, the Code of Good Tax Practices can be considered
a normative pressure, as it “sets out a series of recommendations or
guidelines aimed at enhancing transparency and mutual trust, citing the
information that should come before corporate governing bodies”.4
Mimetic isomorphism, which DiMaggio and Powell (1983) associate
with contexts of uncertainty, refers to organisations modelling them­
selves on competing organisations. Depoers and Jérôme (2019, p. 100)
refer to tax issues as representing “a great source of uncertainty and
concern for companies” and acknowledge the contradiction between the
sensitive and strategic natures of tax-related information “while, at the
same time, pressures for increased fiscal transparency are increasing
from all sides”. Their findings lead them to suggest that the alignment of
4
Available at: www.internationaltaxreview.com/article/2a6a
3lfsp39jvzr1j6zgg/spain-une-19602-provides-standards-for-tax-compliance-in
-corporate-sphere#:~:text=In%20Spain%2C%20the%20Code%20of,come%20
before%20 corporate%20 governing%20 bodies, accessed 08/12/2022.
M.C. Branco et al. Utilities Policy 82 (2023) 101568

corporate disclosure policies with those of the industry group is used by Table 2
companies to manage such uncertainty. Korca et al. (2021) refer to the Sample by country.
adoption of the GRI standards as an example of this type of isomorphism, Country No. %
mentioning the widespread use of such standards in Europe and com­
Brazil 3 9%
panies as a result of the view that not adopting them would constitute a Chile 4 13%
threat to their legitimacy. Colombia 2 6%
These pressures – coercive, normative, and mimetic – can also be France 1 3%
linked to diffusion channels, with external pressure, such as the one Hong Kong (HK) 1 3%
Italy 2 6%
exerted by the state, peer pressure exerted from other firms, and internal Portugal 1 3%
diffusion pressure exerted by professional networks (Strang and Soule, Republic of Korea 1 3%
1998; see also Boxenbaum and Jonsson, 2017). Thus, isomorphism can Spain 5 16%
also be studied from the perspective of the outcome of these institutional Thailand 6 19%
United Kingdom (UK) 1 3%
pressures exerted by different channels of diffusion (Boxenbaum and
United States (US) 5 16%
Jonsson, 2017; Heugens and Lander, 2009). Total 32 100%
Table 1 summarises the main characteristics of isomorphism to help
highlight its perceived theoretical value within the framework of insti­
tutional theory. wanted to analyse, as well as to obtain a first insight into how tax issues
were being described. The second step pertained to the definition of the
4. Research method reporting criteria checklist, consisting of “clear pre-defined categories”
(p. 1804) and developed based on the information disclosed in the re­
Our sample consists of the 32 electric utilities included in the S&P ports and on existing literature. These two steps were carried out by the
Global Sustainability Yearbook 2022 (see Table 2). A content analysis of first author. However, the first step was also conducted by the second
the non-financial reports (sustainability, ESG, or integrated reports) of and third authors on the eight reports that had been previously
these electric utilities was conducted to examine the level of develop­ considered as containing more information. This instrument was sub­
ment of tax-related SR. With 6 companies (19%), Thailand is the country sequently used to quantify the extent to which the electric utilities in the
with more companies in the sample (6), followed by the US and Spain, sample addressed tax issues. The criteria are presented in Table 3. A
with 5 companies (16%) each. European companies represent about disclosure score was then constructed by detecting the presence or
31% of the sample. absence of information pertaining to each of the responsible taxation
Our data collection approach is adapted from the one used by criteria. The analysis of the level of tax-related sustainability reporting
Manes-Rossi and Nicolò (2022). Similarly to these researchers, we have was made using a scoring system that consisted in assigning a point for
content analysed the 2021 sustainability or ESG reports or, in their the presence of information pertaining to any of the categories consid­
absence, the integrated reports of the companies in the sample (4 ESG ered. The disclosure scores were calculated by adding the points thus
reports; 10 integrated reports; and 18 sustainability reports). As argued obtained.
