EY
At a macro level, government policies affecting investment in supply chains are usually influenced by various interconnected public policy goals, including: • By Marna Ricker, global vice chair – tax, EY, and Jay Camillo, global operating model effectiveness (OME) leader, EY, with contribution from Joost Vreeswijk, global tax sustainability and supply chain leader, EY
Managing national security by enabling a stable local supply of vital goods, for example steel, active pharmaceutical ingredients and semiconductors Fostering domestic resilience with nearshore and friendly-shore supplies of critical goods in case of globalised supply chain disruption Increasing employment through onshoring Addressing environmental concerns by using fiscal and tax policy to support green industries and circular business models, and to reduce disposal and transportation waste.
The inflection point of supply chain, sustainability and tax: what does business need from government? The G7 is working hard to tackle a host of global issues ranging from geopolitical upheaval to climate change. As businesses respond to the new taxes and trade regulations designed to help meet the challenges, they are transforming their supply chains in ways that support global goals while managing and leveraging the new policies and tax implications. Their one big ask of governments: reassurance that they will provide clear enough guidance so that success is everyone’s to share
•
•
T he G7 is setting multiple goals and policies to deal with a variety of issues including global trade disruption, geopolitical upheaval and climate change challenges. Businesses tasked with compliance and implementation of policies designed to meet these goals face substantial pressure to transform supply chains in response. Both governments and businesses need to understand each other’s goals and perspectives if these policies are to succeed. This is particularly true when evaluating the interaction of supply chains, sustainability and tax. SUPPLY CHAIN MODELS IN THE NEW ERA OF GEOPOLITICS The complex distribution of power globally is a defining feature of today’s geopolitical environment, and it has profoundly changed the landscape for global investment, technology transfer and trade. Blocs involving North America, the European Union and China are transforming global supply chains into more regionalised systems. Wars and renewed superpower rivalries are also driving change, as seen in the recent upheaval in global sea-lane traffic that
•
Environmental concerns – and efforts to address them – have been the focus of the most active policymaking initiatives, but all these goals are likely to have a major influence on future supply chains. SUSTAINABILITY AND TAX A surge of fiscal initiatives supporting the United Nations Paris Agreement’s global goal of net-zero emissions by 2050 is prompting companies to take action and play a meaningful role. Businesses are considering how to balance the new fiscal subsidies and incentives with the new liabilities from indirect tax, tariffs and customs. Clear government policy related to these “carrots and sticks” is vital to helping businesses advance social responsibility and meet commercial targets. The EU’s Carbon Border Adjustment Mechanism (CBAM), the new Corporate Sustainability Due Diligence Directive (CS3D) and the Indo-Pacific Framework for Prosperity (IPEF) supply chain agreement are prominent regional examples of clear policy. The EY Green Tax Tracker cites more than 2,000 taxes and levies and 1,000 incentives that support sustainability. And these will all have implications for business decisions about supply chains, product configuration, sourcing and manufacturing. CBAM, for example, will have profound implications for supply chains in carbon intensive industries. Specifically, new import fees could impel companies to
challenges the stability of markets and economies.
12
G7 ITALY: THE APULIA SUMMIT — 2024
globalgovernanceproject.org
Made with FlippingBook. PDF to flipbook with ease