by these researchers, content analysis is “one of the most popular and The third step involved the analysis and interpretation of the infor­
reliable methods” (p. 1804) used in the examination of non-financial mation obtained. Consistent with Manes-Rossi and Nicolò (2022), we
reports within the literature and derives useful patterns and insights. reviewed the reports using the checklist, assessing whether any key­
We conducted a content analysis of the reports using the systematic words associated with tax issues (such as tax, taxation, or fiscal)
multi-step process adopted by Manes-Rossi and Nicolò (2022, p. 1804): appeared in the reports and ensuring that only sentences, paragraphs, or
first, we extracted and performed an overview of the reports; second, we explicative infographics explicitly associated with the topic were
developed a reporting criteria checklist; third, we analysed and inter­ considered tax-related SR. The fourth step, considered as “complemen­
preted the information following the theoretical concept adopted of tary to the previous one” and illuminated by the theoretical concepts of
isomorphism and diffusion; fourth, we selected illustrative quotations isomorphism and diffusion, involved the selection of “illustrative quo­
and infographics. The first step consisted in downloading the reports tations and infographics” to be used as illustrative examples to aid in the
from the companies’ web pages and screening them to check whether understanding of tax-related SR (p. 1806). This part of the analysis was
tax issues were referenced. Such a previous examination allowed us to
identify the parts of the reports that contained the information we
Table 3
Responsible taxation reporting criteria.

Table 1 1. Does the letter to stakeholders mention tax issues?

Main characteristics of institutional isomorphism. 2. Does the materiality analysis include tax issues, either explicitly or as part of, for
example, economic and financial performance or business integrity?
Types of Type of pressures Who exerts the pressure
3. Does the report include an autonomous section on tax issues?
isomorphism
4. Does the report include a description of tax policy (or similar, such as tax
Coercive • Formal and informal • Other organisations upon management or tax strategy)?
isomorphism pressures exerted on which they are dependent 5. Does the tax policy mention tax havens?
organisations • Cultural expectations in 6. Does the tax policy mention transfer pricing?
• Resource dependence society 7. In case the report includes a GRI index, does it include a reference to GRI 207 – Tax?
• Company’s legal and 8. Does the report include an indicator (table or figure) offering information on direct
contractual context economic value generated and distributed (DEVGD)?
• The State by way of laws 9. Does the report offer country-by-country tax-related information?
and regulations 10. Are tax issues mentioned in connection with risks?
• The State as a shareholder 11. Are tax issues mentioned in connection with the supply chain?
• Multinational corporations 12. Are tax issues mentioned in connection with the SDGs?
Normative • Formal education • Professional organisations 13. Does the report mention the participation of the company in responsible taxation-
isomorphism • Professional networks • Regulatory bodies related initiatives?
• Moral duty • Consultants 14. Does the report mention awards pertaining to responsible tax practices or
Mimetic • Contexts of uncertainty • Other companies in the reporting?
isomorphism organisational field 15. Does the report mention the existence of an autonomous report devoted to
• International standards responsible taxation issues (for example, a tax transparency report)?

5
M.C. Branco et al. Utilities Policy 82 (2023) 101568

also performed by the author that conducted the two first steps Table 5
mentioned above. The second and the third authors also subsequently Average disclosure score by country.
applied the criteria to the eight reports they analysed for the first step. Country No. Average
Only a couple of discrepancies were found, and they were easily
Spain 5 11.80
reconciled. Italy 2 11.00
Regarding the integrated reports, only the financial statements sec­ Other European countries 3 6.67
tion was not examined for sustainability-related tax information. It is Thailand 6 0.67
worthy of note that among the ten reports presenting more of this type of US 5 0.20
Chile 4 6.50
information, one could count only two integrated reports, those of Terna Brazil 3 3.33
and Neoenergia. Other non-European countries 4 1.00
Total 32 4.56
5. Main findings and discussion

In Table 4, information on the number of companies from each Table 6

country that obtained a score of zero or a score within the three intervals Reporting by disclosure category.
[1–2], [5–8], and [9–14] is presented. All five Spanish companies and Category No % Countries (No. companies)
both Italian companies present scores in the interval between 9 and 14.
DEVGD 19 59% Spain (3); Chile (4); Italy (2); Brazil (2);
No company has presented information on all the 15 criteria shown in Colombia; Portugal; France; UK; Thailand; US;
Table 3. Considering the reporting criteria, all the companies from HK; Republic of Korea
Colombia, the US, and Thailand are among the worst performers in Autonomous 15 47% Spain (5); Italy (2); Chile (3); Portugal; France;
section Brazil; UK; Thailand
terms of tax-related SR (Table 4), with half of the Thai companies and 4
Tax policy or 15 47% Spain (5); Italy (2); Chile (3); Portugal; France;
of the US ones being included in the set of companies with a score of 0. similar Brazil; UK; Thailand
The lack of attention from US companies is in line with Hardeck and Risks 15 47% Spain (5); Italy (2); Chile (3); Portugal; France;
Kirn’s (2016) results. They are coherent with the idea of a consistency Colombia; UK; Thailand
between a low level of reporting and the “prevalent view of taxes as GRI 207 – Tax 14 44% Spain (5); Italy (2); Chile (3); Portugal; Brazil
(2); UK
being harmful to social welfare” in this country put forward by these
Transfer pricing 12 38% Spain (5); Italy (2); Chile (3); Portugal; UK
researchers (p. 1349). Materiality 12 38% Spain (5); Italy (2); Chile (2); France; Portugal;
Companies from the EU lead in terms of such reporting (Table 4, analysis UK
Table 5, Table 6). The 4 top companies are Iberdrola, Red Eléctrica, and Tax havens 9 28% Spain (5); Chile (2); Italy; UK
Country-by- 9 28% Spain (5); Italy (2); Portugal; Chile
Endesa from Spain, and Enel, from Italy. Then follow the other Spanish
country
and Italian companies. After these, appear the two Chilean companies Autonomous report 7 22% Spain (3); Chile (2); Italy; Brazil
which are subsidiaries of the Enel Group. Thereafter follow the Portu­ Supply chain 7 22% Spain (4); Italy (2); Republic of Korea
guese company (EDP), the Brazilian company Neoenergia and the UK- Taxation-related 6 19% Spain (5); Italy
based company Atlantica. These findings on the Spanish and Italian initiatives
SDGs 3 9% Spain; Italy; Brazil
companies are in line with Hardeck et al. (2019), who found that Spain
Awards 2 6% Spain
and Italy were among the countries with over 90% of companies Letter to 1 3% Spain
reporting tax-related issues in their CSR reports, well above companies stakeholders
from France and the UK (about 74% and 69%, respectively).
Information presented in Table 5 reveals the difference in terms of
average disclosure score by country. Spain leads with an average score of special relevance. For example, in their examination of the integration
of 11.8, followed by Italy with 11. The other European countries of SDGs in SR in the European energy sector, Manes-Rossi and Nicolò
(France, Portugal, and the UK, with only one company each) follow at a (2022) seem to attribute great importance to the inclusion of such goals
distance, but with an average score above those of the other countries. in the CEO’s/Chairman’s statements or letters and materiality matrices.
Chile’s score stands out among those from non-European countries, with The CEO letter defines companies’ strategic lines and reflects organ­
6.5. However, if one excludes the two companies that are controlled by isational culture and values, and it is used to enhance audiences’ per­
Enel, this score drops to 3.5. A similar situation happens in the case of ceptions of legitimacy. As Manes-Rossi and Nicolò (2022) do regarding
Brazil. If one does not consider the company which is controlled by the integration of SDGs, we interpret the inclusion in such statements of
Iberdrola, the average score drops from 3.33 to 1. The average scores for references to tax issues as evidence of putting them at “the core of firm’s
the US and Thailand stand out for being below 1. operations and strategies” (p. 1808).
Although to construct the disclosure score an equal-weighted index is Iberdrola, from Spain, is the only company that mentions the issue of
used and each item of disclosure is deemed equally important, for the responsible tax behaviour in the letter from the chairman, and identified
discussion one has to acknowledge that some of them may be considered itself as a good corporate citizen:
Our activities have also had a very positive impact on government
coffers in all the countries in which we are present, to which we have
Table 4
contributed more than €7800 million. And we do so responsibly, based
Country representation in score intervals.
on a culture of compliance embedded in all of our activities, and which
Score interval has given leading positions on the tax transparency ratings.” (Iberdrola,
0 [1–2] [5–8] [9–14] 2022, p. 7, p. 7).
No. 4 from the 2 from Brazil; 3 from 1 from Brazil; 5 from Regarding the consideration of tax issues in the materiality analysis,
companies US; Thailand; 1 from Chile; Spain; only 2 companies have explicitly considered the issue of “responsible
by country 3 from 1 from Chile; 1 from 1 from 2 from taxation”, Acciona and Acciona Energia. Both companies offer a tradi­
Thailand; Colombia; France; 1 Italy;
tional materiality matrix, which is very similar. Fig. 1 reproduces the
from
Portugal;
matrix offered in Acciona Energia’s SR. They also offer a network of
1 from 1 from the HK; 1 1 from the UK 2 from relationships between the material issues, in which the issue of
Colombia from the Republic of Chile responsible taxation is depicted as influencing and being influenced by
Korea; 1 from the US the issues of “ethics and anti-corruption” and “corporate governance”.

6
M.C. Branco et al.
Fig. 1. Acciona Energia’s traditional materiality matrix
Source: Acciona Energia (2022, p. 18).
Both companies view transparency and fiscal responsibility as being
“directly related to economic performance” (Acciona Energía, 2022, p.
70).
Neither these 2 companies nor Iberdrola explicitly mentioned tax
issues in both the CEO’s/Chair’s statements or the materiality analysis.
However, they were the only companies that did at least one of these
things.
Besides those 2 companies, only 10 other companies [all the Euro­
pean ones except the one from the UK and the two Chilean companies
controlled by Enel and Neoenergia (from Brazil)] mention the issue at
hand as part of or related to the following material issues: responsible
development (1); contribution to society (1); economic and financial
performance (2); good/sound governance and equitable/ethical/fair
corporate behaviour/conduct (4); economic business sustainability (1);
business integrity (1). Regarding the other companies, we were not able
to see a link between responsible tax behaviour and the material issues
considered.
Only 3 companies mention tax issues directly and explicitly in rela­
tion to SDGs: Red Eléctrica, Terna (Italy), and Neonergia. Red Eléctrica
Group (2022, p. 349) explicitly states that its tax strategy is aligned with
its 2030 Sustainability Commitment, “which defines, as one of its four
priorities, the contribution to the development of the socio-economic
environment”. It acknowledges its “contribution to the achievement of
the” SDGs, “especially SDGs 1 (No poverty), 10 (Reduce inequalities)
and 17 (Partnerships for the goals) through the tax contribution in all
countries in which the Company operates” (p. 353). Neoenergia (2022,
p. 104) associates the taxes it pays to SDG 8 (Decent work and economic
growth), and states that its tax policy “is based on the principle that the
taxes it pays operate as the principal contribution to sustaining public
expenditures, and therefore as one of its primary contributions to society
as a whole and to the SDGs”. Although acknowledging that in the
countries in which it operates “overall tax revenue represents an
essential contribution to public expenditure and, thus, to economic
development and the social welfare of citizens” and asserting that its
approach to taxation meets its “obligation to make an economic
contribution” to such territories, Terna (2022, p. 159) only establishes a
direct link between taxation and SDG 17 (Partnerships for the goals).
These results are in line with the public growing pressures on utilities to
demonstrate their contribution to sustainable development, and to
ensure the legitimacy of their businesses (Venturelli et al., 2023).
These 3 companies are among the few presenting their tax policies/
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Utilities Policy 82 (2023) 101568
strategies in such a way as to acknowledge their economic responsibility
as defined by Geva (2008) and Renouard and Ezvan (2018). Eletrobras
(2022, p. 63) is also among such companies, recognizing “the impor­
tance of taxes for the country as a source of government revenue, for
fiscal policy, and for macro-economic stability”. The other is EDP (2022,
p. 102), which acknowledges its “ethical and civic duty to contribute to
the financing of the general functions of the States in which it operates,
by paying the taxes, levies and other contributions that are due,
contributing to the well-being of citizens and to the development of the
group’s local business”.
We believe that the consideration of tax issues in connection with the
supply chain is an aspect worthy of note because it reveals a perspective
of assuming responsibility for sound sustainability practices within the
company’s premises, but also for the soundness of such practices for
their suppliers, and in the final analysis for the supply chain as a whole
(Andersen and Skjoett-Larsen, 2009). Except for Endesa (which is
controlled by Enel), all the Spanish companies appear to extend their
responsibility regarding tax issues to the entire supply chain. By
demonstrating this high level of commitment, companies seem to show
that they are engaged with best social responsibility practices toward tax
issues, which is particularly relevant for companies under intense social
scrutiny.
For example, Red Eléctrica Group (2022, p. 321) mentions, in the
section on “responsible value chain”, as one of the requirements and
controls established before authorising the subcontracting to a third
party, the “proof that the subcontractor is up to date with payments to
the Tax Administration and the Social Security Agency”. Acciona
Energia (2022, p. 108) refers to the existence of “No-Go Policies”
regarding contracting suppliers, which include the existence of “debts
with the Social Security Institute or Tax Authorities”.
The good performance of European companies is very likely related
to the existence of regulation on SR in the EU (the NFR directive), which
dates from 2014. We view this as a mechanism of coercive isomorphism.
Although it does not require companies to disclose tax-related infor­
mation, the existence of this sort of legislation is likely to influence all
types of information. In addition, institutional complexity may also
affect the process of adoption of the Directive, with decision makers
taking different times to respond to coercive institutional pressures
(Raaijmakers et al., 2015). In fact, this directive has been transposed to
national legislation with different lags. Italy and the UK were among the
first countries to transpose the NFR directive to their national legislation
M.C. Branco et al.
(in 2016). Portugal did it in 2017. Of the EU countries with companies
included in the sample, Spain was tardy, transposing the directive only
in 2018. Posadas and Tarquinio (2021, p. 22) suggest that this tardiness
may be explained by the “lack of urgency” in the transposition given the
“maturity” that characterized this type of reporting process in Spain.
Despite this tardiness, among companies from the EU, the Spanish
ones stand out for being those with the more developed reporting
practices. Besides the high level of maturity of SR in Spain (Posadas and
Tarquinio, 2021), another likely explanation for this is that the docu­
ment transposing the NFR directive to the Spanish legislation has spe­
cifically introduced the taxation issue as part of the topics that must be
considered in the information to be published. We view this as another
mechanism for coercive isomorphism, which is particularly interesting
and relevant to the issue under examination.
Furthermore, in Spain there is the Code of Good Tax Practices,
created in 2010 by the Forum of Large Companies, established in the
previous year at the behest of the National Tax Agency. All the Spanish
companies refer to taxation-related initiatives, namely having signed up
to this code. The other company mentioning participation in taxation-
related initiatives is Enel, which offers the following statement:
The Enel Group promotes participation in Cooperative Compliance
schemes where they exist in the various countries in which it operates,
for companies that met the legal requirements for participation. In
particular, Enel participates in the Collaborative Fulfilment scheme in
Italy, for larger companies, in the equivalent scheme in Spain (Código de
Buenas Prácticas Tributarias) and is collaborating with the federal tax
authority in Brazil in a pilot project for the creation of a local cooper­
ative compliance model (Projeto CONFIA - Conformidade Cooperativa
Fiscal). (Enel SpA, 2022, p. 333).
Enel also mentions having adhered in 2021 to the B Team Respon­
sible Tax Principles. Interestingly, Neoenergia (the Brazilian company
controlled by Iberdrola) mentions having been invited in 2021 to
collaborate on the same project referred by Enel, the Collaborative Tax
Compliance Program (CONFIA). The evidence suggests that all these
companies try to identify with initiatives of social legitimacy .
Fig. 2. Endesa’s award for tax transparency
Source: Endesa (2022, p. 275).
8
Utilities Policy 82 (2023) 101568
Spanish companies also deem it important to mention being well-
placed in the ranking of tax transparency and accountability prepared
by the Fundación Haz (previously Fundación Compromiso y Trans­
parencia). Endesa and Red Eléctrica mention their shared first place in
this ranking. Red Eléctrica Group (2022, p. 353) uses about a third of a
page to mention that “for the second consecutive year, the Red Eléctrica
Group leads the ranking in the Corporate Tax Responsibility Report of
IBEX 35 companies for 2020 prepared by the Fundación Compromiso y
Transparencia”. Endesa used half a page for this (Fig. 2).
The good performance of Spanish and Italian companies is consistent
with Slacik and Greiling’s (2020a) findings that these two countries
were not only those whose companies offered more sustainability re­
ports but performed better in terms of compliance with materiality.
Furthermore, the evidence suggests that the companies used social
categories (to be included in the ranking of the Corporate Tax Re­
sponsibility Report of IBEX 35 companies) to demonstrate they act in
socially responsible ways, in line with previous literature (Greenwood
et al., 2017).
We view initiatives like the Spanish Code of Good Tax Practices and
the report prepared by the Fundación Haz as both mimetic and
normative forces. Having signed up for this code and having a good rank
in the list are likely to be viewed by companies as a means to avoid the
questioning of their legitimacy. These tax-related initiatives and award
are aspects that we believe may have contributed to the level of devel­
opment of tax-related SR in Spain. In addition, we also view the Code of
Good Tax Practices as a normative force because it is the initiative of a
network of the Tax Forum of Big Companies which is comprised of the
Spanish National Tax Agency and 27 of the country’s largest companies
(including Endesa and Iberdrola).
Only seven companies have autonomous tax-related reports
mentioned in their SR (the existence of which we have confirmed) (See
Table 7): the 4 top reporters (Iberdrola, Red Eléctrica, Endesa, and Enel),
the 2 Chilean companies controlled by Enel, and the Brazilian company
controlled by Iberdrola. Enel and its subsidiaries and Iberdrola have
produced such a report since 2018, whilst the other Spanish companies
M.C. Branco et al.
Table 7
Autonomous tax-related reports.
Company Autonomous tax-related reports
Endesa Tax Transparency Report 2020, 2021
Enel Total Tax Contribution 2018, 2019; Tax Transparency Report 2020,
2021
Enel Total Tax Contribution 2018, 2019, 2020, 2022
Américas
Enel Chile Contribución Tributaria Total 2018 (in Spanish); Total Tax
Contribution 2019, 2020, 2021
Iberdrola Informe de Transparencia Fiscal 2018 (in Spanish); Report on Tax
Transparency 2019, 2020, 2021
Neoenergia Relatório de Transparência Fiscal 2021 (in Portuguese)
Red Eléctrica Informe de Transparencia Tributaria 2020
and the Brazilian one only since 2020 (Endesa published 2 reports,
whilst Red Elétrica has only the 2020 report on its webpage).
Within companies from Latin America, those that are controlled by
European companies appear to have better tax-related SR than their
counterparts because of the diffusion of practices adopted by parent
companies. The two Chilean companies controlled by Enel are in the top
ten reporters. Neoenergia, from Brazil, which is controlled by Iberdrola,
appears just behind along with the Portuguese company. Curiously, the
other company controlled by Iberdrola, Avangrid, lags behind and is one
of the worst reporters. One possible explanation for this is the fact that
this latter company operates in the US. Also curiously, the worst-
performing Chilean company in terms of tax-related SR (AES Andes) is
controlled by a company from the US (AES Corporation). The other
Chilean company (Colbun) appears in the middle of the ranking.
Both Enel Chile (2022, p. 349) and Enel Américas (2022, p. 340)
mention their adherence to Enel Group’s Tax Strategy. Enel SpA (2022,
p. 330) emphasises that since 2017 the Enel Group has had a tax strat­
egy, approved by the parent company, which its subsidiaries “are
required to adopt”, “thereby assuming the responsibility of ensuring it is
acknowledged and applied”. Although Neoenergia does not mention
Iberdrola in connection with its tax policy, Iberdrola (2022, p. 180) is
explicit about having a tax policy “that sets out the group’s tax strategy”
that “applies to all group companies”. This good performance of the
three Latin American companies controlled by the Spanish and Italian
companies compared to their counterparts may also be an example of
diffusion of practices by coercive isomorphism, in that the parent
companies seem to prefer having standardized tax-related SR practices
across countries as this is likely to offer credibility to such reporting, as
suggested by Hunter and Bansal (2007).
14 of the 24 companies offering a GRI index mention the GRI 207
standard (about 58%). For Red Eléctrica Group (2022, p. 7) “the early
adoption of the new GRI standards, GRI 207 on Tax matters, GRI 303 on
Water and effluents and GRI 403 on Occupational Health and Safety” is
deemed noteworthy. This company is the only one that has done this and
has used this GRI standard in its reports since 2019. All the other Spanish
companies and Enel used it in the 2020 and 2021 reports. The Latin
American subsidiaries of Iberdrola and Enel used it only in the 2021
reports.
Regarding the 14 companies that reported using GRI 207, only 9
have disclosed information covering, with varying degrees of develop­
ment, all four topic-specific disclosures proposed by this standard:
approach to tax; tax governance, control, and risk management; stake­
holder engagement and management of concerns related to tax; country-
by-country reporting. The most problematic disclosure is the latter
(CbCR). Three companies do not offer this information at all. We
considered that the other 2 companies did not present adequate infor­
mation: one of them included a small part of the required information as
part of the information concerning the DEVGD; the other did not present
the required information by country as it should, although the infor­
mation it presented was adequate.
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Utilities Policy 82 (2023) 101568
6. Concluding remarks
Aiming to explore how institutional pressures influence tax-related
SR, this study explored tax behaviour as a CS issue by examining tax-
related SR among electric utilities. Using a theoretical underpinning
based on the concepts of isomorphism and diffusion, we found two
sources of coercive isomorphism: the State, via the NFR directive, and
the laws transposing it; and parent companies. Regarding Spanish
companies being the top reporters, it is likely that the law transposing
the directive adding the requirement of tax-related information has had
a role in this. In the case of Latin American companies controlled by
Spanish and Italian companies, the parent is likely to have determined
the good level of tax-related SR of the subsidiaries. We also detected the
existence of mimetic and normative isomorphism by way of the likely
effect of the existence of responsible tax-related awards and initiatives in
Spain. But the findings also suggest another, different influence of the
institutional context. Avangrid, a company controlled by Iberdrola, does
not perform as well as the other subsidiaries of this company, most likely
because it operates in a context in which the prevalent view regarding
taxes is mostly negative (that of the US).
The study reinforces the theoretical argument that institutional
pressures resulting in isomorphism are connected with the contextual
characteristics of the organisational field, resulting in heterogeneous
responses to the same institutional pressures (Boxenbaum and Jonsson,
2017), by companies located in different geographical spaces, thus
calling for future research to explain these dissimilarities. This study also
contributes to the literature by providing insights on electric utilities’
SR, an under-researched topic (e.g., Slacik and Greiling, 2020a, 2020b;
Traxler and Greiling, 2019), more so when it comes to responsible tax
behavior issues. It is paramount to consider the payment of the fair share
of taxes by companies in the electric sector as a core economic re­
sponsibility. By focusing on the electric sector, this study highlights the
relevance of a sector that provides a vital public service and is an
environmentally sensitive industry exposed to political, social, and
ethical issues (Martins et al., 2020), subject to a wide range of institu­
tional pressures, and for which the disclosure of sustainability infor­
mation on a voluntary or a mandatory basis is often considered a
legitimation tool used to engage with stakeholders (Imperiale et al.,
2023).
This study has political and practical implications for governments,
and non-governmental organisations. The most important takeaway of
our study is perhaps that an SR regulatory framework is an important
driver for more developed topic-specific reporting. Our findings suggest
that even when requirements on certain topics do not exist in such a
framework, it is likely to have a positive effect on their disclosure. When
such requirements do exist, such as in the case of the Spanish trans­
position of the NFR directive, the effect seems to be amplified and
diffused. Another aspect that is likely to have positive impacts on topic-
specific disclosures is the existence of voluntary initiatives encouraging
certain isomorphic practices and the reporting thereof, such as the
Spanish Code of Good Tax Practices. The existence of (preferably non-
profit) organisations seems to act as some sort of “observatories” to let
stakeholders know how companies perform, such as Fundación Haz in
Spain with its regular report tax transparency. Through the above
findings, it is also possible to argue that the coexistence of institutional
pressures/mechanisms is capable of producing normativity, as sug­
gested by Korca et al. (2021). Taken together and following previous
literature (e.g., Risi et al., 2023), our results suggest that tax-related SR
appears as part of an institutional practice that is diffused into an
organisational field through the three isomorphism mechanisms. Gov­
ernments, regulators, and non-governmental organisations may adopt
such mechanisms/institutional pressures to foster the economic re­
sponsibility of organisations through the payment of the fair share of
taxes.
This study has practical implications by highlighting the prominent
role of responsible tax behaviour, by placing economic and financial
M.C. Branco et al.
responsibility at the core of CSR, aligned with Renouard and Ezvan’s
(2018) view. It is important to reinforce for stakeholders and society in
general, that companies’ economic and financial responsibility is not
limited to profit. Rather it is related to companies’ overall economic
performance, which Renouard and Ezvan (2018) relate to how “eco­
nomic value is created and shared”, and encompasses how companies
deal with “tax issues, investment decisions, payments to shareholders,
and treatment of other direct stakeholders” (p. 150).
This study has numerous limitations, among which are the limited
sample and the limited number of companies by country. Another lim­
itation is the focus on annual sustainability or integrated reports.
Further studies could use larger samples with enough companies from
each company to allow more meaningful comparisons. An additional
possible extension of this study pertains to how companies use other
reporting media of the company, such as webpages or press releases.
Some of the findings have implications in terms of directions for
future research. In particular, the findings on the influence of parent
companies on the reporting practices of the companies under their
control suggest the existence of interesting relations that could be
explored. In addition, the possible influence of the tax-related practices
of a subsidiary (Endesa) on the practices of the parent (Enel) is also
something that could be further explored (and eventually confirmed or
infirmed) by way of a case study. Of interest would also be studying
whether the project CONFIA in Brazil, which includes the creation of a
Code of Good Tax Practice similar to the Spanish one will have effects of
the type we suggest existed in the Spanish case. These further studies
could be of interest in terms of theory development, given the out-of-
ordinary coercive, mimetic, and normative isomorphism at play.
Financial Support
Delfina Gomes has conducted the study at Research Center in Polit­
ical Science (UIDB/CPO/00758/2020), University of Minho/University
of Évora and supported by the Portuguese Foundation for Science and
Technology (FCT) and the Portuguese Ministry of Education and Science
through national funds.
This research has been also financed by Portuguese public funds
through FCT - Fundação para a Ciência e a Tecnologia, I.P., in the
framework of the project with reference UIDB/04105/2020.
Declaration of competing interest
The authors declare that they have no known competing financial
interests or personal relationships that could have appeared to influence
the work reported in this paper.
Data availability
All the data used, mainly sustainability reports from companies, are
public available.
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